Handbook of Decentralised Governance and Development in India 9780367337698, 9781032055145, 9780429321887


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Table of contents :
Cover
Half Title
Title Page
Copyright Page
Table of Contents
List of tables
List of figures
List of contributors
Preface
Part 1 The setting
Chapter 1 Decentralised governance and development in India: An introduction
Chapter 2 Seeing PRIs in India and their history from a Gandhian perspective
Chapter 3 The evolution of devolution
Part 2 Dimensions of decentralisation
Chapter 4 Political decentralisation: Role of political parties from colonial times
Chapter 5 Rural local governance and administrative decentralisation: An institutional analysis
Chapter 6 Fiscal decentralisation in India: Status and raising issues
Chapter 7 State–sub-state level fiscal decentralisation in India: Theoretical issues and policy options
Chapter 8 Decentralised planning in India: Challenges and prospects
Chapter 9 Implementation of PESA and status of panchayat raj institutions in fifth scheduled areas of Indian states: Issues, challenges and ways ahead
Part 3 Decentralised rural governance
Chapter 10 Deliberative democracy through Grama Sabha: Progress and issues
Chapter 11 Decentralised governance in India: The anticipated and the unanticipated
Chapter 12 Interrogating local democracy: Formal and informal local governance in Karnataka1
Chapter 13 Good governance in Gram Panchayats of Kerala: Not so good?
Chapter 14 Capacity development for good governance in Panchayats: Status, effectiveness and issues
Chapter 15 ICT for local governance: Status, emerging issues and prospects
Part 4 Decentralised urban governance
Chapter 16 Decentralised governance in urban areas: Problems and prospects from a socio-historical perspective1
Chapter 17 Urban local governance: Revisiting the fundamentals
Chapter 18 Intergovernmental transfers to urban local bodies in India: Issues and directions for reforms
Part 5 Sectorial aspects of decentralisation
Chapter 19 Implementing workfare through decentralised government for poverty reduction
Chapter 20 The policy and practice of decentralised natural resource management in India
Chapter 21 Devolving rights to forest dwellers: Politics of institutional choice and recognition in the Forest Rights Act implementation process in West Bengal, India
Index
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Handbook of Decentralised Governance and Development in India

This handbook examines 25 years of decentralised governance and development in India. It provides a historical overview of developments since the introduction of decentralisation reforms (73rd and 74th Constitutional Amendment Acts) and critically assesses the measures initiated to strengthen decentralised institutions and deepen grassroots democracy. It also discusses the status of service delivery and identifies the issues and challenges involved in achieving development at the local level. The volume studies themes such as the devolution of powers in India, administrative and fiscal decentralisation, decentralised planning, Panchayats in scheduled areas, the sociological aspects of decentralisation, caste, gender and local democracy, capacity building, ICT for local governance, urban local governance, workfare and decentralisation, and decentralised natural resource management. It also looks at Panchayati Raj institutions from a Gandhian perspective. The first of its kind, this handbook will be an essential read for scholars and researchers of decentralisation and development, development studies, fiscal decentralisation, political studies, political sociology, Indian politics, Indian government, public policy and governance, political economy, South Asian studies, and South Asian politics. D. Rajasekhar is the HAG Professor in Economics at the Centre for Decentralisation and Development, Institute for Social and Economic Change, Bengaluru, India. He obtained his PhD from Jawaharlal Nehru University, New Delhi, India (through the Centre for Development Studies, Trivandrum). He was Visiting Scholar at the universities of Oxford, Melbourne, Hitotsubashi, Sussex, and at the Centre for Development Research, Copenhagen. He worked extensively on decentralisation, social protection, and microfinance and served in policy bodies constituted by the government. He has published 27 books and 89 articles in national and international journals and as book chapters. His paper (co-authored) on ‘Motivating Knowledge Agents: Can Incentive Pay Overcome Social Distance?’ was published in The Economic Journal. His paper (co-authored) on ‘Collusion, Co-option and Capture: Social Accountability and Social Audits in Karnataka, India’, published in Oxford Development Studies, was awarded the Sanjaya Lall Prize for its contribution to development studies. He is currently collaborating with researchers from the London School of Economics, and the universities of Bristol, Melbourne,Tsuda, and Hitotsubashi in research relating to decentralisation and poverty reduction, delivery of public services, and social protection. His recent books include Decentralised Governance, Development Programmes and Elite Capture (2018) and Cooperatives and Social Innovations: Experiences from the Asia Pacific Region (2020).

Handbook of Decentralised Governance and Development in India

Edited by D. Rajasekhar

First published 2022 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 605 Third Avenue, New York, NY 10158 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2022 selection and editorial matter, D. Rajasekhar; individual chapters, the contributors The right of D. Rajasekhar to be identified as the author of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record has been requested for this book ISBN: 978-0-367-33769-8 (hbk) ISBN: 978-1-032-05514-5 (pbk) ISBN: 978-0-429-32188-7 (ebk) DOI: 10.4324/9780429321887 Typeset in Bembo by Deanta Global Publishing Services, Chennai, India

Contents

List of tables viii List of figures x List of contributors xi Preface xiv PART 1

The setting 1 Decentralised governance and development in India: An introduction D. Rajasekhar

1 3

2 Seeing PRIs in India and their history from a Gandhian perspective M.V. Nadkarni

22

3 The evolution of devolution V. K. Natraj

34

PART 2

Dimensions of decentralisation 4 Political decentralisation: Role of political parties from colonial times George Mathew 5 Rural local governance and administrative decentralisation: An institutional analysis N. Sivanna and N.Veeresha 6 Fiscal decentralisation in India: Status and raising issues M. A. Oommen 7 State–sub-state level fiscal decentralisation in India: Theoretical issues and policy options M. A. Oommen

45 47

62 78

92 v

Contents

8 Decentralised planning in India: Challenges and prospects M. Devendra Babu 9 Implementation of PESA and status of panchayat raj institutions in fifth scheduled areas of Indian states: Issues, challenges and ways ahead Yatindra Singh Sisodia

106

122

PART 3

Decentralised rural governance

135

10 Deliberative democracy through Grama Sabha: Progress and issues D. Rajasekhar and R. Manjula

137

11 Decentralised governance in India: The anticipated and the unanticipated Manish Thakur

154

12 Interrogating local democracy: Formal and informal local governance in Karnataka 167 Kripa Ananthpur 13 Good governance in Gram Panchayats of Kerala: Not so good? D. Narayana 14 Capacity development for good governance in Panchayats: Status, effectiveness and issues D. Rajasekhar 15 ICT for local governance: Status, emerging issues and prospects Inderjeet Singh Sodhi

184

199 217

PART 4

Decentralised urban governance

233

16 Decentralised governance in urban areas: Problems and prospects from a socio-historical perspective N. Jayaram

235

17 Urban local governance: Revisiting the fundamentals Amita Bhide 18 Intergovernmental transfers to urban local bodies in India: Issues and directions for reforms Shibani Mishra, Alok Kumar Mishra and Prerna Panda vi

249

264

Contents

PART 5

Sectorial aspects of decentralisation

287

19 Implementing workfare through decentralised government for poverty reduction 289 R. Manjula 20 The policy and practice of decentralised natural resource management in India 308 Mahima Upadhyay 21 Devolving rights to forest dwellers: Politics of institutional choice and recognition in the Forest Rights Act implementation process in West Bengal, India Bidhan Kanti Das

322

Index 339

vii

Tables

5.1 5.2 5.3 5.4 5.5 5.6 5.7 6.1 6.2 6.3 7.1 7.2 7.3 8.1 8.2 8.3 8.4 8.5 8.6 9.1 9.2 9.3 9.4 10.1 10.2 10.3 12.1 13.1 13.2 13.3

viii

Top-, middle- and low-ranking states in the devolution index 66 Devolution ranking of states in policy 67 Staff position in Gram Panchayats (top five states in the devolution index) 68 Staff position in Gram Panchayats (bottom five states in the devolution index) 69 Devolution ranking of states in practice 70 Gap between devolution policy and practice of Panchayat functionaries 71 Nature of administrative decentralisation in the Panchayats of selected states 72 Ranking of states in regard to devolution of functions, funds and functionaries and IGT (2015–16) 83 Nature and quantum of devolution recommended by union finance commissions to local governments in India 85 Horizontal criteria adopted by union finance commissions for distribution of grants-in-aid to states for Panchayats and ULGs 85 Criteria for inter-tier distribution of development funds 99 OSR as percentage of total expenditure (Kerala and Tamil Nadu)-GPs 100 OSR as percentage of total expenditure (Kerala and Tamil Nadu)-ULGs 100 Initiatives in decentralised planning in India 109 Status of devolution in major states of India 112 Status of District Planning Committees in major states of India 113 State-wise status of District Rural Development Agency in India 114 Status of constitution of SFC by the states 115 Details of issues of the round table conferences of ministers of panchayat raj of states 116 Knowledge and participation of panchayat representatives in PESA areas 127 Information about various stages of work among panchayat representatives 128 Perception of panchayat representatives in PESA areas 129 Knowledge and perception of panchayat representatives 130 Distribution of states by the prescribed quorum for GS meetings 140 Major functions assigned to Grama Sabha in different states 141 Participation of citizens in GS meetings in Madhya Pradesh 147 Structures and activities of GPs and CVCs 176 Distribution of states by Gram Panchayat size and transfer of tertiary-sector functions 187 Distribution of states by Gram Panchayat size and sanctioned/own functionaries 187 Per capita allocation of untied funds (plan and non-plan) by the State Finance Commission by state across tiers of Panchayat (Rs), 2015 188

Tables

1 3.4 Services offered through Panchayats by tier in Indian States, 2016 196 13.5 Districts (%) with integrated district plans in 2015 by state 197 13.6 Services (%) offered by states across tiers out of the maximum possible services, 2015 197 14.1 Funds (Rs. crores) released and utilised under the RGPSA/RGSA 206 15.1 Status of ICT infrastructure in Gram Panchayats 220 17.1 An index of urban devolution 252 17.2 Status of implementation of decentralisation reforms post JNNURM 253 18.1 Trends in municipal revenues in India 267 18.2 Distribution of local government revenues: Select OECD countries 2010 268 18.3 Major sources of shared revenues and compensations in municipal corporations of India 268 18.4 Major sources of general and specific-purpose transfers in municipal corporations of India 269 18.5 Distribution of municipal revenues by source in India (%): 2012–2013 270 18.6 Central and state tax–GDP ratios 1950–1951 to 2015–2016 270 18.7 Distribution of grants to states for urban local bodies: Criteria and weights (%) adopted by the Finance Commissions of India 276 18.8 Inter-governmental transfers versus own-source revenues in select metropolitan areas 277 18.9 Distribution of tax revenue sources of select metropolitan cities 279 18.10 Recommendations of local finance committees and commissions in India 280 19.1 Key features of the previous wage employment programmes (1970s to the mid2000s) 292 19.2 Performance of MGNREGS in India during 2008–09 to 2018–19 297 21.1 Basic unit of authority vested in rights determination as well as forest governance 326 21.2 Comparative account of potential CFR versus CFR recognition under the act 328

Charts 5.1 Analytical and spatial dimensions of administrative systems 14.1 Training institutions in states for Panchayats

64 208

Appendices 6A

List of the states that have no activity report (out of 25 states) as per the “Report of the Mid-Term Review and Appraisal” (2006) 88 6B Vertical sharing of resources based on latest SFC report available 88 7A Criteria for horizontal distribution of Tamil Nadu 102 7B Status of deficit in Karnataka panchayats 104 7C Percentage distribution of financial condition of ULG (2002–07) in percent – Karnataka 104 14A Number of programs organised and participants trained by NIRD (1992–93 to 2016–17) 214

ix

Figures

5.1 5.2 13.1 13.2

Devolution index 65 Status of devolution in India (region-wise) 66 Distribution of electrified houses by social groups 189 Distribution of households by availability of latrine within the house by social groups 190 13.3 Households using improved sanitation facility (%) by social groups, 2013–14 190 13.4 Nutritional status of children, 2013–14 – stunted (%) by social group 191 13.5 Nutritional status of children 2013–14 – underweight (%) by social group 191 13.6 Percentage of rural houses with cement and mosaic floor, 2011 192 13.7 Percentage of urban houses with cement and mosaic floor, 2011 192 13.8 Population (age 20–24) attending educational institutions by social group, 2011 193 13.9 Poverty (%) by social group, 2009–10 193 13.10 Percentage of urban households with drainage, garbage disposal, no direct opening to road, 2012 194 13.11 Percentage of rural households with drainage, garbage disposal, no direct opening to road, 2012 195 14.1 Proportion of ERs trained to total (2008–09 to 2010–11) 204 14.2 Distribution of states by proportion of funds accessed for capacity development (2014–15 to 2017–18) 207 14.3 Distribution of states by proportion of trainees to total (2014–15 to 2018–19) 209 14.4 Distribution of key states by total funds received (%) and trainees (%) during the period 2014–15 to 2018–19 209 14.5 Distribution of states by amount (Rs.) spent for each trainee during 2014–15 to 2018–19 210 19.1 Share of SCs/STs in the total person days of employment in India (in %) 298 19.2 Share of women in the total person days of employment in India (in %) 298 19.3 Average person days of employment per household 299 19.4 Proportion of households availing of 100 days of employment 300

x

Contributors

Kripa Ananthpur works at the Madras Institute of Development Studies, Chennai, India. Her research focuses on the dynamics of local democracy, women’s empowerment, and the interface between governance and civil society institutions. She has extensively researched on decentralisation and governance in Karnataka, Tamil Nadu, Rajasthan, South Africa, and East Timor. M. Devendra Babu is an Honorary Professor, Karnataka State Rural Development and Panchayat Raj University, Gadag, Karnataka, and formerly a Professor of Economics, Institute for Social and Economic Change (ISEC), Bengaluru, India. Amita Bhide is a Professor and Dean at the School of Habitat Studies, Tata Institute of Social Sciences, Mumbai, India. She studies issues of urban transformation and governance through a practice-based perspective. Bidhan Kanti Das is an Associate Professor of Anthropology and Jt. Coordinator of M Phil in Development Studies at the Institute of Development Studies, Kolkata, India. He has published over 25 papers in peer-reviewed journals and has edited two volumes. His research interests are forest governance, tribal development, climate vulnerability. N. Jayaram is a Visiting Professor at the Institute of Public Policy, National Law School of India University, Bengaluru, India. He has taught sociology at Bangalore University and Goa University, and research methodology at Tata Institute of Social Sciences, Mumbai, India. R. Manjula is an Assistant Professor at the Centre for Decentralisation and Development, ISEC, Bengaluru, India. She has co-authored books and research papers (published in national and international journals and as chapters). Her most recent co-edited book is Cooperatives and Social Innovation (2020). George Mathew is the Chairman of the Institute of Social Sciences, New Delhi, India. His area of specialisation is local governments and decentralisation. His research and studies focus on the political empowerment of women and the marginalised through the local governments in rural India. His concern is integrating research with action. Alok Kumar Mishra is an Associate Professor of Economics, School of Economics, and the Director of the Programme of Land, Housing, Transport and Urban Economics, HUDCO Chair Programme, ICSSR Sponsored Research Programme at the University of Hyderabad, India. xi

Contributors

Shibani Mishra is an Assistant Professor of Economics at Binayak Acharya College, Berhampur, under the Government of Odisha, India. She is also studying for her PhD in Urban Public Finance at the School of Economics, University of Hyderabad, India. M. V. Nadkarni is an economist who is also interested in other social sciences and ethics. He is an Honorary Visiting Professor at Institute for Social and Economic Change (ISEC), Bengaluru, India, and author of several books including the latest Socio-economic Change and the Broad-basing Process in India (edited, 2020). D. Narayana is currently a member of the Contributory Pension Review Committee of Government of Kerala, India. He was the Director of Gulati Institute of Finance and Taxation (GIFT), Thiruvananthapuram during 2012–13 and 2016–19. He has a PhD from the Indian Statistical Institute, Kolkata, India. V. K. Natraj was educated at the University of Mysore, India, and at Oxford, UK. He retired as a Professor of Development Studies from Mysore and served as the Director of the Madras Institute of Development Studies, Chennai, India. He is the co-editor of Development Narratives: The Political Economy of Tamil Nadu (2014). He was also visiting faculty at the Centre for Political Studies, Jawaharlal Nehru University, India. M. A. Oommen is an Honorary Fellow, Centre for Development Studies, and Honorary Professor, Gulati Institute of Finance and Taxation, Kerala, India. He is a development economist of repute with a rich collection of professional papers and about 30books to his credit. Prerna Panda is currently working as an Assistant Professor of Economics at Government Women’s College, Sundargarh, Odisha, India. She is also studying for her doctoral degree in Urban Economics at the School of Economics, University of Hyderabad, India. D. Rajasekhar is HAG Professor and head of the Centre for Decentralisation and Development in the Institute for Social and Economic Change, Bengaluru. His areas of interest are decentralization, social protection, microfinance and public services, and published extensively on these themes. Yatindra Singh Sisodia is a Professor and Director at the M.P. Institute of Social Science Research, Ujjain, India. With democracy, decentralised governance, electoral politics, tribes, and development as his areas of interest, he has 18 books and over 80 papers in reputed journals and edited volumes to his credit. N. Sivanna (retired Professor at ISEC, Bengaluru) is currently working as an Honorary Professor at Rural Development and Panchayati Raj (RDPR) University, Gadadg, Karnataka, India.With a special focus on decentralisation, he has authored many books, monographs, working papers, and published research articles in various research journals. Inderjeet Singh Sodhi is a Professor of Public Administration at Rajiv Gandhi National Institute of Youth Development, Sriperumbudur, India. With local governance, disaster management, and rural development as his areas of interest, he earlier taught atthe University of Dodoma, Tanzania,Africa, and Colleges in Jaipur, India.

xii

Contributors

Manish Thakur is a Professor at the Public Policy and Management Group, Indian Institute of Management Calcutta, Kolkata, India. Mahima Upadhyay is a PhD scholar at Institute for Social and Economic Change (ISEC), Bengaluru, India. She is working on institutional analysis of local government and decentralised natural resource management as her PhD research. N. Veeresha is a PhD Fellow in Political Science at Institute for Social and Economic Change (ISEC), Bengaluru, India. He is currently a Guest Faculty at the University Law College, Bangalore University, Bengaluru, India, and working on a doctoral dissertation related to insurrection and governance.

xiii

Preface

It has been 27 years since historic legislations on decentralised governance were passed by the Indian Parliament. Since then, public services at the local level have been sought to be delivered through decentralised governance, and it is believed that this may have resulted in the good development outcomes of democratic decision-making and improved service delivery in both rural and urban areas. In order to critically examine the progress that decentralised governance has made since then and the impact of democratic decentralisation on development outcomes, the Centre for Decentralisation and Development (CDD) at the Institute for Social and Economic Change (ISEC), Bengaluru, organised a seminar entitled ‘Twenty-Five Years of Decentralised Governance in India: Status, Issues and the Way Forward’ during 28–30 August 2018 at the Institute. A large number of papers were presented in this seminar; of them, those providing historical perspective for the last 27 years are included in this volume. In addition, five additional chapters are included so that the volume is complete in terms of issues covered.These papers were revised three times in the light of comments provided. The experience of reading the papers presented in the seminar, making a careful selection of papers for the volume and editing the same in the last couple of years, has been a gratifying experience to me as the subject of the volume is close to my heart. During this period, I have received generous help and support from organisations and well-meaning persons. A partial grant from the Indian Council for Social Science Research, New Delhi, was greatly helpful in organising the seminar. My heartfelt thanks go to Dr. A Ravindra, former Chairman, Board of Governors (BoG), ISEC, Prof. Sudha Rao, Member of BoG, ISEC, Prof. M G Chandrakanth, former Director, ISEC, Dr. S S Meenakshisundaram and Prof. R S Deshpande for their support and encouragement. A six-member screening committee, constituted for the organisation of the seminar, screened the abstracts and provided comments on draft papers. I am immensely grateful to Prof N. Jayaram for not only being part of the screening committee and offering critical comments on a number of draft papers but also for his guidance in the organisation of the seminar and bringing out this volume. My sincere thanks go to Prof M.V. Nadkarni and Prof Abdul Aziz, members of the screening committee, for their support in the screening of abstracts as well as in the review of draft papers. My heartfelt thanks to my colleague Dr R. Manjula who has been with me in this more than two-year journey right from the organisation of the seminar to the publication of the volume. She helped me in the organisation of the seminar, took an active part in the screening committee meetings, and provided considerable support at all the stages of publication of this volume. I also thank Prof M. Devendra Babu, my former colleague at the Centre for Decentralisation and Development, for being part of the screening committee and his participation in the screening of abstracts. The research assistance provided by Mr. Murali J. is gratefully acknowledged. xiv

Preface

I am thankful to three referees of Routledge (two at the stage of proposal clearance and one after the full manuscript was submitted) for their critical and incisive comments on the papers included in this volume. I thank all the chapter contributors for their patience in revising their papers in response to three rounds of comments, and improving the quality of their chapters in the process. Last but not the least, my heartfelt thanks go to Dr Shashank S. Sinha, Publishing Director, Routledge, for providing the idea that the papers presented in the seminar have potential to be brought out as a handbook of decentralised governance and development, Ms Antara Ray Chaudhury, Development Editor, Routledge, for getting the entire process of refereeing completed in an efficient and gentle manner, and Ms Anvitaa Bajaj, Editorial Assistant, Routledge, for her help and support in the editorial process. D. Rajasekhar

xv

Part 1

The setting

1 Decentralised governance and development in India An introduction D. Rajasekhar

It has been over two-and-half decades since historic legislations on decentralised governance were passed by the Indian Parliament. Ever since, public services at the local level have been sought to be delivered through decentralised governance, which has resulted in good development outcomes such as the increased participation of people in service delivery improvements and in local development in both rural and urban areas. In order to critically examine the progress that decentralised governance has made in the last 25 years and the impact of democratic decentralisation on development outcomes, this handbook of decentralised governance and development in India presents chapters contributed by eminent scholars who have worked extensively on the subject. The chapters in this volume aim to provide a historical overview of developments since the introduction of decentralisation reforms (73rd and 74th Constitutional Amendment Acts, henceforth 73rd and 74th CAAs), critically assess the measures initiated to strengthen decentralised institutions and deepen the grassroots democracy, discuss the status of service delivery and identify issues and challenges involved in achieving development at the local level.

Concept of decentralisation A straightforward definition of decentralisation in the English dictionary is an ‘act or process of giving some of the power of a central government, organisation, etc., to smaller parts or organisations around the country’.1 Yet, academicians and development organisations have found it challenging to define decentralisation and the various publications2 that have come up on this subject are testimony to this. In contrast, there is no disagreement on the use of the term centralisation, an antonym of decentralisation, as the concentration of power, resources and authority in a centre. A common approach has been to include changes introduced by the central government towards giving away its powers under decentralisation (Rondinelli, Nellis and Cheema, 1983). According to this approach, decentralisation is the process that transfers political, administrative and fiscal responsibilities (or powers) from the centre to local organisations. Local organisations, in general, include locally elected governments, community based organisations and so on. In DOI: 10.4324/9780429321887-1

3

D. Rajasekhar

some studies, the transfer of powers by the central government to community based organisations is termed decentralisation.3 In India, however, it is the transfer of functions to constitutionally created local governments that is widely viewed as decentralisation.4 Accordingly, decentralisation is defined as the transfer of political, administrative and financial powers by the central government to elected governments at the district, sub-district and village levels. So, one often hears in the Indian discourse that decentralisation means the transfer of the three Fs – functions, functionaries and finances – from the central government to a locally elected government. The transfer of functions from the centre to the periphery takes place on the basis of the principle of subsidiarity, which can be defined as the devolution of functions to that government which is best suited to undertaking the devolved functions and delivering good outcomes. I agree with this view, but would like to go beyond this definition for the simple reason that mere transfer of powers to a locally elected government will not result in decentralisation. In my view, an essential component of decentralisation should be the participation of people in decision-making, empowerment of the community and the democratisation of the society. This is because the transfer of powers takes place, in the first place, for the benefit of the community, including those marginalised – women and persons from the disadvantaged caste groups. Decentralisation is meaningful to the community when people seize the opportunity provided (i.e., utilise the powers that are transferred to the local government), participate in the decision-making process for service delivery and local development and assert their rights and entitlements. Viewed from this angle, the participation of people in the local government is a dominant paradigm. Deliberative democracy (deliberation leading to consensus-based decision-making) for improved service delivery and local development is an integral part of decentralised governance. The participation of people in decentralised governance (i.e., taking part in village assemblies, voting in elections) enables the poor to hold the local government accountable and contribute to improved and efficient service delivery. This is likely to result in elected leaders and other elites being accountable to the community for their actions rather than allowing them to capture benefits from or co-opt the marginalised in the process of development. If such empowerment does not take place, the likely result is the exit (Hirschman, 1970) of the people from the process of development, and co-option and capture of benefits through decentralised governance (Lakha, Rajasekhar and Manjula, 2015; Rajasekhar, Devendra Babu and Manjula, 2018), leading to loss of interest in the very decentralisation. The participation of people and hearing their voices will result in improved service delivery and local development, while exit, capture and co-option are unlikely to result in good development outcomes. I therefore define decentralisation as the devolution of political, administrative and fiscal powers from the centre to the locally elected government, and the participation of people and the presence of their voices in improving service delivery and development through the local government.

Forms of decentralisation The degree of decision-making power transferred by the central government depends on the form of decentralisation. About 40 years ago, Rondinelli (1981) arrived at three forms of decentralisation, and there has been hardly any disagreement on them since. The first form of decentralisation is deconcentration, which can be in two extreme forms (Rondinelli, 1981, p. 137). At one extreme, it is a mere shifting of the workload from the central government to staff located in outside offices, where staff may not be given powers to decide how these functions should be performed. At the other extreme, a system of field administration is created where the staff, still under the direction and control of the ministry, make routine 4

Decentralised governance and development in India

decisions and adjust the implementation of central directives to conditions in the locality subject to guidelines. The second form of decentralisation is delegation, which ‘implies the transfer or creation of broad authority to plan and implement decisions concerning specific activities […] to an organisation that is technically and administratively capable of carrying them out’ (Rondinelli, 1981, p. 138). Organisations to which functions are delegated are under the indirect control of the central government, and the ultimate responsibility for the functions remains with the latter. The third, and most radical, form of decentralisation is devolution, which implies the strengthening or creation of an independent local government. The characteristics of devolution are that a local government (a) will have autonomy and be outside the direct control of the central government; (b) must have clear or legal jurisdiction where it will undertake functions; (c) will be given powers to raise resources to undertake functions; (d) will be developed as an institution, which, in the perception of local citizens, will deliver services to satisfy needs and on which they have an influence; and (e) will have reciprocal and mutually benefiting interaction with other levels of government. It needs to be noted that the central (or higher levels of the) government will have supervisory power and a financial role, and that the local government will act in accordance with national development plans and policies. Another form, namely privatisation, is added in another paper by Rondinelli, Nellis and Cheema (1983). According to them, privatisation takes place when the central government divests itself of the responsibility for certain functions and transfers them to, inter alia, voluntary organisations, cooperatives, religious organisations, parallel organisations and interest groups (farmers’ cooperatives, credit associations, mutual aid societies, village development organisations, women and youth clubs), or allows private enterprises to perform these functions. The responsibilities transferred will include the production of goods and the supply of services (which were hitherto undertaken by the central government or its agencies), supervision of services and so on. These forms are also seen as a hierarchy of decentralisation types – ranging from the least to the most desirable. Deconcentration is seen as the least desirable form, while devolution is viewed as a process of putting local government firmly and legally on the ground as has been done in India through the 73rd and 74th CAAs.There is considerable dislike in India for privatisation as a form of decentralisation,5 although privatisation trends are strongly visible in the form of transferring functions to parallel organisations, voluntary agencies, farmers’ producer organisations and so on. Falletti (2005), however, argues that one form complements the other – the introduction of the weakest form will lead to the demand for stronger forms of decentralisation. Another categorisation that one often comes across in the literature is political, administrative and fiscal decentralisation. Political decentralisation is the degree to which the central government allows the local government to undertake political functions of governance. The indicators used to measure political decentralisation are representation through elections, articulation and representation of interests, participation and contestation. Administrative decentralisation is defined as the extent to which the local government has autonomy from the central government in relation to the administrative staff. This is measured in terms of the freedom that the local government has in the recruitment and discipline of staff. Fiscal decentralisation, which is defined as the extent to which the central government has devolved financial powers to the local government, is measured in terms of empowerment in the mobilisation of own revenue and autonomy in expenditures (see Schneider, 2003). When the three types of political, administrative and fiscal decentralisation are firmly established, one would say that there is democratic decentralisation. This is considered to be much more valuable. Blair (2000, p. 21) defines democratic decentralisation as ‘meaningful authority 5

D. Rajasekhar

devolved to local units of governance that are accessible and accountable to the local citizenry, who enjoy full political rights and liberty’.Viewed from this angle, democratic decentralisation excludes all those forms and types that do not have a democratic component.

Justification for democratic decentralisation Why do we need democratic decentralisation? Based on a review of decentralisation experiments in a number of countries, Rondinelli (1981, pp. 135–136) provided 14 benefits of decentralisation. The benefits that top the list are decentralised and need-based planning that reflects the preferences of the community, and overcoming the limitations of centrally controlled national planning such as red tape and highly structured procedures. The other important ones are (a) knowledge of and sensitivity to local problems and needs; (b) greater political and administrative penetration of national government policies; (c) greater representation for political, religious, ethnic and tribal groups in development decision-making; (d) development of flexible, innovative and creative administration with greater capability; (e) participation of citizens in development planning and management; and (f) political stability and national unity. Based on a review of existing studies, I argue below that there are at least two broad purposes for which decentralisation reforms are introduced. The first one is instrumental purpose (a means), namely, to enable citizens to participate in democratic decision-making, and promote transparency and accountability in decision-making, service delivery and local development. Sometimes, it is stated that this is a means as well as an end in itself because the above will result in certain values such as participation, equality, inclusiveness, fair treatment to all citizens and rule of law. These are attributes of good governance and development that are important in themselves. The second purpose is to bring development (an end) in a broader sense including area development, human resource development and poverty reduction. Let us examine each of these in some detail below. Decentralisation is introduced for good governance (participation, transparency and accountability) at the local level to achieve development. A central government, the geographical location of which is far from the residence of a large proportion of the population, will find it difficult to understand the needs of all citizens, prioritise the same and initiate activities to address these needs.6 Even if the central government undertakes these activities, such activities will lead to inefficient outcomes because of information asymmetry.7 On the other hand, local governments, being close to the people, have an information advantage to identify people’s needs, prioritise them, prepare need-based plans and undertake activities. In this, village assembly is an important institutional mechanism to secure people’s participation in the deliberation (Rao and Sanyal, 2010: Gibson, 2012). In this entire process of identification of needs and planning activities to address the needs, the local government facilitates the participation of citizens including marginalised populations such as women or those belonging to disadvantaged castes and groups.8 Citizen participation results in a demand for accountability and transparency from the elected leaders and officers and eliminates corruption in the process (Rondinelli, 1983; Kulipossa, 2004; Sharma, 2006). If elected leaders fail in their accountability, they are voted out in the elections.Thus, the purpose of reforms is to bring in decentralised governance (participation, transparency and accountability). The second important purpose of decentralisation is to achieve certain development outcomes such as human resource development, area development and poverty reduction (Johnson, 2003). Local government, being closer to the people, is in an advantageous position to obtain information on the situation, problems and needs of citizens. The problems and needs of citizens may be related to human resource development (drinking water, sanitation, health and 6

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education), area development (intra- and inter-village roads, streetlights, infrastructure that promotes natural resources and so on) and poverty reduction (through development of farm and non-farm activities, provision of wage employment and so on). Leaders elected to the local government will have incentives (such as re-election) to formulate plans in accordance with the above needs and preferences of citizens and implement them for the benefit of people (Crook and Sverrisson, 2001; Blair, 2000; Crook and Manor, 1998; Manor, 1999; Rondinelli, McCullough and Johnson, 1989; Kulipossa, 2004; Oates, 1972; Jutting et al., 2005; Smoke, 2015). Decentralised planning provides cost-efficient services as a decentralised government will consider local preferences more carefully as compared to the central government (Oates, 1972). Transferring fiscal powers to local governments such as tax imposition and the use of tax revenue for service delivery strengthens the relationship between citizens and elected leaders. The needs and preferences of citizens will have to be incorporated into the planning and implementation of development plans; otherwise, citizens will refuse to pay taxes and defeat leaders not accountable to them in elections. The accountability of elected leaders can further be enhanced through civil society and community based organisations (Heller, Harilal and Chaudhuri, 2007; Sanyal, 2009). All these will result in good development outcomes. Policies of affirmative action for disadvantaged groups such as women and those belonging to depressed castes will promote inclusive development by encouraging participation from these disadvantaged groups in the decentralised planning and implementation (Duflo, 2005). Because of such participation and voices, the locally elected government will be expected to improve the efficiency and responsiveness of public officials,9 and promote the coverage, quality and efficiency of service provision through better governance and resource allocation10 (Robinson, 2007; Chattopadhyay and Duflo, 2004; Besley et al., 2012; Rajasekhar and Manjula, 2012: Deininger et al., 2015; Smoke, 2015), although some studies are cautious in their conclusions about the beneficial impact of affirmative action policies (Kudva, 2005; Ban and Rao, 2008 and Jayal, 2006). There are, however, critiques of decentralisation (Prud’homme, 1995). Bardhan (2002, p. 187) argues that uncritical celebration of decentralisation may lead one to overlook its limitations. Some of the limitations are (a) that decentralisation reforms may not benefit backward regions to the same extent that they have benefited developed regions; (b) poor governance leading to the ‘exit’ of marginalised groups from participation because of the perception that ‘nobody listens to them’; (c) elite capture of benefits that are meant for the poor (Bardhan and Mookherjee, 2006); and (d) livelihood concerns preventing the poor from participating in the decentralised government (Rajasekhar, Babu and Manjula, 2018).

Evolution of local self-government in India The rural local government in India is called a panchayat, which literally means an assembly of five people. Panchayats have existed in India since Vedic times. Nadkarni, Sivanna and Suresh (2018) review the evolution of local government from the Vedic times to the British India period and note that there was a well-structured and well-functioning local decentralised institution with women participation in ancient India. Despite some setbacks in the post-Buddha period, the continued presence of village assemblies, town councils and guilds indicates that some form of local decision-making prevailed. During medieval India, the local bodies particularly at the village level ‘performed several functions: managing community lands, collection of taxes, keeping track of ownership and transfer of lands, maintaining peace and order, and looking after village temples and their needs’ (Nadkarni, Sivanna and Suresh, 2018, p. 107). They survived the onslaught of hostile Muslim 7

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invaders. Akbar accepted the village institutions and made them part of his civic administration. However, the introduction of feudal chiefs and revenue collectors from the Mughal period onwards gradually weakened the role of these village-level decentralised institutions, especially in the collection of land revenue. Mughals placed city administration in the hands of the office of Kotwal, a centralised autocratic regime, although the public charity of local merchants and guilds ensured that some towns received drinking water through wells and tanks and other civic amenities such as parks and schools. So, when the British arrived in India, they found local bodies in several villages. In the eyes of the British, these were dominated by upper castes and rich cultivators, and were not representative of the village (Maddick, 1970). Lower-caste households eking out a livelihood from wage labour in agriculture did not have much say in these bodies. The British did not build upon these traditional institutions which had the village as the basic unit of governance. The reforms introduced by Lord Ripon and others created local boards at the block level, far from villages. According to Nadkarni, Sivanna and Suresh (2018), this was done for better supervision from above. The British reforms on decentralisation did not have an adult franchise as the base, and compromised equality (especially women participation). Local boards were widely seen as appendages of the British administration (Maddick, 1970). Thus, at the time of independence, panchayats were found to be weak in many parts of India. Local self-government figured prominently during the struggle for India’s freedom from colonial rule. Spearheading the discussion, Mahatma Gandhi argued for village swaraj as an independent republic, yet linked with many other institutions. The lack of consensus on local government resulted in the mention of this only in the directive principles leading to the nonformulation of legislation firmly placing panchayats in India. The need for vibrant micro-institutional arrangement to involve the people was, however, felt soon after independence as rural development programmes such as Community Development Programme of 1952 did not succeed in enabling the people to participate in the governance. In 1957, the Balwant Rai Mehta Committee was appointed to assess the extent to which community development projects and national extension services had succeeded in the utilisation of local initiatives and creation of institutions to ensure continuity in the process of improving economic and social conditions in rural areas. The committee recommended the establishment of three-tier, elected Panchayat Raj Institutions (PRIs), and the devolution of the necessary resources, power and authority to them so that the community could be meaningfully involved in the planning, decision-making and implementation process.The Santhanam committee was appointed in 1963 to look into the fiscal aspects of PRIs. Soon after this, PRIs were set up in several Indian states and were beginning to make some difference at the local level. However, two important developments resulted in the weakening of the Panchayati Raj system. First, the loss of Congress party influence at the grassroots level resulted in a process which could be called centralisation. Second, PRIs did not succeed in bringing democratic decentralisation, increasing the participation of people – especially those belonging to SC and ST communities – or addressing the issues concerned with the development.This has been attributed to the resistance by politicians and bureaucrats at the state level to share power and resources with the PRIs, domination of the local elite over the implementation of rural development programmes, capacity constraints in PRIs, corruption, inadequate devolution of powers and responsibilities to panchayats, frequent interference into the Panchayat Raj system by the government and its officials, irregular elections within Panchayat Raj bodies, etc. (Mathew, 1994). The imposition of emergency and the call for strengthening the democracy of the society generated an interest in decentralised decision-making at the local level. As it was realised that 8

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PRIs were not playing an effective role in rural development, a high-level committee under the chairmanship of Ashok Mehta was appointed to examine and suggest measures to strengthen PRIs. The committee recommended PRIs as a two-tier system, with Mandal Panchayat at the base and Zilla Parishad at the top. It believed that the PRIs were capable of planning for themselves with the resources available to them, and that such planning should take care of the rural– urban continuum. The committee recommended four-year terms to PRIs and reservations to SC and ST households.

The 73rd and 74th Constitutional Amendment Acts Following the Ashok Mehta Committee report, and the experience of West Bengal and the Karnataka states in decentralised governance in the 1980s, the discussion on ways of securing people’s participation in the development process through PRIs and the devolution of powers continued. In addition, multilateral and bilateral aid agencies, suggesting liberalisation policies for addressing the problems of poverty, unemployment, ill-health and poor education, stressed the revitalisation of local government to secure people’s participation in addressing these problems and carrying out the development. In response to the above, historic legislations (the 73rd and 74th CAAs) were passed in 1992. Hailed as important landmarks for their radical approach towards decentralisation, these legislations devolved powers to sub-state level governments and sought to ensure the participation of citizens in general and disadvantaged groups in particular. These legislations sought to bring a new political system at the grassroots level by giving priority to decentralised political institutions and to people’s participation in local governance and planning. In rural areas, a three-tier model with democratically elected governments at the village (Grama Panchayat), block/taluk (Taluk Panchayat) and district (Zilla Panchayat) levels was adopted. These were the Panchayati Raj Institutions (PRIs) that have become the rural part of decentralised governance in India. In urban areas, the 74th CAA provided a legislative framework for the establishment and strengthening of urban decentralisation. The two legislations incorporated the following provisions to strengthen decentralised governance in rural as well as urban areas.

Gram and Ward Sabha In order to enable the participation of people in decision-making processes for the identification and prioritisation of needs, as well as the preparation and implementation of plans, a provision for the Grama Sabha consisting of all voters in the jurisdiction of Gram Panchayat and Ward Sabhas in urban areas was made. Grama Sabha will exercise such powers and perform such functions at the village level as decided by the state government. These institutions are expected to play key roles in the monitoring the implementation of development plans, and the promotion of accountability, at the local level. Certain rules such as quorum, mandatory participation of women and so on aim to ensure that citizens including women and those belonging to disadvantaged castes do participate in the decision-making.

Mandatory elections A five-year term is uniformly provided to all local governments in rural and urban areas with elections within six months in the case of premature dissolution. In view of irregular elections before the 73rd and 74th CAAs, mandatory elections to local governments once in 9

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five years are expected to promote the accountability of elected leaders to the decentralised government.

Reservations to disadvantaged groups Historically, the participation of disadvantaged groups (women and those belonging to SC and ST communities) in decentralised governance was limited or non-existent because of the prevailing social and economic structure. In order to improve their representation and participation in the local self-government, one-third of seats and executive positions are reserved for women and for persons belonging to SC/ST categories; the reservation for SCs and STs is done according to proportion to their population.

Constitution of the finance commission PRIs should have adequate resources to implement plans prepared by the people and fulfil their aspirations. In view of changing aspirations, there is also a need to periodically revise the quantum of funds to be provided to PRIs. The amendments have, therefore, made it mandatory to constitute a finance commission once in five years to review the finances and to recommend the size of funds to be allocated to PRIs and also the principles and the basis on which taxes should be collected in the jurisdiction of Grama Panchayats and urban local bodies.

Devolution of functions Article 243G empowers the state governments to endow panchayats with such powers and authority to enable them to function as institutions of self-government. Panchayats are made responsible for the preparation and execution of plans for economic development and social justice with regard to functions listed in the 11th and 12th schedules of the Constitution.

The volume and its major themes After the historic legislations on decentralised governance were passed by the Indian Parliament in the early 1990s, all the Indian states passed conformity acts and implemented the provisions of these two historic legislations. Elections to PRIs were held regularly, barring a few deviations here and there.The policy of reservations was followed in the last 27 years, and this has improved the representation of women and those belonging to depressed castes significantly. State finance commissions (SFCs) were constituted in different states, although several states have defaulted in terms of the Constitution of the required number of commissions in the last 27 years and in the implementation of their recommendations. The state governments transferred some or all the functions relating to local development and sought to deliver public services at the local level in accordance with principles and practices of decentralised governance. A three-day seminar on Twenty-five Years of Decentralised Governance in India: Status, Issues and the Way Forward was organised by the Centre for Decentralisation and Development, Institute for Social and Economic Change, Bengaluru to critically examine the progress that decentralised governance has made since then and the impact of democratic decentralisation on development outcomes. In the seminar, which was organised during 28–30 August 2018, 36 papers were presented. Of them, those providing an overview of developments relating to various aspects of decentralisation for the last 27 years, assessing their status and discussing issues, are included in this volume. In addition, five chapters (dealing with evolution of decentralisation, Grama 10

Decentralised governance and development in India

Sabha, capacity building, urban decentralisation and natural resource management) were added to make the volume complete in terms of issues covered. The chapters included in the volume were revised three times in response to comments provided by the editor, experts and reviewers of Routledge. This volume is unique in the following respects. ••

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•• ••

To the best of my knowledge, this is the only volume on decentralisation in India which provides a historical overview – which documents the developments in the decentralisation during the first 40 years of the post-independence period and, later, 27 years of decentralised governance after historic legislations were passed and complied with by Indian states. This is perhaps the only volume on decentralisation which provides a comprehensive account on decentralisation covering the setting (for the initiation of decentralisation reforms in India), different dimensions of decentralisation (political, administrative, functional and fiscal), decentralised governance in rural and urban areas and finally sectoral aspects of decentralisation. Almost all the chapters provide the status at the all-India level with the help of secondary data collected from devolutions index reports, finance commission reports and so on, and provide an assessment of the subject chosen for a discussion. Third, given that the volume is comprehensive in dealing with diverse aspects of the decentralisation, the conclusions and key arguments that emerge from the volume will be of considerable relevance to policy-makers and researchers in India and outside. A number of universities and other educational institutions in India offer a course on decentralised governance for development. In addition, competitive exams conducted by the central and state governments for various administrative positions also include the subject of the Panchayati Raj system in India. There is no textbook which covers various aspects of decentralisation in India in a comprehensive and historical manner. This volume fills in this gap.

The chapters in this volume are presented in five parts. Part 1 deals with the setting, while Part 2 discusses different dimensions of decentralisation. Parts 3 and 4 are on rural decentralised governance and urban decentralised governance, respectively.The last part is devoted to a discussion of sectoral aspects of decentralisation.

Part 1: The setting The two chapters included in this part deal with the history of decentralisation in India before the enactment of the two legislations (the 73rd and 74th CAAs) and address the following questions: What was the background to decentralisation reforms in India? What factors influenced the enactment of these legislations? M. V. Nadkarni, in his chapter ‘Seeing Panchayati Raj Institutions in India and their history from a Gandhian perspective’, argues that Gandhi’s perspective provided an important motive for ushering in PRIs. Gandhi’s contribution lies in providing certain moral principles of governance with which to judge the actual PRIs today. These principles, derived from his faith in truth and nonviolence, emphasised people’s sovereignty, individual dignity and freedom, self-rule, equality, inclusiveness, commitment to the welfare of all (Sarvodaya) – not just of a majority – non-discrimination and, last but not least, avoidance of hierarchy, authoritarianism and patronisation from above. In his Hind Swaraj (1909), Gandhi sought an alternative to the prevailing political and economic system; decentralised democracy in the form of PRIs was an integral part of this alternative. People’s active participation in governance was seen as its very 11

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life-blood by him. Merely instituting local governments but dominated by and totally dependent on the state and central governments was not Gandhi’s idea of Panchayati Raj. The second chapter of Part 1 – ‘The evolution of devolution’ by V. K. Natraj – analyses factors that influenced the evolution of decentralisation/devolution. The writings of Mahatma Gandhi and opposition to his view constituted the first factor. Mahatma Gandhi’s idea of decentralisation, where the village was the centre, did not receive much support from members of the Constituent Assembly who favoured a western or Anglo-American style of Constitution with a parliamentary democracy. Second, the period just after independence was not considered to be the right time for decentralisation as the need to maintain the unity and integrity of the country was considered to be immense. Third, with the techno-centric approach to agricultural development through the green revolution in the 1960s to 1970s, the institutional structures required for the development were almost absent from the discussion, thereby resulting in less emphasis on decentralised government in the policy discourse. The fourth important factor is the perspective on development which has undergone changes over time. Factors such as the emergence of scepticism about the role of centralised governance, the neglect of the human side of development, economic reforms and the growth of civil society and public participation have played fairly important roles in the development of the devolution perspective. Finally, the coalition politics bringing changes in the centre-state power equation also paved the way for devolution policies.

Part 2: Dimensions of decentralisation The three important dimensions of the decentralisation – political, administrative and fiscal – are discussed in Part 2 of the volume by raising the following questions: Are political parties working for devolution of powers through local governments and developing the culture of political decentralisation? Does the local government have administrative autonomy – that is, freedom to recruit and control the staff? Is the local government empowered to mobilise its own revenue and take appropriate decisions on expenditure? Did finance commissions strengthen fiscal decentralisation? Could Panchayats and urban local bodies develop decentralised plans for economic development and social justice? For the benefit of 9 percent of the tribes in India, the Panchayat (Extension to Scheduled Areas) Act (PESA) was passed in 1996 and areas from ten Indian states came under the act.What is the status of the implementation of PESA? The six chapters included in this part address these questions. George Mathew, in his chapter ‘Political decentralisation: the role of political parties from colonial times’, analyses the history of political decentralisation in India from the Ripon Resolution (1882), which is considered the Magna Carta of local governments, and provides a detailed discussion on arguments for and against the elections to panchayats on political party symbols. While political decentralisation is associated with pluralistic politics and representative government, it also supports democratisation by giving citizens more influence in the formulation and implementation of policies through reservations, Grama Sabha and district planning. Although political parties did not support decentralisation, the judiciary stood by the panchayats, brilliant young people came forward to contest in panchayat elections and the improved participation of women and disadvantaged groups brought accountability and transparency issues to the forefront. The chapter ‘Rural local governance and administrative decentralisation: an institutional analysis’ by N. Sivanna and N.Veeresha looks at the status of administrative decentralisation with the help of indices of devolution across the states. The authors seek to find out the extent of the devolution of powers by the state governments to the rural local governments to recruit, 12

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discipline and transfer the personnel, analyse issues and challenges faced by PRIs in the administrative decentralisation and identify measures needed to strengthen the same. They argue that administrative decentralisation has taken place in the form of delegation rather than devolution, and that the recruitment, supervision and control of panchayat staff are still in the hands of state government and line departments. The two chapters (Chapters 6 and 7) by M. A. Oommen, ‘Fiscal decentralisation in India: status and raising issues’ and ‘State sub-state level fiscal decentralisation in India: theoretical issues and policy options’ are on fiscal decentralisation. They are interconnected and hence must be read together. In Chapter 6, Oommen examines the direction, progress and quality of the process of fiscal decentralisation as this plays an important role in determining the extent to which decentralised governments become viable agents of social and economic transformation at the local level. After outlining the manner in which the central and state governments have gone about the process of fiscal decentralisation, he presents the progress, status and quality under four heads (fiscal assignments, transfer system, basic services and horizontal equity and creating institutions of local self-government). He argues that important problems plaguing fiscal decentralisation are inefficient functional assignments (non-specification of roles and responsibilities of panchayats; not defining the boundaries of the state government) and funds and functionaries not following functions and expenditure responsibilities. In Chapter 7, Oommen analyses the potential of the Union Finance Commission to reduce inter-state horizontal disparities and of the State Finance Commission to reduce intra-state disparities in the delivery of minimum basic services to the citizens of India. The state governments tasked with implementing the recommendations of SFCs have failed in rectifying the vertical and horizontal imbalances at the state sub-state level.The state governments have also not adhered to the constitutional mandate of the periodic constitution of SFCs, placing SFC reports in the public domain and preparing actiontaken reports. Specific purpose finance (or tied fund) dominates vertical transfers in almost all the states and untied funds are either small or non-existent, making it difficult for the local government to carry out planning for the functions devolved to them for economic development and social justice. In his chapter ‘Decentralised planning in India: challenges and prospects’, M. Devendra Babu provides a historical overview of local-level development planning in India during the planning period through the recommendations and suggestions of various committees and commissions on decentralised planning. Offering a summary of the decentralisation of functions, functionaries and finance across states and the status of district planning committees (DPCs), the author argues that the attention paid to decentralised planning is inadequate, and that panchayats confine their role to service delivery and some agency functions in the absence of real devolution. He also underlines the emerging policy trends towards a re-centralisation of functions and finances. The Indian government’s Panchayat (Extension to the Scheduled Areas) Act (PESA), passed in 1996 in order to address the needs of tribal people, aims at empowering tribes in states with Fifth Scheduled Areas to manage their local affairs and to preserve and safeguard their traditions and customs, their cultural identities as well as their customary modes of social–personal relations. In his chapter ‘Implementation of PESA and status of Panchayati Raj institutions in Fifth Scheduled Areas of Indian states: issues, challenges and ways ahead’,Yatindra Singh Sisodia provides an overview on the functioning of the PESA Act with the help of primary data collected from representatives of local governments located in the contiguous Fifth Scheduled Areas of Madhya Pradesh, Gujarat and Rajasthan. He argues that while PESA provided an impetus to the functioning of panchayats in the tribal areas, there was little progress with regard to fulfilling the overall development needs of tribes in the Fifth Scheduled Areas. 13

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Part 3: Decentralised rural governance The main intentions behind the 73rd CAA were to create institutional structures for decentralised rural governance, facilitate the participation of citizens, especially those belonging to disadvantaged groups, and democratise rural society. How has Grama Sabha, an important institution created to facilitate the participation of citizens, performed over the last 27 years? Has decentralisation contributed to the democratisation of society? What are the unanticipated consequences? What has been the role of traditional and informal panchayats in decentralised rural governance? What is the role of the size of the local government; capacity development; and information and communications technology (ICT) in influencing decentralised rural governance? The six chapters in this part address these questions. D. Rajasekhar and R. Manjula in their chapter ‘Deliberative democracy through Grama Sabha: progress and issues’ discuss the progress made in the functioning of Grama Sabha (GS) – an institution created to promote deliberative democracy; assess the needs and preferences of citizens and incorporate the same into planning; oversee the implementation of development programmes; and ensure the accountability of the local government to citizens and its progress in decentralising rural governance and improving service delivery at the grassroots level. With the help of a secondary source review and evidence from the states of Karnataka and Madhya Pradesh, this chapter discusses the functioning of GS, progress in the people’s participation and impact on service delivery. The authors argue that although Grama Sabha resulted in important benefits such as improved participation and the strengthening of democratic decision-making and politics at the local level, its effectiveness in promoting deliberative democracy in all states was limited by a number of factors. Manish Thakur, in his chapter ‘Decentralised governance in India: the anticipated and the unanticipated’, provides a sociological perspective on decentralisation by providing a synoptic review of the benefits of the 73rd CAA in relation to its impact on social structure and processes of politicisation. He argues that although decentralisation policies have not led to substantial improvement in the quality of the delivery of public services at the grassroots level, they have created an unanticipated public good of making the rural stratification system quite malleable. They have done so by letting the idea of democratic citizenship take strong roots in the countryside and opening up the field of political representation to hitherto marginalised communities. He further argues that these unanticipated consequences should not necessarily be detrimental to the overall public good even when they undermine the efficacy of the anticipated policy outcomes. Customary village councils (CVCs), as collegiate, collective and cooperative institutions, have existed since Mughal times, and are engaged in religious activities, dispute resolution, social service and support and participation in development activities. What explains the persistence of these institutions at the village level? What are the domains in which CVCs and Grama Panchayats interact? What is the nature and impact of interaction? Kripa Ananthpur, in her chapter ‘Interrogating local democracy: formal and informal local governance in Karnataka’, analyses these questions as they have deeper implications for local democracy with the help of three sets of research data collected over a period of 15 years. After providing a detailed account of the pattern of membership in CVCs, leadership, participation of different socio-economic groups, legitimacy of these institutions and their activities, the author argues that the coexistence of Grama Panchayats and CVCs is attributed to complementary roles performed by them, and contributes to our understanding of the concept of ‘institutional dualism’. D. Narayana in his chapter ‘Good governance in Gram Panchayats of Kerala: not so good?’ puts forward a hypothesis that the size of the local government matters in local governance. It is widely 14

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regarded that a decentralised government is best-suited for the provision of public and quasipublic goods, identification of target groups of beneficiaries and effective implementation of policies. In the context of an Indian decentralisation that is over two-and-half decades old, Kerala is often talked about as a success story. Among the Indian states, Kerala is often credited with taking democratic decentralisation forward and achieving remarkable results in the provision of public services. These achievements of Kerala are often attributed to political decentralisation and fiscal decentralisation. The issue explored in this chapter is whether a viable size and historical advantage of higher literacy and lower social gradient in education played a part in this success. Given that the success is confined to the provision of services benefiting individuals the often-heard story is hard to believe.The author argues in this chapter that the size of Grama Panchayats matters in the good governance with reference to Kerala state, and that this has a theoretical foundation. In his chapter ‘Capacity development for good governance in panchayats: status, effectiveness and issues’, D. Rajasekhar examines the effectiveness of capacity development policies and programmes for about three million elected representatives (ERs) of local government and discusses the issues involved in the capacity development. With the help of a review of secondary sources and literature, the chapter shows that the policies and programmes were in line with the requirement for capacity development of ERs; of them, most are women and belong to disadvantaged caste groups having little prior experience in decentralised governance. However, a gradual shift of the policies away from the qualitative development of the capacity of ERs and limited decentralisation adversely affected the effectiveness of these policies. The implementation of policies and programmes was such that they aimed at quantitative dimensions of training rather than quality aspects. The mere provision of training to ERs did not result in significant capacity development in the absence of sufficient devolution of powers and an appropriate decentralisation framework. Technology is needed for informed decision-making, efficient service delivery and enhanced participation, transparency and accountability. Information and communications technology (ICT) can be used for interaction between four different groups of stakeholders, namely government to government, government to business, government to citizen and citizen to government. The chapter on ‘ICT for local governance: status, emerging issues and prospects’ by Inderjeet Singh Sodhi provides a broad spectrum of the programmes and projects launched to introduce ICT and e-governance in the functioning of local government. The author traces the status of the implementation of ICT projects wherein the local government stores and exchanges data on a variety of aspects and provides speedy delivery of services, bringing out the nuances of introducing ICT in different schemes of government at the national level.

Part 4: Decentralised urban governance India has experienced an unprecedented growth of its urban population in recent decades. Given that such rapid growth is on account of migration into towns and cities, and that growing urban populations put enormous pressure on infrastructure, basic services, land, housing and the environment, there is an immense need to strengthen democratic decentralisation in urban areas. This is because issues relating to basic services in urban areas are local and so citizen participation in decentralised governance is crucial. Hence, the 74th Constitutional Amendment Act (1992), relating to urban decentralised governance, was introduced. Although there were a few studies soon after the legislation, research on decentralised urban governance has been neglected in India, and as compared to decentralised rural governance not many scholars have in the past paid attention to issues relating to urban decentralised governance. The three chapters in this part therefore deal with urban decentralised governance. 15

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In his chapter ‘Decentralised governance in urban areas: problems and prospects from a socio-historical perspective’, N. Jayaram traces the idea and practice of urban governance from a socio-historical perspective. It starts with a discussion of the introduction of urban governance institutions in the form of municipalities in the colonial era and the changes this institution underwent in the post-independence period up to the enactment of the 74th Amendment in 1992. It then examines the nature and trends in the decentralised urban governance since the implementation of this amendment in 1993. Jayaram argues that there is a disjunction between the objectives of the 74th Amendment and the reality of urban governance regarding the relationship between the state governments and urban local bodies, the dynamics of party politics and power play in relation to urban governance, the problems associated with the funding of the urban bodies, and the similarities and differences across the cities under the three tiers. Amita Bhide in her chapter ‘Urban local governance: revising the fundamentals’ analyses the state of urban decentralised governance linked to land-use planning and regulation/control of building, as well as poverty alleviation. She finds that the status of devolution is poor and that we have, even after 25 years of the 74th Amendment, created a highly complex, fragmented and confused system of urban governance that produces poor outcomes on the ground. She notes that ‘a new lease of life’ to urban local governments that was expected to be provided by the 74th Amendment has remained a dream, and that decentralised reforms failed to make a dent in the situation of highly dependent, incapable, corrupt and inefficient urban local governments. Even while contemporary urban programmes pay lip service to the issue of urban decentralisation, there is very little action on ground. The author argues that the failure to decentralise is rooted in the mismatch between the actual nature of Indian cities, changes in their political environment and the precepts of urban decentralisation. In the context of a highly unsatisfactory state of municipal finances and intergovernmental transfers to municipalities, the chapter ‘Intergovernmental transfers to urban local bodies in India: issues and directions for reforms’ by Shibani Mishra, Alok Kumar Mishra and Prerna Panda looks at the fiscal federalism and public finance frameworks mandated by the Constitution of India and the role of state and central finance commissions in the schemes of central–state and state–local transfers. The theory and practice of intergovernmental transfers, including both international and national practices, are analysed to draw lessons for designing a robust system of fiscal transfers to ULBs in India and suggest directions for reforms in the system of intergovernmental transfers to municipalities in India in the context of the new regime of the Goods and Services Tax (GST) which has subsumed some important municipal taxes.The authors argue for a robust framework of municipal finance, including the sharing of tax bases or tax yields at the state level, the sharing of the divisible pool of taxes at the central level and a partnership-based approach to finance urban infrastructure.

Part 5: Sectoral aspects of decentralisation The three chapters in this final part look at the sectoral aspects of decentralisation.These aspects are poverty reduction through the provision of wage employment, decentralised natural resource management and decentralised management of forest resources. In her chapter ‘Implementing workfare through decentralised government for poverty reduction’, R. Manjula examines the evolution of workfare (work + welfare) programmes for the creation of wage employment for the poor to achieve the objectives of poverty alleviation and livelihood security in India. Several workfare programmes have been implemented since independence to address the problem of seasonal unemployment in rural areas, but the outcomes were poor. The Mahatma Gandhi National Rural Employment Guarantee Scheme 16

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(MGNREGS) was therefore implemented in 2006. Grama Panchayats are assigned a greater role in the implementation of programmes meant for poverty alleviation and employment creation. The author analyses the progress made in the implementation of MGNREGS through decentralised government and the challenges faced in the provision of wage employment. The implementation of MGNREGS by the local government shows that the scheme was successful in providing wage employment to female workers and in raising agricultural wages, but challenges such as the hoarding of job cards, inadequate provision of work and delays in the release of wages still remain to be addressed. The next chapter, ‘The policy and practice of decentralised natural resource management in India’ by Mahima Upadhyay, looks at the policy and the practice of decentralised natural resource management against the background of decentralisation being practiced in India as an institutional mechanism to deal with resource degradation and ensure efficiency, equity and sustainability in resource management. The institutional arrangements adopt a pluralistic-polycentric approach within a decentralised framework and involve the community, the line departments and the local government in the management of natural resources. The author argues that the practice, however, seems to favour the user groups over other institutional structures such as the local governments. Second, though the outcomes of natural resource management have been mixed, community participation has had a significant role in the success of decentralised management of resources. Given that the local government is constitutionally mandated to promote deliberative democracy, there is a need to strengthen its role in the resource management arena. The final chapter in the volume is entitled ‘Devolving rights to forest dwellers: politics of institutional choice and recognition in the Forest Rights Act Implementation process in West Bengal, India’ by Bidhan Kanti Das. This chapter analyses the implementation process of the Forest Right Act (2006) at the state level, using an ‘institutional choice and recognition’ framework for decentralisation reforms in the forestry sector. Based on micro-level evidence in Maoist-affected districts of West Bengal, India, this chapter explores the reasons behind this ‘institutional choice and recognition’ by the state. It also tries to examine the consequences of choosing and recognising a new institutional arrangement at the state level. It is argued that the ‘bundle of forest rights’ under the act has been reduced to only individual land titles on the ground, denying ‘community forest rights’ claims in the governance of forest resources. Second, the state government treated individual land rights claims as another ‘beneficiary scheme’ of the local government, with the intention of ‘political clientelism’ to secure votes in democratic politics in rural West Bengal. Third, the recognition of individual land titles will allow the forest department to retain its power and authority over forest resources. The state should therefore play an important role in transferring power to the local government for the management of natural resources.

Towards a conclusion The Handbook of Decentralised Governance and Development in India reaches the following overall conclusions. The ideas of Mahatma Gandhi positively influenced the design of decentralised governance. Mahatma Gandhi’s moral principles of governance, in particular decentralised democracy, formed important components of the 73rd and 74th CAAs such as mandatory elections, provision of Grama and Ward Sabhas, mandatory participation of disadvantaged groups in the meetings of these institutions and reservations to disadvantaged groups to promote people’s participation in the decision-making and democratisation of the society. This design, as the chapters in this volume show, contributed to the spread of deliberative democracy and democratisation of society in some Indian states. Panchayats created a new type of political opportunity 17

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structure at the village level in an unprecedented way and have furthered the spread and reach of democratic political contestation to the hitherto politically uninitiated. It should, however, be noted that the functioning of Grama Sabha, an institution created to promote deliberative democracy, was adversely affected by poor implementation, frequent changes in the functions assigned to Grama Sabha, schemes (sponsored at the central as well as state government levels) making deliberative democracy redundant and parallel bodies marginalising people’s assembly. The gap between the principles of decentralised governance and practice in the field has continued even after 27 years of decentralised governance reforms. Political decentralisation has not received much support from political parties, which do not even ensure that elections to panchayats are held on political party symbols on a uniform basis.The administrative decentralisation has taken the form of delegation rather than devolution, and panchayats do not have control over their staff, leading to unproductive devolution of functions on account of inadequate staff to carry out devolved functions.The problem of inefficient functional assignment continues to plague the fiscal decentralisation. The cardinal principle of public finance that the allocation of funds and functionaries should follow functions or expenditure responsibilities is not adhered to. The much-needed simultaneous transfer of disaggregated functions, funds and functionaries has not happened in any desired pace and manner. State finance commissions (SFCs) are provided in the decentralised governance reforms to bring in an efficient transfer system that ensures predictable vertical transfers to rectify the expenditure and resource mismatch, facilitate horizontal equity and offset the comparative fiscal disadvantages of panchayats and municipalities. Here again there is a hiatus between principle and practice. Most SFCs and the state governments tasked to implement the recommendations of SFCs have failed to rectify the vertical and horizontal imbalances at the state sub-state level. The state governments have also not adhered to the constitutional mandate of the periodic constitution of SFCs, placing SFC reports in the public domain and preparing action-taken reports. Specific purpose finance (or tied fund) dominates the vertical transfers in almost all the states and untied funds form either a small or a non-existent part of the total funds, thus making it difficult for the local government to carry out decentralised planning for the functions devolved to them. As a result, the development outcomes, as shown by the chapters that focus on sectoral aspects of decentralisation, have tended to be poor and uneven across the regions and social groups. Several chapters in this volume show that there is an underlying tendency to re-usurp panchayat functions by the staff of panchayats or line departments. It is the staff of line departments who prepare plans for panchayats under the supervision and guidance of state-level departmental heads. Most of the funds are allocated to district rural development agencies, which are independent of panchayats in many states and are headed by bureaucrats. A discussion on capacity development policies and programmes shows that there is a shift in the focus of these programmes away from elected representatives to the training of staff and training infrastructure leading to re-usurpation of panchayat powers and functions by bureaucrats. The discussion on decentralised management of natural resources as well as forests in the volume also shows the tendency to re-usurp panchayat functions through user groups in the case of natural resource management and by not recognising the community rights to forest resources. The idea and practice of urban governance show a disjunction between the objectives of the 74th Amendment and the reality of urban governance regarding the relationship between the state governments and urban local bodies, the dynamics of party politics and power play in relation to urban governance, the problems associated with the funding of the urban bodies, and the similarities and differences across the cities under the three tiers. The fundamental concepts of ‘urban’ or ‘local’ or the ‘nature of the institution at the local level’ are being contested, and need 18

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to be revisited. It is argued that top-down efforts to bring urban decentralisation are likely to encounter resistance at multiple levels and be prone to manipulation and co-option to produce a highly complex and fragmented political space, unless accompanied by moves to encourage a simultaneous bottom-up demand for local autonomy.

Notes 1 www​.o​​xford​​learn​​ersdi​​ction​​aries​​.com/​​defin​​ition​​/engl​​ish​/d​​ecent​​raliz​e (accessed on 25 October 2020). 2 See, for instance, Wallis (1991), UNDP (1999), Schneider (2003) and Mewes (2011). 3 In the literature on decentralised natural resource management, the transfer of certain functions to user groups in the management of natural resources is termed ‘decentralisation’. See, for instance, Ribot, Agrawal and Larson (2006). 4 According to this view, the transfer of functions to organisations other than local government (that is, line departments, community-based organisations and so on) does not constitute decentralisation. 5 In a seminar on the decentralised delivery of educational services held at the National Institute of Educational Planning and Administration (NIEPA), New Delhi, participants disagreed that privatisation is one of the forms of decentralisation as it would then mean that private schools set up in India will qualify to be called decentralised units. 6 During the COVID-19 lockdown period, the strong call for decentralised decision-making by individual state governments regarding the pandemic was made as it was felt that the central government would not be in a position to determine the intensity of the disease in a locality and the ameliorative measures that should be taken. 7 Information asymmetry theory proposes that an imbalance in information between the two parties leads to inefficient outcomes. 8 Heller and Rao (2015) term this ‘deliberative democracy’. See this book for a detailed discussion. 9 The mechanism through which this happens is that female leaders tend to be less criminal and corrupt, more efficacious and less vulnerable to political opportunism (see Baskaran et al., 2018). 10 Besley et al. (2004) find that the reservation of seats for SC/ST resulted in the enhanced targeting of public goods in favour of households belonging to these communities.

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Deininger, Klaus, Jin, Songqing, Nagarajan, Hari K. and Xia, Fang (2015). ‘Does Female Reservation Affect Long-term Political Outcomes? Evidence from Rural India’, Journal of Development Studies, 51(1), pp. 32–49. Duflo, Esther (2005). ‘Why Political Reservations?’ Journal of the European Economic Association, 3(2–3), pp. 668–678. Falleti, T. G. (2005). ‘A Sequential Theory Of Decentralization: Latin American Cases in Comparative Perspective’, American Political Science Review, 99(3): 327–346. Gibson, C. (2012). ‘Making Redistributive Democracy Matter: Development and Women’s Participation in the Gram Sabhas of Kerala, India’, American Sociological Review, 77(3), pp. 409–434. Heller, Patrick, Harilal, K. N. and Chaudhuri, Shubham (2007). ‘Building Local Democracy: Evaluating the Impact of Decentralization in Kerala, India’, World Development, 35, pp. 626–648. Heller, Patrick and Rao, Vijayendra (eds.) (2015). Deliberation and Development: Rethinking the Role of Voice and Collective Action in Unequal Societies. Washington: World Bank. Hirschman, Albert O. (1970). Exit, Voice and Loyalty: Responses to Decline in Firms, Organisations and States. Harvard: Harvard University Press. Jayal, Niraja Gopal (2006). ‘Engendering Local Democracy: The Impact of Quotas for Women in India’s Panchayats’, Democratization, 13(1), pp. 15–35. Johnson, Craig (2003). Decentralisation in India: Poverty, Politics and Panchayati Raj, Working Paper 199. London: Overseas Development Institute. Jutting, J., Corsi, E., Kauffmann, C., McDonnell, I., Osterrieder, H., Pinaud, N. and Wegner, L. (2005). ‘What Makes Decentralisation in Developing Countries Pro-Poor?’ The European Journal of Development Research, 17(4), pp. 626–648. Kudva, Neema (2005).‘Engineering Elections:The Experience of Women in “Panchayat Raj” in Karnataka, India’, International Journal of Politics, Culture and Society, 16(3), pp. 445–463. Kulipossa, F. P. (2004). ‘Decentralisation and Democracy in Developing Countries: An Overview’, Development in Practice, 14(6), pp. 768–779. Lakha, Salim, Rajasekhar, D. and Manjula, R. (2015). ‘Collusion, Cooption and Capture: Social Accountability and Social Audits in Karnataka, India’, Oxford Development Studies, 43(3), pp. 330–348. Maddick, Henry (1970). Panchayati Raj: A Study of Rural Local Government in India. UK: Longman. Manor, James (1999). The Political Economy of Democratic Decentralisation. Directions in Development Series. Washington, DC: World Bank. Mathew, George (1994). Panchayat Raj: From Legislation to Movement. New Delhi: Concept. Mewes, K. (2011). ‘Decentralization: Concepts and Definitions’, in Decentralization on the Example of the Yemeni Water Sector. VS Verlag für Sozialwissenschaften. Nadkarni, M. V., Sivanna, N. and Suresh, Lavanya (2018). Decentralised Democracy in India – Gandhi’s Vision and Reality. Abingdon: Routledge. Oates, Wallace E. (1972). Fiscal Federalism. New York: Harcourt Brace Jovanovich. Prud'homme, R. (1995). ‘The Dangers of Decentralization’, World Bank Research Observer, 10, pp. 201–220. Rajasekhar, D. and Manjula, R. (2012). ‘Affordability of Streetlight Services by Gram Panchayats in Karnataka: Status, Determinants and Ways Forward’, Journal of Rural Development, 31(4), pp. 419–434. Rajasekhar, D., Babu, M. Devendra and Manjula, R. (2018). Decentralised Governance, Development Programmes and Elite Capture. Singapore: Springer. Rao, Vijayendra and Sanyal, Paromita (2010). ‘Dignity Through Discourse: Poverty and the Culture of Deliberation in Indian Village Democracies’, Annals of the American Academy of Political and Social Science, 629, pp. 146–172. Ribot, J. C., Agrawal, A. and Larson, A. M. (2006). ‘Recentralizing While Decentralizing: How National Governments Reappropriate Forest Resources’, World Development, 34(11), pp. 1864–1886. Robinson, Mark (2007). ‘Does Decentralisation Improve Equity and Efficiency in Public Service Delivery Provision?’, IDS Bulletin, 38(1), pp. 7–17. Rondinelli, Dennis A. (1981). ‘Government Decentralization in Comparative Perspective: Theory and Practice in Developing Countries’, International Review of Administrative Sciences, 47(133), pp. 133–145. Rondinelli, Dennis A., Nellis, J. R.and Cheema, G. S. (1983). ‘Decentralisation in Developing Countries: A Review of Recent Experience’, World Bank Staff Working Papers No. 581, The World Bank. Rondinelli, Dennis A., McCullough, J. S.and Johnson, R. W. (1989). ‘Analyzing Decentralization Policies in Developing Countries: A Political Economy Framework’, Development and Change, 20(1), pp. 57–87. Sanyal, P. (2009). ‘From Credit to Collective Action: The Role of Microfinance in Promoting Women's Social Capital and Normative Influence’, American Sociological Review, 74(4), pp. 529–550. 20

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Schneider, Aaron (2003). ‘Decentralisation: Conceptualization and Measurement’, Studies in Comparative International Development, 38(3), pp. 32–56. Sharma, C. K. (2006). ‘Decentralization Dilemma: Measuring the Degree and Evaluating the Outcomes’, Indian Journal of Political Science, 67(1), pp. 49–64. Smoke, Paul (2015). Rethinking Decentralization: Assessing Challenges to A Popular Public Sector Reform. USA: New York University. UNDP (1999). ‘Decentralization: A Sampling of Definitions’, Working Paper prepared in connection with the joint UNDP-Government of Germany evaluation of the UNDP role in decentralization and local governance, United Nations Development Programme. Wallis, Malcolm (1991). ‘Local Government and Development: A Guide to the Literature’, Environment & Urbanization III, 1, pp. 121–129.

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2 Seeing PRIs in India and their history from a Gandhian perspective M. V. Nadkarni1

Gandhian perspective on PRIs Panchayati Raj Institutions (PRIs) are rural local government institutions. Though they were accorded constitutional recognition in 1992 following the 73rd Amendment to the Constitution of India, they existed even earlier.The urban local governments also received constitutional recognition through the 74th Amendment in 1992, and they too existed earlier. But the amendments meant a significant advance over the earlier situation because they recognised local governments as the integral part of the federal structure of India’s governance as its third tier, along with the Union or the central government as its first and the state governments as the second. It meant a quantum jump in their legal as well as the political status. Mahatma Gandhi, however, may have reversed their ranking, putting PRIs as the first and basic tier, the state governments as the second and the Union government as the third tier! In any case, the constitutional recognition of PRIs meant that they could not any longer be ignored or side-tracked on the excuse of their being less bureaucratically efficient than ‘higher’ political leadership in carrying out development tasks that concern people at the grassroots level. The 73rd and 74th Amendments have deepened as well as broadened Indian democracy, in spite of the fact that local bodies do not have legislative powers of the kind which are invested in the Union and state governments. PRIs as they exist today are an outcome of combined influence from three sources: (a) the memory of the fact that Panchayats in some name or other existed in India from the Vedic times onwards, often informally, and that in spite of their chequered career and lack of universal spread in India, they continued to exist almost till India’s independence; (b) Gandhi’s philosophy, moral principles for polity and his vision of Gram Swaraj; (c) government initiatives, which were partly influenced by (a) and (b) above, but mainly by modern liberal political thought and the thinking of eminent contemporary Indian leaders and by the need for local rural development all over the country in all its dimensions. Though Gandhi was one of the three sources of influence, his perspective – if not in letter and actual design, then certainly in spirit – provided an important motive for ushering in PRIs in India. Gandhi’s main contribution lies in providing certain moral principles of governance, through which the PRIs in reality today can be judged. 22

DOI: 10.4324/9780429321887-2

PRIs from a Gandhian perspective

The present article tries to see the PRIs from a Gandhian perspective. A Gandhian perspective on PRIs is not necessarily limited to what he explicitly said or wrote about Panchayati Raj or Gram Swaraj as he called it. It also extends to others like Jayaprakash Narayan who were influenced by Gandhi and extended or applied his perspective to new things he had not attended to. Gandhi, for example, was almost wholly concerned with villages and making villages the base of his Swaraj. This was not only because the rural population was (and still is) the major part of India’s population, but also because he thought that modernisation impoverished villages and took away whatever political power they had.The idea of his Swaraj was not only to restore the lost power to villages, but to enhance it so as to achieve real democracy. He was not in favour of urbanisation as a way of development. But if in the course of economic development, cities do emerge and become more in number, and if an increasing number of people live in villages, Gandhian principles will not deny the same self-governance to urban areas which he wanted to accord to the villages. However, the present article is confined to PRIs, since Gandhi gave his thought mainly and explicitly to them. Gandhi’s perspective on PRIs has to be understood in the context of his general political philosophy. He believed that politics without principle (morality) is a deadly sin to be avoided. Political systems and practices have to be based on the fundamental principles of truth and nonviolence. Principles derived from these fundamental values are the sovereignty of people, individual dignity and freedom, self-rule, self-reliance, equality, inclusiveness, welfare of all (sarvodaya) and avoidance of hierarchy, authoritarianism and patronisation from above. His ideal of a political system was Gram Swaraj, though he did not elaborate its details. Swaraj is self-rule, not just independence from foreign rule. By it, he meant a genuine democracy, where India’s villages rule themselves, and are not dominated, or dictated to, or patronised from above. A democracy, to be genuine, had necessarily to be decentralised along with all political power and sovereignty of the state. Though there had been Panchayats in India at the grassroots level since the Vedic times, Gandhi breathed fresh air into the whole concept, giving it a new significance. His idea of Gram Swaraj was a part of the alternative political and economic system, in preference over capitalist democracy, in fact over western civilization itself. He developed his idea of this alternative in his small seminal book Hind Swaraj, published in 1909 (Parel, 2010).The alternative political system he envisaged was the one where maximum possible participation by people could be ensured. People in the villages should have the power to elect and even change their representatives if found incompetent or corrupt. Gandhi elaborated his concept of Gram Swaraj later in a key article in Harijan dated 28 July 1946. Important excerpts from this are given below: Independence must begin at the bottom. Thus, every village will be a republic or Panchayat having full powers. It follows, therefore, that every village has to be self-sustained and capable of managing its affairs even to the extent of defending itself against the whole world. […] Ultimately, it is the individual who is the unit. This does not exclude dependence on and willing help from neighbours or from the world. It will be free and voluntary play of mutual forces. […] In this structure composed of innumerable villages, there will be ever-widening, never-ascending circles. Life will not be a pyramid with the apex sustained by the bottom. But it will be an oceanic circle whose centre will be the individual. […] Therefore, the outermost circumference will not wield power to crush the inner circle but give strength to all within and derive its own from the centre. (Gandhi, 1959, pp. 8–9) A few central ideas lie at the base of this vision. They are (a) all individuals have equal rights against other individuals as well as against the state, and corresponding duties; (b) ‘the State 23

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will be there to carry out the will of the people, not to dictate to them or force them to do its will’ (CWMG vol. 89, p. 297); (c) all individual villagers form the village Panchayat, as equals and as its basic units, and as ‘centres’ of the whole polity; (d) the villages are autonomous, having full powers; (e) but they are not isolated from each other, having links with other villages socially, economically and politically; (f) they are also linked with the wider state, not in a hierarchical relationship, but in a way that the wider circles derive their power from and are loyal to the inner circles, namely, the village Panchayats and ultimately to the individuals forming them; (g) the state and the economy as a whole function in such a way that they are never detrimental to the autonomy and self-sustaining ability of villages; (h) all individuals are guaranteed their fundamental rights including the right to freedom of association for peaceful purposes. Gandhi had a problem with the basic character of the modern state including democracies. It was dominated by vested dominant interests, and used its authority with the threat of violence, the threat too often turned into reality. In an article in Modern Review in 1935, Gandhi wrote: I look upon an increase in the power of the State with the greatest fear, because, although while apparently doing good by minimizing exploitation, it does the greatest harm to mankind by destroying individuality which lies at the root of all progress. The State represents violence in a concentrated and organised form. The individual has a soul, but the State is a soulless machine, it can never be weaned from violence to which it owes its very existence. (Gandhi, 1954, p. 74) Democracy was no doubt devised to eliminate the arbitrariness of the state, and to subject the state itself to the rule of the law, in ensuring that the people would have an important and decisive voice. Democracy accepted as its basic postulate that all the citizens of the state are equal, with equal voting power to send representatives. It did not, however, mean that all have equal participation or equal voice in decision-making. The comparatively few elected representatives, in whom people expressed confidence periodically – say, once in five years – decided everything on behalf of the people. There was a serious gap between the voting citizens and their representatives, involving lack of access to political decision-making for the former. Another major problem of western democracy, in Gandhi’s view, was the undue weight given to majority opinion, implying that the interests and concerns of the minority could be ignored. He said: ‘Let us not push the mandate theory to ridiculous extremes and become slaves to resolutions of majorities. […] Swaraj will be an absurdity if individuals have to surrender their judgement to majority’ (Gandhi, 1961, p. 45). He felt that majority rule went against the principle of non-violence or Ahimsa. The majority rule was even given a philosophical basis by utilitarianism. He was explicit in the criticism of this philosophy. He wrote in Young India in 1926: ‘A votary of Ahimsa cannot subscribe to the utilitarian formula (of the greatest good of the greatest number). He will strive for the greatest good of all’ (Gandhi, 1954, p. 4). Gandhi advocated the philosophy of Sarvodaya (welfare of all) to replace utilitarianism. He felt that only Sarvodaya could be a true democracy, in which ‘we would regard the humblest and lowest Indian as being equally the ruler of India with the tallest in the land’ (ibid, p. 5). He said again in 1940, ‘My notion of democracy is that under it the weakest should have the same opportunity as the strongest.That can never happen except through nonviolence’ (Gandhi, 1961, p. 11). Gandhi would concede that there could be differences of opinion and interests, but one should arrive at a consensus which hurts no one, and where no one is deprived by any decision. It is the duty of the majority to persuade the minority and take it along. For Gandhi, it is important that a 24

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democracy respects and accommodates a plurality of interests, cultures, faiths and languages, and ensures equal participation of all in the polity and economy. Gandhi thought of Gram Swaraj as an alternative that will rid the state of these limitations. Decentralised democracy holds the hope of a better alternative in Gandhian perspective for several reasons. First, it puts much more power into the hands of ordinary people, and more scope for real ‘self-rule’. Writing in Young India, dated 6 August 1925, Gandhi said: ‘Self-government means continuous effort to be independent of government control, whether it is foreign government or whether it is national. Swaraj government will be a sorry affair if people look up to it for the regulation of every detail of life’ (Vyas, 1962, p. 4). Self-rule means that people take up more responsibilities themselves, reducing the need for government control or regulation from above. Second, even if decentralised democracy does not establish self-rule in the full Gandhian sense, it can nevertheless hold the role and power of the state in greater check. It means more freedom and greater role for people at the grassroots level. Third, decentralisation promotes political education and consciousness, civic responsibility and leadership qualities among common people. It creates better awareness of one’s own as well as others’ rights. Fourth, decentralised democracy brings into the open hidden and innate social evils in villages, including caste discrimination, paving the way for confronting and mitigating them. Fifth, decentralisation facilitates openness or transparency, which can be a powerful factor in favour of significantly reducing corruption. This means that political accountability is much easier to ensure. Mutual and frequent contacts between people and their representatives make the system more responsible as well as responsive. Sixth, this reduces transaction costs and improves informational bases in several important spheres – infrastructure-building, provisioning of public goods and services, and the targeting of schemes like anti-poverty measures. Local governments can more effectively and efficiently handle such functions. Experience gained from handling such tasks generates greater creativity in the political system for problem-solving in the public and collective sphere at the local levels where it matters most. Finally, funds get distributed much more widely, as they should, in the hands of people or their representatives under decentralised democracy. Together with more transparency and vigilance on the part of people, such a political and administrative system reduces the scope for misuse and corruption significantly compared to a centralised system beyond the watch of common people. It is the centralisation of power which leads to greater corruption. Gandhi never advocated laissez faire or a free market economy as a way of checking the power of the state. Laissez faire meant handing over power to market forces, not to people. He was not a market-liberal, but a demos-liberal.2 He was aware that a policy of laissez faire may benefit a few but would exploit many and accentuate inequalities. Nor did Gandhi ever support the idea of state socialism where the state takes over the economy to run it through bureaucracy or technocracy. State socialism went against the grain of his political philosophy of keeping the state power in check and at a minimum. For Gandhi, people are the source of all political power, and for people’s power, ‘ultimately it is the individual who is the basic unit’ (Harijan, 28 July 1946; quoted in Iyer, 1993, p. 347). Dr Ambedkar was wrong in thinking that in advocating Gram Swaraj, Gandhi believed in the primacy of villages as the basic unit of the state. For Gandhi, the basic and ultimate unit of the state was the individual. Gandhi’s solution to the problem of providing an alternative economic system to complement the decentralised political system of Gram Swaraj was a decentralised economy. A centralised system of economy with concentration of economic activity in a few areas and of economic power in a few persons cannot go with a decentralised system of Panchayati Raj, because the Panchayats will not then be able to generate their own financial resources under such a system. They will be forever dependent on transfers of funds from the higher tiers of governance, 25

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resulting in weak political power for themselves. Gandhi, therefore, thought of a democratised economy which is possible only with a decentralised economy. Under a decentralised economy, productive economic activity will be scattered throughout the length and breadth of the country and economic power also will be distributed more evenly among all people. He sought to achieve this through encouraging labour-intensive small-scale industries. Universalising capitalintensive large-scale production units tend to exclude many able-bodied people from work and opportunities of making a living. It alienates workers from capital as well as from the meaning, purpose and unity of the production process. It leads to economic centralisation. On the other hand, ‘economic decentralisation means that both capital and tools are in the hands of actual producers’ (Ela Bhatt, 2013, p. 109). Economic activity has to be, to the best extent possible, both small-scale and labour-intensive, because otherwise the worker will not be able to raise and own capital for it. Charkha was the symbol of this approach. Gandhi, however, was not opposed to the use of machinery and large-scale production absolutely. He would accept it where it does not lead to unemployment and if care is taken to absorb labour in another activity rendered surplus in one industry. He used to often say that he was not opposed to machinery but to the craze for machinery. He said, ‘I am not against machinery as such but I am firmly opposed to it when it masters us’ (CWMG, vol. 64, p. 118). Ela Bhatt explains: ‘He [Gandhi] wanted technology to adapt to human needs and energise them [people] and not overwhelm them and lay human lives to waste’ (Bhatt, 2013, p. 109). The spread of industries to villages was as important to Gandhi as their small scale of production. This was logical since decentralised village industries had necessarily to be small. He wanted every village to be a hub of economic activities within the easy reach of all, and in turn to be such that people could take up productive activities of their choice at places of their choice, much more than in the present system of industrialisation and economic development. People should not have to migrate great distances in search of work in his model of home- or cottage- and village-based industrialisation. Gandhi asserted: ‘Under my scheme nothing should be produced by cities which can equally well be produced by the villages’ (quoted in Datta, 1986, p. 13). He wanted production by the masses, not mass production.The survival of villages as economically viable centres alone would give meaning to decentralised democracy from the Gandhian perspective. Gandhi’s economic alternative would also contribute immensely to the reduction of economic inequality across both persons and regions. He was seriously concerned with the problem of inequality, whether it was economic, social or political. His solutions were designed to reduce it to the minimum, without having to resort to communism.

A brief history of transition to the present3 Historians Venkatarangaiya and Pattabhiram observed that ‘almost every village in the country in ancient times had a self-governing body of its own’ (1969, p. v). Gandhi was aware of it. It may not have been of an ideal type, however. Most likely, it was not representative of all sections of people in the respective villages, and upper castes and landed gentry may have dominated it. These village bodies continued their existence in the medieval period also, since they suited the convenience of the rulers, including Muslim rulers, as basic units of administration and for tax collection.These bodies performed several functions: managing community lands, keeping track of changes in the ownership of lands, collecting revenue, maintaining peace and order, looking after village temples and their needs, and even taking up construction and maintenance of community tanks and wells. However, a situation of anarchy is said to have prevailed over wide areas of India, particularly in the north, after the breakdown of the Mughal rule, seriously affecting – if not totally destroying – the local institutions. But even amidst the changes, a power structure 26

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emerged in the villages which tried to restore order to protect life and property. This may have made the position of village headman and village accountant-cum-record-keeper stronger and more important. At some stage, these positions became hereditary instead of being elected. The British could not fail to take note of the existence of the local institutions, which were called ‘little republics’ by Sir Charles Metcalfe, who was a civil servant in the East India Company and also Acting Governor General of India (1835–1836). In one of the Revenue Papers, he famously wrote: The village communities are little republics, having nearly everything they want within themselves and almost independent of any foreign relations. They seem to last when nothing else lasts. Dynasty after dynasty tumbles down, revolution succeeds revolution […] This union of village communities, each one forming a little state in itself, has, I conceive, contributed more than any other cause to the preservation of the people of India. (quoted in Rodriguez, 2004, p. 324) Henry Maddick, however, observes that ‘Metcalfe’s description could apply only to the area around Delhi where villages established themselves as self-supporting units which withstood invaders and tax gatherers alike. […] It can hardly apply to the majority of that vast number of villages making up rural India’ (1970, p. 15). Maddick does not, however, cite any source or support as the basis of his observation. Metcalfe’s description of the self-rule by villages did not prevent East India Company (hereafter ‘Company’) rule from nearly destroying the earlier system of governance. It happened first through making the village Patwari, who used to keep land records and collect taxes for the Mughal emperor, and the village Daroga, who was a police functionary, own employees of the Company. Thus, they were made responsive and responsible to the Company government and not to the village people whom they had served.This tempted them towards depredations to enrich themselves at the cost of villages. Secondly, the Company merged neighbouring villages depending on their size, affecting their traditional identity. The British developed a bureaucratic apparatus down to villages which superseded and overwhelmed village institutions. Thirdly, the British also developed a parallel judiciary which made the judicial functions of the Panchayats redundant. Fourth, the British created the Zamindari and similar systems, allowing intermediaries between the cultivator and the government to collect revenue. This made the rural society more feudal and unequal. Fifth, the British nearly killed village handicrafts, particularly handlooms, by freely importing mill-made cloth from England, disrupting the village economy and weakening or even destroying local self-government. This also led to a lot of discontent in the countryside, leading to the mutiny of 1857.Village self-government broke down not only in areas directly under British rule but also those under princely states. This was because these states were not independent and were subject to the same forces which were at work in British India. Even in urban areas, there was some self-government under the aegis of guilds of merchants and artisans when the local economy was strong, and this was also destroyed under Company rule. However, the Company administration took some initiatives to start urban municipalities even before the battle of Plassey in 1757.They had a settlement in Madras (now Chennai) where they started a municipal corporation in 1688. Similar corporations were started in Bombay (Mumbai) and Calcutta (Kolkata), both in 1726. They had only nominated members, and not elected ones. Under the Government of India Act of 1850, several more urban municipalities were established on similar lines (Tinker, 1967, pp. 25–26, 29). The 1857 mutiny created significant financial stress which led to the doctrine that the cost of police in the cities and towns should be borne by the residents, which led to the necessity of raising local funds.The resolution 27

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issued in 1864 by Lord Lawrence stressed that whatever service could be performed by local civic bodies should be left to them (Tinker, 1967, pp. 36). This doctrine came to be known as the Principle of Subsidiarity. The 1864 Resolution led to the formation of several more urban municipalities. As much as possible, the expenses incurred on civic services were also expected to be borne by the urban local bodies. Although the elective principle was held in abeyance, the members were expected to have meetings with important residents (ibid, p. 37). It was only after Lord Mayo’s resolution of 1870 that some efforts were made to introduce an element of representativeness in the urban local bodies, but control was firmly in the hands of government servants (ibid, p. 37). Mayo’s resolution induced initiatives in rural areas too. The first step in that direction was the Bengal Chowkidari Act 1870, which empowered District Magistrates to set up village Panchayats, though with nominated members. These Panchayats were expected to levy and collect taxes to pay for the village chowkidars or watchmen (Mathew, 2014, p. 4). But the progress in establishing village Panchayats was very slow, and the Famine Commission of 1880 remarked that the absence of local bodies in rural areas was a major impediment in distributing relief supplies to famine-stricken people (ibid, p. 4). It was through Lord Ripon’s resolution of 1882 that a bigger stride was taken. He introduced the principle of having a majority of elected members in the local bodies, in the name of promoting ‘political and popular education’. The resolution applied to the forming not only of municipal boards in urban areas but also rural boards. There were to be district local boards and also tehsil/taluka boards to cover the whole countryside. At least two-thirds of every board was to be non-official members, who should be elected wherever possible (Tinker, 1967, pp. 44, 45). India’s then-political leaders like S. N. Banerjee, Gopal Krishna Gokhale and Phirozshah Mehta, who were fighting for a share in power for Indians at all levels including the national and provincial, welcomed the proposals of Lord Ripon (ibid, p. 58). In pursuance of the proposals, different provinces passed local government acts to create rural boards. The acts did not officially provide for Panchayats at the village level, but a few provinces tried to start them. The system did not work well even at the board level, because these local boards had great difficulties in getting adequate financial support, and could not afford to provide for village-level Panchayats even where they existed (Tinker, 1967, pp. 55–56). A Royal Commission on Decentralisation in India submitted its report in 1909, in which it recommended re-establishing village Panchayats for local governance, in addition to retaining the district and taluka boards. The Panchayat members were to be elected by village people. They were to be entrusted with the functions of petty civil and criminal jurisprudence, sanitation, minor public works, and building and managing village schools, but not with the task of taxation. The government of India, however, went about the suggested steps very slowly. Mahatma Gandhi, who had come onto the national stage by then, appeared to have been too involved in national issues and did not appear to have lent his weight to expediting the implementation of the recommendations of the Royal Commission Report of 1909 whether as they were or improved. The national politics of self-rule was the main issue that engaged the attention of nationalist leaders, not local self-government itself. Not that the issue was completely ignored. The Congress party did strongly support the idea of re-establishing village Panchayats, but Gandhi advised against giving judicial functions to these Panchayats as he was well aware of the caste and other factions within villages. He did, however, recommend that village Panchayats provide education for boys as well as girls, take care of village sanitation and health care, resist untouchables and ensure that villagers’ daily needs were met (Sharma, 1994, pp. 115–117). But at that stage, village Panchayats were yet to become a concrete and formal reality; they were mainly in the people’s memory of the past, though there were informal groups of village elites in most villages. 28

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On the whole, the focus of the British self-government policy was on strengthening the local boards at the district and taluka levels.Village communities were not actually the basic units of local government. The British attempt at creating local democracy thus proved hollow as it did not provide for the direct participation of village communities. Only the taxpayers constituted the electorate. It is clear that what the British tried to do did not follow a Gandhian perspective at all. Gandhi’s vision of Village Swaraj covered the country as a whole; the Swaraj that the British agreed to provide was hardly representative and democratic even at the restricted local level, though it is at that level they were willing to provide some self-rule. At the time of drafting a Constitution for India after independence, Gandhi’s model of Gram Swaraj faced serious criticism not only from Dr B. R. Ambedkar but even from Jawaharlal Nehru, who was Gandhi’s protégé and designated by Gandhi himself to become the future Prime Minister of India. In Ambedkar’s view, giving power and autonomy to villages would strengthen the very feudal forces which had kept India backward. Ambedkar felt that while a typical Indian village was a ‘cess pool’ of orthodoxy, superstition and caste oppression, urbanisation meant an escape from these social evils particularly for the oppressed castes. The very basis of a liberal democratic society was the individual as in a parliamentary democracy, and not a village as in Gandhi’s Village Swaraj, he argued (Rodriguese, 2004, pp. 158–159). Nehru felt that the Indian economy could not be based merely on traditional village industries, and that modern technology was essential for India’s progress including progress in agriculture, but Village Swaraj was to be based on the continuation of traditional village-based technology. Though Gandhi was not a member of the Constitution Drafting Committee, there were a few Gandhians in it. They argued that Dr Ambedkar’s view was erroneous, since for Gandhi also the individual was a basic unit and it is the individual adults who would elect village representatives, that a western democracy model would lead to neglect of villages if adopted in India, and that freedom was won because of the participation of vast numbers of the rural population and they should have participation in governance. Finally, M. Ananthasayanam Iyyangar intervened in what appeared to be an impasse in the Constituent Assembly Debates. He asked, ‘Where are the [village] republics? They have to be brought into existence’. He suggested that the Gandhian alternative did not seem possible at the national and state levels, but a clause could be introduced under the Directive Principles of State Policy advising the state governments to establish village Panchayats in their respective states. It was thus that Article 40 was added in the Directive Principles,4 aimed at reconciling what appeared then to be a constitutional incongruency. It meant that at the national and state levels there were to be institutions on parliamentary lines, but at the local levels of villages, taluks and districts there would be PRIs. In a situation of a very inadequate presence of village Panchayats all over the country, the district and taluka (local) boards had to continue for some time after independence, but the state governments started forming and empowering village Panchayats and urban municipalities through statelevel legislations. The National Development Council and the Planning Commission provided some guidelines and indicators to states so that a broad if not a rigid common national pattern of PRIs could emerge.The principle of adult franchise and direct election was adopted not only at the national and state levels, but also at the local government level.This was a tremendous democratic advance since voters were taxpayers only before independence.Another advance was that the principal aim of the government henceforth was economic and social development, and not just one of maintaining law and order. A holistic development of the whole economy and infrastructure – both physical and social – was considered necessary for village communities. Towards this end a Community Development Programme (CDP) was initiated for the whole country on 2 October 1952 – Gandhi Jayanti day, as an homage to Gandhi – and a Ministry of Community Development was started in the Union (Central) government, in which Nehru took a great personal interest. It 29

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was felt, however, in the course of time that the CDP was dominated by bureaucracy and was not giving the desired results.The programme was running against the Gandhian principle that villagers be involved in planning and implementing their own development. A committee was therefore appointed in 1957 under Balwantrai Mehta, a member of Parliament, to go into the working of the CDP and National Extension service and make recommendations to improve the situation. The committee observed that the programme did not succeed in evoking popular initiative. It called for a genuine decentralisation involving the devolution of power and responsibilities to elected local bodies. The committee recommended three levels of PRIs: the village Panchayats at the village level (or a cluster of villages if they were small), Panchayat samitis at the block level and zilla parishads at the district level. Only the village Panchayats were to be directly elected by the people. But it was the Panchayat samiti which was envisaged to be the main local body with the responsibility of all development work at the local level like agricultural and irrigation development, schools, public health and local industries. The village Panchayats were to be responsible for water supply, sanitation, lighting, roads and the welfare of backward and scheduled castes. The zilla parishads were meant to achieve coordination between Panchayat samitis especially for large development projects which covered more than one taluka or block. The Balwantrai Committee took care to recommend the earmarking of certain sources of revenue to Panchayat samitis like land revenue, water rates for minor irrigation works, tax on professions, trades and employment, surcharges on the duty on the transfer of immovable property, pilgrims tax, entertainment tax and a share in motor vehicles tax. The recommendations also covered reservations for SCs, STs and women. The recommendations were approved by the Union government (National Development Council), and different state governments passed legislations to implement the proposals. Some states like West Bengal and Kerala which had leftist governments saw an opportunity for mass mobilisation and giving real political power to the people. These states looked at PRIs as something more than agents of economic development alone. These states proved more effective in decentralising governance. A major shortfall of the Balwantrai pattern was that more power and functions were envisaged for the indirectly elected block-level Panchayat samitis than for village Panchayats which were directly elected by the people. This was not consistent with the Gandhian perspective. The Janata Party government, which came to power in 1977, not only accepted the principle of decentralised democracy, but also announced that it would try to introduce decentralised economic planning at the district and block levels. PRIs were looked upon not merely as development agencies but more as institutions of self-rule by people at the grassroots level.The Ashok Mehta Committee, appointed in 1978, identified a few problems like ambiguity in the role of and status of PRIs, domination by rural elite and lack of involvement of PRIs in planning. Strangely, it did not favour Panchayats at the village level, but recommended that the zilla parishads and samitis have a mix of directly elected members, ex-officio members and nominated members. More importantly, the committee recommended an amendment to the Constitution of India to give a clear constitutional status to PRIs. Following the recommendations of the Ashok Mehta Committee, a few states introduced direct elections to the PRIs. For the first time in the history of PRIs, Karnataka reserved 25–30 per cent of seats in PRIs for women. The L. M. Singhvi Committee of 1986 reiterated the Ashok Mehta Committee’s recommendation for a constitutional mandate for PRIs which had to wait till 1992.

The present PRIs in terms of the Gandhian perspective Gandhi himself had not worked out the details of how his Gram Swaraj was to be organised; he left the task to others. He did not specify how the inner circles of village Panchayats would 30

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be linked to wider circles or any details of the Constitution of the whole system of his Gram Swaraj in the country. The Constitution of India accepted parliamentary democracy at the national and state levels, with its Directive Principles of State Policy requiring states to organise village Panchayats. A fairly uniform and systematic pattern of local governments in the country emerged only after the 73rd and 74th Constitutional Amendments were passed in 1992. While the 73rd Amendment came into effect on 24 April 1993, the 74th Amendment came into effect on 1 June 1993.The 73rd Amendment dealt with PRIs in rural areas, while the 74th dealt with urban municipalities and corporations. The amendments have deepened as well as broadened Indian democracy, in spite of the fact that the local bodies do not have legislative powers of the kind which are invested in the Central and State Legislatures. Indian democracy is deepened because it now operates right down up to the grassroots level. It is also now more broad-based because sections of people hitherto neglected like the SCs, STs and women are now accommodated through reserved seats. The village community expected to operate in the present system needs at least two formal institutions to operate – the Gram Sabha (village assembly) and Gram Panchayat (village executive). Gram Sabha is where all women and men of the village above the age of 18 are members. It meets as often as its members wish, but at least twice a year. The Gram Sabha is not merely a deliberative body, but would also decide what steps are necessary to secure and promote village welfare in all its dimensions of education, public health and hygiene, drinking water, electricity, culture, sports and entertainment; plan what rural works to take up with what budget and how to raise revenues; monitor the progress of various welfare or development programmes; identify the poor and the deprived who need special assistance and plan the steps needed to provide for them; approve the annual budgets, monitor the expenditure and subject it to audit. Besides Gram Sabha, a smaller formal body is also needed, corresponding to the executive wing of the state: the ministry forming the government. Such a body has always existed in Indian villages traditionally, going by the name of village Panchayat. It consisted of at least five (panch) persons, and that is how it became known as ‘Panchayat’. The exact number is left to convenience or need. It has to be large enough to represent all sections of the village. The Gram Sabha may or may not have existed formally in the past or traditionally, but the Panchayats have almost always existed. Gandhi did not explicitly draw a distinction between the Gram Sabha and Panchayat, but implied it when he said that the latter has to be elected by all the adults of the village in a meeting. The 73rd Amendment introduced a three-tier system within the PRIs themselves, signifying some amount of uniformity in the country – the village, intermediate (mandal) and the district. Small states with populations under 20 lakh need not have the intermediate level. A main weakness of PRIs earlier was the absence of regularity in the elections to the Panchayats. Now every state ought to have a State Election Commission with the task of conducting elections to Panchayats every five years regularly. Independence of the State Election Commissioner is assured by requiring that the person shall not be removed from service in the same way as a high court judge. The amendment also mandated a system of reservation of seats in Panchayats for SCs and STs in the same proportion of their share in the total population of respective states, and for women to the extent of one-third. The reservation for women, however, was raised to 50 per cent later by the states. The massive entry of women into PRIs has been a spectacular success, drawing them out of domestic environments and contributing to their empowerment. The Panchayats were to be genuinely empowered through the devolution of appropriate powers and responsibilities. They are the main agencies for the planning and implementation of economic development, provided with necessary funds along with functions and functionaries 31

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and due help from states. To ensure some autonomy and certainty in funds, the Constitution provides for state finance commissions (under Article 243-I Amendment) every five years in each state to recommend transfers of funds in the same way that the finance commissions at the federal level allot resources to the states. Under Article 243-H, the Constitution empowers the Panchayats ‘to levy, collect and appropriate’ taxes, duties, tolls and fees subject to limits set by the laws made by respective states for the purpose. These two provisions are intended to secure the self-governing character of Panchayats and enable them to act relatively freely. Due to constraints of space, a detailed assessment of PRIs in India is not attempted here, particularly as it has already been done by the author elsewhere.5 Nor is it relevant here, since this article is concerned only with seeing whether and how far they are in conformity with Gandhi’s vision and principles. An exact or full conformity with Gandhi’s vision is not expected, because Gandhi gave only a broad vision without essential details. His idea that there would be no hierarchy between village Panchayats and states and the centre, but only horizontal and equal relations, is good as a principle to keep in mind to prevent the states from lording over and interfering at will in village Panchayats, and similarly the central government from lording over and interfering in matters pertaining to states. In practice there are difficulties. Not all subjects can be demarcated in watertight compartments and allotted in mutual exclusiveness. Often the scope and coverage of several subjects cuts across village and state boundaries. A subject like the environment or climate change has to be tackled both collectively at the national level and disaggregated state and village levels, and even at the household level. All such matters have to be worked or managed in a spirit of constructive cooperation and not hegemony. The situation at the time of independence in India was such that village Panchayats could not have created the state and central governments by devolving powers and functions to them, simply because the village Panchayats hardly existed in any formal or operational sense. They had to be first brought into existence. On the whole, however, Indian democracy is fairly effectively decentralised and is unique. The village Panchayats may still be dependent on the states, but there is also a significant amount of self-rule. There is a lot of vibrancy and even inclusiveness in village Panchayats and they have emerged as a vital part of the Indian federation. To that extent, Gandhi’s vision is met. There is, however, an important shortfall in the present structure of Indian democracy from the point of giving proper representation to village Panchayats at the state and central levels. To give effect to Gandhi’s vision, it is necessary that the voice of local governments should be heard at the state and central levels too. There is at present a representation of local bodies in the state legislative councils up to one-third, but there is no such provision for representation in the Rajya Sabha at the central level. But this is necessary. It will be mutually beneficial. At the national level, there would be a greater appreciation of the problems at the local level, and similarly there would be a greater appreciation of national problems at the local level.6 A few changes are needed at the state level too. Presently, the total strength of the Legislative Council cannot exceed one-third of the number of MLAs, and the representatives of local bodies in the council cannot exceed one-third of its total strength. This is hardly adequate to give proper voice to local bodies in the council, and the size of the council has to be enlarged. Further, according to the present system, the candidate for the election as a representative of local bodies need not be a member of these bodies, and can well be an outsider. This is not a proper representation. The candidate has to be a member. Further, the voters in the election for representatives in the state legislative councils or Rajya Sabha (as proposed above) should be members of the village Panchayats only, and not members of zilla parishads or mandal Panchayats. These proposals will induce greater respect for local self-government in the body politic, which is presently given the status of a ‘poor cousin’ at best. 32

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Notes 1 This chapter was developed from the author’s earlier work (Nadkarni, Sivanna and Suresh, 2018), especially Chapters 1 to 4 and 11 by the author. For details, this book has to be consulted. 2 A demos-liberal is concerned with the freedom of people and human rights and happiness. In contrast, a market-liberal is concerned mainly with the freedom of the market. 3 The historical account in this section is based mainly on Chapters 3, 4 and 5 in Nadkarni, Sivanna and Suresh (2018, pp. 95–174). For more details, these chapters may be referred to. 4 Article 40 reads: ‘The state shall take steps to organise village Panchayats and endow them such powers and authority as may be necessary to enable them to function as units of self-government’. 5 Chapters 6 and 7 in Nadkarni, Sivanna and Suresh (2018, pp. 175–253) present a detailed critical review of PRIs in India on the basis of (a) self-governance in decision making and autonomy in finance, (b) how far they are inclusive, (c) performance in development programmes, and participation in planning, (d) regularity of elections, and (e) how far they are environment-friendly including care for sanitation. 6 For details of this proposal, see Nadkarni, Sivanna and Suresh (2018, pp. 77–79, 353–355).

References Bhatt, Ela (2013). ‘Perspective from Below – My Sisters, Swaraj is ours to Take!’ in Shah, G (ed.) Re-reading Hind Swaraj: Modernity and Subalterns. New Delhi: Routledge, pp. 100–122. CWMG (1969–81). Collected Works of Mahatma Gandhi. New Delhi: Government of India, Ministry of Information and Broadcasting, The Publications Division. Datta, A. (1986). The Gandhian Way. Shillong: North-Eastern Hill University. Gandhi, M. K. (1954). Sarvodaya (The Welfare of All). An anthology edited by Bharatan Kumarappa. Ahmedabad: Navajivan Publishing House. Gandhi, M. K. (1959). Panchayati Raj. Compiled by Prabhu, R. K.Ahmedabad: Navajivan Publishing House. Gandhi, M. K. (1961). Democracy: Real and Deceptive. Compiled by Prabhu, R. K.Ahmedabad: Navajivan Publishing House. Iyer, R. (1993). The Essential Writings of Mahatma Gandhi. New Delhi: Oxford University Press. Maddick, Henry (1970). Panchayati Raj: A Study of Rural Local Government in India. UK: Longman. Mathew, G. (2014). ‘Panchayati Raj in India: An Overview’ in Mathew, G. (ed.) Status of Panchayati Raj in the States and Union Territories of India 2013. New Delhi: Concept, pp. 3–32. Nadkarni, M. V., Sivanna, N. and Suresh, Lavanya (2018). Decentralised Democracy in India – Gandhi’s Vision and Reality. Abingdon: Routledge. Parel, A. (eds.) (2010). Gandhi: Hind Swaraj and Other Writings. New Delhi: Cambridge University Press. Rodriguese,V. (eds.) (2004). Essential Writings of B R Ambedkar. New Delhi: Oxford University Press. Sharma, R. S. (1994). Panchayat Raj and Education,Volume II. New Delhi: Mittal. Tinker, H. (1967 - Indian edition; first published 1954). The Foundation of Local Self Government in India, Pakistan and Burma. Mumbai: Lalvani. Venkatarangaiya, M. and Pattabhiram, M. (eds.) (1969). Local Government in India: Select Readings. New Delhi: Allied. Vyas, H. M. (eds.) (1962). Village Swaraj by M K Gandhi. (A Compilation of Gandhi’s Writings on the Subject). Ahmedabad: Navajivan Publishing House.

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3 The evolution of devolution V. K. Natraj1

Background Before entering the field of my inquiry I should state that the terms ‘devolution’ and ‘decentralisation’ are used as synonyms in this chapter. This is done for the sake of convenience although one can spot subtle differences between the two. The purpose of this chapter is principally to situate decentralisation within an evolutionary perspective. This can be broken down into several segments, as follows. First, the place of decentralisation in the agenda of the state experienced considerable change in the decades following independence. It is instructive to probe into the nature of these changes. Next, and this is an essential part of the previous issue, there are discernible variations in the centre–state views on this question. From the diversity of opinions expressed in the Constituent Assembly (CA) to present-day debates, the union and state governments continue to exhibit differences in their attitude towards local government bodies. And there is no uniformity among the states either. In fact there are noticeable differences among them. Finally there are two other interesting features which clamour for attention. One is the difference in the manner in which the centre treated the rights of the states when it could have commanded acceptance of its view (the details of this are discussed below). That it did not exercise its power (politically speaking) is in itself interesting. Further, the chapter makes an attempt to inquire into the relation between the model of development followed at the national level and the fortunes of decentralisation. To proceed to another level there is also an attempt to assess the influence of global developments on development strategy and therefore indirectly on decentralised governance. By way of a caveat it needs to be mentioned that, given that this paper was intended to be a keynote address at a seminar, it has had to contend with paucity of time and consequently of space. Almost as a rule, narratives on devolution in India commence with the 73rd and 74th amendments to the Constitution which conferred constitutional status on Panchayat Raj Institutions (PRIs) and Urban Local Bodies (ULBs). There is hardly any doubt that this was an epochal event but to focus on it without situating it in the appropriate background would be to treat it as a sudden emergence whereas in actual fact devolution in this country has a history. It would be appropriate to commence our inquiry into the history of decentralisation/devolution from the days of the Constituent Assembly. Among the very many issues that the CA discussed, one 34

DOI: 10.4324/9780429321887-3

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which was fundamental to its work concerned the type of governance structure that independent India should opt for. The basic choice was between the following: •• ••

A pyramidal structure where Panchayats formed at different levels would be placed one on top of the other. A ‘modern Anglo-American-European’ structure based on direct elections and representing essentially the Westminster model of governance.

Although there were debates on this question, the first type, which may be called the Gandhian model, did not command heavy support. It is interesting to see that the one person who did not appear surprised by this was Gandhi himself. In a prescient passage he remarked: Congressmen themselves are not of one mind even on the contents of independence. I do not know how many swear by non-violence or the charka (the spinning wheel) or, believing in decentralization, regard the village as the nucleus. I know that, on the contrary, many would have India become a first-class military power and wish for India to have a strong centre and build the whole structure round it. (Gandhi, 1946, quoted in Austin, 1966, p. 40)

Perspectives on villages and Directive Principles The perspectives on villages as units of governance spanned a wide spectrum from the Gandhian village republics at one extreme to Ambedkar’s description of the village as ‘a sink of localism and a den of ignorance’ (Constituent Assembly Debate, 1948). It may be mentioned that another thinker who did not have what may be described rather irreverently as ‘rural romanticism’ or ‘agrarian fundamentalism’ was the engineer planner M. Visvesvaraya. He was for a modern economy and coined the phrase ‘industrialise or perish’, quite the opposite of Gandhi’s view which was ‘industrialise and perish’. In the Constituent Assembly an attempt was made rather belatedly by Rajendra Prasad, the president of the assembly, to have a ‘Constitution that begins with the village and goes up to the Centre’, since the village ‘has been and will ever continue to be our unit in this country’. B. N. Rau, advisor to the assembly, pointed out that this was not feasible since the assembly had decided in favour of direct elections to both houses at the centre as well as the provinces and that this would be difficult to reverse. In the final analysis even those who advocated Panchayats were unwilling to make them the base for an indirect system of government and the amendments they moved did not support the ‘decentralization of a Gandhian constitution’ (Austin, 1966). An important feature which flows from this is that the Gandhian idea of Panchayats was never wholly absent from the discussion. In some form or other, local government and people’s participation figured every now and then in the debates on the future constitution. This resulted in Article 40 in the Constitution which was part of the Directive Principles of State Policy under Part IV. A point of relevance in this context is an observation made by Ambedkar in his final speech to the CA. He expressed great satisfaction that the Constitution adopted by the CA was centred on the individual and not the group. He remarked that India had paid a heavy price for having a social structure based on the group. Obviously he was referring to the caste system which he held in deep contempt. The Constitution, in his view, did well by focusing on the individual. It would be appropriate, at this point, to refer to Article 40 in some detail. This is in Part IV. The Directive Principles are not justiciable but they are to be regarded as ‘fundamental in the governance of the country’. Ambedkar thought that if the principles were ignored there might 35

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be no legal challenge to such an omission but that the politicians would have to answer the people at the polls. In contrast, T. T. Krishnamachari poured scorn on the Directive Principles, describing them as a ‘veritable dustbin of sentiment sufficiently resilient to permit any member of the House to ride his hobby horse into it’.Years later, a prominent political scientist Kaviraj (1996) referred to them as the ‘Constitution’s basket of ineffectual intentions’. On balance there is some substance in both views. Over time the Directive Principles have made some impact on policy as Ambedkar thought they would but this impact has taken more than a little time to manifest itself. Also the impact is the result of a number of factors some of which will be discussed later. A related point is the following: it cannot be denied that the Gandhian ideal of Panchayats has always held some appeal in India. It is not uncommon even at present to find political leaders and social activists speaking, at times with nostalgia, about the Indian village and its record as a ‘self-governing’ unit. Often this appeal is used for political gain but there are many who have a firm belief in the ideal. However, taken all in all, only a part of Gandhi’s vision is accepted and a smaller portion implemented if at all. There is hardly ever any attempt to bring into being the whole of Gandhi’s social, economic and political vision. At the cost of simplification it can be argued that what is accepted is a part of Gandhi’s vision at the instrumental level; there is generally inadequate willingness to accept it as a philosophic construct. A point worth noting is that the negative effects of economic growth, especially on the environment, as well as its human costs, have led to some elements of the Gandhian perspective finding a place in the development dialogue. In many ways Gandhi was a profoundly important development thinker although some of his values do not command universal acceptance (but that is a different issue which need not detain us here). Gandhi’s influence on development thought in general and in particular in the Indian context is particularly discernible with reference to some aspects. There has not been total acceptance of his vision nor, to be fair, complete rejection of it. In concluding this aspect of the discussion it may be said that Gandhi’s impact on development theory becomes visible only when the dialogue is seen against a wide background, in fact a holistic one. Reverting to the structure of governance debated by the CA there was a view that since the country had some experience of operating the democratic system it would be unwise to forego this advantage. And the pattern finally adopted, as stated above, was the Westminster model. On Panchayats, the most reasoned stand was taken by K. Santhanam, a well-known journalist and later chairman of the Finance Commission, M. Ananthasyanam Ayyangar, a future speaker of the Lok Sabha and N. Madhava Rau, the last effective Dewan of the princely state of Mysore. They were not dismissive of Panchayats but felt that in their present state they could not become units of governance but given a supportive environment they could mature into this role. It is largely because of this line of reasoning that Panchayats found a place in Article 40 of the Constitution.

Post-independence priorities What has been described so far must be situated in the proper nexus. Let us begin by asking ourselves what the primordial concerns of the state were at that time.The country was about to become independent, in fact it became so even as the process of drafting the Constitution was underway. Soon after it became a republic. Quite obviously the first point on the agenda of the state was to ensure that the country held together as one unit and became a functioning nationstate. The principal issue of concern was to maintain what is generally referred to, in our idiom, as the ‘unity and integrity of the country’. It must be remembered too that the extent to which there should be a strong centre was debated in some detail. Ambedkar was inclined towards a 36

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relatively strong centre and, as argued above, was no admirer of village India. In this context it is not surprising that nation-building received urgent attention from the new rulers. This must have been reinforced by the size and, more importantly, the diversity of the country. There was also the compulsion of having to deal with the influx of refugees. The state could hardly be expected to concern itself with devolution. The accent predictably was on the nation-state and protecting it from the danger of separatist tendencies (the favourite expression in the 1950s and 1960s was ‘fissiparous tendencies’). As is well known the integration of over 500 princely states into the new order was a herculean task. All of this would have added to the concern for keeping the country united. In this context it should surprise no one that the state concentrated on ensuring that the country stayed as one unit.We can see that even seven decades after independence some of the problems in this regard have not been resolved fully. This could be termed the problem of nationalities within the nation. An important consequence of this perception was that devolving power as distinct from transferring functions was not a priority. There is also the view put forward by some scholars that centralisation was seen as the recipe for maintaining the unity of India. The argument was that the combination of centralisation, vesting power in the centre and keeping the sub-national units reined in would be the best guarantee against the danger of the nation-state splitting up. We should also draw attention to another important development which does not appear to have exhausted itself. That is the demand for linguistic states. The centre held out against this for some years, finally conceding it in the formation of the Andhra state2 in 1953. The demand for new states continues to be heard. Again this too would have exerted its own impact on the state. Regarding the proposition that centralisation was perceived to be the recipe to hold the country and the nascent nation-state together, two points of interest require to be analysed.

Respect for states’ autonomy Serious problems notwithstanding, the Congress party occupied a very strong position in the early post-independence years. It was in power at the centre and in a large majority of the states. It had stalwarts as leaders. Yet few attempts were made to ram policies down the unwilling throats of the states. Decentralisation/devolution is one such area. The centre was careful not to take any steps regarding devolution which the state might regard as ‘interference’ in their legitimate province. A good illustration is provided by Henry Maddick (1970) who was an early and recognised authority on decentralisation especially with respect to India. In 1954, the Union Ministry of Health, which was in charge of the Community Development programme at that time, suggested greater uniformity in legislation relating to Panchayats across states. The Second Conference of Ministers of Local Self-government passed a resolution recommending such a step.Yet the committee which formulated the views of the conference did not favour this recommendation. Another example in this genre relates to the Balwantrai Mehta Committee, the first major effort in decentralisation after independence. Consider the following: the National Development Council considered the report and endorsed the principal recommendation of empowering the people but also stated that the manner in which this act should be implemented was to be left to the states. The NDC was quite firm that there should be no ‘enforced uniformity’. This position may be considered as a ‘decentralized approach towards decentralization’. This may have been due to two causes (among many). A slightly cynical interpretation would be that this ‘generosity’ towards the states resulted from the fact that the centre was not totally committed to decentralisation.The second one is that the Congress party, then dominant across the country, had leaders of stature in the states who could stand up to those at the national level. In other words they could not be taken for granted. 37

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Development paradigm and devolution The other point of interest is the relationship between the fortunes of devolution and the overall paradigm of development pursued by the state. In the early post-independence years the model of development, especially in agriculture and rural development, was a blend of the institutional and technological dimensions. Programmes like Community Development were important components of the development profile. So were land reforms. Slowly, however, the approach began to get more technocentric and the institutional aspects received increasingly less attention. Altering the agrarian structure, admittedly never implemented with great vigour except perhaps for the abolition of the intermediary/Zamindari system, lost even the momentum it once possessed, and the focus was more sharply on the technological front. A strategy of development which is oriented towards a technocentric model is generally rather impatient of delay and has little time for participatory and consultative processes.To make the assessment fair, the country did go through serious problems which may have prompted reliance on technology. In the mid-1960s, India experienced recurring food crises and was rendered highly dependent on food aid from the US leading to the patronising statement that the country was an example of ‘ship to mouth existence’. This and the desire to make India an industrial force must have contributed to the thrust on technology. Also to be emphasised is the reluctance of the ruling powers to implement thoroughgoing institutional changes since this would inevitably mean cutting at the root of the political and economic clout of the political and economic elite. George Mathew was one of the first authorities on our subject to invite attention to this nexus between the model of development and decentralisation.This can be found in some of the papers in his collection titled From Legislation to Movement (Mathew, 1995).

Towards decentralisation What then explains the shift towards decentralised governance in India? Panchayat Raj Institutions have experienced three phases: ascendancy (1959–1964), stagnation (1965–1969) and decline (1969–1977).This is the analytical description given by the Ashok Mehta Committee in its 1978 report. It is justifiable, in my view, to suggest that even during the first phase of ascendancy PRIs were not really endowed with adequate powers to act as units of governance. They had authority which was delegated to them but essentially they were development agents. It would not be correct to view them as institutions of governance. However, within that framework, the phases identified by the Ashok Mehta Committee are acceptable although there are differences with regard to them across states. During the second and third phases the Indian state experienced considerable upheaval. There was a downturn in the economy. The food crisis has already been mentioned. There was a ‘plan holiday’ and for a few years there was an annual plan and the fiveyear plan was suspended. In the last phase there was the emergency which became a defining moment in the country’s democratic history.Towards the end of this phase the era of dominance of the Congress party began to fray and for the first time there was a coalition at the centre. The formation of a non-Congress government in West Bengal was, from the point of view of local government, a major development. One of the first important experiments in rural local government was initiated in that state. This and the step subsequently taken in Karnataka were both related to the emergency as well as to certain other trends at the macro/global level.

Scepticism about centralised governance At the national level the emergency had instilled an apprehension about a ‘strong government’. There was an inclination for a state which was committed to civil liberties and the protection of 38

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citizens’ rights.This was accompanied by a demand to revisit union–state relations. Several states had been saying, without much success, that the equation in political and financial terms was quite heavily tilted towards the centre and that it was time to examine this in some detail and take corrective measures to redress the relationship. At the same time the development paradigm also began to come under the scanner. This particular aspect of the problem will be discussed at some length later but suffice it to say that putting the then-prevalent development model under scrutiny made its own contribution in the move towards a relatively more participatory model of governance. One of the results of all this was the appointment of the Ashok Mehta Committee to make recommendations relating to PRIs. The committee gave its report to the centre in 1978 but before the latter could act on its recommendations the government lost its majority. However, the Ashok Mehta Committee’s recommendation had a quite significant effect in some states. In passing it may be remarked that inter-state differences with regard to the status of local government are common and continue to this day. In the early post-independence years the trend was towards a strong centre since this was seen as an effective, indeed essential, safeguard against separatist tendencies. But in the early 1980s this began to be re-examined.There began to emerge the view that the protection against separatist tendencies was not to centralise but to share power with sub-national units. This would strengthen the bonds of unity. It should be noted, however, that what was attempted had more than a fair share of problems. It found expression in the formulation made by then-Prime Minister Rajiv Gandhi. He paid warm compliments to the governments of Karnataka and West Bengal, both non-Congress, for their efforts at devolution of power to local bodies. But he also advanced the view that the conduit between what he called the PM and DM was clogged. By DM he was referring to the head of the administration at the district level known as the District Magistrate (also known by other names such as the collector/deputy commissioner). Rajiv Gandhi’s view was that this route had to be cleared of the congestion which bedevilled it. With this and also the objective of enlisting people’s participation in development and to make the administration more responsive than it was, he proposed a constitutional amendment which would incorporate measures to achieve these aims. The necessary changes were incorporated into the proposed 64th amendment bill to the Constitution (Ghosh, 1989) which ran into rough weather. It encountered stiff resistance among the political and intellectual community for several reasons. It was a thinly veiled attempt to establish a direct connection between the PM and the DM, bypassing the states. The intention, it was suspected, was to weaken the states and strengthen the centre while outwardly arguing for a more participatory system of governance. It was argued that the amendment, if it gained acceptance, would actually leave the states with less autonomy than what they were enjoying at that time. Ultimately the government was unable to see the amendment through parliament since it lacked the required majority in the upper house. In just a few years, the situation changed and the government, again a Congress one at the centre, succeeded in having the Constitution amended but before we describe that important change we need to discuss a few other developments which exercised an influence over the fortunes of devolution. Reference was made earlier to the nexus between devolution and the model of development. Over time the model pursued by India and quite a few other developing countries leaned towards the application of technology and aimed at ‘modernising’ the economy. There was an emphasis on industry, especially heavy and basic industry, and as noted earlier in agriculture too the orientation turned more in the direction of technology rather than institutional modifications. Globally there emerged critiques of this paradigm of development. Particularly strongly critiqued was the neglect of the human costs of development. Environmental concerns attracted 39

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attention. Degradation of the environment started entering the development discourse in a big way. Not unnaturally public protests against the damage to the environment and the human costs of economic growth, manifested for example in the displacement of populations from their habitat and the failure to rehabilitate them effectively, became more common than before. It should be no surprise that this was accompanied by civil society organisations playing a role in the development dialogue. Movements like Narmada Bachao Andolan are prime examples but a number of micro-movements questioning the rationale of ‘received wisdom’ on development could be seen sprouting (Sheth, 2004). In the past two decades we have witnessed a noticeable increase in awareness of the costs of growth. While there may be some instances where this awareness is appropriated for crass political purposes and for furthering less than justifiable ends it has also meant that the state is no longer able to pursue unrestrained growth. And although it often succeeds in silencing or overcoming protests the fact of opposition to policy is important in itself. Due to a constellation of factors like the collapse of the erstwhile USSR and the discrediting of dirigiste regimes (not always with the justification which free marketers and a section of economic liberals claim) there was disenchantment with ‘centralised governance’. Incidentally this should not be conflated with planning, much less central planning. James Manor puts across this view very well by arguing that there was a feeling that centralised governance had failed (1995). This ought to be seen in conjunction with the view gaining currency from the late 1980s onwards that the role of the state needed to be diluted. The conditionality imposed by international institutions while offering rescue packages included a dilution of the state’s role in economic matters.This trend has enjoyed the support of endogenous factors such as pro-market forces becoming strong and combining with their political counterparts. All in all there was an unintended coming together of factors which led to a diluted state which withdrew slowly from several areas once regarded as its fundamental duty – education and health care are obvious examples. The combination described above resulted in a demand for a ‘thinner state’ now euphemistically spoken of as ‘less government and more (effective) governance’. While the objective of devolution of powers was not fully achieved, it did serve to strengthen the move towards that process to some extent. This brings us back to a question raised at an earlier point in this analysis and that is the relationship between the development paradigm and the oscillating fortunes of devolution. The point has been made that advocates of techno-centric development generally tend to be impatient of lengthy consultative processes and prefer to short-circuit them. A good example is the attempt made about two decades ago by Chandrababu Naidu when he was chief minister of the erstwhile state of Andhra Pradesh (Natraj, 2000). In the recent past, what we see is a somewhat contradictory scenario developing before us. On the one hand, questions are raised about the role of technology and more generally the presently accepted approach to development. As discussed above, the human and environmental costs of development as well as the place of centralised governance are all under scrutiny. At the same time at the practical level there is a noticeable shift away from concern with institutional issues.There is a tilt towards technology to the relative neglect of institutional issues.

Towards constitutional status for local government It is time to revert to another issue briefly discussed above. And that is the relationship between devolution and a strong centre. To begin with, when the focus was on nation-building and resolving the nationalities question the approach was that only through a strengthening of centralising forces could the risk of separatism be contained. Over the years the orientation swung 40

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to the other extreme and there developed a rather different version. This was one in which the sub-national units were being incorporated into the task of nation-building and maintaining the country’s unity. This was sought to be done by making an attempt to recognise sub-state units, in other words local government institutions, as a third tier of governance. The approach came virtually full circle. While in the initial post-independence years the accent was on centralisation the thrust altered to favour devolution although this variant has its critics. One can almost ascribe a dialectical relationship to this nexus. But it should be noted that when the Rajiv Gandhi government thought of the 64th amendment to the Constitution one of the reasons it failed was because there was a suspicion among its critics that the amendment would bypass the states and establish a direct PM–DM conduit (Chandrashekar, 1989). We have seen that the attempt failed. It is interesting that in just a few years the situation altered and the government headed by P. V. Narasimha Rao was able to get the 73rd and 74th amendments passed and for the first time PRIs and ULBs secured constitutional status as units of governance. The very different fortunes of the 64th and 73rd–74th amendments are striking. They can be explained with reference to the following factors. The PM–DM conduit which Rajiv Gandhi had attempted and which had raised high levels of suspicion among the political classes as well as the critical intelligentsia was not part of the later package. As a former and distinguished civil servant who worked with P. V. Narasimha Rao mentioned in an interview (with this author and his research colleagues in MIDS), the prime minister advised his team not to wait for the best legislation to be formulated, there were several obstructions in the way and, therefore, what they should do was to aim at getting the basic principle of devolution of power to local bodies accepted. This meant of course that certain compromises would be required and indeed this is what transpired. A good example is the Member of Parliament Local Area Development Fund/MPLAD under which every MP is given a fairly substantial grant to utilise according to her/his preferences in the constituency. This would be subject to some restrictions. The scheme was extended to members of the state legislatures also and the quantum of the grant has been raised continuously. (Sezhiyan [2005], the well-known political leader from Tamilnadu, was one of the few to recommend discontinuing the scheme.) This is a good example of the tactical compromise which Narasimha Rao must have had in mind when he advised his bureaucrats not to keep waiting for the ideal legislation. In addition an important development which exercised an influence over the fortunes of devolution was the official adoption of economic reforms in 1991. This refers in common parlance to the policy consisting of three principal components, namely liberalisation, globalisation and privatisation/LPG.The philosophic thrust of this policy was on diluting the role of the state, a point which was adverted to earlier in this discussion. However, it would be wrong to suggest, as is sometimes done in talking about economic reforms, that this was a sudden transformation brought into being by a new set of events and developments. While the latter had a role the truth is that a number of steps were taken over the years preceding the reforms which prepared the ground for their formal introduction. It would be more correct and appropriate to argue that the reforms were certainly an epochal event but at the same time were not an unprepared sudden policy change (Natraj, 1995). We should add to this one further feature.The era of minority governments, coalition politics and states growing stronger relative to their earlier position – this new age had been developing for a few years and by the time the Narasimha Rao government took office had become hard reality. Dr. Anil Kumar of ISEC has worked on this theme and observed the nexus between devolution and the development paradigm in vogue (Anil Kumar, 2014). Of course this is not meant to suggest that the reforms promoted devolution by intention or that the latter encourages the 41

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promotion of a ‘diluted state’. It is just that the two processes have shown convergence. In this context it is worth remarking that the altering relationship between the centre and the states has had an impact on the issues adumbrated here although an important issue is often lost sight of.This is that any attempt to promote local government institutions and empower them in performing their participatory and development functions must be preceded by an equally serious attempt to rearrange the relations between the centre and the states. Although EMS Namboodiripad stressed this point in the Ashok Mehta Committee it has not found the necessary resonance. It is tempting to refer to a criticism of the 73rd and 74th Constitutional amendments which provide the foundation for local bodies as institutions of governance. In Tamilnadu for instance the view is often heard that these amendments, far from being truly devolutionary, actually have taken powers away from the state governments and transferred them to local government institutions. Then-chief minister of Tamilnadu M. G. Ramachandran appended a note of dissent to the Ashok Mehta Committee report, disagreeing with the recommendation to strengthen local government at the district level. His view was that if this were to be implemented there would result a ‘dangerous diarchy’ with the district collector caught between two masters, namely the government and the Zilla Parishad. Interestingly both the DMK and AIADMK voted against the Constitutional amendments, possibly the only issue on which the two agreed.

Concluding observations The principal points in this essay may be summarised as follows. At a time when the country had the domination of the Congress party at the centre and in most states care was taken not to offend the sensitivity of the states regarding their autonomy. On the local government front there was generally consultation and persuasion rather than the thrusting of policy on the states. It should be added that this is most likely the outcome of the following: a. preoccupation with nation-building and making sure that the country stayed as one unit b. absence of full-fledged commitment to decentralisation with local government units treated as units of governance, as a result of which for a long period local government institutions were essentially agents of the state government c. difficulty reconciling a model of development with a definite thrust on modern industry with decentralised governance d. respect for the autonomy of the states not least because of strong leadership at that level It was only after the Ashok Mehta Committee gave its report that local government institutions were explicitly recognised as political/governance units. Until then they were in effect perceived more as agents for implementing development policy. The fortunes of devolution and the prevailing model of development share a quite perceptible relationship. In particular an overtly technology-centred paradigm has little patience for consultative decentralised processes. The 73rd and 74th amendments to the Constitution are regarded by some as not true decentralisation but actually taking power away from the states and vesting them with local government institutions. Tamilnadu exemplifies this clearly. There has not been a meaningful effort to redefine centre–state relations which is an important requirement for restructuring local government institutions. However this dimension appears not to have engaged the attention of policymakers to the extent required. 42

The evolution of devolution

Devolution has also been influenced by economic reforms, the era of coalition politics and the changes taking place in the centre–state power equation. The influence of international institutions is also perceptible in some contexts. Some issues still need to be articulated. They are indicated below although not discussed in detail. Development must necessarily be a meaningful blend of the short and long term, small and large scale as well as the national, regional and local levels.These may be described as the temporal, sectoral and spatial components of the development/planning profile. What needs attention is the mechanism which can combine the different components alluded to above. Students of devolution may perhaps sharpen their focus on this question which has major implications for the development profile and its realisation. There is room to suspect that in the zeal to promote decentralisation some of the other dimensions sketched here may not receive the attention they deserve. Also in the prevailing atmosphere the state is becoming inactive in spheres which were once its vital responsibility. Intervention in a meaningful sense is not visible. The issues raised above may provide some food for thought for students of devolution. All in all a rigorous inquiry into decentralisation in India must necessarily take account of the dimensions mentioned here. This is not to suggest that these have not merited scholarly attention but emanates from the belief that they need more acute scrutiny. Most important, possibly, is that the factors adverted to here need to be unbundled and at the same time seen while interacting with one another.

Notes 1 This chapter was presented as a keynote address in the seminar. In that context, several notes must be made. To begin with there is the audience it is meant for. At the seminar were several specialists on the subject of devolution such as George Mathew who is one of the progenitors of Panchayat studies in the country. He could be called one of the grandparents of the discipline except that he may not like to be so addressed. In addition there was Dr. Meenakshisundaram who was a fellow conspirator along with me on the P. R. Nayak committee on Panchayats in Karnataka, one of the very many constituted in this state. There was Professor Nadkarni with his awesome credentials as a scholar. Then there was the Chairman of ISEC, Dr. Ravindra, and academics such as Professor D. Narayana. A great deal of what I have said is the result of a comparative study of Panchayat Raj Institutions in Tamilnadu, West Bengal and Karnataka conducted some years ago in the Madras Institute of Development Studies, Chennai (Natraj et al. 2006). And one of the principal authors of the publications to come out of this project is present here. I refer to Dr. Kripa Anantpur of MIDS, now a well-known researcher. I should acknowledge that in preparing this talk I benefited from discussions with another active participant in the research, Dr. Ganesh Prasad, formerly of MIDS and now on the faculty of the State Institute of Rural Development, Mysuru, as well as a long-term research associate of mine and a well-known one, Dr. Gayathri Devi, formerly of ISEC. And, of course, I have to mention that none of them is responsible for the views expressed and certainly have no share in the mistakes which are my copyright. In one sense I could be accused of plagiarism but my defence is that I am basically guilty of ‘stealing’ material to which I have made some contribution. Also if I have mentioned some scholars and left out a great many no disrespect is intended to them. 2 It is another matter that the larger entity, namely Andhra Pradesh, formed in 1956, is the first state to have truncated itself in 2014.

References Austin, Granville (1966). The Indian Constitution: Cornerstone of a Nation. London: Oxford University Press. Chandrashekar, B. K. (1989). ‘Panchayati Raj Bill: The Real Flaw’, Economic and Political Weekly, 24(26), pp. 1433–1435. 43

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Constituent Assembly Debate (1948). Constituent Assembly of India Debates (Proceedings). Gandhi, M. K. (1946). Harijan, X, p. 236, 28 July. Ghosh, Arun (1989). ‘The Panchayat Raj Bill’, Economic and Political Weekly, 24(26), pp. 1429–1431. Kaviraj, Sudipto, (1996). ‘Dilemmas of Democratic Development in India’ in Leftwich, Adrian (ed.) Democracy and Development. Cambridge: Polity Press. Maddick, Henry (1970). Panchayati Raj: A Study of Rural Local Government in India. London: Longman Group. Manor, James (1995). ‘Democratic Decentralisation in Africa and Asia’, IDS Bulletin, 26(2), pp. 1–8. Mathew, George (1995). Panchayati Raj: From Legislation to Movement. New Delhi: Concept Publishing House. Natraj,V. K. (1995). ‘Marketing Liberalisation: India’s Quest’, European Journal of Development Research, 7(2), pp. 338–352. Natraj, V. K. (2000). ‘Political Decentralisation and Development Models’, Economic and Political Weekly, 35(26), pp. 2215–2216. Natraj, V. K., Majumdar, Manabi, Ananthpur, Kripa, Prasad, Ganesh, G. S. and Banerjee, Indrashis (2006). From Delegation to Devolution. Monograph No. 4, Chennai: Madras Institute of Development Studies. Sezhiyan, Era (2005). Members of Parliament Local Area Development Scheme (MPLADS) —Concept, Confusion and Contradictions. New Delhi: Institute of Social Sciences. Sheth, D. L. (2004). ‘Globalisation and New Politics of Micro-Movements’, Economic and Political Weekly, 39(1), pp. 45–58. Vaddiraju, Anil Kumar (2014). ‘Economic Reforms and Political Decentralisation in South India: An Uneven Question?’, Manage Development, 36(1).

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Part 2

Dimensions of decentralisation

4 Political decentralisation Role of political parties from colonial times George Mathew

Introduction Political decentralisation is central to the strengthening of democracy by enabling effective people’s participation, especially in a diverse and plural society. According to the World Bank, Political decentralization aims to give citizens or their elected representatives more power in public decision-making. It is often associated with pluralistic politics and representative government, but it can also support democratization by giving citizens, or their representatives, more influence in the formulation and implementation of policies. (World Bank Group, 2001) It is evident that without the political parties and their ideological commitment, no progressive thinking can reflect either at the policy level or in governance.The multiparty democracy at the Federal and State levels in India is unique.Therefore, the question is: are political parties in India working for the devolution of powers through the local governments? Are they committed to a multilevel federalism, creating among the bureaucrats leaders of our highly stratified society, the culture of political decentralisation? Can we say that in every district there is a democratically elected district government? This chapter analyses the history of political decentralisation in India from the Ripon Resolution (1882), which is considered the Magna Carta of local democracy, till today with an assessment of the various factors affecting its slow progress. Today more than 68 per cent of India’s population live in villages where Panchayats (village local governments) play the key role.The urban local governments (the municipalities) came to the forefront only with the 74th Constitutional amendment in 1992. Therefore this chapter focuses on the key role the rural population played through the Panchayats in the political decentralisation process.

Emergence of the new Panchayati Raj The seeds of political decentralisation were sown in India with the government resolution of 18 May 1882 when Lord Ripon was the viceroy, providing for local boards consisting of a DOI: 10.4324/9780429321887-4

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large majority of elected non-official members and presided over by a non-official chairperson. Although this is considered to be the Magna Carta of local democracy in India, the fact of the matter is that the role of local administration was elevated by the introduction of this resolution. Designed to make use of that ‘intelligent class of public-spirited men, whom it is not only bad policy, but sheer waste of power, to fail to utilise’ (Venkatarangaiya and Pattabhiram, 1969, p. 109), the resolution proposed the establishment of rural local boards, two-thirds of whose membership was composed of elected representatives. The progress of local self-government on the lines of the Ripon Resolution of 1882 was tardy, with only some half-hearted steps taken in setting up municipal bodies and boards at the district level. However, the term ‘self-government’ had begun to gain currency. In 1907, the government constituted a Royal Commission on Decentralisation which, in its report released in 1909, elaborated further the principles enunciated in the Ripon Resolution. Although this commission comprised five Englishmen and only one Indian, Ramesh Chandra Dutt, it recognised the importance of Panchayats in the Indian context.The commission recommended that it is most desirable, alike in the interests of decentralisation and in order to associate the people with the local tasks of administration, that an attempt should be made to constitute and develop village Panchayats for the administration of local village affairs. (Malaviya, 1956, p. 221) Although the commission visualised certain difficulties in the success of such an effort, like ‘caste and religious disputes’ or the influence of the landlords with large estates, which ‘may prevent free action by the tenantry’, it agreed that these difficulties were ‘far from insurmountable’. The 24th session of the Congress in Lahore in the same year (1909) took Panchayats seriously and passed the following resolution: This Congress expresses its satisfaction that the Secretary of State has recognized that the Local Self-Government scheme of 1882 has not had a fair trial and has pressed on the Government of India, the necessity of an effectual advance in the direction of making local, urban and rural bodies really self-governing and it expresses the earnest hope that the Government will be pleased to take early steps to make all local bodies from Village Panchayats upwards elective with elected non-official chairman and to support them with adequate financial aid. (Malaviya, 1956, pp. 215–216) It was repeated at the Silver Jubilee session of the Congress in Allahabad (December 1910), with the words: it is believed that the Government will without much delay announce the reforms which they have decided to carry out. An important feature of them will probably be the revival of Village Panchayats, which are to be endowed with real power. But all this remained on paper only. Thus, in Karachi (December 1913) in the 28th session of the Congress, in its resolution regretted that ‘the recommendations of the Decentralization Commission, with regard to further development of local self-government have not yet been given effect to’ and urged early steps to increase the powers and resources of local bodies.Then a powerful plea for Panchayats came from Dr Annie Besant, who, presiding over the 32nd session 48

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of the Indian National Congress at Calcutta, said, ‘economic and moral deterioration can only be checked by the re-establishment of a healthy and interesting village life, and this depends upon the re-establishment of the Panchayat as the Unit of Government’. In the same session, Surendra Nath Banerjee strongly attacked the government saying that it had emasculated the institution of local self-government. Incidentally, as the minister for Local Self Government of Bengal, under dyarchy, Banerjee enacted legislation for the Calcutta Municipal Corporation, which is still regarded as one of the most progressive acts of local government in this country. In this background, the Montagu-Chelmsford Reforms of 1919, under the proposed scheme of dyarchy, made local self-government a ‘transferred subject’. This meant that local self-government was brought under the domain of Indian ministers in the provinces. It was a promising move and an advance in this sphere.To make local self-government both fully representative and responsible, the reforms had suggested that there should be, as far as possible, complete popular control in local bodies and the largest possible independence for them from outside control. Notwithstanding this professed objective of the Montagu-Chelmsford scheme, it did not make the Panchayats truly democratic and vibrant instruments of self-government at the level of the villages, due to organisational and financial constraints. Still, in almost all provinces and a number of native states, acts were passed for the establishment of village Panchayats. In the Gaya session of the Congress party in 1922, Deshbandhu Chittaranjan Das, the president of the session, underlined the importance of village autonomy. However, these statutory Panchayats covered only a limited number of villages and had, generally, a limited number of functions. By 1925 only eight provinces in British India had passed local self-government acts. From 1920 till 1947 under Gandhiji’s leadership, Panchayats occupied the central stage ideologically as well as the vision and mission of the Congress party. Gandhiji’s idea of Gram Swaraj was that the village is a republic. In 1942 when the American journalist Louis Fischer interviewed Gandhiji, he said, You see, the centre of power now is in New Delhi, or in Calcutta and Bombay, in the big cities. I would have distributed it [powers] in the seven hundred thousand villages of India[…] In other words, I want the seven hundred thousand dollars now invested in the imperial bank withdrawn and distributed among the seven hundred thousand villages. Then each village will have its one dollar which cannot be lost. (Fischer, 1942) In 1943, he said that the roots of democracy were to be found in the old Panchayat system and not in Great Britain. With such profound thinking, experience and conviction, what happened to Congress when India got freedom? Panchayats did not even figure in the first draft of the constitution. When Gandhiji’s attention was drawn to the omission of the Panchayats in the Constitution draft in 1947, he remarked: ‘it is certainly an omission calling for immediate attention if our independence is to reflect the people’s voices. The greater is the power of the Panchayats, the better for the people’ (quoted in Mishra [1994, p.19]).

Developments during the Nehruvian Era Even Jawaharlal Nehru was not very enthusiastic about the Panchayats during the initial period of independence. But gradually, and especially from 1957, he became an ardent champion of 49

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Panchayati Raj – a term which he himself coined. While inaugurating the Nagaur Panchayat in Rajasthan on 2 October 1959 Jawaharlal Nehru said: We are going to lay the foundations of democracy or Panchayati Raj in our country […] It is a historic event. It is fitting that the programme of Panchayati Raj should be inaugurated on Mahatma Gandhi’s birthday […] The progress of our country is bound up with the progress in our villages […] We decided that in every village there should be a village Panchayat with more powers […] which will help its economic effort […] The time has come when the responsibility for planning and executing development schemes should be entrusted to the people […] In our Panchayats also everyone should be considered equal; there should be no distinction between man and women, high and low. [Government of India (GoI) no date] Nehru was well aware that the Congress party did not by and large share his enthusiasm for giving powers to the Panchayats and the opposition against rural decentralisation was too strong. But between 1957 and his death in 1964, Nehru carried on his fight for establishing Panchayati Raj on a firm footing almost like a crusader with some of his trusted lieutenants, especially S.K. Dey, minister for Panchayati Raj. According to S.K. Dey, just a few days before he passed away in 1964, Jawaharlal called me at midnight. I found him in a very contemplative mood when I drove over to his Teen Murti Bhawan residence. His head was bent as he looked at me and said, ‘Look, I want to ask you a question. Suppose the entire Government holds against your community development programme and Panchayati Raj, will you be able to resist?’ (Dey, 1990, pp. 6–7) When S.K. Dey said, Today they won’t do so and the reason is that in the entire Hindi-speaking belt, Panchayati Raj is a façade. But we have some States which are doing very well […] whether it was Maharashtra or Gujarat the programme cannot be abolished though they can be dislocated or disturbed. Nehru told him: ‘Look my friend, sorry, you have no time. There is no time. Panchayati Raj cannot be saved, nor even your programme’ (Dey, 1990, p. 6). Nehru’s foreboding turned out to be true. In 1966 at one stroke the government abolished the Ministry for Community Development, Panchayati Raj and Cooperation which had been there from 1956. Nobody raised a voice. Even the press would say that community development and Panchayati Raj failed.

Post-Ashok Mehta Committee developments The appointment of the Ashok Mehta Committee on 12 December 1977 was a watershed in the history of the Panchayats in India. The report was submitted to Prime Minister Morarji Desai on 21 January 1978.Then there were positive developments in the Panchayati Raj system, especially in non-Congress states like West Bengal, Karnataka and Andhra Pradesh. 50

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Then in 1977 when the Left Front-led government came to power in West Bengal under the leadership of Jyoti Basu, local government got a leap forward. EMS Namboodiripad (hereafter EMS) was a great inspiration for the West Bengal Marxist party leadership to implement a new generation of Panchayati Raj. EMS’s vision was that ‘Defence of parliamentary democracy at the Central and State levels […] and its extension to the district and lower levels as envisaged in the four-pillar democracy is, therefore, of extreme importance to the advance of Indian society’ (GoI, 1978, p. 163). EMS’s faith in democratic decentralisation arose from the conviction that ‘it helps the working people in their day-to-day struggles against their oppressors and exploiters’ (Ibid); akin to what Gandhiji said about Zamindars, Capitalists and Rajas in 1946. EMS could not think of the Panchayati Raj Institutions as anything other than the integral part of the country’s administration with no difference between what are called the ‘developmental’ and ‘regulatory’ functions. What is required is that, while certain definite fields of administration like defence, foreign affairs, currency, communications, etc., should rest with the Centre, all the rest should be transferred to the States and from there to the district and lower levels of elected administrative bodies. (Ibid) Prime Minister Rajiv Gandhi, who was a moderniser par excellence, took a bold step for the Panchayats. It is interesting to note that he came to the idea of Panchayati Raj not from any commitment to Gandhian ideology. He was constantly touring the districts and meeting the collectors in order to find ways to reform district administration. At the end of this exercise he realised that district administration was non-responsive and cruel at times, because ‘it was unrepresentative’. This was a far-sighted realisation indeed and it encouraged him to introduce the 64th Constitutional Amendment bill, which was defeated in the Rajya Sabha on 15 October 1989. Then with Prime Minister Narasimha Rao’s initiative, the path-breaking 73rd and 74th Constitutional Amendments were passed, but he took away the very essence and spirit of them by introducing the Member of Parliament Local Area Development Scheme (MPLADS), then giving Rs. one crore to a member of parliament for what is called development work in the constituency. Era Sezhiyan, former member of parliament, strongly criticised the Union government’s MPLADS in the following way: I feel that the greatest damage done by the Scheme has been to obstruct the process of decentralisation of authority and resources towards the emergence of village level selfgovernments […] such schemes are unfit to be part of a parliament system. The Scheme is a passing aberration in the system, but it should be a lesson for future generations not to embark on such erroneous schemes. (Sezhiyan, 2005, pp. 5–6). And now the total allocation under MPLAD is Rs. five crores per year. Even after 1993, hardly any Congress-ruled state has been a pioneer in devolving power to the people. No Congress-ruled state between 1993 and 2014 took any initiative for strengthening the Panchayats. Of course, the only exception was Chief Minister of Madhya Pradesh Digvijay Singh, who conducted the first elections as per the 73rd Amendment in the state, in 1994. In 2004, when the United Progressive Alliance (UPA) under the leadership of the Congress party came to power, it created the Ministry of Panchayati Raj. There was a very positive 51

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response to this move but there was a strong view that it should have been the ‘Ministry of Local Government’ because the institutions of local self-governments were accepted de facto as the third tier of governance. Therefore, the Ministry of Local Government would be the coordinating and facilitating ministry and the other core ministries, which are associated with local development, should function in close liaison with the Ministry of Local Government to ensure better planning and monitoring of local development programmes as well as their efficient implementation. It may be underlined here that only a full-fledged ministry of Panchayats and Nagarpalikas, i.e. a Ministry of Local Government with an appropriate mandate, could sincerely implement the provisions in Part IX and IXA of the Constitution. But no action to this effect was taken by the ruling Congress party or the Congress-led coalition government. However, during the five-year period when Mani Shankar Aiyar was the Union Minister for Panchayati Raj, the Ministry of Panchayati Raj made a positive impact on 70 per cent of the population of this country.The push it gave to the national debate on various issues affecting the lives of ordinary people, and the ideas and programmes it generated at the state level and below to make Panchayats the ‘institutions of self-government’, created a lot of hope in the mind of common citizens. In short, these five years created a strong ferment for Panchayati Raj as a means to give power to the people. That was one of the major reasons for the Congress party returning to power in 2009. In 2009, when the UPA came back to power a second time, a retrograde step was taken by making one minister in charge of rural development as well as Panchayati Raj. There was another ministry of tribal affairs also. The riddle which is beyond one’s comprehension is: when article 243G categorically says that the Panchayats must undertake planning and economic development, why is there a separate ministry for rural development? It may be noted here that when a political party is in opposition or out of power, it is greatly concerned about local government, rural development, power to the people and so on. But when the same party comes to power or leads the coalition, its interest in giving power to the people in the villages and towns to participate in the process of decision-making on matters that affect their lives vanishes. When political parties of all hues do not believe in decentralisation, devolution or local government, who is the happy lot in governance? It is bureaucracy – officers from the village to the highest level. Since 1882 the bureaucracy in our country has been subverting consistently the ideals of local government or Panchayati Raj.1 The bureaucracy is not at all happy to see Panchayats emerge as institutions of self-government or the third stratum of governance. The case from the very beginning was that bureaucracy throttles the local government. What Annie Besant stated in the 1917 session of the Congress party about the manner in which the British through the bureaucracy controlled the Panchayats is highly relevant here: Tie up a baby’s arms and legs, and then leave it to teach itself to walk. If it does not succeed, blame the baby.The free baby will learn equilibrium through tumbles; the tied up baby will become paralyzed, and will never walk. (Indian National Congress, 1917) Annie Besant asserted that the village Panchayats were made dependent upon the higher government officials, thus killing the village Panchayat system:‘On the procrustean-bed of bureaucracy, all that did not fit it had to be chopped off; the villagers had their own ways, which had served them well, but they were not the Collector’s ways, so they were bad’ (Ibid). 52

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EMS had stated how Panchayati Raj was then, and how it should be. According to EMS, The Constitution itself according to me, failed to envisage an integrated administration in which, apart from the Centre and the States, there will be elected bodies which will control the permanent services at the district and lower levels. Democracy at the Central and State levels, but bureaucracy at all lower levels – this is the essence of Indian polity as spelt out in the Constitution. (GoI, 1978, p. 160) Even after seven decades of independence, our administrative culture is such that the officers want to retain the powers of the line departments and not give the power to the people.Their structure and procedures are deeply mired in the imperial model of governance and they retain their distrust of local governments.Therefore, it is the ‘collector raj’, ‘Block Development Officer (BDO) raj’ and ‘gram sevak raj’ which is the order of the day. In 1995, this writer conducted a study of Shadnagar in Andhra Pradesh where Jawaharlal Nehru had inaugurated the first Panchayat in South India on 11 October 1959.When asked the reason for the failure of Panchayati Raj, an old guard stated that the officials worked against giving power to the non-officials and especially the people’s representatives from the villages. He went on to say that, in this, they were hand-in-glove with state-level politicians. In order to sabotage the new generation of Panchayats, they create parallel bodies, which has a devastating impact on democratically elected local bodies. Hardly anything has been done seriously to change the mindset of the bureaucracy. If the people won’t take action to eradicate the nexus between politicians and officials at various levels, Panchayati Raj and rural development will remain a pipe dream. The village officer, the BDO and other officials happily work with the leaders or village landowners or other powerful groups. In most villages, about 15–20 per cent are the scheduled castes, who are mostly landless and poor. In such situations elected Panchayats function in namesake. It is the landlords who get elected as mukhia/sarpanch/president. If the scheduled caste members (Dalits), courageous women, people with idealism question their actions or when elected try to bring changes through the Panchayats, they are at the receiving end of the landlords and upper castes as well as the officials.The violence and loss of life caused because of grassroots democracy in the country, since 1994, is horrendous. This happens because grassroots democracy is more basic, meaningful and real than democracy at the higher levels. Democracy only for parliament elections and state elections could be seen as only a superstructure. That is why people take the Panchayat elections seriously. In the Jammu and Kashmir state, voter turnout during the Assembly elections in 2008 was 63 per cent. But the Panchayat election held in 2011 saw a staggering 79 per cent. This is true of the local government elections in all other states as well. But our highly stratified, caste-ridden society has not imbibed the spirit of real democracy.Therefore the conflict dimension of social change has come to the forefront as the social reality. If we compare the violence and loss of life during the parliamentary elections and State Assembly elections with that of the local government elections since 1952, fatalities in the latter is a matter of great concern. In a functioning democracy with more than seven decades of history, why is this kind of violence taking place not only in Bihar but also in a majority of states?

Political parties’ participation Whether and to what extent political parties should participate in Panchayati Raj elections is a question that has occupied the centre-stage of the discussion on Panchayati Raj in the country 53

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even before independence. In fact, the Santhanam Committee (1964) on Panchayati Raj elections stated that one of the most controversial issues they had to deal with was the participation of political parties in the local government elections (GoI, 1965, p. 51). The question added significance because of the two prominent, at the same time sharply divided, schools of thought on the subject of political parties’ participation in the Panchayats’ and municipalities’ elections. One major line of thought was the one which advocated apolitical village Panchayats and the other was against the ‘woolly idea of having local bodies’ elections on an apolitical basis’ (Subrahmanyam,1989). The Sarvodaya idea, inspired by Gandhiji, was that Panchayati Raj Institutions (PRIs) should be ‘non-political’, meaning that political parties should be kept out. Consensus was considered the best way of arriving at decisions. Jayaprakash Narayan believed that political parties corrupted the Panchayati Raj programme and used decentralisation for the selfish interests of the political parties. Sarvodayees wanted to rebuild Indian democracy on the basis of Gram Samaj at the bottom and upper tiers of the block, district, state and national levels. According to Sarvodaya’s principle, barring villages, representation at each level must be through indirect elections. They believed that by this, the principle of consensus, if not unanimity, would prevail in all levels of administration and electioneering, and party politics would be eliminated. Of course, this argument had a fine moral and idealistic appeal. As the vast majority of our people were illiterate and ignorant, the burden of the protagonists of this school was ‘to save them from becoming pawns in the contest for power by political parties and ambitious pressure groups’ (Narayan, 1963 and Mishra and Avasthi, 1967). Jayaprakash Narayan was critical of political parties because he believed that they impeded self-government and liberation of local initiative. For Jayaprakash Narayan, local self-government cannot be created within a system with competing political parties (Ibid). His ultimate idea was ‘partyless democracy’. The All-India Panchayat Parishad (of which Jayaprakash Narayan was Chairman) in 1961 went to the extent of advising the states to work for uncontested elections, giving rewards to villages electing their Panchayats without contest. About 30 percent of all Panchayat elections at that time were uncontested. The protagonists of the Westminster model of parliamentary democracy considered Sarvodaya’s non-political, non-party system as utopian. They even suspected that it would lead to totalitarianism. The liberal democracy school opposed this Sarvodaya concept and wanted political participation. S.K. Dey, for instance, characterised democracy without contest as that of dead people: A self-sufficient village republic consisting of God-fearing people thinking, believing and acting all alike, is a village dead before it is born. Life cannot spring from such inanition. Democracy demands ideology and ideals in a perpetual but healthy clash. Only dead people do not compete. (Dey, 1960, p. 173) In a conference convened at Jaipur in 1964 to discuss the question of Panchayati Raj and democracy, there was a clash of these two viewpoints. S.C. Jain of the Rural Institute Vidya Bhawan supported the Sarvodaya view while C.P. Bhambri and others argued that involvement of parties in the Panchayati Raj system was both necessary and desirable. The parties would act as tools of modernisation in the villages: The PR (panchayati raj) institutions provide a base for progressive parties to operate and fight against the forces of backwardness and tradition. The village people are to be 54

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politicised […] Political parties have to act as a great instrument for the politicisation of the rural masses. (Quoted in Kihlberg, 1975) The Government of India appointed in 1962 a committee on anti-corruption chaired by K. Santhanam, known as Santhanam Committee. The Santhanam Committee’s review of the Panchayats showed that before the advent of independence and after, there had been proposals for political parties not to contest municipal elections. Occasionally, all parties have stayed away from such elections but no resolution to abstain has been kept for any length of time. During the Nehruvian period till 1964, most political parties abstained from direct participation in elections to the Panchayats. One reason was that in small wards with 100–500 voters, locally prominent men were likely to succeed. They did not adopt party labels but political parties used to absorb the elected members into their fold. However, in 1964 the Congress party and Communists fought the Panchayat elections in Tamil Nadu directly with 36.3 per cent Panchayat members in the state elected unopposed. The use of party symbols in Panchayat elections was not permitted in states except Kerala. The Santhanam Committee was of the opinion that while political party influences cannot be legally banned, it was wrong and unnecessary to encourage their entry into the village by the provision of party symbols. The committee’s recommendations merit our attention because it reflected the thinking of that time – the formative stage of Panchayati Raj in India. The Santhanam committee recommendations were: •• •• •• ••

There should be no legal provision prohibiting political parties from influencing Panchayati Raj elections. No political party symbol should be issued in any election to Panchayati Raj institutions. No representations from political parties should be entertained in relation to Panchayati Raj institutions. Official recognition should not be accorded to political party groupings among members of Panchayati Raj bodies. (Santhanam, 1964)

Only the first recommendation was at slight variance with the Sarvodaya stand, while all others were in conformity with Jayaprakash Narayan’s thinking. But on the question of unanimity in elections, it took a strong view against the Sarvodaya line, saying ‘no cash prizes or material inducements or incentives should be offered for unanimity in PR elections’ (Kumar, 1977, p. 52).The committee believed that contests were both healthy and educative and recorded having come across villages where anxiety for unanimity and consensus meant continuation of domination by the traditional authorities and the suppression of the new spirit of youth. An experience they had in Gujarat was illuminating. In Gujarat, the committee members visited a village where the Panchayat had been unanimously elected for many terms without any change of personnel. When they put the question whether there were no other persons fit to serve in the Panchayat and why the same persons were elected continuously for long periods, the only reply was that no one wanted a change (Santhanam, 1964, p. 55). The concluding remarks of the Santhanam Committee were important for that time and remain so even today: ‘Contests are both healthy and educative. Avoidance of contests on a large scale may mean the suppression of youth and it may stunt the growth of Panchayati Raj itself ’ (Ibid). We find a remarkable change after about four years of the Santhanam Committee report. At a conference on Panchayati Raj in 1969 at Hyderabad, the majority opinion was for political 55

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competitiveness on an ideological basis for both rural and urban India. But the dissenting voice at the meeting still believed that the face-to-face community of the Indian village could be better served if it was insulated from political party rivalries. The Ashok Mehta Committee unequivocally recommended that political parties should be allowed to participate effectively at all levels because it would make for a clearer orientation towards programmes and would facilitate healthier linkages with higher level political processes. It is also necessary to provide constructive outlet to opposition parties; parties out of power at the state level may be able to chalk out achievement at the district level. Direct elections coupled with programme-based contests would offer greater scope to weaker sections for availing the opportunities offered by the political system. (GoI, 1978, p. 52) The first state to put into practice the Ashok Mehta Committee suggestion was West Bengal and thus after 19 years of the inauguration of the Panchayati Raj in the country, for the first time political parties were officially recognised in the local elections. But the two Congress Parties at that time pleaded for non-partisan Panchayat polls. The Janata Party was divided on the issue – P.C. Sen strongly opposed party-based contests while Sushil Dhara and Biman Mitra held a different view. The CPI (M) believed that direct involvement of political parties in the working of PRIs would make the Panchayat leadership more disciplined and responsible in managing these institutions and would put an end to the age-old tradition of rural coteries reaping the benefits for narrow, sectarian and caste interests. The left parties countered P.C. Sen’s ‘partyless democracy’ thesis with the argument that ‘partyless candidates could not bring about social change and uphold and strengthen democracy because collective, organised efforts are needed for this; only political parties could bring them about’ (Shiviah, Srivastava and Jena, 1980, p. 53). The 1987 Karnataka elections to PRIs were held officially on party lines. For the first time, individuals who dominated the village scene through their caste, family, money power and bullying tactics, were challenged by candidates put up by national or regional parties. Villages which had seen several decades of domination of one particular family or caste had to face stiff challenges.The rural scene witnessed serious rifts and restlessness even in families because in one family, members were aligned on different party lines. Discussions and debates in tea shops and other public places were elevated to the level of political ideologies, to assessments of the balance sheets of political parties and the track records of political leaders. The elections proved to be a churning process of ideas and action creating a high level of political awareness. In this context, there is much to learn from the British experience. The London County Council from its inception in 1889 has had clearly defined party divisions among its members. Elections are frequently contested on party lines. In the local governments in England, political party organisation brings greater coherence and definition into the policies of the governing body. Eric Jackson in his study of local governments in England says: Political organisation in local government affairs does have the undoubted advantage, as it does in Parliament, of bringing greater coherence and definition into the policy of the governing body. Where the parties are well organised and disciplined, it is possible to get a decision more quickly than when there is no such organisation […] The leader of a political group in power or a representative who can speak with authority on behalf of that group, can be much more sure of his touch when conducting such discussions, and those with 56

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whom he is discussing can feel that what he says is more likely to be adopted by the council than when discussions are conducted by a representative who has no such backing. (Jackson, 1959, p. 140) On the other hand, participation of political parties in local governance is resisted by Canadian voters. However, it cannot be claimed that the system is entirely free from party politics. The New Democratic Party (NDP), a major political party, has been regularly fielding its candidates in municipal elections. Its success has been limited because the Liberals and Conservatives, instead of nominating their candidates directly, have been supporting like-minded independent candidates, giving rise to local coalitions of individuals who are opposed to the political philosophy of NDP.There is another phenomenon, too – domination of what is known as ‘civic’ parties, professing different lines in civic matters. A study in 1969 revealed that 24 out of 28 cities had at least one such party. However, there has been a consistent demand for allowing political parties to participate in municipal elections. Examining the arguments for this growing stance among political scientists and commentators, Richard C. Tindal and Susan Tindal were of the view that organised political parties provide the potential for not only strong leadership but also more effective scrutiny of the municipality’s activities through an organised opposition or alternative governing group. As a result, there is a group within council pledged to scrutinise and criticise municipal activities, an important role which is normally left to everybody – nobody. (Tindal and Tindal, 2008, p. 274) The two authors put forward an argument in support of political parties, which can hardly be contested. According to Tindals there is no political way to build a road, claim proponents of this viewpoint which reflects the lingering notion that local government activities are administrative – not political – in nature.Yet if the actual construction of a road is a matter of engineering not politics, the decision on where to locate a particular road is certainly political. The decision on whether the traffic problem in question should be solved through building a road or providing an alternative form of public transit is also clearly political. The decision on whether the scarce financial resources of the municipality should be used on transportation or some other pressing need is again political (Ibid, p. 276). In our particular social and political situation in India, there may be a tendency for ruling parties to adopt an ostrich-like policy about the official contest of parties in local elections. These elections, at any point of their tenure, will be seen as a verdict on their performance and popularity. More often than not they would rather shy away than face the test. This is one more good reason for bringing political parties into the Panchayat sphere. The usual fall-out of non-political Panchayat elections is the domination of independent candidates of all hues and shades without any internal control and accountability to the people. They may claim support of one party or other in a free-for-all situation. Some of them may be motivated by public good, but many of them belong to the political lumpen class which is fast capturing the rural political scene. For them, Panchayats are a new source of social power and unbridled corruption. They are self-appointed guardians of the social status quo and representatives of oppressive forces. These leaders are impeding the growth of democratic spirit at the grassroots level. The sooner they are replaced by official candidates of political parties, the better. Some political parties may also behave in a similar fashion. Yet, since they also contest Assembly and parliamentary elections, their representatives in Panchayats cannot afford to ignore the dynamics of wider politics. 57

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There are two basic questions. First, the nature of our Panchayats: are they a mere extension of the executive arm of the Indian state as is being practised or instruments of planning for ‘economic development and social justice’ as Article 243G of the Constitution asserts? If Panchayats are seen as sheer implementing agencies for various government-sponsored schemes and programmes – without any will of their own – then they may remain apolitical as is expected from the administration. However, if they are envisaged as the third tier of government and basic units of our democratic edifice, they are destined to be political in a multiparty democracy. After all, ‘economic development’ and ‘social justice’ are not apolitical – devoid of any ideological orientation; these terms have definite political connotations. For example, one point of view may favour free markets as the engine of economic growth, while a competing viewpoint may like to replace the market with collective will and government intervention. Some may support the caste system and the Brahminical order while others may crave for a casteless society offering equal options to everybody.These questions are essentially political and need to be addressed on a political plane from Panchayats to Parliament. Another equally important question relates to the isolationist view of Panchayats. When Jayaprakash Narayan and others pleaded for the negation of political parties in Panchayati Raj, they also dreamt of partyless democracy at the level of state and central governments. However, it has been impossible to achieve the ideal in any system except military dictatorships. During the 2005 local government elections in Pakistan, one could read comments in Pakistani newspapers and periodicals and also on the internet bitterly criticising the absence of political parties from the scene. Tanvir Ahmad (2005) writes: People who have studied the original devolution plan and some crucial amendments made just before the current elections have started questioning the wisdom of keeping political parties away from the local government set-up. They think that this ‘philosophy’ will create a political void and ultimately lead to parochial factors like biradari, ethnicity, groupism, etc., to penetrate into the system. Not that national-and provincial-level elections are free from these factors, but over the years the impact has visibly lessened. The mainstream political parties now have national agenda and contest elections on the basis of a national programme, or at least demonstrate that they are doing so. If the councillors, nazims and naib nazims are to be non-political elements, from where will the future leadership emerge? If the whole nation is ruled by political parties, how can Panchayats exist and grow in a non-political set-up? It should not be forgotten that all governance is local or the local is inextricably linked with the national or even global. Nobody can be really aware of national questions, unless she or he is conscious of local issues. Moreover, can a Panchayat engaged in crucial struggles with the social and economic forces of the day hope to succeed without support from the political class? Let’s not treat politics as a villain. In the right hands, it can be a maker of history. And what is democracy if not a laboratory for bringing about qualitative changes in the exercise of state power? And which other body of governance represents the state to the people more closely than Panchayats?

Connecting to rural development The power-brokers about whom Rajiv Gandhi spoke so eloquently continue to hold sway. They appear in various ways as contractors, go-betweens, lobbyists and so on.They always prefer 58

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centralised corridors of power and not decentralisation. It is much easier to deal with Members of Parliament (MPs) and Members of Legislative Assemblies (MLAs) along with the officials in the national and state capitals than nearly 28 lakh representatives in nearly 2.5 lakh local governments. The contractors are omnipresent. The much acclaimed Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) which is to be implemented by Panchayats has banned contractors. But the collusion between officials and contractors has given sizable space to the latter. There are two issues which are of critical importance in the context of Panchayati Raj and rural development. First, the implementation of the Panchayat (Extension to Scheduled Areas) Act (PESA) of 1996 in nine states that come under this act. No state government is implementing this act in letter and spirit. As per the 2011 census, our tribal population was 104,281,034 (8.6 percent) and their poverty level was 47.3 per cent in rural and 33.3 per cent in urban.The Union government set up in 2013 a foundation – the Bharat Rural Livelihood Foundation – to provide livelihood to the tribals. But what a difference it would have made to tribals if PESA had been taken seriously by the state governments. Second, the Gram Sabha in our Constitution is the most meaningful aspect of democracy bringing direct democracy to the fore. Gram Sabha to Lok Sabha is the best model one can think of in democratic governance. Therefore, the question is: if we had powerful Gram Sabhas, which were functional like the communes in Switzerland, would the Coca Cola problem in Plachimada (Palakad District) in Kerala2 or the land acquisition issue in Singur, West Bengal (Ghosh, 2012, pp. 15–16) have ever come up? The same is the case with many other issues the villagers are facing in all other states. If the local governments are not allowed to express the ‘local will’ and make it known to the state and Union governments, then the latter will face a serious crisis in governability. This was witnessed during the above-mentioned agitation over land acquisition at Singur, which shook the foundation of the Left Front government in West Bengal. While proceeding with the industrial project involving the acquisition of nearly 1,000 acres of land, the West Bengal government chose not to discuss the issue in the forums of Gram Sabha, Gram Panchayats and even the district planning committee.The net effect of this was that the channel of communication between the top and the grassroots got disrupted leading to a situation under which the capacity of the state government to resolve a local conflict democratically and without the use of force was undermined. It is important to note how the whole narrative or the grammar of politics is now changing because of political decentralisation. Despite many shortcomings and deficits, the country is moving towards inclusive politics, thanks to the upsurge of democratic aspirations of people in the villages of India. Here it is important to highlight some hopeful signs as well. ••

•• •• ••

It is heartening to note that at least one institution of the state has stood by the Panchayats. That is the judiciary. Whether it is the lower courts or high courts or Supreme Court, the judiciary has in many memorable judgments defended the constitutional rights of local governments. Brilliant young people are coming forward to contest the local government elections and once elected they are doing extraordinary work in the Panchayats. Women, in spite of all the problems they face, are slowly but steadily entering public life and they are bringing about tremendous impact in the villages, blocks and districts. Marginalised and deprived sections are consistently getting windows of opportunity through the local government elections, even though there are threats and roadblocks. 59

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••

Accountability and transparency issues have come to the forefront, before and after the Panchayat and municipality elections.

In the 1950s, 1960s and 1970s, the powers were highly centralised at the centre (because of this, the Union government was known as the central government). Then the states had to consistently fight for their constitutional rights. The result? The Sarkaria Commission was appointed and several high-profile cases were fought in the Supreme Court. Then the Inter-State Council came into existence and slowly but steadily we moved to a federal structure as far as Union and states were concerned. Today, every move by the Union government raises the issues of federal principles, encroachment on the domain of the states as well as division of responsibilities between the Union and the states.

Conclusion The elected Panchayat/municipal representatives and civil society have to take the same action which the states took till about the 1970s. Panchayats are under the states. All the district Panchayats, block-level Panchayats and Gram Panchayats must unite and seriously demand their constitutional rights from the states. It is a big deal. Civil society organisations can complement and support the demands of 244,827 Panchayats and their representatives which together number nearly 2,800,000. Then multilevel federalism will become a reality in our country. Fundamental to all these, in a multiparty democracy, is political decentralisation. India has gone a long distance from 1982, but still has miles to go. It is high time for the creation of a high-powered commission to look into the issues mentioned above and recommend ways and means for the Panchayats and Municipalities to function as institutions of self-government and thus the first tier of the Indian federal system. Among the politicians transcending political party lines, as well as in the bureaucracy, there is a small section that is committed to the principle of power to the people. Though it is a minuscule number compared to the total size, their commitment and conviction have kept our flag flying at least in a few areas. Those who occupy the seats of power are there because of the people who are sovereign in a democracy. The time has come to make power to the people a reality. Tokenism will not do. If we do not do it now, people’s deprivation, alienation and misery will provide a fertile ground for civil strife and extremism such as Naxalism, which has gripped nearly one-third of the districts of India. What Rajiv Gandhi, while introducing the 64th Constitutional Amendment bill in Parliament on 15 May 1989, said is highly relevant to fulfil the basic principles of the 73rd and 74th Constitutional Amendments: ‘To the people of India, let us ensure maximum democracy and maximum devolution. Let there be an end to the power-brokers. Let us give power to the people’ (GoI 2006, p. 18). Today this is the mission of political decentralisation in India.

Notes 1 ‘Bureaucracy had probably its own role in dissociating the PRIs from the development process.Several factors seem to have conditioned their perception.The system of line-hierarchy would find favour with them as an organisational principle. The officers would feel that they are primarily accountable for results and financial proprieties to the State Government. The officials knew no better than to trust their own fraternity.They would, on the one hand, therefore, be averse to PRIs being entrusted with 60

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additional functions and on the other would not easily get adjusted to working under the supervision of elected representatives’ (GoI, 1978, pp, 5–6). 2 ‘Palakkad battles the Goliath’, The New Indian Express, Chennai, 4 April 2004.

References Ahmad, Tanvir (2005). Dawn, August 20. Dey, S. K. (1960). Community Development: A Movement is Born. Allahabad: Kitab Mahal. Dey, S. K. (1990). ‘Reflections on Panchayati Raj’ in Mathew, George (ed.) Panchayati Raj in Jammu & Kashmir. New Delhi: Institute of Social Sciences and Concept Publishing Company, pp. 6–7. Fischer, Louis (1942). A Week with Gandhi. New York: Duell, Solan and Pearce. Ghosh, Buddhadeb (2012). ‘What Made the ‘Unwilling Farmers’ Unwilling? A Note on Singur’, Economic and Political Weekly, xlvii(32), pp. 13–16. GoI (1965). Report of the Committee on Panchayati Raj Elections, Ministry of Community Development and Cooperation. New Delhi: Government of India. GoI (1978). Report of the Committee on Panchayati Raj Institutions (Chairperson: Ashok Mehta). New Delhi: Government of India, Ministry of Agriculture and Irrigation, Department of Rural Development. GoI (2006). The State of the Panchayats, Volume III, Ministry of Panchayati Raj. New Delhi: Government of India. GoI (n.d.). Jawaharlal Nehru’s Speeches 1957–1963. New Delhi: Ministry of Information and Broadcasting. Indian National Congress (1917). Statement in the 32nd session of the Indian National Congress in Calcutta, December 26–29. Jackson, W. Eric (1959). Local Government in England and Wales. Bristol: Penguin Books. Kihlberg, Mats (1975). The Panchayati Raj of India: Debate in a Developing Country. New Delhi: Young Asia Publications. Kumar,Virendra (1977). Committees & Commissions in India 1947–1973 Volume VI 1964–1965. New Delhi: Concept Publishing Company. Malaviya, H. D. (1956). Village Panchayats in India, Economic and Political Research Department. New Delhi: All India Congress Committee. Mishra, Sweta (1994). Democratic Decentralisation in India (A Study of Retrospect and Prospect). New Delhi: Mittal Publications. Misra, K.P and Avasthi, Rajendra (eds.) (1967). Politics of Persuasion: Essays Written in Memory of Dr. G. N. Dhawan. Bombay: P. C. Manaktala and Sons. Narayan, Jayaprakash (1963). Swaraj for the People. New Delhi: Sarva Seva Sangh Prakashan. Santhanam, K. (1964). Report of the Committee on Prevention of Corruption. New Delhi: Ministry of Home Affairs, Government of India. Sezhiyan, Era (2005). “Introduction” to “MPLADS: Concept Confusion and Contradictions”. New Delhi: Institute of Social Sciences. Shiviah, M., Srivastava, K. B. and Jena, A. C. (1980). Panchayati Raj Elections in West Bengal 1978. Hyderabad: NIRD. Subrahmanyam, K. (1989). ‘Panchayat Reform: A few Pitfalls Can Be Avoided’, The Hindustan Times, May 18. Tindal, Richard C. and Tindal, Susan (2008). Local Government in Canada. Toronto: Nelson Education. Venkatarangaiya, M and Pattabhiram, M (eds.) (1969). Local Government in India: Select Readings. Bombay: Allied Publishers. World Bank Group (2001). ‘Political Decentralisation’, Decentralisation & Subnational Regional Economics. Available at: www​.w​​orldb​​ank​.o​​rg​/pu​​blics​​ector​​/dece​​ntral​​isati​​on​/po​​litic​​al​.ht​m (Accessed: 12 July 2018).

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5 Rural local governance and administrative decentralisation An institutional analysis N. Sivanna and N. Veeresha

Introduction Rajni Kothari (1988) believed that greater federalism and decentralisation to lower levels within the states are institutional devices that can be used as instruments for empowerment, because inherent in this process is the transfer of power to lower levels. In his book Rethinking Democracy, Kothari (2007) explains that decentralisation is the means to transform the concept of democracy into “an agenda of transformative politics, and social and cultural emancipation” (ibid, p. 176). In developed countries, decentralisation reforms were initiated to improve the transparency and accountability of the governance. In developing countries, these aim to deliver public services and goods in an efficient manner. Seen in this context, decentralisation is the dispersal of the authority and power of decisionmaking processes. In terms of governance, it is about devolution of powers (administrative, financial and political) among the various spheres of government.The goals of decentralisation can be broadly categorised into administrative (deconcentration/delegation), ecological (market/privatisation), fiscal (economic) and political (devolution) dimensions. Among these forms of dimensions, devolution is considered the most appropriate form as it transfers legislative, executive and judicial responsibilities to the local governments on the basis of the principle of subsidiarity. In the Indian context, it is also seen as a process of empowerment of hitherto non-represented or excluded sections of society (in political processes except for voting during elections) such as Scheduled Castes, Scheduled Tribes (hereafter SC/ STs), minorities, women and other vulnerable and depressed classes to exercise their rights towards reaching the mainstream social, economic and political life (Aziz and Arnold, 1996; Mathew, 1995). Set in this backdrop, in India the 73rd and 74th Amendments to the Constitution added Panchayats and municipalities to the federal governing structure of the polity. The twin objectives of these amendment acts are local “economic development” and “social justice”. The state governments in India have legislated their Panchayat Raj acts following the passage of the 73rd Amendment to the Constitution in 1992. Karnataka was the first state to pass the Karnataka Panchayat Raj Act 1993 in conformity with the 73rd Constitutional Amendment Act. Kerala, Karnataka, West Bengal, Tamil Nadu,Tripura and Sikkim are some of the states that pioneered in the area of decentralisation reforms. Improvement in the delivery of public goods, transparency and accountability (Jamabandhi in Karnataka, social audit in Andhra Pradesh and ombudsman in Kerala) are some of the achievements of decentralised governance in the country. Yet the goals of “economic development” and “social 62

DOI: 10.4324/9780429321887-5

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justice” are far from the reach of rural citizenry. It is being observed that “the 73rd Amendment did not entail any specific measures for administrative decentralization and subsequent attention to this aspect of decentralization has been minimal” (Mullen, 2014, pp. 35–36).

Statement of the problem India’s journey with decentralisation reforms represents a complex, dynamic process in delivering the twin objectives of “economic development” and “social justice”. The 25 years of decentralised governance have witnessed some successes and multiple shortcomings.The successes includes improved representation of women and the SC/ST community in local decision-making and better delivery of public services and development outcomes. The major shortcomings consist of inadequate political will and insufficient administrative efficiency and fiscal deprivation of local governments.The chapter looks at one of the shortcomings of decentralisation, i.e. the administrative capacity of the rural local governments through the lens of an institutional perspective.

Objectives and questions The main thrust of this chapter is to understand the institutional dynamics of administrative decentralisation and its implications on the quality of rural local governance. It aims to explore the nuances of institutional aspects with regard to the devolution of power and authority among the centre, state and local governments.To achieve this objective, we seek to raise and answer certain research questions such as:To what extent are powers devolved by the respective state governments to the rural local governments to recruit, discipline and transfer personnel? What has been the experience of rural local governments in India in terms of administrative decentralisation? What are the issues and challenges faced by the Panchayati Raj Institutions (PRIs) in the administrative decentralisation? What measures are needed to strengthen administrative decentralisation? The chapter consists of four sections. The first section covers the introduction, statement of the problem, research objectives and questions, data sources, methodology and analytical framework. The second section provides an overview of administrative decentralisation in India. The third section deals with the institutional aspects of administrative decentralisation in selected states on the basis of a devolution index report. The last section delineates certain issues and challenges of administrative decentralisation which are followed by concluding remarks.

Data sources and methodology One of the main data sources is the devolution index report1 of 2015–16, developed by the Tata Institute of Social Sciences (TISS) for the Ministry of Panchayati Raj, Government of India. The ranking of states, in terms of devolution in policy and practice, is taken into account in analysing the institutional effectiveness of the Panchayats in discharging 29 functions under the Eleventh Schedule of the Constitution. Other related data were collected through the reports published by the Ministry of Panchayati Raj, Government of India, on the devolutionary process. To explore the dynamics of institutional efficacy of the Panchayats in terms of administrative decentralisation, an analytical framework developed by Cohen and Peterson (1999, p. 163) has been used. This analytical framework is useful in understanding administrative decentralisation and this has been looked at from the perspective of “institutional monopoly” (centralised) and “institutional pluralism” (decentralised). The proponents of administrative decentralisation argue for (i) transfer of responsibility; (ii) planning and management; (iii) raising and allocation of resources; and (iv) delivery of goods and services.While political decentralisation provides the basic rationale for local government, 63

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it is administrative decentralisation, coupled with commensurate financial decentralisation, that gives content and substance to local government institutions and determines how effective their role would be (Cheema and Rondinelli, 1983). Under the 73rd Constitutional Amendment, the key provision from the point of view of administrative decentralisation is Article 243 G which lays down the powers, authority and responsibility of the Panchayats. This provision enjoins the state legislatures to endow the Panchayats with such powers and authority as may be necessary for them to function as “Institutions of Self-Government”. As a result, the Panchayats have the two-fold responsibility of preparing and implementing plans and schemes for economic development and social justice. This provision of the amendment clearly emphasises development and it is very clear and unambiguous. The important consideration for administrative decentralisation is the “principle of subsidiarity”. As per this principle, the prescribed activity should be carried out at a given level and not necessarily at the higher levels. The activity should be located at as low a level as possible, so as to maximise accountability. Also, it needs to be seen that each and every activity requires a minimum size for functional efficiency and economy; availability of administrative and financial resources for handling the activity in a capable and competent manner; and, more importantly, the accrual of benefits to the area. One of the defined principles of an inter-governmental system is the assignment of roles to each level of government. Role clarity is essential both for efficient delivery of services as well as for people to hold them accountable for their performance. This requirement has been effectively addressed through “activity mapping” which has been able to ensure greater precision and purpose in the devolution of functions and responsibilities to Panchayats. As a result of this administrative innovation, in the states of Kerala, Karnataka, Maharashtra, Odisha, Tamil Nadu Tripura and West Bengal activity mapping is followed by budget analysis and rearranging budget heads to match the functions proposed to be devolved. Overall, administrative decentralisation is a method of downsizing the control of the central administration in planning and implementation. This can be done by sharing the specific developmental functions and roles with the local administrative units. Under enlightened central leadership, administrative decentralisation leads to democratisation and greater political participation (Cohen and Peterson, 1999, p. 24). To understand the institutional dynamics with particular reference to the devolution of powers and authority to the Panchayats to recruit and supervise the staff, a modified version of an analytical framework developed by Cohen and Peterson (1999) is being adopted. It consists of mainly two components, analytical and spatial (Chart 5.1).To contextualise, Panchayats are institutional structures of decentralised governance and their nature and mode of functioning depend upon the extent of administrative decentralisation that the state government divests for the Panchayats.

Analytical framework Chart 5.1 Analytical and spatial dimensions of administrative systems Analytical (role) Monopoly (centralisation)

Pluralism (decentralisation)

I Institutional monopoly III Dispersed institutional monopoly

II Institutional pluralism IV Institutional pluralism

Source: Cohen and Peterson, 1999, p. 163.

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Spatial dimension

Rural governance and decentralisation

Devolution of powers to the Panchayats: an overview The general situation in India is that there is devolution but not enough of asupport system. In some states such as Andhra Pradesh, even the elections to PRIs are not regularly held and the appointments of state finance commissions are postponed because the state-level leaders in such cases believe in holding power and resources close to their chest instead of devolving. This limits the extent and impact of decentralisation. The reluctance of the higher political leaders to part with power and resources under their control may sometimes be due to doubts about the capacity of the PRIs to absorb and effectively use all the devolved resources. The effect in both the cases, however, is the same. The experience of decentralisation reforms in India indicates that the state government, being constitutionally responsible to rural development, is not willing to devolve powers and authority to the local governments. Graph 1 gives an overall ranking of the states in a devolution index. Based on evidence presented in Figure 5.1, the top-, middle- and bottom-ranked states in devolution are identified in Table 5.1. A striking feature which comes out from these data on devolution ranking is that southern states are in a better position in terms of devolving powers to the Panchayats.Three out of the top five states belong to the southern region. From the index, it can be inferred that the devolution of 3Fs (functions, funds and functionaries) in southern states is better as compared to India as a whole. Figure 5.2 represents the overall situation of devolution in India with respect to 3Fs. From the graph it is clearly understood that the states in the southern region fared well compared to those

Dadra and Nagar Haveli, 3 Lakshadweep, 2

Puducherry, 6 Kerala, 1 Maharashtra, 2 Tamil Nadu, 4 Sikkim, 6 Chandigarh, 5 Karnataka, 3 Gujarat, 5 Daman and Diu, 4 West Bengal, 7

Andaman & Nicobar Islands, 1

Telangana, 8 Haryana, 8

Goa, 23

Madhya Pradesh, 9 Rajasthan, 10

Arunachal Pradesh, 22

Andhra Pradesh, 11

Manipur, 21

Bihar, 12 Tripura, 13

Punjab, 20

Jharkhand, 13 Jammu and Kashmir, 19

Uttarakhand, 14

Assam, 18 Odisha, 17 Chhattisgarh, 16

Uttar Pradesh, 15 Himachal Pradesh, 16

Figure 5.1 Devolution index. Source: Government of India (2016). 65

N. Sivanna and N. Veeresha Table 5.1 Top-, middle- and low-ranking states in the devolution index Sl. No

Top five

Middle five

Bottom five

1 2 3 4 5

Kerala (1) Maharashtra (2) Karnataka (3) Tamil Nadu (4) Gujarat (5)

Andhra Pradesh (11) Bihar (12) Tripura (13) Jharkhand (13) Uttarakhand (14)

Jammu and Kashmir (19) Punjab (20) Manipur (21) Arunachal Pradesh (22) Goa (23)

Source: Government of India (2016).

of other regions in the country. In India, the situation of the devolutionary process is very slow and burdened with only functions. All the states have devolved, to the Panchayats, functions of more than half of 29 subjects of the Eleventh Schedule. Southern states have devolved 24 subjects to the Panchayats which is the highest in terms of the devolution of functions.The average number of functions devolved in the Eastern, Northern, Southern and Western region accounts to 15, 16, 24 and 14, respectively. Similarly, the average percentage of funds and functionaries devolved amounts to 0.61, 1.2, 1.9 and 1.2, and 0.69, 0.54, 0.85, and 0.66, respectively. Figure 5.2 indicates that Panchayats are given the charge of a number of functions with inadequate funds and functionaries. In the context of the devolution of powers and authority to the Panchayats, a widely accepted understanding in the literature is that Panchayats are very weak in their fiscal positions and largely dependent upon the state and union governments for the same. It is being observed that “some degree of fiscal autonomy is needed, among other factors. The analysis of this aspect in the context of Karnataka State […] reveals […] [that] the panchayats in the state have very little fiscal autonomy” (Babu, 2004, p. 1). And it is important to note that “Financial weakness is among the severest obstacles to viable political decentralization” (Smith, 1985, p. 197). It is an accepted fact that Panchayats are weak in fiscal strength and it is equally interesting to note here that the Panchayats are much weaker in terms of functionaries or staff. It can be observed from Figure 5.2 that 1.9 percent is the highest devolution of funds to the Panchayats which is reflected in the states of the southern region. The average percentage of number of functionaries devolved stands at only 0.85 percent. This means that the devolution of functionaries is more than 50 percent less than the devolution of funds to the Panchayats.The inadequate number of personnel in the Panchayats suggests that there may be an underutilisation of funds

Figure 5.2 Status of devolution in India (region-wise). Source: Government of India (2016). 66

Rural governance and decentralisation

(apart from state- and central-sponsored schemes) and that it may affect the organisational capacity of the Panchayats. The states in the southern region are placed in a better position than the rest of the country in devolving functions, funds and functionaries to Panchayats.Yet, there is a wide gap between functions and funds, functions and functionaries, funds and functionaries. To understand the nuances of devolutionary process it is essential to go into the details of devolution as a policy concern and commitment by the states and its operation in reality. For this purpose, the devolution index (policy and practice) is taken into account to highlight these factors. Table 5.2 highlights the status of devolution with regard to functions, functionaries and funds to the three-tier Panchayats.The states of Kerala, Karnataka, Maharashtra,Tamil Nadu and Table 5.2 Devolution ranking of states in policy State

Functions rank

Functionaries* rank

Funds rank

Aggregate devolution in policy (DPo)

Kerala Karnataka Maharashtra Tamil Nadu Telangana Sikkim West Bengal Odisha Tripura Gujarat Haryana Rajasthan Uttarakhand Madhya Pradesh Andhra Pradesh Assam Himachal Pradesh Manipur Chhattisgarh Jharkhand Uttar Pradesh Goa Punjab Jammu and Kashmir Bihar Arunachal Pradesh Andaman and Nicobar Islands Daman and Diu Lakshadweep Chandigarh Dadra and Nagar Haveli Puducherry

2 1 5 7 6 11 9 13 8 4 13 3 16 13 10 12 16 19 16 14 13 16 15 16 15 16 2 3 1 3 3 2

1 9 2 5 12 7 13 12 13 8 18 16 11 3 10 17 4 9 8 14 6 12 15 3 15 6 2 1 3 4 5 6

1 2 5 3 4 7 8 6 13 12 11 16 9 12 16 15 14 10 16 16 16 16 16 16 16 16 1 2 2 2 2 2

1 2 3 4 5 6 7 8 9 10 11 11 12 12 13 14 15 15 16 17 17 17 18 19 20 21 1 1 1 2 2 4

Source: Government of India (2016). *The indicators for the transfer of functionaries (administrative decentralisation) are number of functionaries (own + transferred) per 1,000 population, % of techno-professional functionaries in the functionaries own and transferred and % of positions filled to sanctioned strength (Government of India, 2016, p. 56).

67

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Telangana are ranked as the top five and Arunachal Pradesh, Bihar, Jammu and Kashmir, Punjab and Goa as the lowest-performing five states in the devolution of 3Fs as a policy. Regarding the transfer of functionaries, Kerala, Maharashtra, Jammu and Kashmir Madhya Pradesh, Himachal Pradesh and Tamil Nadu are placed in the top-five positions. In these states, the powers have been devolved to the Panchayats to recruit their personnel and to regulate their service conditions subject to the rules as laid down by the state government. Traditionally, the local governments in India have been performing core functions related to governance and development outcomes especially in education, health and other social welfare areas. The effective delivery of these essential public services depends upon the adequate number and quality of the personnel of the Panchayats. Unless the PRIs as an institution are strengthened and made efficient in carrying out their functions, the goals of the 73rd Amendment, i.e. local “economic development” and “social justice”, are difficult to fructify. In this regard, it is observed that: GP will continue to perform many agency functions in future, the GP has to be strengthened as an institution. Without strengthening the core capacity of the GP, its performance in carrying out agency function will not improve. Therefore, the solution lies in providing essential manpower on a regular basis, so that they continue to work and are incentivised to acquire additional skills, to carry out both core and agency functions efficiently. (Government of India, 2018, p. 12) It is essential to understand to what extent these policy commitments have been translated into action in reality. Table 5.3 provides the number of staff in the Gram Panchayats of the top five states in the devolution ranking. It can be understood from Table 5.3 that in spite of the well-spelt-out provisions in the state Panchayat Raj acts, the sanctioned strength of manpower in the Panchayats has not been filled completely. For example, in Maharashtra only 17,325 secretary posts were sanctioned for the total 27,905 Gram Panchayats. It indicates that the number of secretary posts sanctioned is not in proportion to the number of GPs.This means another 10,580 GPs are either managed by the secretaries of other Panchayats or functioning without secretaries. The concern is even if these 10,580 Panchayats were managed by other GP secretaries, the work burden and the amount of travel and other factors undermine both the capacity of the secretary and the institutional efficacy of the Panchayats. However, it must be noticed that the vacancies of staff other than the secretary post are also high in number which needs to be taken care of immediately to enable Panchayats to function as “institutions of self-government”. Haryana, Assam, Rajasthan, Bihar Table 5.3 Staff position in Gram Panchayats (top five states in the devolution index) State

Kerala Maharashtra Madhya Pradesh Himachal Pradesh Tamil Nadu

No. of Gram Panchayats

Secretary or equivalent Sanctioned

Filled

Vacant

Sanctioned

Filled

Vacant

999 27,905 23,012 3,243 12,620

999 17,325 23,040 3,243 12,618

999 16,655 NA 3,243 12,618

NA 670 NA NA NA

14,463 57,510 62,915 4,003 73,642

14,207 56,916 NA 3,474 73,642

256 594 NA 529 NA

Source: Government of India (2011). Note: NA = Not available

68

Other staff

Rural governance and decentralisation Table 5.4 Staff position in Gram Panchayats (bottom five states in the devolution index) State

Haryana Assam Rajasthan Bihar Jharkhand

No. of Gram Panchayats

Secretary or equivalent

Other staff

Sanctioned

Filled

Vacant

Sanctioned

Filled

Vacant

6155 2202 9166 8463 4562

2237 1955 9168 8463 4562

1377 1897 8732 5754 3240

860 58 436 2709 1322

NA 1307 NA NA NA

NA 1162 NA NA NA

NA 145 NA NA NA

Source: Government of India (2011). Note: NA = Not available

and Jharkhand are placed at the bottom in delegating the administrative functionaries to the Panchayats as a policy commitment. The data in Table 5.4 shows that the filling up of sanctioned posts of secretary or equivalent in GPs is relatively poor in these states compared to the states of Kerala, Maharashtra, Madhya Pradesh, Himachal Pradesh and Tamil Nadu. The commitment for empowering Panchayats by devolving functionaries by the state governments as a policy matter is reflected in Table 5.2. However, it is important to understand whether these policy commitments were translated into practice or not in reality. Table 5.5 informs the performance of states in devolution in practice by highlighting the status of devolution with regard to functions, functionaries and funds to the three-tier Panchayats that operate in practice. Kerala, Maharashtra, Gujarat, Sikkim and Karnataka are ranked as the top five and Goa, Arunachal Pradesh, Manipur, Assam and Jammu and Kashmir are ranked as the five lowest-performing states in the devolution of 3Fs in practice. In terms of transfer of functionaries, Kerala, Sikkim, Telangana, Tamil Nadu, Bihar, Uttarakhand and Jammu and Kashmir are placed in the top five positions. In these states, the devolutionary powers to the Panchayats to recruit their personnel and to regulate their service conditions are operating in reality.

Institutional aspects of administrative decentralisation in selected states The endowment of Panchayats with functions is fruitful only if the devolution of functionaries is also done. This includes the devolution of powers to Panchayat functionaries as well as the capacity-building of the same. Placing state government functionaries active at the local levels under the jurisdiction of Panchayats may also be necessary. Ensuring the availability of functionaries is a major requirement of deepening democracy as it strengthens the PRIs by equipping them with competent manpower. It is only by way of the effective functioning of the functionaries that self-governance is made possible. The state government employees assigned to the Panchayat institutions have to be made accountable to the Panchayats. In this scenario, it is necessary to understand the devolution of functionaries in the top-performing states of the devolution index with regard to the nature and extent of the powers that the Panchayats have in the recruitment, supervision and control over the staff. For the purpose of analysis, the Kerala and Maharashtra models are considered in this chapter as there is a certain degree of institutional autonomy to the Panchayats in terms of administrative decentralisation. 69

N. Sivanna and N. Veeresha Table 5.5 Devolution ranking of states in practice State

Functions rank

Functionaries rank

Funds rank

Aggregate devolution in practice (DPr)

Kerala Maharashtra Gujarat Sikkim Karnataka West Bengal Telangana Madhya Pradesh Bihar Punjab Tamil Nadu Rajasthan Jharkhand Haryana Andhra Pradesh Uttar Pradesh Uttarakhand Tripura Chhattisgarh Himachal Pradesh Odisha Jammu and Kashmir Assam Manipur Arunachal Pradesh Goa Dadra and Nagar Haveli Andaman and Nicobar Islands Lakshadweep Daman and Diu Puducherry Chandigarh

1 3 2 4 9 6 8 5 6 17 11 6 7 10 8 8 12 14 13 16 14 18 15 18 18 18 2

1 4 9 2 10 14 2 8 4 15 3 7 6 11 11 11 5 7 13 8 12 5 15 9 16 17 2

2 5 5 7 2 4 5 4 4 15 2 8 10 1 6 3 11 7 6 11 13 9 12 16 14 17 1

1 2 3 4 5 5 6 7 8 8 9 9 10 10 11 11 12 12 13 14 15 16 17 19 20 21 1

3

1

4

2

1 4 4 5

2 4 3 2

2 3 6 5

2 3 4 5

Source: Government of India (2016).

Delegation of powers to the Panchayats under the Kerala Panchayat Raj Act (KPRA), 1994 There are clear provisions in the KPRA (1994) with regard to the devolution of functionaries to the Panchayats. Several sections of the act consist of details about the nature and extent of powers and authority to be devolved to the Panchayats in the recruitment, supervision and control of the staff appointed by the Panchayats.To illustrate, section 166 (sub-sections 2 and 3) directs that: (2) Subject to the other provisions of this Act and the guidelines and assistance, financial, technical or otherwise of the Government, the village panchayat shall have exclusive power2 to 70

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administer the matters enumerated in the Third Schedule [and to prepare and implement schemes relating there for economic development and social justice]. (3) Village Panchayat shall also have powers to enhance employment facilities and to undertake developmental activities and to start manpower banks, under the leadership of the village Panchayats. Section 174 of sub-section (2) of Kerala Panchayat Raj Act (KPRA), 1994 clearly specifies that “Where the Government delegates a function under sub-section (1) to panchayat at any level, it shall allot to that panchayat such fund and personnel as may be necessary to enable the Panchayat to discharge the functions so delegated”.

The Maharashtra model The Maharashtra State has created a Panchayat cadre consisting of (i) class I and II officers of state cadres posted from line departments to Zilla Parishads (ZPs) on deputation; and (ii) class III and IV employees who are ZP employees and not state government employees, with separate service rules for each of these categories. In the state government cadre (class II), certain percentages of vacancies are always filled through promotion from the district cadre (Government of India, 2011). An expert committee report of the Government of India (2013, p. 105) found that in most states there was an inadequate number of employees having due capacity to perform their tasks. Nor was their accountability to the Panchayats clear. Further, rules and regulations in this regard were not clearly defined. Table 5.6 illustrates the gap between devolution in policy and practice with specific reference to the devolution of functionaries and the current status of functionaries in the concerned state. From Table 5.6, a gap can be seen between devolution in policy and practice in devolving the administration staff to the Panchayats by the respective state governments. The gap between policy and practice3 can be explained on the basis of an institutional monopoly, i.e. centralised and institutional pluralism, i.e. decentralised. Table 5.7 gives a picture of the devolution of functionaries, the mode of recruitment of Panchayat staff, the extent and nature of control over the staff by the Panchayats and, more importantly, to what extent the Panchayats are really exercising power and authority over the delegated/devolved staff. Table 5.6 Gap between devolution policy and practice of Panchayat functionaries Top five states in devolution Top five states in devolution in policy in practice

Current status of functionaries (proportion of availability of functionaries in Panchayats*)

Kerala Maharashtra Jammu and Kashmir, Madhya Pradesh Himachal Pradesh Tamil Nadu

Kerala Sikkim Telangana, Tamil Nadu

0.97 0.99 0.86, 1

Bihar Uttarakhand and Jammu and Kashmir

0.75 0.73, 0.43

Source: Government of India (2016). *The scores indicate the aggregation index of functionaries among the various spheres (two-tier in the case of Sikkim and three-tier in the case of other states) of Panchayats. The index was taken into account only for the states of devolution in practice.

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N. Sivanna and N. Veeresha Table 5.7 Nature of administrative decentralisation in the Panchayats of selected states State

Administrative decentralisation (transfer of functionaries to PRIs)

Institutional monopoly1or dispersed2 monopoly or pluralism3

Kerala

PRIs have full managerial and part disciplinary control over transferred functionaries. Class III and Class IV employees at all levels are Zilla Parishad employees. Functionaries for 13 departments have been transferred to the PRIs. There is a State Panchayat Service. Departmental staff are answerable to departments. Anganwadi workers, teachers and health workers are appointed by PRIs. Employees are under the control of PRIs but Panchayats exercise limited control over them There is no significant devolution of functionaries. Certain powers are delegated to PRIs related to ten departments. GOs have been issued for the devolution of functionaries for 14 functions All Panchayat employees function under dual control of Depts. concerned and the PRIs, GPs have Panchayat development officers (PDOs).

Dispersed monopoly4

Maharashtra Madhya Pradesh

Bihar

Sikkim Tamil Nadu Telangana Gujarat Karnataka

Dispersed monopoly Partial pluralism5

Dispersed monopoly

Partial pluralism Only delegation Delegation not devolution Yet to be devolved Dual control

Source: Authors’ construction using Government of India (2017). 1 Conventional approach of centralisation which means that the powers of a specific administrative task is held by a central governmental unit or distributed to non-central or private levels that do not promote accountability. 2 Conventional approach to administrative decentralisation. This is an approach which recreates administrative monopolies without legal basis and technical capacity of the centre. 3 Institutional pluralism emphasises the institutional and organisational distribution of roles required to carry out the task and leveraging public resources with private resources that can be generated by promoting role pluralism among the task-related actors. 4 In the context of administrative decentralisation in India, specific to the Kerala case although we see Panchayats have full managerial control over the staff, yet they lack the necessary technical and managerial capacity. This again necessitates Panchayats to rely upon the state government for the technical capacity in order to discharge 29 functions. Cohen and Peterson (1999, p. 85) called them dispersed or distributed institutional monopolies, as an alternative source of administrative power to the centre or state. 5 Partial pluralism here means that there is a creation of role pluralities among the institutions (centre, state and Panchayats) to share a specific administrative task.

In Kerala, the PRIs have full managerial and part disciplinary control. This means that Panchayats in the state have a dispersed institutional monopoly. Panchayats do not have full freedom to exercise control over the staff. The transition from dispersed institutional monopoly to institutional pluralism is yet to take place for Panchayats in Kerala. By and large, it is more of an administrative delegation only, but not devolution. It is observed that A kind of dual control is inevitable. Since the State Government carries out some of its functions through the field level staff who have been transferred to the Local Governments, 72

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State control over the staff becomes necessary. Also, as the cadre is managed by the State, such control is automatic. (Vijayanand, 2009, p. 22) Tamil Nadu represents an interesting case in the sense that it scores 1.0 in terms of proportion of functionaries which is the highest among all the states.Yet, it does not significantly devolve any functionaries to PRIs. It seems that this appears to be the case of centralised decentralisation or administrative centralism or only delegation. The control and supervision over the staff are still with the concerned departmental authority. The states of Kerala, Karnataka and Maharashtra initiated several measures through which certain lessons can be drawn in building a separate Panchayat cadre. Under the Kerala PR Act (1994), PRIs have full managerial control and partial disciplinary control over the functionaries. Maharashtra state provides Class I and II employees to Zilla Panchayats from the line departments on deputation and Class III and IV are ZP employees. This demarcation gives a sense of clarity to the roles of the functionaries.The clarity of the role is critical in discharging the functions in a productive manner.The separation of functional roles provides prospects for horizontal and vertical accountability as each functionary will have clarity of their roles and responsibilities without any ambiguity. Karnataka has initiated a separate cadre known as the Panchayat development officer to look after the developmental works at GP. The recent Amendment of 2015 envisages a separate service known as the Karnataka Panchayat Administrative Service (KPAS). In the light of limited experience of specific administrative decentralisation practices, the recommendations4 of the Second Administrative Reforms Commission are worth considering for the states to devolve the necessary administrative power and authority to the local government institutions. However, these recommendations were not implemented because of a lack of enabling an administrative and legislative environment for transferring state government employees to the Panchayat cadre and resistance from the existing employees. However, the idea is gaining ground. The Rural Development Ministry has proposed a separate cadre of “Panchayat service” for focused and effective implementation of the centrally sponsored schemes (CSSs) such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Indira Awas Yojana (IAY), the Total Sanitation Campaign (TSC), and the Backward Region Grant Fund (BRGF). It is proposed that the states earmark a part of the BRGF to meet their share of the expenditure on the functionaries of this cadre. The centre would support the efforts of the state government by earmarking a part of MGNREGA allocation. The share of the central government would be 80 percent for the first year, which will reduce by 10 percent every year subsequently. In the first phase Gram Panchayats up to a population of 5,000 would be covered. Under the recruitment and service rules of panchayat service, every Gram Panchayat would be entitled to one Panchayat development officer, junior engineer, accountant cum data entry operator and assistant extension officer (Government of India, 2010). Notwithstanding the above guidelines, most of the states including decentralisation-friendly states such as Kerala, Karnataka, Madhya Pradesh and Maharashtra are implementing the above CSSs with the help of outsourcing staff. In a way it is one of the means of overcoming the shortage of staff; however, the recruitment of outsourced staff was mainly seen for the implementation of CSSs or projects funded by the World Bank. The impact of outsourcing staff is optimal in terms of delivery of the particular scheme. For example, during the financial year 2013–14, Karnataka outsourced a total of 34 and 22 employees to implement the MGNREGA and Gram Swaraj Yojane, respectively. The pattern of staff outsourcing is mostly visible for the CSSs; however, this may not be an option for the sustainable future in empowering the Panchayats. In fact more CSSs are outsourcing staff and the Panchayats are empowered less as they have to focus on 73

N. Sivanna and N. Veeresha

implementing CSSs or SSSs (state-sponsored schemes) rather than implementing the 29 subjects of the Eleventh Schedule. The broad patterns emerging out the devolution of functionaries are: •• •• •• ••

Only administrative delegation is taking place in the transfer of functionaries to the PRIs. A few states have initiated a separate Panchayat cadre such as Madhya Pradesh-State Panchayat service and a provision has been made in the Karnataka PR Act 1993 (but is yet to be constituted by the Government of Karnataka). PRIs lack autonomy to exercise power and control over the staff, as is seen from the experiences of Kerala and Tamil Nadu. Dual control is visible in most of the states especially by the concerned line departments.

A serious issue here is that in most cases Panchayat members at the village level lacked administrative experience and required knowledge, which made the bureaucracy take the lead in dayto-day administration of PRIs. Hence, competence of the Panchayat members becomes very important thus highlighting the need for proper orientation. Training should be provided not only to the elected members but also to bureaucrats so that they support the local government in times of need. Effective implementation of the functions devolved will require building up the capability of Panchayats to encompass training, provision of adequate functionaries, and giving technical assistance and support to other Panchayats. The absence of training, in fact, is seen by many states as an excuse not to devolve functions, despite the fact that it is their responsibility to provide such capacity-building. However, in an attempt to address this weakness most states have stepped up and ensured that such training is given, but often they are one-time events and sustained support is often lacking. The central government has also started a number of schemes aimed at capacity-building in local bodies and rewarding empowerment and accountability. For example, the budget of 2012– 13 allocated 300 crores of rupees under central schemes for training and capacity-building, incentive schemes for empowerment and accountability, encouraging leadership of women and youth (Panchayat MahilaevambYuvashakti Abhiyan), research and infrastructure development. Since not all local areas are at the same level of economic development, resource crunch – both human and financial – is acutely felt by local bodies in economically backward regions. The central budget for 2012–13 therefore made a further provision of as much as Rs. 5,050 crores towards “Backward Regions Grant Fund”. State governments, however, have always been the main source for manpower support to the local bodies, since PRIs come under the state’s subject.

Issues and challenges Normally, negative perceptions dominate in the literature on bureaucracy vis-à-vis Panchayats or local governments, and its role is almost invariably decried. Bureaucracy, however, provides a technocratic backbone and muscle to decentralised democracy, without which it is difficult to even properly design and implement programmes and projects. But its role, however essential, is subservient to the political authority, because, despite bureaucrats’ expertise they do not represent people. It is the elected political authority which represents them, and naturally in a democracy, the political authority has dominance over technocracy. The success of a decentralised democracy depends on the mutual understanding and willing cooperation between both political authority and bureaucracy, and both should share the credit of such success because both are equally needed partners with complementary roles. The Community Development Programme of the 1950s failed to deliver precisely because the role of technocracy or bureaucracy was overemphasised. Pinto says that by late 1950s it was realised that 74

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“it was no more a people’s programme but bureaucratic mobilization to fulfil targets set by the centralised planning process” (1992, p. 283). And that is how the process of democratic decentralisation got a significant fillip thereafter, and we have come a long way from that position by now. Nevertheless, an observation made by Pinto (1992, p. 291) remains relevant. The author observed that the simple “unity of command” is no longer obtained, and that apart from vertical commands of technical hierarchy, there are now cross-commands of the elected representatives. The “line-ministry employees” working at the local level have to obey both these commands, which may not always be an easy task, particularly when the latter are made unofficially and orally and conflict with official vertical commands. Studies based on field work in Andhra Pradesh and Karnataka respectively by Babu (2002) and Sivanna (2002) show that in spite of this problem, there has been a working relationship between local officials and elected representatives which is cordial and co-operative. But instances of conflict do arise. For example, Babu points out that the cheque-drawing rights are given to the Sarpanch to be countersigned either by the group executive officer (GEO) or a member of the Gram Panchayat (GP), with the choice between the two left to the Sarpanch. In most cases, the Sarpanch prefers a member of the GP to countersign, whereas for audit purposes it is the GEO who is accountable (Babu, 2002, p. 79). There is another problem which the local officials face because of the way that higher political leadership and bureaucracy function. Funds are mostly received near the end of the financial year, and the time left to implement the schemes is hardly adequate, resulting in spill-over works, which is taken to reflect poorly both on the local bureaucracy and the Panchayats. This forces them to spend funds in a short time hastily and ineffectively (Sivanna, 2002, p. 170). Manor (2011, pp. 10–11) points out instances which show how great benefits accrue when local leadership and bureaucracy work together. Health Ministry officials in Cambodia found that working through local councils (corresponding to our Panchayats) enhanced the impact of their schemes. In India, the problem of absenteeism among school teachers and health professionals working in villages was significantly brought under control when they were made answerable to elected representatives. Sivanna (2002, p. 170) observed that there was a better attendance of officials at review meetings when Ministers or MLAs were present. Manor recommends a balance between two types of accountabilities for “line ministry officials” working in decentralised democracy – horizontal accountability under which they are accountable to elected representatives of PRIs – and vertical accountability to their superiors in the respective departments or ministries. He emphasises the word “balance” and explains: If elected members/leaders of local bodies are given overwhelming power over the line ministry employees whom they encounter (school teachers, health professionals, agricultural extension workers), they tend to abuse them. But – to consider the more common problem – if elected representatives have little leverage over those people, the line ministry employees tend to do as they like. Absenteeism by teachers and health professionals – a massive problem across much of South Asia – is the sort of abuse which ensues. How might balance be achieved? The best answer is to give significant powers over line ministry employees’ future prospects both to leaders of elected local bodies and to their bureaucratic superiors […] One way to foster accountability is to allow both the leaders of an elected body at a lower level and employee’s bureaucratic superiors to insert comments on his or her performance during the previous year. This will make the employee feel beholden to both. (Manor, 2011, pp. 11–12) 75

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Concluding remarks Administrative decentralisation in India, including the decentralised reform-progressive states such as Kerala, Karnataka, Tamil Nadu, Sikkim, shows that it is taking place only in the form of delegation rather than in the devolution form. The proper devolution of functionaries is yet to go far ahead in order to achieve the institutional efficacy of the Panchayats. It is being observed that though the states are delegating the functionaries, the staff concerned discharges its functions only on the basis of directives/guidelines of the concerned departments/state agencies. The recruitment, supervision and control of the Panchayat staff is still, by and large, in the hands of the state government and line departments. The capacity of the functionaries who have been deputed to the rural local governments is poor in terms of adapting to the local specific conditions of the Panchayats. In this context, it is critical that Panchayats, as autonomous institutions, should have sufficient human resources along with the devolution of functions and funds. Both devolution of functions and funds remain unproductive without adequate staff to carry out specific functions by utilising the funds. The 25 years of administrative decentralisation reforms indicate that Panchayats are severely suffering from inadequate staff. The existing staff are over-burdened with multiple responsibilities. With the influx of more CSSs and SSSs, the functionaries do not get enough time to make efforts in deepening the decision-making process. To achieve the goals of Article 243 G it is essential for the states to have a separate service cadre exclusively for the Panchayats. A critical factor is “political will” and commitment to the “principle of subsidiarity”. The institutional efficacy of the Panchayats is directly dependent upon the knowledge, skills and attitude of the staff working in the PRIs. This is important at the grassroots level for the effective and efficient delivery of public goods and services. Only Panchayat staff with full autonomy can do justice to the twin goals of “economic development” and “social justice”. Anything lesser than this may not yield good local governance or better development outcomes at the local level.

Notes 1 The devolution index (DI) reports are independent studies commissioned by the Ministry of Panchayati Raj. The objective is to encourage the states to empower Panchayats through Panchayat Devolution Index ranking. As far as the seriousness of the DI it is sufficed to say that DI reports have brought out the status of devolution in the country. DI reports served as a baseline reference to understand the devolution process as a whole. In terms of the robustness of the data, the continued revision of methodology has considerably improved the quality of data.To illustrate, the 2015–16 methodology has inducted qualitative methods for the collection of primary data in the selected Panchayats. This field component has facilitated in verifying and cross-checking the self-reported data and information. The DI reports have brought a normative framework for the devolution and have to be seen as an extension of 73rd CAA progress towards achieving the goal of Panchayats functioning as an “institution of self-government”. 2 Italics are highlighted by the authors and not connected with the law. 3 In the gap between devolution in policy and practice, the indicator used is the “Average percentage increase in own regular staff, own contract staff, regular staff in local institutions under the control of panchayat, contract staff in local institutions under control of panchayat in 2012–13, 2013–14, 2014–15 (Government of India, 2016, p. 68), Ministry of Panchayati Raj” (Bold fonts highlighted are of the authors and not connected with the original source). 4 The Second Administrative Reforms Commission (SARC) in its 6th report, titled “Local Governance— an inspiring journey into the future” (SARC 2007: 70) made the following recommendations: (i) Adequate staffing of local bodies, requiring close attention of the State Finance Commissions and state governments; (ii) Powers to be given to Panchayats to recruit personnel and to regulate their service conditions subject to such laws and standards as laid down by the State Government. Evolution of this 76

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system should not be prolonged beyond three years. Until then, the Panchayats may draw upon (for defined periods) staff from departments or agencies of the State Government, on deputation; and (iii) A detailed review of the staffing pattern and systems in all the States, with a zero-based approach to PRI staffing to be undertaken over the next one year, to implement the policy of PRI ownership of staff, involving the Zilla Parishads in this exercise.

References Aziz, Abdul and Arnold David D (eds.) (1996). Decentralized Governance in Asian Countries. New Delhi: SAGE. Babu, Devendra M (2002). ‘Process and Performance of Panchayats (in Andhra Pradesh)’, in Aziz, Abdul, Sivanna, N., Babu, Devendra M, Sekhar, Madhushree and Nelson, Charles C., (eds.) Decentralised Governance and Planning: A Comparative Study in Three South Indian States. New Delhi: Macmillan. Babu, Devendra M (2004). Finances of Panchayats in Karnataka: A Policy Paper.Working Paper 143. Bangalore: Institute for Social and Economic Change. Cheema, G. S. and Rondinelli, D. A. (eds) (1983). Decentralization and Development: Policy Implementation in Developing Countries. London: Sage in cooperation with the United Nations Centre for Regional Development. Cohen, M. J. and Peterson, B.S (eds) (1999). Administrative Decentralization: Strategies for Developing Countries. Connecticut: Kumarian Press Inc. Government of India (2010). Background Note for Discussion. New Delhi: Ministry of Rural Development. Available at: nrega​​.nic.​​in​/ci​​rcula​​r​/mee​​ting_​​14092​​​010​.p​​df (Accessed: 16 February 2014). Government of India (2011). Dedicated Manpower for the Gram Panchayats (GPs). New Delhi: Ministry of Panchayati Raj. Government of India (2013). Towards Holistic Panchayat Raj: Twentieth Anniversary Report of the Expert Committee on Leveraging Panchayats For Efficient Delivery of Public Goods and Services, Vol I: Policy Issues. New Delhi: Ministry of Panchayati Raj. Government of India (2016). Devolution Report 2015–16. New Delhi: Ministry of Panchayati Raj. Government of India (2017). Annual Report 2016–17. New Delhi: Ministry of Panchayati Raj. Government of India (2018). Report of the Committee on Performance Based Payments for Better Outcomes in Rural Development Programmes. New Delhi: Ministry of Rural Development. Kothari, Rajni (1988). State against Democracy. Delhi: Ajanta. Kothari, Rajni (2007). Rethinking Democracy. London: Zed Books. Manor, J (2011). Perspectives on Decentralisation.Working Paper 3.Visby: ICLD Swedish International Centre for Local Democracy. Available at: www​.icld​.se Mathew, G. (ed.) (1995). Status of Panchayati Raj in the States of India. New Delhi: Concept. Mullen, D. Rani (2014). Decentralization, Local Governance, and Social Wellbeing in India: Do Local Governments Matter? Special Indian Edition. Oxon: Routledge. Pinto, Marina, R. (1992). ‘Rural Development and Bureaucracy in India’, Indian Journal of Political Science, 53(3), pp. 279–296. SARC (Sixth Report of the Second Administrative Reforms Commission) (2007). Local Governance – An Inspiring Journey into the Future. Sixth Report of the Second Administrative Reforms Commission. New Delhi: Ministry of Personnel, Public Grievances, Government of India. Sivanna, N. (2002). ‘Process and Performance of Panchayats (in Karnataka)’ in Aziz, Abdul, Sivanna, N., Babu, Devendra M, Sekhar, Madhushree and Nelson, Charles C. (eds.) Decentralised Governance and Planning: A Comparative Study in Three South Indian States. New Delhi: Macmillan. Smith, B. C. (1985). Decentralisation:The Territorial Dimension of the State. London: Allen & Unwin. Vijayananad, S. M. (2009). Kerala – A Case Study of Classical Democratic Decentralization. Thrissur: Kerala Institute of Local Administration (KILA).

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6 Fiscal decentralisation in India Status and raising issues M. A. Oommen

Introduction The 73rd/74th Constitutional Amendments (CAs) that introduced Parts IX and IXA into the Indian Constitution in 1993 added a new dimension to Indian fiscal federalism. The dual federalism of India comprising the union and states was transformed into a multi-layered federation with a three-tiered rural component called Panchayat Raj Institutions (PRIs) and an urban component consisting of nagar panchayats, municipalities and corporations. Unlike in other countries, the rural local governments in India account for 99% of the number of local governments (LGs) and encompass nearly 70% of the population of the country. Fiscal decentralisation may be defined as the restructuring of fiscal balances in a federation by fiscally empowering the LGs. This means relevant devolution of taxing and spending powers along with arrangements for rectifying mismatches in resources and responsibilities. The task of making LGs viable agents of social and economic transformation at the local level depends a great deal on the direction, progress and quality of the process of fiscal decentralisation. The Constitution bestows this onerous responsibility on the shoulders of the Union Finance Commission (UFC) and the State Finance Commission (SFC), besides on the states. This chapter is a critical situational analysis covering the status of and issues relating to fiscal decentralisation. A brief review of literature is set out as a backdrop to the theme on hand.

A brief review of literature The decentralisation model of India as envisaged in the Constitution, and the fiscal decentralisation which is an integral subset of it, is neither a proto-type nor even a modified adoption of the Western pattern. I will show in the next chapter in this volume how Indian decentralisation reforms and the fiscal decentralisation complementary to it are different from their Western counterparts. The assertion of the Fourteenth Union Finance Commission (UFC-XIV) that India does not have an “optimal model of devolution or decentralisation that is uniformly applicable to all states” is untenable and lacks any basis. The two CAs present a model of local democratic governance that consists of a set of institutions of self-government mandated to deliver “economic development and social justice” (Articles 243G and 243W), as well as a district 78

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planning committee (DPC) required to implement spatial planning, environmental conservation, etc. (Article 243ZD), an SFC to rationalise state and sub-state level fiscal relations (Article 243I and 243Y) and so on. Clearly, CAs provide an integrated model whose salience is well exemplified in Parts IX and IXA of the Constitution. Oommen (2005) for the first time presents a fairly detailed review of literature on fiscal decentralisation in India. After a comprehensive review of fiscal federal theories in general to serve as a backdrop to his study, Oommen organises his review of India under three heads viz. the historical setting,1 fiscal assignments and the transfer system. The study documents fairly comprehensively the literature on India’s fiscal decentralisation. There is no point in repeating it. He concludes the study thus: [T]he theories and institutions evolved in the context of western market economies may not be strictly relevant or applicable to fiscal decentralisation in India. It is important also to note that several institutions and accountability mechanisms currently underway in India-the gram sabha, three tier, sub-state level rural institutions, state finance commissions, district planning committees, audit arrangements, and indeed the fiscal assignments and relations – are not all time tested. Some need nurturing, and others need radical modifications and corrections. (Oommen, 2005, p. 250) This section therefore covers the period from early 2000 onwards through the present. The most authentic account of fiscal decentralisation in India is best captured in the relevant chapters of the Union Finance Commission since UFC-XI as well as in the various SFC reports that have come in the public domain during the last 20 years. It is not only redundant, but beyond the scope of this chapter, to go into the details of these reports. In this section we would like to cover the studies on fiscal decentralisation, some of which noticeably focus on the working of these commissions. Institutions as well as individual scholars have done these studies. We may examine the most important of them starting with the institutional studies. The World Bank Study (2004) ably summed up in Geeta Sethi (2004) was the most comprehensive narrative of the process of fiscal decentralisation in India till that date with focus on Karnataka and Kerala.2 In conceptual clarity, analytical rigour and comprehensiveness the two studies are notable and provide an early benchmark. Although Karnataka and Kerala were admittedly advanced in terms of decentralisation, the quality of fiscal decentralisation in the two states differed. Kerala, which took a “big bang” approach, taking a pioneering lead in unbundling the 29 subjects of the XI schedule and the 18 subjects of XII schedule into activities and sub-activities along with a devolution of 35–40% of state plan funds to local governments, was in sharp contrast to the experience of Karnataka which took to a schematic transfer arrangement that virtually neglected the gram panchayats (Oommen, 2004). The recommendations to improve fiscal assignments and transfer systems in Indian fiscal federalism contained in the two studies are valid even today. A comprehensive appraisal of the working of PRIs covering 25 states and 6 union territories available in 3 volumes is the most elaborate study (MoPR, 2006) on decentralisation in India. The study touches on activity mapping, tax and non-tax sources of revenue and a few other items.This study does not touch on the process of fiscal decentralisation. A similar but considerably updated study by the Institute of Social Sciences with focus on political decentralisation in 28 states and 7 union territories written by 35 individual scholars with domain knowledge on each state/UT and edited by George Mathew (2014) has a paper specifically on fiscal decentralisation. Indeed it is a useful compendium. 79

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Although not a study on fiscal decentralisation, Government of India (2007) is an excellent work that contains useful recommendations to carry forward the efforts towards building local democracy as envisaged in the 73rd/74th CAs and to make “local governance an inspiring journey into the future”. This is the sixth report of the second administrative reforms commission which knew fully well that the process made so far had been “uneven, halting and slow”. Although the report does not address fiscal decentralisation, it makes useful analysis on panchayat finance, urban finances and the devolution of funds. Another major study sponsored by the Ministry of Panchayati Raj and produced by a team of fiscal experts of NIPFP under M. G. Rao (Rao et al., 2011) which covers the entire country is important for it focuses on the progress made in fiscal decentralisation on the basis of SFC reports and covers most individual states. The study makes case studies of select states in regard to functional activity mapping and revenue assignments. The study offers some suggestions for reforming rural fiscal decentralisation. A more recent study sponsored by the World Bank compares the approaches of 16 SFC reports from Karnataka, Tamil Nadu, Kerala, Maharashtra and Madhya Pradesh (Oommen, 2018a). Comparison of approaches is done at two levels: (a) between SFCs within a state and (b) interstate comparisons. The primary focus of this comparison is how the constitutional mandates relating to vertical and horizontal imbalances are approached and resolved and how the goal of creating “institutions of self-governments” mandated by the Constitution is addressed by the states. Economic Survey (2018) (see Government of India [2018]) needs special mention because it devotes, for the first time in the history of India, one full well-documented chapter on the issue of fiscal decentralisation in India. The survey shows that the second and third tiers of government tend to underperform vis-a-vis the goal of a low and declining dependence on devolved resources and a high and rising share of direct taxes in total taxes. The key finding is that these tiers under-collect direct taxes even relating to their statutory powers. It raises the problem of whether this under-collection leads to poor-quality service delivery in the country and throws up the issues for wider discussion. Economic and Political Weekly (EPW) has produced two special issues, one on the Thirteenth Finance Commission (Vol. 45, Issue No. 48) and the other on the Fourteenth Finance Commission (vol. 50, Issue No. 21), where scholars critically review the recommendations of these UFCs. Inter alia in these issues two papers (Oommen [2010a; 2015]) critique and evaluate the recommendations of UFCs and the process of fiscal decentralisation to the LGs. Most of the other works on fiscal decentralisation in India are also related to critiquing the union finance commission or state finance commission reports. Oommen (2008) has a collection of papers that address some of the issues relating to the emerging fiscal decentralisation to local governments during the first decade of the 73rd/74th Constitutional Amendments. While Alok’s (2008) paper in the volume brings together in one place the recommendations of 40 SFCs, the paper by Oommen gives a detailed account of the trend in expenditure and revenue decentralisation to both rural and urban local governments for 15 major states and for all of India. The paper by Indira Rajaraman and Darshy Sinha (2008) in the volume is a pioneering case study of the 29 functions assigned to PRIs in Madhya Pradesh, Chhattisgarh, Rajasthan and Odisha. After examining the major heads and subheads, the authors point out many “idiosyncratic ways of accounting for their expenditure”. They offer several policy recommendations, four of them exclusively for states and two for the union. Two papers (Srivastava, 2008; Kumar, George and Praveen, 2008) in the volume specifically address the lessons that Kerala offers for other states. Shaheena’s (2008) paper is important because she empirically tests, using econometric tools, the hypothesis that transfers work as a disincentive 80

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to local revenue efforts and concludes that unconditional grants have a dampening effect on revenue mobilisation. Undoubtedly the most authentic sources of state–sub-state level fiscal decentralisation are the various SFC reports. A comprehensive comparative study of select first-generation SFCs (Karnataka, Kerala, Punjab, Rajasthan and West Bengal) is contained in Oommen (1998). This very first comparative study contains useful recommendations to carry forward the process of financial reforms by the second-generation SFCs. With no precedents to fall back upon, most of the first-generation reports had done a good job although in terms of promoting intra-state territorial equity in providing essential public services, unbundling functions (except Kerala) and promoting financial autonomy most of them did not come up with reasonable packages of recommendations. All the UFCs (the first four) made sweeping comments about the “sketchy” and ineffective recommendations of the SFCs. It is easy to make general comments and escape. This is unprofessional, if not uncharitable, because there were several useful reports that can easily hold a candle to the union counterparts. As far back as 2010, Oommen raised the pertinent question: have the SFCs fulfilled their constitutional obligations? The author argues that the SFCs have missed a great opportunity in building an inclusive and participatory local democracy and that the blame has to be collectively shouldered by the union, state and local governments (Oommen, 2010a). Although there are several studies on SFC reports, in terms of coverage and significance we mention only three, viz. Alok (2016), Gupta and Chakraborty (2019) and Peterson and Mathur (2006). The study by Alok which claims to have covered 65 reports tries to bring into one place the major recommendations of SFC reports along with the summary of the recommendations of the UFCs, including FC-X with reference to the LGs. An interesting aspect of the study is the space it devotes to discussing in detail the statutes on the qualifications of the chairperson and members, the manipulations and studied indifference of state governments, the ToRs of SFCs, the methodologies followed, measures recommended for strengthening local governments and so on. The Gupta and Chakraborty paper is a good review of the functioning of the latest SFCs in 25 states in regard to their approach, revenue-sharing principles and effectiveness in addressing the vertical and horizontal imbalances.This study also examines how each state responded to SFC recommendations besides providing policy suggestions for improving the functioning of SFCs. Peterson and Mathur’s (2006) study of SFCs is particularly important because it concentrates on the devolution to urban local governments and makes very valuable recommendations for reforming and strengthening urban governance. Studies on fiscal decentralisation to urban local governments are very few and far between. Oommen (2019) seeks to critique the role played by the SFC and UFC in delivering fiscal decentralisation. The paper uses two general parameters, (a) the provisioning of basic services and (b) the creation of institutions of self-government, to evaluate the outcome of fiscal decentralisation. This is done in the backdrop of a critique of the conceptual framework postulated in the two amendments. It is underlined that the Constitution treats local government on par with the state when it comes to the sharing of financial resources and rectifying vertical and horizontal imbalances. The UFC and SFC complement each other in promoting territorial equity in India’s cooperative federalism. While it is for the UFC to ensure interstate horizontal equity, the SFC has to complement territorial equity at the state level. The empirical support is provided by selected SFC reports besides the last four UFC reports. The study shows that there are serious shortfalls in accomplishing autonomy and in the provisioning of basic public goods. Although there are several reports on decentralisation, in-depth research studies by academic scholars are few and far between. This is a serious lacuna. 81

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Fiscal decentralisation: a review of progress Fiscal decentralisation is an integral subset of decentralisation which is a political process. The outcome of fiscal decentralisation therefore is a measure of the success of the project of decentralisation reforms. The progress in achieving the proverbial three Fs, viz. functional autonomy, financial autonomy and functionary autonomy or independence in the management of administration, is generally considered a good barometer. In a multi-tiered federal context autonomy has to be defined to ensure role clarity. As a Government of India document aptly puts it: Devolution in the context of the panchayats, means that when the authority in respect of a specific activity is transferred from the state to the local governments, the latter should have the prerogative of taking decision in respect of planning and implementation of such activity. In fact functions, funds and functionaries are complementary to one another in the process of devolution of responsibilities and powers upon the panchayats. (GOI, 2001, p. 5) Obviously devolution cannot be an isolated exercise but has to be understood in the context of addressing the fiscal imbalances as I have made it clear at the outset. In what follows I wish to organise the discussion under the following heads: (a) fiscal assignments; (b) transfer system: design and progress; (c) basic services and horizontal equity; and (d) towards creating institutions of self-government. This break-up is deliberately done to focus on systemic progress, avoiding stereotypical status analysis.

Fiscal assignments As per the 73rd/74th CAs the functional assignments to PRIs are given in Schedule XI and list 29 subjects taken from the state list under the VII schedule; those of urban local governments (ULGs) are given in Schedule XII and contain 18 subjects drawn from the state list. Without unbundling these subjects into activities and sub-activities and spelling out the roles and responsibilities of the PRIs and ULGs, and defining the boundaries of the state, it is not possible to ensure efficient functional assignments. In a tradition where no one wants to part with power, the process of decentralisation suffers because none of the conformity acts passed went for activity mapping. True, the conformity legislations of a few states like Gujarat sought functional clarities. Some states like Madhya Pradesh felt the need and issued executive orders to define functional domains. It was Kerala’s Subrato Sen Committee3 (1996–98) that for the first time worked out a clear demarcation of functions into activities and sub-activities based on a rule of thumb of the principle of subsidiarity. Since then a few states have attempted to do the same. But the idea gathered momentum only after the enthusiastic drive of the Ministry of Panchayat Raj (MoPR) from 2004 onwards. MoPR (2006) produced a three-volume status report, the second volume of which outlines the status of the states’ devolution after a decade of the landmark amendments.The situation in regard to activity mapping up to November 2006 is given in Appendix 6A. It is a negative list of 14 states showing those states that have not taken up activity mapping. Even among those who have taken statutory measures the progress does not seem to be something to write home about. One cardinal principle of public finance is that the allocation of funds and functionaries should follow functions or be more specific in assigning expenditure responsibilities which are best captured in the activities if mapped out. Evidently as far as tax assignments are concerned, most states incorporated into their conformity legislations the prevailing practice of tax assignments and did not work out a fresh need assessment. The number of taxes assigned to PRIs 82

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(mostly the gram panchayats) range from 2 in Bihar to 10 in Gujarat and the variety of taxes assigned for the country as a whole add up to 40, a prolific number with no parallel anywhere in the world. Similarly one can trace around 30 non-tax revenue sources. Even so, one can strongly assert that given the fact that almost all conformity acts (except those of Jammu and Kashmir) have assigned property tax to gram panchayats,4 the tax potential of LGs in India is indeed not poor.The real issue is tax effort for the large majority although there are conspicuous exceptions who are really fiscally weak. UFC-XIII as well as the Economic Survey (2018) have made insightful observations on tax potential and performance. If property taxes are efficiently implemented Indian local government systems can avoid the proverbial transfer dependency. From the review of literature and going through a sizable number of SFC reports, I can firmly say that the much-needed simultaneous transfer of disaggregated functions, funds and functionaries has not happened in any desired pace and manner. Table 6.1 presents a state-wise relative index regarding the progress of devolution of functions, funds and functionaries to the PRIs. It also has an index on infrastructure governance transparency (IGT). For the three Fs and IGT, several relevant indices are aggregated to form the sectoral and overall composite index. In 2015–16 Kerala tops the list, followed by Karnataka, Maharashtra and Tamil Nadu (see Table 6.1). By and large, the ranking could be assumed to hold true in regard to ULGs as well. Table 6.1 Ranking of states in regard to devolution of functions, funds and functionaries and IGT (2015–16) Name of federal unit

Functions rank

Functionaries rank

Finances rank

IGT rank

Aggregate index of the devolution policy

Kerala Karnataka Maharashtra Tamil Nadu Telangana Sikkim West Bengal Odisha Tripura Gujarat Haryana Rajasthan Uttarakhand Madhya Pradesh Andhra Pradesh Assam Himachal Pradesh Manipur Chhattisgarh Jharkhand Uttar Pradesh Goa Punjab Jammu and Kashmir Bihar Arunachal Pradesh

2 1 5 7 6 11 9 13 8 4 13 3 16 13 10 12 16 16 16 14 13 16 15 16 15 16

1 9 2 5 12 7 13 12 13 8 18 16 11 3 10 17 4 9 8 14 6 12 15 3 15 6

1 2 5 3 4 7 8 6 13 12 11 16 9 12 16 15 14 10 16 16 16 16 16 16 16 16

2 1 3 3 6 7 5 10 6 13 4 16 12 15 9 8 18 19 14 11 17 13 13 21 20 22

1 2 3 4 5 6 7 8 9 10 11 11 12 12 13 14 15 15 16 17 17 17 18 19 20 21

Source: Devolution Report 2015–16, pp. 58–59

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Transfer system: design and progress The primary task of any SFC is to promote fiscal decentralisation at the state–sub-state level. It is the counterpart of the UFC which inter alia has to supplement the resources of the panchayats and the municipalities. An efficient transfer system should ensure predictable vertical transfers that could meet the expenditure and resource mismatches, besides facilitating horizontal equity. The transfer system should be equalising and offset the comparative fiscal disadvantages of panchayats and municipalities. If basic services of reasonable standard quality are provided to every citizen irrespective of her choice of residential location, we are on the road to regional equity. Without going into the details of each and every SFC one can reasonably maintain that most SFCs and the state governments tasked to implement them have failed in rectifying the vertical and horizontal imbalances at the state–sub-state level. This section focuses mostly on vertical imbalances and the next on horizontal imbalances. Given the fact that every state has to constitute an SFC every five years, it is reasonable to have at least 120 SFCs by now and for all the old generation states to have submitted their fifth SFC. But so far only 13 states have submitted their reports. Actually only 87 SFCs are in the public domain. This does not speak highly of the fiscal decentralisation at the sub-state level because it is equivalent to dishonouring the constitutional mandate. Appendix 6B, based on the latest available SFC reports, gives some idea of the latest available SFC devolution packages (the actual could be much below this). Ideally the size of vertical transfers should have some bearing on the needs following from the expenditure assignments, particularly the core services. The transfers (other than specific grants) should be untied and the local governments should have autonomy in spending. It is evident from Appendix 6B that in the majority of cases, the divisible pool is based on the sharing of the own tax revenue or total own revenue including non-tax revenue. The size of the vertical transfers ranges from 2.5% of own tax revenue (OTR) in West Bengal (4th SFC) or 3% of OTR in Odisha to 48% of the Non-Loan Net Own revenue receipts (NLNORR) in Karnataka. Karnataka’s apparently big percentage number does not necessarily mean a high devolution because the transfer includes the salaries of the employees and is scheme-related. The transfers to gram panchayats in Kerala, which range only from 12% to 20% of OTR, are in terms of quality any day better than those of Maharashtra or Karnataka which report very high percentage transfers. The story of vertical transfers would be incomplete without mentioning the transfers made by the UFC as part of the amendment made to Article 280(3)(bb) and (c) to the LGs. Table 6.2 elaborates the situation in regard to UFC transfers. The quantum jump from RS.10,000 crore by the Eleventh Commission (UFC-XI) to 2.87 lakh crore by the Fourteenth Commission is certainly a great leap forward in vertical transfers by the union government.

Promoting basic services and greater horizontal equity The major task of a local government everywhere in the world is to provide quality basic services like drinking water, sanitation, streetlights, primary health care and so on to the citizens in the concerned locality. The role of the SFC is to facilitate this. This will ensure horizontal equity. The best way to promote horizontal equity is to operationalise the well-known federal principle that every citizen should be ensured a minimum level of basic services irrespective of her choice of residential location as already mentioned. It is important to recall here that the resource group5 constituted in 1995 by the Planning Commission under the Chairmanship of Raja Chelliah to provide assistance to the SFC recommended water supply, sanitation/sewage, solid waste collection, primary education and primary health as core 84

Fiscal decentralisation in India Table 6.2 Nature and quantum of devolution recommended by union finance commissions to local governments in India UFC and period covered

Mandate

Type of recommendation made

UFC-XI (2000-2005) UFC-XII (2005-2010) UFC-XIII (2010-2015) UFC-XIV (2015-2020)

In ToR

Adhoc

10,000

86

0.78

In ToR

Adhoc

25,000

150

1.24

In ToR

Result oriented Accountability A diluted Approach

87,519

250

2.28

2,87,436

228

3.06

In ToR

Total amount Growth over Local governments’ for five years previous share in the (Rs. in crore) UFC (%) centre’s divisible pool revenues (%)

Source: Basic data-various UFC reports

services of local governments and the group worked out normative standards for each one of these services.The task of providing essential services assumes significance only if SFCs follow the path of continuity of course on the assumption that the states accept the recommendations. Having gone through a large number of SFC reports, one can reasonably conclude that a large majority of SFCs have failed in this. The first SFC of Karnataka which spelt out the standards and working cost of select basic services was a leading exception. Kerala’s SFC-I worked out details of select basic services based on the Chelliah committee, but never acted upon them as its implementation was contingent on UFC grants. SFC IV of Kerala used a deprivation criteria that measured the inadequacies in water supply, sanitation, housing, etc., and identified villages and tried to make horizontal equity a practical proposition. In this section we also examine the role played by the UFC in promoting fiscal decentralisation and horizontal equity.Table 6.3 presents the criteria followed by the UFC in devolving funds to LGs. Table 6.3 Horizontal criteria adopted by union finance commissions for distribution of grants-in-aid to states for Panchayats and ULGs Criteria

Population Area Distance from highest per capita Income Decentralisation Devolution Index Revenue Efforts Deprivation Index SCs/STs Population UFC Grant Utilisation Index Total

Weights assigned (%) 11th UFC

12th UFC

13th UFC

14th UFC

PRIs

ULBs

PRIs

ULBs

PRIs

ULBs

PRIs

ULBs

40 10 20 20 – 10 – – – 100

40 10 20 20 – 10 – – – 100

40 10 20 – – 20 10 – – 100

40 10 20 – – 20 10 – – 100

50 10 10 – 15 – – 10 5 100

50 10 20

90 10 – – – – – – – 100

90 10 – – – – – – – 100

15

5 100

Source: Basic data-various UFC reports

85

M. A. Oommen

Meaningful devolution or deprivation indexes are important. But neither the 11th nor 12th, which used these criteria, worked out composite criteria on a meaningful and scientific basis. Invariably all the UFCs paid undue weight to the population and for UFC-XIV it was as high as 90%.

Towards creating institutions of self-government (Since the next chapter addresses the issue, in greater detail, we invite the attention of the reader to that.)

Raising issues Decentralisation is an integrated process and fiscal decentralisation is its keystone. The issues raised are therefore germane to the entire entity understood as democratic decentralisation. Our thrust is on fiscal decentralisation. First, the original sin of entrusting the major responsibility of carrying forward the process of decentralisation as part of the grand project of building local democracy to the states lacked forethought and failed in providing a mission mode. Reforms towards decentralised local governance should have been part of a federal vision in which the union, states, LGs and the civil society were natural components. In this context it is not wide of the mark to note that two basic questions were not asked and remedies for them were not even raised let alone acted upon. They are: who should do what and who should tax where and what? The root causes of several issues in regard to fiscal decentralisation can be traced to this. Second, the quality of fiscal decentralisation depends a great deal on the quality of the SFC reports which in turn depends on the capabilities and competence of the chairpersons and members. While there are significant exceptions, the central tendency leaves many things to be desired. Even a casual perusal of the qualification prescribed in almost all states will show the lack of seriousness in this regard. That it can go to a ludicrous extent may be seen from the fact that in Andhra Pradesh for the second SFC the chairman of a municipality and the sarpanch of a gram panchayat were appointed as members. Unless and until the situation changes, not only is it impossible to ensure quality, but the seriousness and respect the UFC commands in honouring and implementing recommendations at the sub-state level can never be ensured. Third, the necessary condition for fiscal decentralisation viz. preparing and implementing activity mapping is an unfinished task as we have already explained in the study. This has to be addressed on an emergency basis. Fourth, no effort is being made to ensure continuity and change.This is true even in regard to the UFC. All four UFCs from the eleventh (UFC-XI) had to make recommendations with reference to 280(3)(bb) and (c). Implicit in the mandates “to supplement the resources” of panchayats and municipalities is the question, for what? For one, the supplementary measures should not be interpreted narrowly as filling the vertical gap. Broadly speaking the answer to the question is to facilitate the process of fiscal decentralisation and to ensure the provisioning of basic services as we have already pointed out. It is for the UFC therefore to examine to what extent each SFC has fulfilled the constitutional tasks expected of it. As already noted, the rider “on the basis of the recommendations made by the finance commission of the states” is advisedly added to underscore the organic link of local finance with the larger spectrum of Indian public finance. The recommendation of UFC-XI to delete the words “on the basis of the recommendations made by the Finance Commission of the state” is in a way questioning the wisdom of the two CAs in integrating local finance as part of India’s fiscal federalism. Some restructuring of the conceptualisation and design of the intergovernmental transfer arrangements is certainly in order. Even so, except UFC-XIII, it is doubtful whether the other UFCs have appreciated the message and 86

Fiscal decentralisation in India

tasks implicit in the core terms of reference (TOR) given to all the UFCs via Article 280(3)(bb) and (c). UFC-XI and UFC-XII, despite having a TOR mandate to review the union and states’ finances and to suggest a plan for “restructuring of the public finance”, studiously kept out local finance from their restructuring recommendations. In refreshing contrast, UFC-XIII strongly supported the fiscal decentralisation process as well as LGs through “a predictable and buoyant source of revenue substantially higher than the present levels”, and linked the support flow with the union divisible pool. Moreover, they thoughtfully introduced a performance grant system which was a bold initiative to incentivise the “laggard” states to be viable partners in Indian fiscal federalism. It is well known that many state governments are deliberately reversing the decentralisation process through creating parallel bodies, putting activity mapping in cold storage, starving LGs of funds, soft-pedalling on SFC recommendations and so on.The nine-point package of conditionalities (six for panchayats) to avail of performance grants certainly will help to streamline local governance and help to move towards creating institutions of self-government, besides setting standards of basic services and the like. It is instructive to recall here the excellent discussion on local government vis-a-vis fiscal federalism, accountability, property tax and so on given in Chapter 4 of Economic Survey (2018) and proceed with it further. That the initiative of UFC-XIII has not been carried forward by UFC-XIV in spite of the latter’s repeated pronouncements to pursue “a comprehensive view” and their claim that “continuity and change” will be upheld.True, UFC-XIV retained the performance grant concept, but also restricted it viz. making reliable data available and improving own source revenue. These are important but certainly not challenging, because it is not at all demanding especially when it comes to improving performance. Fifth, the Achilles heel of fiscal decentralisation in India is that we do not have a reliable financial reporting system for the third tier. As I have discussed this on several occasions I do not propose to elaborate here (see Oommen [2015; 2018a] among others). More importantly all the UFC and several SFC reports have strongly referred to this. Even so the progress made is not very high. Sixth, the problem of CSSs which are handled by different union ministries mostly on ad hoc bases rather than sound allocation principles has been aggravated of late and calls for immediate reform. This is essential for rational fiscal decentralisation reforms. Seventh, the rapid growth of parallel agencies transgressing the assigned functional domains of PRIs and ULGs has posed a serious threat to efficient fiscal decentralisation. This prevents effective service delivery in areas like drinking water, sanitation, solid waste management, slum development, housing and the like besides distorting the whole process. In this context special mention may be made of the Member of Parliament Local Area Development Scheme (MPLADS) launched in December 1990 almost parallel to the decentralisation initiative by the Government of India and of the Member of Legislative Assembly Local Area Development Scheme (MLALADS) by the state governments although it was started much later. Neither the UFCs nor the SFCs have made any observation about this “model” of spending at the local level. A non-lapsable sum of Rs. 5 crore per annum for an MP (i.e. the amount an MP can potentially accumulate to be spent in a year) spent through the district collector is a sort of wheel within a wheel. This problem continues. No one wants to bell the cat. To conclude, we have raised certain basic issues that need to be addressed by all the stakeholders, besides the public who have to carry forward efforts towards deepening democracy. Efforts to treat LGs as poor relatives run contrary to the letter and spirit of the Constitution exemplified in Parts IX and IXA of it as well as the basic principles of fiscal federalism. Both the UFC and SFC have to travel a long way towards building territorial equity and viable local democracy in India. 87

M. A. Oommen Appendix 6A List of the states that have no activity report (out of 25 states) as per the “Report of the Mid-Term Review and Appraisal” (2006) Sl. No.

Name of the state

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Arunachal Pradesh Assam Bihar Goa Himachal Pradesh Jammu & Kashmir Jharkhand Madhya Pradesh Maharashtra Sikkim Tamil Nadu Tripura Uttar Pradesh Uttarkhand

Source: Based on the “Report of the Mid-Term Review and Appraisal” (2006); Ministry of Panchayat Raj, Government of India

Appendix 6B Vertical sharing of resources based on latest SFC report available Sl No

States

1

Andhra Pradesh (3rd)

2

3

4

5

Sharing of revenues

Assessed the needs of local bodies to arrive at devolution numbers. Devolution is by way of grants and assignment. This works out to 6.77% of total tax and non-tax revenues of the state including the share of central taxes for the year 2004–05. Assam (5th) Assessed the fund requirement of the ULBs and RLBs in both general and Schedule VI areas. It consists of both revenue gaps as assessed by the commission and grant recommended to support operational infrastructure. The fund requirement works out to 15.90% in 2016–17, 14.50% in 2017–18, 13.50% in 2018–19 and 12.60% in 2019–20 of the state’s net own tax revenue net of cost of collection at 10%. Bihar (5th) 8.5% of the state’s own tax revenue net of collection costs and entertainment tax in 2015–16 and 9% in 2016–17 to 2019–20 should be devolved to the local bodies. Chhattisgarh 8% of net tax revenues of the state to be shared with the local bodies. Net tax (2nd) revenues of the state comprise the deduction of proceeds of three taxes, i.e. land revenue, tax on goods and passengers and other taxes on commodities and services which are transferred in full to local bodies and also the cost of collection. Cost of collection is assumed to be 2% of the state’s own tax revenue. Gujarat The commission recommended devolution of an additional 10% of the state’s (2nd) total revenue receipts. At present the state government shares 21.15% of its total gross revenue receipts with the local bodies. (Continued )

88

Fiscal decentralisation in India Appendix 6B (Continued) Sl No

States

6

Haryana (5th)

7

8

9 10

11

12

13 14

15 16 17

18

Sharing of revenues

The commission recommended devolution of 7% of the state’s own tax revenue net of cost of collection, VAT revenues and 2% of stamp duty and registration fees collected on behalf of urban bodies. And stamp duty of 2% over and above the recommended devolution. Himachal The commission adopted a gap-filling approach. Funds to be devolved were Pradesh derived by including salaries of staff, honorarium of members, office expenses, (5th) TA/DA expenses. Jammu and The commission recommended 12.5% of divisible pool, i.e. the state’s tax Kashmir proceeds net of the cost of collection of 10% to be devolved upon the ULBs, (1st) and 7% of identified tax proceeds net of tax collection charges (less by 10%) for PRIs during the award period, 2007–08 to 2011–12. Karnataka The commission recommended devolution of 4,870 the Non-Loan Net Own (4th) Revenue Receipts (NLNORR) with a four-stage revenue-sharing formula. Kerala (5th) The commission recommended 20% of the net proceeds of annual SOTR to local governments as total devolution on (t) basis for 2016–17. For subsequent years it increases by 1% every year. Devolution comprises development funds; maintenance funds and general purpose funds. Under the general purpose fund, it recommended sharing 3.5% of the net proceeds of annual SOTR to local governments as general purpose fund (GPF) on (t) basis. Under the maintenance funds, 5.5% of the net proceeds of annual SOTR calculated on (t) basis shall be devolved to local governments. And under the development fund, the commission recommended sharing 11% of the net proceeds of annual SOTR calculated on (t) basis shall be devolved to local governments. The rate of devolution shall be increased to 11.5% in 2017–18, 12.5% in 2018–19, 13.5% in 2019–20 and 14.5% in 2020–21. Madhya The commission recommended 7.5% of the 90% of the net tax and non-tax Pradesh revenue of the state to be shared between gram panchayats and ULBs. (4th) Maharashtra The commission recommended at least 40% of the state’s total revenue from tax (4th) and non-tax revenue to local bodies. Out of the divisible pool, 20% to be set aside for incentive grants for horizontal distribution amongst PRIs and ULBs. Manipur The commission recommended a transfer of 10% of the state’s tax and non-tax (3rd) revenue and share in central taxes to LBs. Mizoram 15% share of own tax revenues of the state to be shared among the LBs. At least (1st) 5% of the excise duty be shared to the LBs from the date of actual levy of tax additionally. Odisha (4th) The commission recommended 3% of the net own tax revenue of the state (net of cost of collection, entry tax, entertainment tax and motor vehicle tax) Punjab (5th) The commission recommended 4% of the net total tax revenue of the state (less cost of collection) to be devolved to local bodies. Rajasthan The commission recommended 5% of the state’s net own tax revenue (excluding (4th) entry tax and land revenue), In addition, 100% of land revenue, 25% of entry tax, 3% of royalty on minerals, 2% cess on excise duty and 10% surcharge on stamp duty are also recommended to be devolved. Sikkim (5th) The commission recommends that an amount of at least 4.5% of the net proceeds of the state’s taxes, fees and levies should be devolved to PRIs and ULBs for the period of 2020–25. (Continued )

89

M. A. Oommen Appendix 6B (Continued) Sl No

States

19

Tamil Nadu The existing overall vertical devolution proportion of 10% of the net state’s own (5th) tax revenue (SOTR) may be retained for the award period of the commission. Net SOTR calculated by deducting cost of collection, surcharge on stamp duty of RLBs/ULBs and other surcharges. Tripura (3rd) The commission did not recommend any specific devolution percentage for LBs from the state’s tax and non-tax revenues. For PRIs and RLBs of Schedule VI areas it computed the pre-devolution gap by assessing requirement of establishment expenditure, maintenance expenditure and development expenditure of the RLBs. This formed the basis for their devolution for the period 2010–11 to 2014–15. Uttar PradeshThe commission recommended 15% of the state’s tax and non-tax revenues net (4th) of cost of collection to be devolved. Uttarakhand The commission recommended a devolution amount of 11% of state’s own tax (4th) revenue to be distributed between PRIs and ULBs. West Bengal The recommended devolution, being 2.5% of the tax revenue of the state for the (4th) year 2015–16. Thereafter, it grows annually at the rate of 15% with a general caveat that if in a particular year the state’s own tax revenue grows by less than 15%, the recommended devolution is 2.5% of the actual tax revenue.

20

21 22 23

Sharing of revenues

Note: Based on the SFCs recommendations as worked out by Gupta and Chakraborty (2019)

Notes 1 For a brief but useful account of the historical setting one may read a recent study by Reddy and Reddy (2019). 2 The Karnataka study was done by M. Govinda Rao and that of Kerala by M. A. Oommen for the Bank. 3 This author was a member of the committee. 4 Now some states like Punjab and Rajasthan have withdrawn this tax and Uttar Pradesh and Uttarakhand collect the tax at the district level. 5 The author was a member of that committee.

References Alok,V. N. (2008). ‘Role of State Finance Commissions in Fiscal Decentralisation in India’ in Oommen, M. A. (ed.) Fiscal Decentralisation to Local Government in India. New Castle: Cambridge Scholars Publishing. Alok,V. N. (2016). Background Paper presented at the National Workshop on ‘Fiscal Decentralisation and State Finance Commission’ at Habitat Centre, New Delhi. George, Mathew (2014). Status of Panchayat Raj in the States and Union Territories of India 2013. New Delhi: Concept Publication. GOI (2001). Report of the Task Force on Decentralisation of Powers and Functions upon Panchayati Raj Institutions. New Delhi: Krishi Bhavan. Government of India (2007). Local Governance: An Inspiring Journey into the Future. Sixth Report of the Second Administrative Reforms Commission. New Delhi: Government of India. Government of India (2018). Economic Survey, Ministry of Finance, Government of India. New Delhi: Oxford University Press. Kumar, K. K. Krishna, George, K. K. and Praveen,V. K. (2008).‘Grants from Central and State Governments: How Far Did They Offset Disparities in Fiscal Capacity of Gram Panchayats in Kerala?’ in Oommen, M. A. (ed.) Fiscal Decentralisation to Local Government in India. New Castle: Cambridge Scholars Publishing. Manish, Gupta and Chakraborty, Pinaki (2019). ‘State Finance Commissions: How Successful Have They Been in Empowering Local Governments’, paper presented at the Roundtable on ‘Fiscal Federalism in 90

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India: Contemporary Perspectives’ jointly organized by Earnest & Young LLP, India and Madras School of Economics, held on February 22 & 23, 2019 at Chennai. Ministry of Panchayat Raj (2006). Report of the Working Group on Democratic Decentralisation and PRIs (November 2006), Planning commission, Ministry of Panchayat Raj. New Delhi: Government of India. Oommen, M. A. (1998). Devolution of Resources to Rural Local Bodies: A Comparative Study of Select State Finance Commission Reports. ISS Occasional Paper Series 21. Oommen, M. A. (2004). ‘Fiscal Decentralization in Kerala’ in Sethi, Geeta (ed.) Fiscal Decentralisation to Rural Governments in India. New Delhi: Oxford University Press. Oommen, M. A. (2005). ‘Rural Fiscal Decentralisation in India: A Brief Review of Literature’ in Jain, L. C. (ed.) Decentralisation and Local Governance. New Delhi: Orient Longman. Oommen, M. A. (2008).‘Fiscal Decentralisation to the Sub-State Level Governments in India’ in Oommen, M.A. (ed.) Fiscal Decentralisation to Local Government in India, New Castle: Cambridge Scholars Publishing. Oommen, M. A. (2010a). ‘Have the State Finance Commissions Fulfilled Their Constitutional Mandates?’ Economic and Political Weekly, 45(30), 24 July. Oommen, M. A. (2010b). ‘The 13th Finance Commission and the Third Tier’, Economic and Political Weekly, XLV(48), 27 November. Oommen, M. A. (2015). ‘Implications for Local Governments’, Economic and Political Weekly, 50(21), 23 May. Oommen, M. A. (2018a). Approaches of State Finance Commissions and Local Finance in India. New Delhi: Institute of Social Sciences. Oommen, M. A. (2018b). Local Government Budgets: Towards A Reliable and Rational Financial Reporting System, Research Unit on Local Self Governments. Thiruvananthapuram: Centre for Development Studies. Oommen, M. A. (2019). Fiscal Decentralisation in India: Critiquing the Role of State Finance Commission and Union Finance Commission, presented at the Roundtable on ‘Fiscal Federalism in India: Contemporary Perspectives’ jointly organized by Earnest & Young LLP, India and Madras School of Economics. Peterson, E. George and Mathur, O. P. (2006). State FCs and Urban Fiscal Decentralisation in India: India Urban Initiatives. Washington DC: Urban Institute. Rajaraman, Indira and Sinha, Darshy (2008). ‘Functional Devolution to Rural Local Bodies in Four States’ in Oommen, M. A. (ed.) Fiscal Decentralisation to Local Government in India. New Castle: Cambridge Scholars Publishing. Rao Govinda, Raghunandan T. R., Gupta, Manish, Datta, Polly, Jena, Pratap Ranja and Amarnath, H. K. (2011). Fiscal Decentralisation to Rural Local Governments in India: Selected Issues and Reform Options. New Delhi: National Institute of Public Finance and Policy. Reddy,Y.V. and Reddy, G. R. (2019). Indian Fiscal Federalism. New Delhi: Oxford University Press. Sethi, Geeta (2004). Fiscal Decentralization to Rural Governments in India, World Bank. New Delhi: Oxford University Press. Shaheena, P. (2008). ‘Impact of Untied Grants on Tax Revenue Mobilisation: Analysis of Gram Panchayat Finances of Kerala’ in Oommen, M. A. (ed.) Fiscal Decentralisation to Local Government in India. New Castle: Cambridge Scholars Publishing. Srivastava, D. K. (2008). ‘Fiscal Decentralization at the Sub-State Level in India: Some Lessons from Kerala’ in Oommen, M. A. (ed.) Fiscal Decentralisation to Local Government in India. New Castle: Cambridge Scholars Publishing. World Bank (2004). ‘India: Fiscal Decentralization to Rural Governments’ in Volume I – Main Report, Rural Development Unit, South Asia Region, The World Bank.

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7 State–sub-state level fiscal decentralisation in India Theoretical issues and policy options M. A. Oommen

India’s fiscal decentralisation, now a quarter-century old, is part of the larger process of democratic decentralisation reforms heralded through the 73rd/74th Constitutional Amendments (CAs). For the purpose of this chapter decentralisation is defined as the empowerment of the people by strengthening local governments. Obviously it is more than a governance reform.1 Fiscal decentralisation may be defined as restructuring fiscal balance in a federation by fiscally empowering the local governments. It is a way of deepening democracy and fiscal decentralisation is to be seen as part of this substantive goal. For the first time in the history of fiscal federalism, India through the two CAs has created a state-level institution called the State Finance Commission (SFC) to rationalise and systematise state–sub-state fiscal relations. The SFC is the real agent and instrument of fiscal decentralisation in India. The purpose of this chapter is to: (i) postulate a conceptual framework for state–sub-state fiscal relations in India; (ii) empirically verify the cases of three SFCs in the light of that, and; (iii) indicate the policy options for improving fiscal decentralisation as it unfolds in India.

State–sub-state level fiscal relations: towards a theoretical framework There is no theoretical approach in the literature on fiscal federalism that can naturally accommodate the democratic decentralisation that India has initiated following the 73rd/74th Constitutional Amendments. To be sure, issues in decentralised public finance and governance can be understood only contextually. Indian fiscal decentralisation can be understood only from the larger political and administrative dimensions launched in the 1990s. Panchayats and municipalities, once appendages of rural and urban departments, have now become a third stratum of government in Indian federalism. This calls for a radical reordering of fiscal balances, both vertical and horizontal, at all levels, certainly at the state and sub-state levels of governance. The State Finance Commission (see Articles 243I and 243Y), whose primary concern is

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DOI: 10.4324/9780429321887-7

State–sub-state level theoretical issues

rectification of the fiscal imbalances (and through that improving economic imbalances), has to play a critical role. The task of the SFC is extremely onerous because of two important reasons. One, there has been no reordering of fiscal powers and fiscal balance. Nobody has ever asked the questions de novo who should do what? Who should tax what and where? Two, the CAs did not provide for a local list, but added much confusion by providing for an eleventh schedule for panchayats with 29 broad subjects and a twelfth schedule for urban local governments with 18 subjects which overlap with Schedule VII. The fine-tuning of functional mapping and ensuring role clarity was left to each state and its legislature. Therefore no uniform pattern could emerge. Actually a simultaneous devolution of functions, funds and functionaries is needed to facilitate an orderly fiscal balance. This amorphous situation can considerably complicate the tasks of the SFC. At this stage it is instructive to distinguish the salience of the decentralised reforms in Indian fiscal federalism from their Western counterparts. The basics of fiscal federalism theory, be they classical or second generation, (see Oates, 2005;Weingast, 2009) differ from India’s fiscal federalism especially as modified by the 73rd/74th CAs. For one, fiscal decentralisation in India can be understood only from the larger political and administrative dimensions of decentralisation reforms introduced through the 73rd/74th CAs which try to create an autonomous space for local governments (LGs). The term “local self-government”, having repeatedly appeared in the official documents since the Mayo Resolution of 1870, took statutory significance only when the CAs specified the goal of creating “institutions of self-government” at the local level (Article 243G and 243W).2 The local bodies3 (panchayats in rural areas and municipalities in urban areas) were given constitutional status as regularly elected governments with powers, authority and responsibilities in defined areas. Logically, the CAs necessitate a reordering of the fiscal balances at the various levels with focus on the local governments. The reordering of fiscal balance has both a vertical and horizontal component.Vertical imbalance refers to the mismatches between levels of government in responsibilities and resources. Horizontal or inter-jurisdictional imbalance refers to the presence of geographical and fiscal inequities. The fiscal balance questions have particular significance in a vast country such as India with great regional disparities in resource endowment, level of income, level of development, fiscal disabilities and even social deprivation. In brief the prime rationale of the SFC in India can be traced to the rectification of imbalances at a sub-national level. In the case of sub-national governments, the resource pool would consist of both intergovernmental transfers and the own source revenue (OSR) of the local government, besides borrowings. Second, historically the sub-state level governance was departmentally administered. Bringing clarity to the functional and financial responsibilities of local governments has therefore become a demanding task and requires tremendous skill. Given the adhocism and the amount of ambiguity in the state local functional responsibilities, there is a need for a simultaneous devolution of functions, funds and functionaries. As the Government of India Report (2001, p. 5) rightly puts it: “In fact functions, funds and functionaries are complementary to one another in the process of devolution of responsibilities and powers upon the panchayats”. Third, the tripartite framework formulated by the great public finance “guru” Musgrave (1959), viz. macroeconomic stabilisation, income distribution and resource allocation, although very popular in Western theories of public finance, does not seem to be relevant to explaining the decentralised realities of Indian pubic finance. The classification set out by Musgrave

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is essentially a reductionist approach because it reduces the scope of public finance vis-a-vis. development. Fourth, it is important to recognise that the micro-economic theory of consumer choice is inapplicable to the social and fiscal realities of Indian federalism. The formal theory based on a demand-driven model of consumer choice goes back to Tiebout (1956) who postulates that individuals (households) “shop” among a large local jurisdiction in an effort to balance marginal site costs (including all tax prices) with the marginal evolution of public-services packages. Such costless mobility of “consumers” in search of their preferred public goods or “voting by feet” in Tiebout’s words in a federation like India where the majority of the population live on land and the mobility envisaged is inapplicable. Also it is important to stress that the role of local governments in democratic countries like India is more related to the development concept of citizens than the institutional concept of the consumer whose voting is an expression of self-interest (Mulgan, 1997; Council of Europe, 1995). Oates dismisses this model “as a set of assumptions so patently unrealistic as to verge on the outrageous” (Oates, 1981, p. 93). He and most others of his persuasion follow the analytical framework of neoclassical economics and explain the economic rationale of multi-level governments on the ground that they would provide optimal public goods in accordance with voter preferences and choices. Oates (1972) outlines a “decentralisation theorem” which argues for a geographical area that internalises the benefits and costs of a public good. India’s rural local governments with their three-tier system do not easily fit into a model of jurisdictions that would internalise costs and benefits. Such a theory virtually rules out intergovernmental transfer arrangements. Fifth, the institutions, goals and strategies envisaged in the CAs such as the gram sabha (the voters’ assembly that is mandated to articulate the preferences of the citizen, determine the priorities of budget, respond to the audited accounts and so on), the bottom-up planning process consolidated by the institution of the District Planning Committee which not only has to integrate sectoral and spatial planning, but also has to plan for economic development and social justice, etc., and most importantly the SFC which is mandated to carry forward the process of fiscal decentralisation are far from the institutional structures which Western fiscal federalism literature postulates in designing its theoretical framework. Besides designing an intergovernmental transfer system at the sub-state level, the SFC has to make recommendations regarding the principles which should govern the determination of the taxes, duties, tolls and fees which may be assigned to, or appropriated by, the panchayats. In brief, the tasks of fiscal decentralisation cannot be performed independent of the constitutional responsibilities implicit in all these institutions, especially in the SFC. Given the fact that the SFC is the critical factor in the state–sub-state-level fiscal relations some prevailing misconceptions on its role need to be clarified.The political class, policy-makers and even experts seem to harbour the notion that the SFC and the local governments it deals with have only a subordinate constitutional status.This is totally incorrect.The SFC is modelled on the union finance commission (UFC) created under Article 280 as is well exemplified in the language of Articles 243I and 243Y which establish the SFC. Almost the same wording is repeated.While the UFC is mandated to rectify or reduce the vertical and horizontal imbalances at union–state levels,4 the SFC has to perform the same tasks with regard to state–sub-statelevel local institutions. Evidently the Constitution treats LGs on par with the state government, certainly when it comes to sharing of financial resources. It is also inadequately appreciated that the task of addressing the question of horizontal equity by the SFC is much more onerous and to be sure instrumentally more significant. This is so for three reasons. One, it has to consider a larger number of rural and urban entities and

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collectively speaking nearly 2.5 lakh local governments.The UFC has to consider only 29 states. Two, although implicitly, the SFC is the institutional agency which has the responsibility to facilitate and promote the golden rule of cooperative federalism, viz. that every citizen should be assured a minimum of public services irrespective of his/her choice of residential location. Schedules XI and XII include most primary public services within the domain of local governments although the manner of financing them is left unspecified. Indeed, ensuring intrastate equity in providing minimum essential services of standard quality to all places is no sinecure task particularly if the state government concerned is indifferent to the recommendation of the SFC or when the SFC itself is silent on this responsibility. Three, Article 280(3) was amended as part of the two CAs to add clauses (bb) and (c) in order to take measures to augment the resources of panchayats and municipalities on the basis of the recommendations “made by the finance commission of the state”. These sub-clauses affirm the organic link between LGs and SFCs in Indian fiscal federalism. It is only when interstate disparities are reduced by the UFCs through their inter se distribution criteria and intrastate disparities are reduced by SFCs through the horizontal distribution criteria that the Indian federation becomes a sustainable and inclusive nation-state. To get the nation moving in sync and to ensure territorial equity are collective goals, and desirable ones. The issue of fiscal balance assumes considerable significance at the sub-state level in view of the need to provide a minimum level of public services of standard quality at the local level and to determine the cost of such services. While one may raise the problem of affordability, in the cooperative federal context of India the SFC’s role becomes very important in determining the vertical share as well as in the choice of criteria for horizontal distribution. While the two CAs made provisions for the creation of necessary institutions and conditions, the major task of carrying forward the process of decentralised governance is left to the states. Public finance experts concur on the question that expenditure assignment is the first crucial step and all others including funds and functionaries follow from this. As already mentioned no such effort was made as part of the two CAs. There was no local list by way of assignment of expenditure responsibilities or revenue-raising powers, making it easy for states, especially those reluctant to part with power, to continue with the status quo and stick to the minimum conditions warranted by the CAs. Whether done deliberately or inadvertently the retention of item no. 55 in the state list is an affront on the third tier of governments and the 73rd/74th Constitutional Amendments. The list of 29 subjects given in Schedule XI and the 18 subjects given in Schedule XII have no operational significance unless they are broken up into activities and sub-activities and the functional domain of the Panchayati Raj Institutions and municipalities are clearly specified. Only the state of Kerala did it and incorporated it into the statute books. Several other states followed much later and particularly after the formation of the Ministry of Panchayati Raj in 2004 which purposefully promoted activity mapping. The cherished goal of creating autonomous government (Articles 243G, 243W) which will deliver “economic development and social justice” at the local level through a process of functional autonomy, financial support and functionary support to maintain this remains remote and far away from reality. In other words, there is a lack of clarity and ostensibly much over-assignment including many unfunded expenditures. This creates problems of growing gaps in meeting the primary needs of the citizens at the local level. Another important component relating to the state–sub-state fiscal relations is the design of an efficient and equitable transfer system. In the Oatsian scheme which seeks internalising costs and benefits, the design of transfers is unimportant. The two CAs have left this

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to the institution of the SFC as we have already noted. It is also important to note that the objectives and tasks of the transfer system which the SFC has to take into account are broadly indicated in the Constitution (Articles 243I and 243Y). We have already noted that the real problem is the issues related to the assignment of functions and working out an equalising transfer system which is considerably complicated by the fact that the Indian federation never had a scientific assignment of functional responsibilities and revenue sources. At no stage did the Indian Constitution makers raise the principle of subsidiarity or any other principles in drawing up Schedule VII which listed out the union list, state list and concurrent list. The Constitution borrowed heavily from the Government of India Act, 1935.6 Indeed the most redeeming feature is the creation of the UFC which has to review the finances of union and states and then design a proper transfer system. The two CAs faithfully followed the tradition and provided for an SFC modelled on the UFC to rationalise the fiscal relations at the state and local government levels. The problems of assignment and intergovernmental transfer arrangements are considerably confounded by the lack of a system of financial accountability along with the absence of systematic budgetary procedures and practices.7 The union and state governments follow systematic budgetary procedures which the LGs may do well to emulate. To sum up this section, fiscal decentralisation in the Indian federal context is the delivery of economic development and social justice, most conspicuously a set of public services through institutions like gram sabha, gram panchayats, district planning processes and sound budgetary practices. I think it is appropriate to quote what Roy Bahl said a decade ago: The key to structuring a workable system of fiscal decentralization is for government to decide how much expenditure autonomy they want to devolve to subnational governments and then to put in place a supporting system of vertical and horizontal fiscal balance. (Roy Bahl, 2008) In the context of this chapter we may substitute the term “government by State Finance Commission” on the assumption that the state government will implement the needed reforms.

Approach of three SFCs – Karnataka, Kerala and Tamil Nadu Article 243I (and also 243Y) mandates the governor to constitute an SFC within one year of the CAs (24 April 1994) and thereafter every five years. At least 140 SFC reports should have been submitted by now. Actually only four states (Assam, Himachal Pradesh, Kerala and Tamil Nadu) have submitted their fifth SFC reports. All others are at different stages of submission from the second to the fifth. Evidently the large majority of states have violated the mandates of the Constitution with impunity. Is honouring the Constitution a matter of convenience? This is a fundamental question. This section examines the SFC reports of Karnataka, Kerala and Tamil Nadu with reference to three issues germane to honouring the constitutional tasks: (1) the effort to build a package of essential public goods; (2) the formula for horizontal distribution; and (3) the progress towards building an autonomous fiscal space.

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These are examined from an intrastate basis. The comparison over time helps to evaluate the trend in continuity and change.

Providing essential public services It is important to recall here that the resource group constituted in 1995 under the Chairmanship of Raja Chelliah by the Planning Commission8 to provide assistance to the SFC recommended water supply, sanitation/sewage, solid waste collection, primary education and primary health as core services of local governments and even worked out normative standards for them.The task of providing essential services assumes significance only if SFCs follow the path of continuity, of course on the assumption that the states accept the recommendations. Only the first Karnataka SFC took this seriously. Karnataka SFC-I (KSFC-I) laid the foundations of sub-state-level fiscal relations, “a launching pad and bench-mark” as KSFC-III correctly notes. Among the first generation reports in India KSFC-I needs to be recognised for its contribution. KSFC-I avoided the gap-filling approach and chose what it calls “a pragmatic normative approach” in identifying the vertical share and in determining the shares of panchayats and municipalities. The well-known federal principle that every citizen should be ensured a minimum level of basic services irrespective of her choice of residence is firmly acknowledged and proceeded to operationalise that. All the SFCs of Karnataka followed this approach but differed in regard to details. KSFC-I recommends earmarked or block grants as part of the total devolution to LGs for upgrading certain essential services in the rural and urban areas. KSFC-I has identified safe drinking water, primary health, primary education and street lights for rural areas and safe drinking water, urban roads, street lights and sanitation for urban areas and compared their actual availability in relation to feasible normative level and worked out the additional expenditure involved for such upgradation. The competent institutions are identified (for streetlight to gram panchayats, primary education to Zilla panchayats, etc.) and the horizontal distribution details are also given. KSFC-II introduced more concrete improvements and took up the question of normatively assessed capital investments. This is something which the so-called gap-filling approach does not entertain. As KSFC-II points out there was a need to have a constant endeavour to achieve normative standards to improve the quality of essential public services. KSFC-III does not strictly follow a normative approach. It recommended the creation of a Rural Infrastructure Development and Finance Corporation for mobilising capital for the development of rural roads, drinking water, street lights, etc. The Tamil Nadu first SFC or for that matter others did not follow a normative approach or take the task of provision of essential services seriously. The first SFC of Kerala (KESFC-I) was well aware of the Chelliah Committee Report (1995) and even worked out standards in regard to five core responsibilities viz. provision of street taps, provision of street lighting, collection and disposal of solid waste surface drainage, and upgradation of roads on the basis of a sample survey it conducted. But KESFC-I did not make it an essential component of its recommendations. No other commission considered this. However it is important to note that KESFC-II and KESFC-IV devolved a share of the state plan as part of the divisible pool to the LGs in the form of a development grant to be utilised on projects as prioritised by them. But this surely is not a substitute for what Karnataka SFC-I did or what the Chelliah Resource Group recommended.

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The horizontal distribution criteria In a way this section is a continuation of the last. In this section we may compare to what extent intrastate equity, especially in regard to the provision of essential public services, is ensured. The SFC surely is not an implementing agency or department. So what we examine are confined to the criteria followed with reference to the inter se distribution in ensuring minimum services. The Karnataka first SFC (KSFC-I) which firmly underscored the need for territorial equity in the provision of basic public services first divided the total divisible pool (36% of the total nonloan gross own revenue [NLGOR]) among urban and rural bodies on the basis of three criteria. They are (a) the proportion of the population living in urban and rural areas; (b) the proportion of rural and urban areas; and (c) an index of backwardness comprising (i) the illiteracy rate, (ii) the number of persons per bed in government hospitals and (iii) road length per sq. km of area. Inter se KSFC-I identified safe drinking water supply, sanitation including garbage removal and underground sewerage, street lights and roads in that order as the most essential services which should be provided by all urban LGs at a reasonable level. For PRIs, supply of safe drinking water, street lights, roads, primary education and primary health care in that order were identified. The SFC also spelt out the standards up to which these services were to be raised over the next five years, worked out the unit cost for upgradation and estimated the financial implications.The idea clearly is to upgrade LGs to a desirable level of providing essential public services.Those LGs which have already achieved the standards are not punished and allowed to improve their standard further. KSFC-II basically followed the first but made very important changes in the normative standards of water supply, roads, streetlights, etc. KSFC-II was more concrete in that it worked out the normatively assessed capital investment needed. KSFC-III made some important departures.The indicators selected were population, area, SC/ST population, illiteracy, population per hospital bed and density of population. Population was given the highest weightage of 40% followed by area with 20%; the remaining 40% was divided equally among the other far indicators. Without going into finer details one can say that these indicators were chosen, mutatis mutandis, for horizontal distribution as well as for ULGS. SFCs in general in Tamil Nadu do not give importance to the provision of minimum services as a dominant criterion in the horizontal allocation of resources (for details see Appendix 7A). True, the first SFC of Tamil Nadu (TNSFC-I) considered core civic service deficiency (with 20% weightage) in its horizontal distribution. All other tiers including urban local governments were left out. TNSFC-V considers some valid horizontal equity considerations like per capita consumer expenditure distance. But it has no relevance for ensuring minimum public services. As regards Kerala SFCs (KESFCs) the most prominent horizontal equity criteria of ensuring core services are considered only by KESFC-IV. The fourth SFC of Kerala elaborates in detail not only its constitutional mandates but outlines its approach as the delivery of economic development with social justices, and emphasises the need to improve the quality of public services. An important aspect that this SFC tries to focus on is the general principle that it is horizontal equity that should be the primary concern of the sub-state-level transfer system. This commission sought inter-jurisdictional equity in basic services using a devolution index, besides giving special grants to gram panchayats identified as comprising the most deprived people of the state. After identifying district cum social group-wise vulnerable gram panchayats (GPs), they were ranked and the 74 most deprived GPs were meticulously chosen for a special grant. KESFC-IV made a bold beginning to include the marginalised communities into the mainstream of development as part of the fiscal decentralisation process and devoted one chapter exclusively to explaining this 98

State–sub-state level theoretical issues Table 7.1 Criteria for inter-tier distribution of development funds Criteria

GP

BP

DP

ULGs

Population (Excluding SC/ST) Deprivation Index Tax Effort Area

50 30 10 10

50 30 – 20

50 30 – 20

50 30 – 20

Source: SFC-IV, Kerala Report; p.186.

devolution strategy. Using well-defined criteria fiscally weak LGs were also identified. The commission significantly changed the development fund allocation formula of the previous commissions and brought more equity in the inter se distribution. This is given in Table 7.1. The deprivation index indicates the magnitude of deprivation with respect to housing sanitation (percentage of families reported as without latrines), drinking water, electricity (percentage of families without electricity connection) and percentage of landless families.This is a great step forward.

Working towards institutions of self-government As is well exemplified in Articles 243G and 243W, a cherished goal of the decentralised governance reforms in India is to create institutions of self-government at the local government level. Undoubtedly the primary task of the SFC is to work towards accomplishing this. The fundamental principle of financial responsibility expounded in public finance literature demands that every institution should raise its own resources even in a federation. As far back as the early 1930s, B. P. Adarkar (1933) noted: The basic principle of practical public finance is that as far as practicable, the responsibility of raising revenue and the freedom of spending it ought to go hand in hand must be granted as more or less fundamental to federal as to other financial system. (Adarkar, 1933, p. 219) Most of the SFCs have acknowledged this principle. A government that fosters fiscal illusion or dependency syndrome can never aspire to be a self-reliant entity. India has a tradition of cultivating a grant-supported local government. The purpose of creating self-reliance is to dethrone the culture of dependency and promote autonomous actions and development. No SFC in India seems to have made such an evaluation specifically. Hazarding an impressionistic inference, I may say that the country is drifting away from the goal of creating autonomous local governments. A government that can generate at least 50% of its own revenue to meet its expenditure could be considered self-reliant in a federation. Given the built-in mismatch in resources and responsibilities, this margin can be scaled down if the intergovernmental transfers are absolutely unconditional and seek progressively to reduce vertical gaps in resources. We do not have reasonably reliable historical data except for Kerala and Tamil Nadu9 to analyse this. It is very difficult to analyse Karnataka from the data given by KSFC-III which ventured to collect time-series data. So only some general observations regarding financial position are made. 99

M. A. Oommen Table 7.2 OSR as percentage of total expenditure (Kerala and Tamil Nadu)-GPs Year

OSR Rs. lakh

Expenditure

OSR as % to TE

OSR Rs. lakh

Expenditure

Kerala-GPS 2005–06 2006–07 2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 2013–14 CAGR

217.33 256.66 295.68 315.37 403.10 482.31 493.63 534.41 544.05 12.98

1514.66 1717.85 1981.88 2373.51 3334.40 4229.85 4801.69 5499.99 5939.13 20.73

OSR as % to TE

Tamil Nadu GPs. 14.35 14.94 14.92 13.29 12.09 11.40 10.28 9.72 9.16

92.57 109.38 130.34 146.21 173.43 186.00 219.00 258.69 301.85 15.39

1101.47 1382.13 2102.98 2979.59 3953.00 5621.45 6550.71 9480.10 9578.42 33.50

8.40 7.91 6.20 4.91 4.39 3.31 3.34 2.73 3.15

Source: SFC Reports 4 and 5 of Kerala and Tamil Nadu. CAGR – Compound Annual Growth Rate.

Table 7.3 OSR as percentage of total expenditure (Kerala and Tamil Nadu)-ULGs Year

OSR Rs. lakh

Expenditure

OSR as % to TE

OSR Rs. lakh

Kerala-ULGs 2005–06 2006–07 2007–08 2008–09 2009–10 2010–11 2011–12 2012–13 2013–14 CAGR

151.95 185.36 199.76 224.46 395.59 478.84 575.46 635.80 775.50 24.38

400.47 415.66 451.10 532.95 966.53 1068.48 1395.52 1582.19 1938.93 24.76

Expenditure

OSR as % to TE

Tamil Nadu - ULGs 37.94 44.59 44.28 42.12 40.93 44.82 41.24 40.18 40.00

1264.70 1460.29 1610.04 1769.75 2093.68 2303.93 2713.02 3325.69 3709.01 14.42

2805.39 3177.43 3770.25 4498.98 5056.71 7257.00 7864.00 11499.00 13728.00 22.46

45.08 45.96 42.70 39.34 41.40 31.75 34.50 28.92 27.02

Source: SFC Reports 4 and 5 of Kerala and Tamil Nadu. CAGR – Compound Annual Growth Rate.

Tables 7.2 and 7.3 give the OSR of Kerala and Tamil Nadu as a percentage of total expenditure from 2005–06 through 2013–14 for village panchayats and for ULGs. Kerala, which had very high OSR-expenditure ratios well above 50% in the 1990s (not reported in Table 7.2), comes down to 14.35% in 2004–05. Table 7.2 shows a steady decline and reaches 9.16% in 2013–14. The story of ULGs is somewhat different. It is within a comfortable range of 38% to 45%. With greater effort, the municipalities of Kerala can hope to progress towards institutions of selfgovernment. The CAGR of expenditure for the nine years of gram panchayat since 2005–06 rose to 20.73% per annum, as against a CAGR of 12.98% per annum for OSR. But the experience of ULGs shows that the CAGR of OSR expanded in tandem with that of the increase in expenditure (see Table 7.3). To be sure there is a need for better performance. 100

State–sub-state level theoretical issues

The Tamil Nadu experience of village panchayats is disquieting. OSR as a percentage of total expenditure in 2005–06 is 8.4% (which itself is very low). It declined to a very low 2.73% in 2012–13 and picked up only marginally the next year. The ULGs that also started with a relatively higher proportion have steeply declined as could be seen from Table 7.3. While the expenditure of CAGR of Tamil Nadu gram panchayats increases by 33.5%, OSR expands at a pace way below at 15.39%. Tamil Nadu GPs need to scale up their mobilisation efforts significantly to travel on the road to autonomous development. The performance of the ULGs of Tamil Nadu also is relatively very weak. The OSR as a percentage of total expenditure of Tamil Nadu which was as high as 45.96% in 2006–07 declined to 27% in 2013–14. This certainly is not a promising trend. Also the CAGR of the OSR of ULG in Tamil Nadu increased at 14.42% per annum, the CAGR of expenditure expanded at the rate of 22.46% per annum. As regards Karnataka, for want of data we cannot make direct inferences regarding self-reliance. Even so we have pieced together some data relating to deficit (defined as revenue – expenditure) for gram panchayats as well as for urban local governments. Table 7.I in Appendix 7B shows the deficit per GP from 2002–03 through 2006–07. Table 7.2 in the Appendix 7B shows the percentage distribution of GPs with financial deficit, financial surplus and chronic deficit. There is definite acceleration in per GP deficit growth which doubled from Rs. 1.83 lakh in 2002–03 to Rs.3.69 lakh in 2005–06 and bulges much higher to R.4.49 lakh in 2006–07. That 6.6% GPs suffer from chronic deficit and their average deficit is much higher than that of the state average of Rs.2.20 lakh for GPs tells of a disturbing situation. Table II in Appendix 7B, which shows the relative percentage of deficits is presumably worse in that it does not speak highly of the transfer arrangements of the period. It is evident that GPs with chronic deficits raised 16.1% by way of their own revenue as against only 15.8% by those with financial surplus. Here it is also important to note that the share of own revenue ranges from 7.6% in the case of the GPs of the Bider district to 53.3% in the richer districts of Bangalore Urban and 38.4% in Bangalore Rural (see KSFC Report-III). Apparently the revenue potential of GPs is extremely uneven. Appendix 7C presents the situation relating to the ULGs of Karnataka. The story of the deficit shown in the table in Appendix 7C for city corporations is also a cause for concern. The analysis of KSFC-III report does not go deeper into this. The last section is in lieu of a conclusion and focuses more on policy options that lie ahead. Given the fact that the fiscal decentralisation process of India cannot be placed within the theoretical framework of Western federal literature, policy options cannot be easily borrowed or adopted from elsewhere. Evidently the fiscal decentralisation experience has been very halting and somewhat casual. Several states have violated the constitutional mandates with impunity. Unless the nation is seized with the seriousness of the situation, the future of decentralisation is bleak. It is very important for state governments to take corrective steps including appropriate amendments to their panchayat and municipality acts and to take efforts in streamlining activity mapping and move towards the mobilisation of tax and non-tax revenues. SFCs should never be made a post for retired or serving IAS officers. They seldom can make independent policy changes. No wonder the GPs and municipalities are drifting away from the cherished goal of creating institutes of self-government. Evidently the union government which took the bold initiative to implement the 73rd/74th CAs has lagged way behind. We have highlighted the need to drop item No. 5 of the state list and spell out a detailed local list including revenue handles. The main burden of this chapter may be seen as drawing attention to the tremendous potential for the UFC for reducing interstate horizontal disparities and for the SFCs to reduce horizontal disparities in the provision of minimum essential services and in ushering in the need for territorial equity. This is an important need. 101

102 100% TPs 50% 10%

20% – – 100% VPs 60% 10%

– – –

100%

Panchayat union 60% 10%

Total

100%

10% – Agricultural labourers 10% 10% – Area 10% – 10% 20% Asset maintenance – – Resource gap on inverse per 10% capita land revenue – – 20% Per capita own income – – – Salary and pension expenses 100% 100% Total 100% Government did not accept the criteria recommended by 2nd SFC and determined the following criteria: Total population 40% Women population 40% SC / ST population including slum population 20%

– 15% 20%

45% 20% – –

50% 15% – 15%

50% 25% 25% –

TPs

Total population SC & ST population Financial viability Per capita house tax collection performance Core civic services deficiency Per capita own resources Per capita expenses on core services Total Second SFC Criterion Total population SC & ST population

VPs

Panchayat union

Criterion

First SFC

Appendix 7A Criteria for horizontal distribution of Tamil Nadu

(Continued )

20% 10% 100%

20% 10% 100%

– – 10% –

Corporation 50% 10% (slum population) – – 10% –

100%

– 15% 35%

40% 10% – –

Corporation

Municipality 50% 10%

100%

– 15% 30%

45% 10% – –

Municipality

M. A. Oommen

20% – 100% VPs 60% 20% 20% – 100%

20% – 100%

Panchayat union 60%

20% 20% – 100%

Population as per 2011 census Area Per capita consumption expenditure distance Proportion of slum population SC/ST Population Total

VPs 32% 32% – 16%

Panchayat union* 32% 32% – 16%

– 15% 5% 100%

– 15% 5% 100% Weight RLB 60 15 10 – 15 100%

Municipality 80%

10% 10% 100%

Municipality 32% 32% – 16%

TPs 80%

10% 10% 100%

TPs 32% 32% – 16%

– 15% 5% 100%

ULB 65 15 10 10 – 100%

Corporation 80%

10% 10% 100%

Corporation 32% 32% – 16%

Source: SFC (TN) 5th Report pg. 247 and 251. Source: TNSFC-V Report – Annexures pg. 290. Note: VPs: Village Panchayats, TP: Town Panchayats. *On cross verification we found that column 2 of Third SFC is wrongly reported and adds up to 119%. Hence we have corrected the column using the data on page 202 of the Third SFC Report.

1 2 3 4 5

Third SFC Criterion Total population Women population Financial viability SC / ST population and slum population Area Debt burden Total Fourth SFC Criterion Total population (2011 census) SC / ST population Area Debt outstanding Total Fifth SFC Sl. No. Criterion

State–sub-state level theoretical issues

103

M. A. Oommen Appendix 7B Status of deficit in Karnataka panchayats Table I: Percentage of GPs with financial deficit, chronic financial deficit and average (per GP) deficit for the period 2002–07 – Karnataka Year

Percentage of GPs

Average amount of deficit (in Rs.)

2002–03 2003–04 2004–05 2005–06 2006–07 2002–07 Chronic deficit

32.7 37.0 33.9 27.5 31.0 27.1 6.6

183225 185483 257465 369345 449832 220359 253104

Source: KSFC-III, p. 39. Table II: Percentage distribution of GPs with financial deficit, surplus and chronic deficit by various sources of revenue – Karnataka Financial sources

GPs with financial deficit

GPs with financial surplus

GPs with chronic financial deficit

Total GPs

Central grant State grant Own revenue Others

36.2 39.2 16.8 7.8

36.6 40.7 15.8 6.9

39.2 36.2 16.1 8.5

35.8 40.6 16.5 7.1

Source: KSFC-III, p .40.

Appendix 7C Percentage distribution of financial condition of ULG (2002–07) in percent – Karnataka Type of ULG

Deficit

Surplus

Total

City corporation City municipal council Town municipal council Town panchayats Total

33.30 3.03 9.80 6.12 7.35

66.70 96.97 90.20 93.88 92.65

100% 100% 100% 100% 100%

Source: KSFC-III, p .189.

Notes 1 The World Bank stresses the governance reform aspect (see World Bank [1997; 2004 among others]). 2 The term “local self-government” is widely used in political science to refer to those functions of domestic administration which were best managed by the personal services and contributions of local communities (see Redlich and Hirst, 1903; Langrod, 1953;Whalen, 1960). From the days of the Mayo Resolution of 1870 this term has been used in Indian official documents on local government and found its way into the Indian Constitution which uses the term “institutions of self-government” (Article 243G &243W) as a cherished goal to be achieved in local democratic governance in India. 3 Many, including “experts”, prefer the term “local body” to “local government” although Parts IX and IXA of the Constitution never use it. 104

State–sub-state level theoretical issues

4 The sixth, seventh and eighth UFCs made some efforts to equalise essential public services across the states. But the amounts were very measly and certainly not critical enough to have any impact. 5 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 (Article 246, Schedule VII, Part II, Item 5). 6 The Indian Constitution has borrowed approximately 250 Articles “verbatim or with minor changes in phraseology from the 1935, Government of India Act” (Brecher, 1961, p. 207). 7 On this it is useful to read Oommen (2018). 8 This author was a member of that committee. 9 We are skipping the data on LGs given by the UFCs which after analysis proved to be unreliable.

References Adarkar, B. P. (1933). The Principles of Problems of Federal Finance. London: P S King and Son Ltd. Bahl, Roy, Sethi, Geeta and Wallace, Sally (2008). ‘West Bengal: Fiscal Decentralization to Rural Governments: Analysis and Reform Options’, International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0907, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University. Brecher, M. (1961). Nehru: A Political Biography. London: Oxford University Press. Council of Europe (1995). The Size of Municipalities, Efficiency and Citizen Participation. Strasbourg: Council of Europe. Francis, Wrigley Hirst and Redlich, Josef (1903). Local Government in England. London: Macmillan and co. GOI (2001). Report of the Task Force on Decentralisation of Powers and Functions upon Panchayati Raj Institutions. New Delhi: Krishi Bhavan. Government of Karnataka, Report of the State Finance Commission (SFC-1, II, and III). Government of Kerala, Report of the State Finance Commission (SFC-1, II, III, IV and V). Government of Tamil Nadu, Reports of the Finance Commission (SFC-II, III, IV, and V), Chennai. Langrod, Georges (1953). ‘Local Government and Democracy’, Public Administration, 31(1), pp. 25–34. Mulgan, R. (1997). ‘The Process of Public Accountability’, Australian Journal of Public Administration, 56(1), pp. 25–36. Musgrave,A. Richard (1959). TheTheory of Public Finance:A Study in Public Economy. NewYork: McGraw-Hill. Oates, Wallace E. (1972). Fiscal Federalism. New York: Harcourt Brace Jovanovich Inc. Oates, Wallace E. (1981). ‘On Local Finance and the Tiebout Model’, American Economic Review, 71(2), pp. 93–98. Oates, Wallace E. (2005). ‘Toward A Second-Generation Theory of Fiscal Federalism’, International Tax and Public Finance, 12, pp. 349–373. Oommen, M. A. (2018). Local Government Budgets:Towards a Reliable and Rational Financial Reporting System, Research Unit on Local Self Governments. Thiruvananthapuram: Centre for Development Studies. Tiebout, M. Charles (1956). ‘A Pure Theory of Local Expenditures’, Journal of Political Economy, 64(5), pp. 416–424. Weingast, R. Barry (2009). ‘Second Generation Fiscal Federalism: The Implications of Fiscal Incentives’, Journal of Urban Economics, 65(3), pp. 279–293. Whalen, Hugh (1960). ‘Democracy and Local Government’, Canadian Public Administration, 3(1), pp. 1–13. World Bank (1997). The State in a Changing World. Washington, DC: World Bank. World Bank (2004). Fiscal Decentralization to Rural Governments in India. New Delhi: Oxford University Press.

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8 Decentralised planning in India Challenges and prospects M. Devendra Babu

Introduction An upsurge of interest in favour of decentralised governments has emerged throughout the world in recent decades. The shift towards decentralisation is attributable to the failure of centralised planning in meeting the basic needs of the people, alleviating poverty, redressing regional disparities and using scarce resources efficiently. Governments provide public goods and physical infrastructure to their citizens. But with the expansion of government activities and the resulting complexity, it is difficult to plan and administer all development activities and provision of services from the centre. Thus, centralised planning is likely to be ineffective and inefficient in the provision of goods and services. In other words, the top-down approach to planning tends to bypass not only the rural poor and some social groups, but also some ‘areas’ within a country which have their own unique resource endowments, characteristics and problems.The centralised system tends to impose a uniform set of development programmes everywhere, without regard to the variety of conditions existing within a country. In contrast to centralised governance, decentralisation is suggested as a solution for the efficient delivery of goods and services. In other words, decentralised decision-making seeks to look in greater detail into the aspirations and requirements of specific local areas and communities and take suitable measures for meeting them. The important advantages of a decentralised development process are: a) Decentralised governance is more responsive to the needs and aspirations of the local people. b) Local problems are better understood, and priorities are drawn up regarding programmes and schemes, and mismatch problems are unlikely to arise. c) The system ascertains the growth potential of the area on the basis of an assessment of the locally available natural, human and financial resources. d) Since the local governance is closer to the people, it is possible for it to rope in the services of the local people and non-governmental organisations (NGOs) in the plan preparation, implementation and monitoring of the programmes and projects. 106

DOI: 10.4324/9780429321887-8

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e) It is possible to mobilise voluntary contribution (cash, kind and labour) from the people, NGOs and philanthropists to supplement resources. f) The most important of all is that, since people’s participation is ensured from the plan preparation through to implementation and the monitoring of the programmes/projects, the delivery system will be more cost-effective. As a result of inherent problems in centralised planning and development there has been a strong policy shift in most countries, especially in the third world, towards the decentralisation of powers since the 1980s. India also embraced this policy reform in establishing the decentralised governments through the 73rd and 74th Constitutional Amendment Acts in 1992. In this context, it is important here to review the role played by decentralised governments and in particular the panchayats (rural local governments) in India in planning for development. Against this background, this paper makes an inquiry into the realities and prospects of decentralised planning in India. The specific objectives are to: •• •• •• ••

present an overview of attempts made towards decentralised planning in India analyse the enabling environment created for undertaking decentralised planning in the post-73rd Amendment period evaluate the present status and challenges faced in decentralised planning in India suggest measures for realising meaningful decentralising planning in India

The study pertains to India and to rural local governments, i.e. panchayat raj institutions (PRIs). The analysis is based on both quantitative and qualitative information. The former is based on secondary sources of information, the latter on observations made in the field and discussions held with the functionaries of PRIs and people as a part of larger studies undertaken in Karnataka and other neighbouring states in India (Aziz et al., 2002; Babu, 2010, 2011a, 2011b; Babu et al., 2017). It is descriptive and analytical in nature. The paper is presented in five sections. After this introductory section, the second one brings out various attempts made in India towards decentralised planning since 1950s; the third section deals with the prerequisites for undertaking decentralised planning; the fourth section analyses the ground realities in grassroots planning; and the final section provides a few observations on what needs to be done for meaningful bottom-up planning in India.

Initiatives in grassroots-level planning in India Soon after the passing of the 73rd and 74th Constitutional Amendment Acts (CAA), many states took the initiative to bring out their own legislations incorporating the main provisions of the Constitutional acts and establishing local governments, especially the panchayats, from 1993 onwards. However, the governance mechanism based on the 73rd CAA does not apply to the smaller states of Nagaland, Meghalaya, Mizoram and Jammu and Kashmir1 and all the Union Territories (except Delhi) as they are governed by other provisions.The important provisions of the 73rd CAA incorporated in the Panchayat Raj Act of the respective states are the three-tier panchayat system; election to PRIs once in five years; Grama Sabha; the reservation of seats and authority positions for deprived and marginalised sections; the devolution of powers, authority and functions; the constitution of a finance commission; and the setting up of planning committees at the district level. The structure of PRIs adopted by the states is as indicated in the 73rd CAA. States whose population is more than 20 lakh have a three-tier panchayat at the village, intermediate and district levels and the rest of the states have two tiers at village and district 107

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levels. Grama Sabha below the village/grama panchayat was incorporated as mandated by the 73rd CAA. In 2015, there were 253,112 village/grama panchayats, 6,614 intermediate/block panchayats, 630 district/zilla panchayats. In all, there were 260,356 Panchayats with 2,351,739 elected representatives functioning in rural India (MoPR, 2015). The most important content in the 73rd CAA relates to the devolution of powers and responsibilities to PRIs. The Eleventh Schedule appended to Article 243G specifies 29 subjects for devolution to PRIs by the states. The states, along with the functions, are supposed to devolve matching resources (sources and transfers) and functionaries to PRIs. The basic objectives of decentralised planning by local governments are to promote socioeconomic development in rural and urban areas, meet the basic needs of people, especially the weaker sections, and alleviate poverty with appropriate support systems. The planning process at the local level consists of identifying the felt needs and aspirations of people and natural and physical resources at the local level; formulating and prioritising projects by matching people’s needs and local resources; and involving people, as well as voluntary and non-governmental organisations, in the planning and implementation stages. In India, the importance of decentralised planning was highlighted in the First Five Year Plan (1951–56) itself. However, the process of decentralised planning in the country was initiated from the 1970s where many states introduced planning at the district level. The district plans took the shape of disaggregation of the state plans. The role assigned to the district planners was mainly consultation and supervision, and the district plans continued to be formulated at the state level and implemented by the official machinery responsible to the heads of departments in the concerned state (Aziz, 1993; Babu, 2010). Further, the central government constituted many expert committees to suggest ways and means of adopting planning from below. The history of initiatives in decentralised planning in India is given in Table 8.1. It can be observed from the table that our five-year plans beginning with the first one emphasised the importance and adoption of decentralised planning. The committees headed by Balwantrai Mehta and Dantwala, and the Administrative Reforms Commission, strongly advocated for local government institutions and their active involvement in planning and development. In the midst of the adoption of numerous poverty alleviation and rural development programmes in the 1980s, the GVK Rao and Hanumantha Rao committees suggested that effective planning by rural local governments would contribute to rural development. These expert committees, keeping the context and conditions of rural India in mind, overwhelmingly put forth the need for local government institutions which would evolve programmes and plans by themselves. However, the central and state governments disregarded this need every time. During this period, one issue that had drawn the attention of planners and technocrats was the appropriate unit/area of planning. They were divided between district, block or village as a unit of planning. Some put forward the district (the Planning Commission and G. V. K. Rao’s Report) as the unit of planning. Dantwala, however, was vocal in espousing the block/taluk as the appropriate area for planning. In between these two, there was an argument for planning at two levels: one, at Mandal (smaller than block/taluk but bigger than a cluster of village panchayats), and the other at district level (the Ashok Mehta Report). The view was that the planning should be at three levels, namely village, block and district which synchronises with three-tier panchayats (the Balwantrai Mehta Report). The debate on the appropriate unit of planning was put to rest by the 73rd and 74th CAAs. Each level of panchayat and urban body is accorded powers and functions in the matters of development in their jurisdiction. Moreover, the District Planning Committee (DPC) is entrusted with the task of guiding all tiers of panchayats in the district and ULBs in planning 108

Decentralised planning in India Table 8.1 Initiatives in decentralised planning in India Year/Period

Institution/committee

Ideas/concepts

First Five Year Plan (1951–56) Second Five Year Plan (1956–61) 1957

Community Development Programme

To break up planning exercise into national, state, district and local community levels

District Development Councils

Drawing up of village plans and popular participation in planning through the process of democratic decentralisation Establishment of village, block, district panchayat institutions Provision of resources/accommodation of local variations, purposeful plan for area Formulated guidelines; detailing the concept of the district plan and methodology of drawing up such a plan in the framework of annual plans, medium-term plans and perspective plans Block-level planning to form a link between village- and district-level planning

1967 1969

1978 1978 1983-84 1984

1985

1992 2006 2008

Balwantrai Mehta Committee Report Administrative Reforms Commission, GoI Planning Commission

M. L. Dantwala Committee Report Ashok Mehta Committee Report Centrally Sponsored Schemes/ Strengthening district plan and district credit plan RBI C. H. Hanumantha Rao Decentralisation of functions, powers and Committee Report finances; setting up of district planning bodies and district planning cells G. V. K. Rao Committee Report Administrative arrangements for rural development; district panchayat to manage all development programmes Constitution of India Legal status to local bodies and assignment of function of local development V. Ramachandran Committee An action programme for the Eleventh Five Year Report Plan Planning Commission Manual for integrated district planning

Source: Various documents/reports of the Government of India

and implementation. The DPC has another important role to play, i.e. integrating the plans of all the local governments vertically and horizontally and preparing a draft development plan for the whole district. However, economists are of the opinion that economies of scale cannot be ensured if the village/grama panchayats are too small in terms of population and area. Hence they concur with the ‘Mandal’ concept of Ashok Mehta and implemented by Karnataka and Andhra Pradesh (undivided state) in the middle of the 1980s (Aziz, 1993; Aziz et al., 2002).

Facilitating environment for planning in the post-73rd Amendment period The 73rd CAA, of course, provided the much-needed constitutional status for rural local governments and their important role in rural development. Article 243G of the 73rd CAA had provided that the state legislature by law may endow panchayats with such powers and authority 109

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as may be necessary to enable them to function as institutions of self-government (Government of India, no date). The Article further provided that such law may devolve to panchayats the powers and responsibilities of preparing plans for economic development and social justice, as well as of implementing schemes for economic development and social justice. Further, it identified 29 subjects/functions to be devolved to panchayats by the state governments – the details of which were appended to the Act as the Eleventh Schedule. In addition, Article 243(ZD) of the 74th CAA provides for the constitution of a DPC at the district level in every state. The main objective of the DPC is to consolidate the plans prepared by the panchayats and the municipalities in the district and to prepare a draft development plan for the district as a whole. Further, every DPC shall, in preparing the draft development plan, have regard to: •• ••

matters of common interest between the panchayats and the municipalities including spatial planning, sharing of water and other physical and natural resources, the integrated development of infrastructure and environmental conservation the extent and type of available resources whether financial or otherwise

The chairperson of the DPC is to forward the development plan prepared by the committee to the state government. Besides powers and functions, finance is also equally crucial for local governments to undertake the tasks of planning and development. With regard to the financial powers of PRIs, the 73rd CAA under Article 243H specifies that states should bestow fiscal powers. Article 243I provides for the mandatory constitution of a state finance commission (SFC) by the states once per five years. Further, the state has to place before the state legislature the action taken report (ATR) on the recommendations of the SFC. Again, Article 280bb places an additional responsibility on the Union Finance Commission (UFC) to supplement the resources of the local governments. Article 243G, when it states that PRIs are endowed with powers and authority, also implies that the states should make arrangements for the provision of functionaries (administrative decentralisation) to carry out the decisions of local government. Grama Sabha (village assembly) below the grama panchayat (GP) was incorporated in the State Panchayat Raj (PR) acts by the states. The functions generally assigned to the GS in many of the state PR acts are: review of Panchayat finances, revision of tax rates, audit reports, progress in works, planning, implementation and monitoring of programmes, identification of beneficiaries under various schemes, etc. The core objective of this institution is to involve the local people in the panchayat’s activities particularly in formulation, implementation and monitoring of development plans. Further, the states have also prescribed the periodicity (two to four times per year), place (revenue village/panchayat headquarter) and quorum of GS meetings. The states have also incorporated a DPC in their PR acts as mandated in the 74th CAA. Planning divisions have been created at the zilla/district panchayats by many states to carry out the planning activities by the local governments. The tasks of this division include preparation of draft and action plans for the district, consolidation and integration of grama and taluk panchayats’ plans in the district plan, distribution of plan resources across the TPs and GPs and monitoring of the plan programmes. Regarding the constitution of a state-level finance commission, almost all the states have incorporated this mandatory provision in their PR acts. Now most of the states constitute the state finance commission (SFC) periodically.The core functions of this institution are to recommend tax/duties/toll powers to local governments, distribute state revenues between state and 110

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local governments, recommend grants-in-aid to lower-level governments and suggest criteria for horizontal distribution of resources, i.e. among the municipal governments and panchayats. The ultimate goal is to make local governments fiscally independent and strong, which in turn makes them responsible for local service delivery and development.

Decentralised planning: the ground realities Status of devolution of the three ‘Fs’ As stated earlier almost all the states in India, in keeping the mandate of the 73rd CAA, established panchayats during 1993 and 1994 and conducted elections to panchayats periodically thereafter. However, with regard to the devolution of functions, finance and functionaries (the three Fs) to panchayats, which is very important from the point of view of planning and development, a large number of states have not shown genuine interest. Many states transferred on paper a large number of subjects/schemes to panchayats but without commensurate transfer of finances and functionaries (Table 8.2). Notable states which were prompt and genuine in transferring all three powers to PRIs are Karnataka, Kerala, Madhya Pradesh, Gujarat, Maharashtra and Rajasthan. The other states have, however, entrusted provision of basic services to village/ grama panchayats by bestowing some tax and non-tax sources and grants from central and state governments. As a result, the higher two tiers of panchayats have confined themselves to performing agency functions. The bureaucracy/line departments at the district level carry out the planning (allocation of outlays) under the supervision and guidance of state and state-level departments.

Status of DPCs Another important facilitator for planning at the grassroots level is the DPC. As stated earlier, Article 243ZD of 74th CAA gives a central role to the DPC in district planning. With regard to DPCs, they were not constituted in a large number of states until a few years back; where they existed, they were toothless (Babu, 2009). The then Prime Minister Dr Manmohan Singh observed in the Conference of Chairpersons of DPCs that ‘of all the provisions in the 73rd and 74th amendments, Article 243ZD of the Constitution which provides for DPCs has perhaps been the last to be implemented in full measure’ (Singh, 2009). Of late, most of the states have constituted DPCs but the bureaucrats/ministers were made chairpersons, which is against the spirit of decentralisation. Even in states like Kerala and Karnataka, which obtained higher ranks in the devolution index, the DPCs are not functioning the way they should (MoPR, 2016; Babu et al., 2017) and one can judge the fate of DPCs in other states where the PRIs are not empowered with functions, finance and functionaries.The position of DPCs in the country can be seen from Table 8.3.

Status of the DRDA The District Rural Development Agency (DRDA) at the district level, which is the nodal agency for implementing rural development and poverty alleviation programmes of the central government, remained independent of panchayats in several states. As a result, planning for these programmes remained outside the purview of panchayats. The status of DRDA in major states is given in Table 8.4. It can be seen from the table that 12 out of 18 states have not amalgamated the DRDA with ZP/DP. Again, in nine states, the chairperson of DRDA is a district-level 111

M. Devendra Babu Table 8.2 Status of devolution in major states of India State

Functions

Andhra Pradesh

10 departments devolved certain powers to PRIs

Assam

Bihar

Chhattisgarh

Jharkhand

Gujarat

Haryana Karnataka

Kerala

Madhya Pradesh

Maharashtra

Odisha

Punjab

Rajasthan

Tamil Nadu

Funds

Functionaries

GPs with tax powers; Functionaries not transferred GO for devolving to PRIs but officers/staff funds to PRIs from 10 from 10 departments departments work for PRIs GOs issued for 7 PRIs empowered to Very minimal devolution of subjects by 6 collect some taxes and functionaries to PRIs departments non-taxes 29 departments issued No tax powers to PRIs Very minimal devolution of Orders for delegating functionaries powers to PRIs Activity mapping for 27 GPs with tax powers; Functionaries for 9 matters undertaken funds for 12 departments departments devolved 3 departments issued No information No information orders devolving functions to PRIs Devolved 14 functions 8 tax sources to PRIs; Functionaries for 14 fully and 5 partially allocation of funds by functions to PRIs 13 departments 10 departmental Tax and non-taxes for GPs No devolution of functions functionaries Devolved 29 subjects GPs with tax powers and Deputed all district and taluk through activity devolution of sizable level personnel/staff to mapping grants from state PRIs Devolved 29 functions GPs with tax powers and Transferred departmental through activity devolution of sizable functionaries to PRIs mapping untied grants from the state GOs issued with respect GPs with tax powers; 13 departmental to 25 functions from released funds for 19 functionaries transferred 22 departments functions from 13 to PRIs departments Devolved 11 subjects Tax powers for GP and Devolved Class III and IV to fully and 18 partially ZP; grants for 11 ZPs departments 21 subjects were Tax powers to PRIs; no Transferred officials of 11 devolved by 11 clarity in the grant departments departments devolution 13 subjects were GPs with tax powers; no No functionaries devolved by 7 clarity in the grant departments devolution 5 departments 5 departments transferred Transferred 5 departments transferred functions funds and 10% untied officials to ZPs to ZPs funds to PRIs Monitoring and GPs with tax powers; 9% No devolution of supervision of 29 of state revenue for functionaries functions Local Governments (Continued )

112

Decentralised planning in India Table 8.2 (Continued) State

Functions

Telangana

Some powers of No information 10 departments delegated to PRIs 12 departments Tax powers to PRIs devolved 16 subjects Transferred 14 subjects ZPs with tax powers; grants for 3 functions

Uttar Pradesh Uttarakhand

West Bengal

14 departments issued GOs transferring 27 subjects

Funds

Functionaries No information

No control on functionaries

Supervisory role over functionaries of 14 subjects Tax powers to GPs, UFC 7 departments devolved and SFC Grants to PRIs functionaries

Source: Ministry of Panchayati Raj (MoPR), Annual Report 2016–17, Government of India

Table 8.3 Status of District Planning Committees in major states of India State

Status

Chairperson of DPC

Andhra Pradesh Assam Bihar Chhattisgarh Gujarat Haryana Jharkhand Karnataka

Functional Functional Functional Functional Functional Functional Functional Functional

Kerala Madhya Pradesh Maharashtra Odisha Punjab Rajasthan Tamil Nadu Uttar Pradesh Uttarakhand West Bengal

Functional Functional Functional Functional Functional Functional Functional Functional Functional Constituted

* * Chairperson of Zilla Panchayat District in-charge Minister * * * Elected from among the DPC members which include District Minister also** Chairperson of District Panchayat District in-charge Minister * District in-charge Minister * Chairperson of District Panchayat Chairperson of District Panchayat * District in-charge Minister Chairperson of Zilla Panchayat

Source: (1) MoPR, 2015, State of Panchayat Raj Report – 2015–16, Government of India; (2) Website: MoPR, Government of India Note: * no information; ** till 2016 the zilla panchayat chairperson was the chairperson

bureaucrat and in four states it is the head of a parallel body (such as the watershed society, Deendayal Antyodaya Yojana – NRLM society).

Status of state finance commissions Another measure where PRIs could have been strengthened both financially and in planning is in SFC reports and their recommendations. Contrary to this, a large number of states did not 113

M. Devendra Babu Table 8.4 State-wise status of District Rural Development Agency in India Major States

Status of DRDA

Chairperson

Executive Chairperson

Andhra Pradesh

Not merged with ZP Not merged with ZP Not merged with ZP Merged with ZP Not merged with ZP Not merged with ZP Not merged with ZP Merged with ZP Merged with ZP Not merged with ZP Not merged with ZP Merged with ZP Not merged with ZP Merged with ZP Not merged with DP Not merged with ZP Not merged with ZP Merged with ZP

ZP President

District Collector



District Collector

ZP Chairperson

Heads of Parallel Bodies

ZP Chairperson District Collector

– –

District Development Officer



ZP Chairperson

District Collector

ZP Chairperson DP Chairperson ZP Chairperson

– – Heads of Parallel Bodies

ZP Chairperson

CEO of ZP

ZP Chairperson ZP Chairperson

Project Director of DRDA Heads of Parallel Bodies

ZP Chairperson District Collector

– –

District Collector



ZP Chairperson

Heads of Parallel Bodies

ZP Chairperson



Assam Bihar Chhattisgarh Jharkhand Gujarat Haryana Karnataka Kerala Madhya Pradesh Maharashtra Odisha Punjab Rajasthan Tamil Nadu Uttar Pradesh Uttarakhand West Bengal

Source: Wikipedia, ‘District Rural Development Agencies’, accessed on 30 August 2016

show genuine interest in setting up SFCs periodically and implementing the recommendations. This applies to states like Karnataka also. By now, Karnataka should have constituted the 6th SFC going by the mandatory requirement. The Fourth SFC submitted its report in May 2018. The number of SFCs constituted by the states can be seen from Table 8.5. Out of 27 states only 2 have constituted a 6th SFC. Not only this, several slippages are noticed with regard to SFC reports starting from the stature and expertise of members of the commissions, reconstitution of commissions, quality of reports and recommendations, long delays in submissions and many more (Government of India, 1995, 2000, 2005, 2010, 2015). As per the Constitution, the UFC has a role in supplementing the resources of local governments and it has to base its recommendation on the SFC reports. However, the successive UFCs (from Tenth to Fourteenth) found the SFC reports unusable due to the above problems (Babu, 2018; Government of India, 1995, 2000, 2005, 2010, 2015). As a result, in a large number of states, PRIs could not be fiscally strengthened to carry out the function of planned development. Whatever life that is seen 114

Decentralised planning in India Table 8.5 Status of constitution of SFC by the states Sl. no.

SFC constituted (number) Number of states

1 2 3 4 5 6 7

1st 2nd 3rd 4th 5th 6th Total states

2 1 5 7 10 2 27

Source: MoPR, Annual Report 2019–20, Government of India

in the case of PRIs in a large number of states is largely because of the devolution of funds by the centre on the basis of recommendations of union finance commissions and also its own programme-tied grants. The extent of resources available at the disposal of PRIs in the total resources of all three level governments indicates whether these institutions are in a position to take up planning and development. During 2002–03 the share of own revenue of PRIs in the combined tax and non-tax revenue in India was 0.40% as compared to 43.06% of states and 56.54% of the centre. After taking into consideration the transfers from higher level governments the share of PRIs account for 5.55%. The position in 2011–12 shows a marginal decline in percentage shares of PRIs with 0.31% and 4.05% respectively compared to 2002–03 (Basavarajeshwari, 2019, p. 71). Another study reveals that the share of own revenue and total expenditure of PRIs among the three levels of government in India is abysmally low with 0.3% and 3.7%, respectively, during 2007–08 (Oommen, 2013).

Missed opportunities Having observed the pathetic situation in not only district planning but also on other important enabling aspects of PRIs in various states in the post-73rd Amendment period, then-Union Minister for Panchayati Raj Mr Mani Shankar Aiyar drew up a roadmap to strengthen and activate these institutions. He organised seven round table conferences with the state ministers in charge of panchayat raj on different issues in different locations of India. The approach of MoPR was that since local government is a state subject and any empowerment has to come from states, the ministry tried to bring the actors concerned directly to the negotiating table. The first, second, fifth and seventh round tables were very pertinent as they touched upon key issues like the devolution of the three ‘Fs’, Grama Sabha, planning and implementation, parallel bodies, the annual reports of the PRIs, and Devolution Index Reports and capacity building (Table 8.6). In these meetings, the ministers of states agreed to convince their governments and empower the PRIs on the above aspects. As a precursor to this the states started the process of constituting DPCs and making provisions for elected members, the chairperson of the district/ zilla panchayat and capacity-building programmes, activity mapping, etc. However, many of the states could not complete tasks such as making the ZP chairperson into the DPC chairperson, implementing activity mapping wherever done, or taking capacity building programmes seriously.The goal of genuine devolution of the three Fs and decentralised planning remain an unfinished task till today. The following paragraphs bring out the efforts made on key aspects of strengthening PRIs and their outcomes. 115

M. Devendra Babu Table 8.6 Details of issues of the round table conferences of ministers of panchayat raj of states Round table number

Date

Place

Points of discussion

First

24–25 July, 2004

Kolkata

Second

28–29 August, 2004 Mysore

Third

23–24 September 2004 7–8 October, 2004

Raipur

Effective devolution of three ‘Fs’ and Grama Sabhas Planning and implementation, parallel bodies and rural business hubs Reservations in PRIs

28–29 October, 2004 27–28 November, 2004 17–19 December, 2004

Srinagar

Fourth Fifth Sixth Seventh

Chandigarh

Guwahati Jaipur

PRIs in union territories and PR jurisprudence Annual reports on state of PRIs and devolution index reports Panchayat accounts and audits Capacity-building of functionaries of PRIs and IT enable e-governance

Source: Replies to Unstarred Question (No. 3556, 18 May 2006) in Rajya Sabha

Till 2004, there was no separate ministry for panchayati raj at the central government level. The then-union government not only created a separate Ministry of Panchayati Raj (MoPR) in 2004 but also made a budgetary provision to it to initiate development in rural areas through PRIs. A programme called Backward Region Grant Fund (BRGF) was launched during 2006– 07 for the Eleventh Plan period (2007–12) where the MoPR identified about 250 of the most backward districts and each district was provided with a minimum of Rs.10 crore per year to take up development activities in rural areas. This was to bridge the critical infrastructure and other development requirements in rural areas. Under this programme a major role was assigned to PRIs in the plan preparation and implementation. In addition, a provision was made to build capacities of functionaries of PRIs particularly in the preparation of participatory district development perspective plan in the selected districts with an additional Rs. one crore per year per district. An evaluation study of BRGF by the Planning Commission brought out both positive and negatives of the programme. On the bright side it reveals that the DPCs were found to be in existence, 81.22% reporting holding of Grama Sabha meeting for the selection of works, and of the total sanctioned works 61.61% were completed, 23.42% were ongoing and one-tenth were yet to be started (Planning Commission, 2014). Another study reports that on average the entitled amount per district between 2007–08 and 2010–11 was Rs. 17 crore and, of this, the release accounts for 62%. Further, between the years of 2009–10 and 2013–14, on average 85% of the total funds released under the scheme were spent (Centre for Policy Research, 2015). Unfortunately, the BRGF programme was discontinued by the government from 2015–16. Thus, almost one-third of the districts (and PRIs) in India lost a sizable untied grant, further leading to laxity in capacity-building programmes for the functionaries of PRIs, diminished importance for participatory planning and neglect of the reduction of regional disparities. Further, the MoPR/Planning Commission in mid-2005 issued guidelines to states stating that henceforth all the central rural development programmes have to be implemented through PRIs.This was done with the intention of empowering local governments in matters of finance and expenditure. In this connection, the then-Planning Commission prepared a framework for adopting a uniform medium term plan structure in India, i.e., a five-year plan (FYP) at all three 116

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level governments, namely central, state and local governments. In this direction, for the capacityand knowledge-building of the functionaries of local governments in planning and implementation, the MoPR (2006) constituted an expert group to prepare a manual on grassroots-level planning (the V. Ramachandran Committee). Simultaneously, the Planning Commission (2008) also prepared a manual on integrated district planning which has been made available to states and local governments for preparation of a five year plan coterminous with the Eleventh Five Year Plan (2007–12) of India. Besides, the Planning Commission made a provision of Rs. 9.0 lakh for each of the ZP/DP for the capacity-building of functionaries of PRIs and for seeking the technical help of reputed institutions in preparing a decentralised district plan. The local governments/DPCs of different states prepared holistic and integrated district plans (a comprehensive district development plan or an integrated district development plan) for the Eleventh FYP for all the sectors and the same were submitted to the Planning Commission. During this period the then-union government introduced a major programme, namely Rashtriya Krishi Vikas Yojana (RKVY), to improve the agriculture sector in India with a huge budgetary provision. One condition imposed on the states to avail the funds under this programme was to prepare district-wise plans for agriculture and allied sectors through local governments and DPC for the Eleventh FYP period. In most of the states, district-level ‘comprehensive district agriculture plans’ (CDAPs) were prepared and submitted to the Planning Commission for funding and implementation of RKVY. The author’s involvement in decentralised plan preparation in Karnataka and observations made across the states in this initiative would reveal that local governments have, to some extent, implemented CDAPs but not the CDDPs/IDDPs. The failure of the latter (except by states like Kerala) was mainly due to the non-devolution of functions, functionaries and funds to PRIs by the states. The plans were prepared keeping in view the local needs and expecting untied resources but in reality the panchayats in many states didn’t receive adequate and untied funds and hence the plans remained on the shelves. And unfortunately no one bothered to continue the preparation of medium-term plans at the district level starting with the Twelfth FYP including Karnataka. The continuation of preparing the medium-term plan after the Eleventh Plan at the district level would have made the functionaries realise their responsibilities, and through it would have gained more knowledge and capacities in plan preparation. Though it is a constitutional mandate under Article 243ZD to prepare district plans by PRIs and urban local bodies, the present NITI Aayog, the country’s top agency in planning, which is supposed to take a lead in motivating and activating this activity, is conspicuously absent. Another issue discussed in the round tables was to prepare a devolution index state-wise and annually, and to incentivise those states which are doing well in devolution in the form of awards and honours. The intention of this exercise is to show the states where they stand with regard to devolution of required powers to PRIs, and what further needs to be done. The MoPR took the responsibility of preparing devolution index reports from the year 2008–09 onwards which became an annual affair. But, again, for reasons unknown, this exercise stopped from the year 2016–17. Now the laggard states in devolution are happy. Again, the Union Finance Commissions (Eleventh,Twelfth and Thirteenth) for inter se (statewise) distribution of PRIs’ share of grants from the centre suggested a set of criteria. Among the indicators of criteria were ‘Index of Decentralisation’ (Eleventh and Twelfth UFCs) and ‘Devolution Index’ (Thirteenth UFC). The main intention of adopting this indicator was to make states strengthen the three ‘Fs’ at the local government level. The indicators considered within this criterion varied and even the weightage assigned also varied from one UFC to another. No doubt it is an innovative indicator the Eleventh UFC adopted but the weight of 20% assigned to it was low and was not powerful enough to influence the states to empower 117

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the PRIs (Babu, 2002, 2018). Oommen (2010) acknowledged the relevance of this indicator as it rewards the states in accelerating the process of democratic decentralisation. However, he was not convinced on the variables chosen for this indicator. Notwithstanding this, the Fourteenth UFC has altogether disregarded this indicator in its criteria. The states are happy to receive assured funds from the union government based on the UFC recommendations for PRIs, and as such they are least bothered about their own role in fiscal devolution. As noted earlier, the share of local governments in the combined revenues of three level governments declined in 2011–12 compared to 2002–03. Yet another problem that is obstructing decentralised planning is the creation of parastatal bodies by the states whose operations are exactly the same as PRIs. These bodies are entrenched in most of the subjects of PRIs be it drinking water, sanitation, housing, education, health, watershed, forests, etc. For instance, a progressive state like Karnataka in decentralisation had withdrawn the drinking water schemes entrusted to the ZP since 1993, and now the statelevel department, namely the Rural Development and Panchayat Raj Department (RDPRD), has created an exclusive division within it called the Rural Drinking Water Division.This division prepares plans relating to all drinking water schemes, implements them and has spending power. The resources from states flow directly to the parallel bodies for expending and these bodies just enlist the local GP president or a member in their managing committees. On the situation of PRIs, Oommen aptly pointed out that the roles and responsibilities of local governments remain ill-defined despite activity mapping in several states. States control funds, functions and functionaries, making autonomous governance almost impossible. Most states continue to create parallel bodies that make inroads into the functional domain of local governments (Oommen, 2018).

Conclusions The foregoing discussion shows that rural local governments in India are far from becoming self-governing institutions.With very few functions and resources at their command, the expectation of a move towards truly decentralised planning in India remains an unfulfilled dream. In a majority of states the PRIs depend largely on central government programmes/schemes and grants.The central grants are tied to these schemes. Even the minuscule grants provided by states to PRIs are tied to one scheme or another. As a result, there is no leverage for PRIs to allocate resources according to local priorities. Of late, in some states some of the central programmes/schemes have been withdrawn from the PRIs and the same are implemented through the state departments, DRDA and parallel bodies. For instance, in Karnataka, the implementation of drinking water schemes were assigned to zilla panchayats but since 2016–17 the same has been implemented by the Rural Drinking Water and Sanitation Division of the Rural Development and Panchayat Raj Department (RDPRD). Similarly, the watershed programmes are implemented through the state-level Watershed Society and water resources department (irrigation) at the district level. Likewise, in urban areas the schemes relating to roads, underground sewage drainage, etc. are implemented through the deputy commissioner of the district. In Telangana, the implementation of MGNREGS and payments under it has been withdrawn from grama panchayats and is entrusted to concerned line departments (Reddy, 2018). Keeping the DRDA outside the purview of PRIs is the best example of how the states sideline the PRIs in the planning and implementation of central rural development and poverty alleviation programmes. Notwithstanding the introduction of measures to strengthen panchayats in some states and also the union government, the grassroots-level planning, by and large, has not moved forward 118

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in the intended manner and speed. In these states the preparation of perspective plans and vision documents is sporadic in nature. As and when the push comes from above, i.e. from the Planning Commission/MoPR (as in the case of preparation of Comprehensive District Development Plan for the Eleventh Plan period), there will be some activity at the grassroots level in plan preparation without making efforts to empower panchayats to plan on their own thereafter, and implement the same. The same is true with regard to the latest Grama Panchayat Development Plan (GPDP). While recommending grants to GPs, the Fourteenth UFC imposed one condition for its utilisation, namely the preparation of plans by GPs. Hence, the MoPR has issued guidelines to GPs on preparation of a GPDP. The respective states also initiated training and facilitating GPs in the preparation of plans.This is a good initiation from the point of view of planning at the grassroots level. However, the lacuna in this process is that the plans in most of the states were confined to UFC grants and suggested schemes. The union and states could not utilise this opportunity to link it to the plans of higher tier-panchayats. In other words, using this opportunity the states could have strengthened the PRIs by providing more untied grants and initiating preparing participatory integrated district plans through DPCs. In these circumstances the question that arises is: what needs to be done to take forward the much eulogised planning from below? The discussion and understanding of decentralisation both from the governance and outcome points of view is varied and it depends on how one grasps it. Decentralisation per se is not bad. The failure of the system in India is largely due to empowerment problems. Hence there is a need for the empowerment of PRIs both by the states and the centre. The success of decentralisation and in turn planning from below depends on the extent of the provision of requisites such as political power, devolution of responsibilities according to the principle of subsidiarity, own revenue raising powers and devolution of grants-in-aid to meet the budgetary gap, creation of exclusive local bureaucracy and above all the capacity-building of functionaries of PRIs and citizens in the art of governance and planning. There are provisions in the 73rd Amendment Act towards empowering PRIs particularly in matters relating to functions and finances; but, since these are not mandatory in nature and left to the discretion of respective states to make legislations in devolving them, nothing much happens. It is the states which are reluctant to share power with the sub-state level governments. The studies pointed out that in those countries where meaningful devolution was made they experienced higher growth (World Bank, 1988). In India, Kerala tops in decentralisation efforts and has good experience in decentralised planning. The outcomes in the matters relating to service delivery, social welfare and development in this state are good. Even in Karnataka, the studies pointed out good outcomes of decentralisation prior to 73rd CAA (Aziz, 1993; Aziz et al., 1998). Now, even after 25 years of experience of decentralisation the institutions remain powerless. Is it not the right time to think of making certain provisions of the Constitution mandatory? Two areas one can think of in this regard are, one, inserting a panchayat list in the Constitution similar to central and state lists of subjects; and, second, along the central and state list of tax powers (sources) a list of panchayats tax powers may be specified. The NITI Aayog, which replaced the erstwhile Planning Commission, does not appear to have done much in the area of planning. It has devoted its time to preparing plans and visions for some key sectors/programmes. For instance, the Government of India accepted the United Nations Sustainable Development Goals (SDGs). The NITI Aayog carefully worked out the programmes/schemes to achieve the SDGs and the suitable local body institutions. However, it failed to consider the deficiencies of PRIs and suggest remedial measures. Again, it had not shown an iota of inkling towards Article 243ZD of the Constitution which emphasises district 119

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planning by local governments. It should take a proactive role in activating the DPCs and motivating the local governments to prepare medium and perspective plans. At least it should impress upon the centre to make compulsory planning and implementation of central programmes and schemes including that come under DRDA exclusively by the PRIs. The MoPR, an important ministry at the central government level, has a pivotal role in strengthening and making panchayats true self-governments. Gradually it has acquired some powers in terms of programmes and budget and some dynamic ministers of this ministry have started bringing some life to PRIs as evidenced in round table conferences and the adoption of the BRGF programme. However, this ministry has been weakened by the withdrawal of BRGF by the GoI in 2015, consequently reducing its budget drastically. It may be noted that between 2006–07 and 2010–11 allocation for the MoPR more than doubled from Rs. 2000 crore to Rs. 5171 crore. Consequent upon the discontinuation of key schemes by the GoI, the allocation has fallen to just Rs. 95 crore (Centre for Policy Research, 2015). There is a need to strengthen the MoPR to evolve schemes/programmes to be implemented by PRIs and allocating larger share from the central budget to it. These measures make the ministry a co-partner with states in empowering PRIs and realising good governance, planning and development. The UFCs could play a catalytic role in strengthening the local governments. Besides recommending larger grants for local governments, they could include a ‘Decentralisation’ indicator in their criteria for horizontal distribution. With a careful and proper selection of variables, this criterion would have the potential to force the states to empower the local governments functionally and financially. The local democratic institutions need to learn from experiences and function effectively. The effectiveness in the governance comes when the sub-institutions within the PRIs such as standing committees, social audit, Grama Sabha, etc. function as per laid-out rules and guidelines. The active participation of citizens in local governance is very important. It is the responsibility of the local government to ensure the participation of people at various levels, which in turn leads to downward accountability.These sub-institutions automatically become active once the PRIs get their due share of powers and, simultaneously, evolve continuous programme of building capabilities and knowledge levels of functionaries and citizens.

Note 1 Became a union territory in August 2019.

References Aziz, Abdul (1993). Decentralised Planning:The Karnataka Experiment. New Delhi: SAGE. Aziz, Abdul, Sivanna, N., Babu, M. Devendra, Sekher, Madhushree and Nelson, Charles (1998). Decentralised Governance and Planning: A Comparative Study in Three South Indian States. Bangalore: Institute for Social and Economic Change. Aziz, Abdul, Sivanna, N., Babu, M. Devendra, Sekher, Madhushree and Nelson, Charles (2002). Decentralised Governance and Planning: A Comparative Study of Three South Indian States. New Delhi: Macmillan. Babu, M. Devendra (2002). ‘Eleventh Finance Commission’s Recommendations and the Local Bodies: Impact Across the States’, Management in Government, XXXIV(2). Babu, M. Devendra (2009). ‘District Planning Committee and Grassroot Level Planning: Some Issues with Reference to Karnataka’, The Grassroots Governance Journal, II(1 & 2), June-December. Babu, M. Devendra (2010). Decentralised Planning in Karnataka: Realities and Prospects, Social and Economic Change Monographs 19. Bangalore: Institute for Social and Economic Change. Babu, M. Devendra (2011a). Comprehensive District Development Plan for Eleventh Five Year Plan, Bangalore Rural District. Bangalore: ISEC. 120

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Babu, M. Devendra (2011b). Comprehensive District Development Plan for Eleventh Five Year Plan, Dakshina Kannada District. Bangalore: ISEC. Babu, M. Devendra (2018). ‘Union Finance Commissions and Panchayat Finances: The Mandate and Experience in India’, Aarthika Cherche: FPI Journal of Economics and Governance, 3(1), January-June. Babu, M. Devendra, Rajasekhar, D., Sivanna, N. and Manjula, R. (2017). Performance and Constraints in the Delivery of Core Functions: A Study of Zilla,Taluk and Grama Panchayats in Karnataka. Bengaluru: Institute for Social and Economic Change. Basavarajeshwari, K. (2019). Local Government Finances: A Study of Selected Grama Panchayats in Karnataka (unpublished Ph.D. Thesis). Bengaluru: Institute for Social and Economic Change. Centre for Policy Research (2015). Budget Briefs,Vol.7, No.7, BRGF, GoI, 2015–16. Government of India (n.d.). The Constitution Seventy-Third Amendment Act, 1992 on the Panchayats. Government of India, Reports of Finance Commissions 1995, 2000, 2005, 2010, 2015. New Delhi: Government of India. MoPR (Ministry of Panchayati Raj) (2006). Report of the Expert Group on Planning at the Grassroot Level: An Action Programme for the Eleventh Five Year Plan. New Delhi: Government of India. MoPR (2015). State of Panchayat Raj Report 2015-16. Government of India. MoPR (2016). Annual Report – 2016–2017. New Delhi: Government of India. Oommen, M. A. (2010). ‘Have the State Finance Commissions Fulfilled Their Constitutional Mandates?’, Economic and Political Weekly, XIV(30), July 24. Oommen, M. A. (2013). ‘Fiscal Decentralisation’, in Mathew, George (ed.) Status of Panchayati Raj in the States and Union Territories of India. New Delhi: Institute of Social Sciences and Concept Publishing House. Oommen, M. A. (2018). Local Democracy in Disarry, The Hindu, May 1, p. 11. Planning Commission (2008). Manual for Integrated District Planning. New Delhi: Government of India. Reddy, M.Gopinath (2018). Status Report on Panchayat Raj Institutions in Telangana State. Hyderabad: Centre for Economic and Social Studies (CESS). Singh, Manmohan (2009). Prime Minister’s Speech at the Conference of Chairpersons of District Planning Committees. New Delhi:Vigyan Bhavan. World Bank (1988). World Development Report. New York: Oxford University Press.

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9 Implementation of PESA and status of panchayat raj institutions in fifth scheduled areas of Indian states Issues, challenges and ways ahead Yatindra Singh Sisodia

Introduction Village communities have been in existence in India for over centuries and panchayats have been an intimate part of the Indian culture.The panchayat raj system is one of the unique democratic institutions that evolved in India by the country’s own genius and ethos (Kashyap, 2003). After Independence, persistent efforts were made to make rural local self-government viable and self-sustainable on the lines portrayed by Mahatma Gandhi. Unfortunately, the response of state governments was of a very different nature and as a result, the pace and pattern of the establishment of rural local political institutions were not very enthusiastic in the initial phase of Independence. The state governments showed very little interest in empowering the villagelevel institutions and the powers transferred to these institutions were almost negligible. After almost 45 years of Independence, the central government realised the hard truth that the delivery system in the tribal/rural area was not effectively operational; it was realised that without the functional participation of people through panchayats, the development of rural and tribal areas would not be sustainable. As a result, the 73rd Constitutional Amendment Act (CAA) was enacted in 1992. The execution of the act was made mandatory for all the Indian states, and panchayats were provided with a constitutional status. The 73rd Amendment has provided uniformity and formal structure to these traditional institutions of self-governance for the sake of their effective functioning.The 73rd Amendment has initiated a fundamental restructuring of the governance and administrative system of the country, based on the philosophy of decentralisation and power to the people. Policy-planners have realised by now that the new panchayat raj institutions have the potential to usher in a new era of change and development in accordance with people’s needs and priorities and to revitalise a deeply troubled system of democracy at the grassroots level (Behar and Kumar, 2002). The idea that produced the 73rd CAA was not a response to pressure from the grassroots but was due to an increasing recognition that the institutional initiatives of the preceding decades 122

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had not delivered, that the extent of rural poverty was still high and thus that the existing structure of government needed to be reformed. It is interesting to note that this idea evolved from the centre and the state governments. It was a political drive to see panchayat raj institutions (PRIs) as a solution to the governmental crises that India was experiencing (World Bank, 2000) at the grassroots level. Advocates of decentralisation in developing countries argue that “bringing government closer to the people will make it more responsive and hence more likely to develop policies and outputs which meet the needs of the ordinary citizens – the majority of whom are the poor” (Crook and Sverrisson, 2001). The institution of panchayat raj in its rejuvenated form seeks to achieve the objectives of democratic decentralisation to accelerate socio-economic development and usher in equity and social justice in rural and tribal areas. The enactments of the 73rd Constitutional Amendment Act and the subsequent state-wise panchayat raj acts in India have brought to the frontline the significance of grassroots democratic processes. Contextually, and theoretically, too, the new panchayat raj system was created as a new model of self-governance (Sisodia, 2002).The objectives of the new panchayat raj are to execute and implement schemes and programmes to meet real local needs, to mobilise people, to channelise their energies towards rural reconstruction through the new institutions. After 25 years of the new panchayat raj in India, its performance and impact continue to be a matter of debate and speculation. Almost three million people including more than one million women and a sizable number of SCs/STs have taken part in panchayats.The sizeable presence of underprivileged and the poor as people’s representatives through reservations for the grassroots political institutions is a landmark development in the rural politics of the country (Sisodia, 2017). It is also a matter of serious debate as to how this excluded lot after their inclusion in active politics at the grassroots would effectively participate and tackle local power equations and set the agenda for development.Yet the fact remains that these backward and so far ignored classes have heralded their arrival on the political stage of the country in the countryside. A perusal of state profiles would show that panchayat raj reforms have certainly taken place with vigour and zeal in some western and southern parts of the country that are relatively sound from the point of view of the economy, are socially vibrant and have active civil societies. In contrast, the northern states with the greatest degree of poverty and inequality, and deep schisms of caste and a low pace of governance, have produced weak panchayats (Robinson, 2005).

73rd Amendment and the implementation of PESA Tribal communities are the most marginalised section of Indian society. They have remained comparatively isolated from the mainstream development process and maintained an uninterrupted long tradition of a well-knit, cohesive social structure and value system backed by their own custom and traditions. They also have several indigenous traditional institutions to resolve their conflicts and manage their resources and socio-political life (Sisodia, 2005).When the institution of the new panchayat raj was planned to be introduced in the tribal areas it was felt that there was an urgent need to protect tribal societies from marginalisation in the age of globalisation. The Working Group (1996) of the Ninth Five Year Plan suggested participatory planning as a necessary prelude for growth and equity in tribal areas which had not gained much significance from the development process since Independence. In order to strengthen the grassrootslevel local bodies and to provide the self-rule of tribal areas, Part IX of the Constitution which deals with panchayats was specially extended through an act of parliament called the Panchayats Extension to Scheduled V Areas Act (PESA) (1996). Prior to this act, a committee was constituted under the chairmanship of Dilip Singh Bhuria to examine various dimensions of the self-rule of tribal areas and the constitutional requirement for the extension of the panchayats provision in 123

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the scheduled areas. Under PESA special treatment has been given to the social, political, cultural and economic aspects of tribal life. The act gives radical governance powers to the tribal community and recognises its traditional community rights over natural resources (Mukul, 1997). One of the highlighting features of PESA is its suggestion that “every Gram Sabha shall be competent to safeguard and preserve the traditions and customs of the people, their cultural identity, community resources and the customary mode of dispute resolution.” In addition to this, the Central Act of 1996 provides extensive powers to gram sabha in the scheduled areas in the following sectors: (i) approval of plans, programmes and projects for social and economic development prior to their implementation; (ii) identification of beneficiaries of anti-poverty programmes; and (iii) certified utilisation of funds spent by the panchayat. PESA, after giving the above exclusive powers to the lowest unit of grassroots democracy, further provides that the gram sabha or panchayats at the appropriate level shall have the following powers: (i) to be consulted on matters of land acquisition and resettlement; (ii) to grant prospecting licenses for mining leases for minor minerals and concessions for such activities; (iii) to plan and manage minor water bodies; (iv) to enforce prohibition or to regulate or restrict the sale and consumption of any intoxicant; (v) to own minor forest produces; (vi) to prevent alienation of land and to restore any unlawfully alienated land of a scheduled tribe; (vii) to manage village markets; (viii) to exercise control over money lending to scheduled tribes; (ix) to exercise controls over institutions and functionaries in all social sectors; and (x) to control local plans and resources. While prescribing such wide-ranging powers to “Gram Sabhas or Panchayats at the appropriate level” PESA has further warned that the State legislation that may endow Panchayats with powers and authority as may be necessary to enable them to function as institutions of self-government. It also contains safeguards to ensure that Panchayats at a higher level do not assume the powers and authority of any panchayats at the lower level or the Gram Sabha. The states were suggested to amend their respective panchayat acts to extend the provisions of the panchayat to the scheduled areas of their respective states within a year, keeping in mind the letter and the spirit of the Central Act of 1996. PESA has been recognised by many activists and scholars as a progressive law because it gives some crucial rights to village-level communities to manage their lives and resources (Choubey, 2015). All ten states having PESA areas in their jurisdiction have amended their state panchayat raj acts but not entirely in consonance with PESA. There are a number of state subject legislations related to land acquisition, excise, mines and minerals, forest produce, village markets and money lending which are yet to be aligned with PESA. The gaps between the central and state legislations, clashes between PESA and pre-existing laws, overlap of control between different tiers of panchayats, lack of clarity on important concepts like community resources, minor water bodies, consent/consultations, etc. are some of the legal difficulties in implementation of PESA (MoPR, Devolution Report 2015–16, p. 89).

Fifth scheduled areas PESA extends Part IX of the Constitution with certain modifications and exceptions to the fifth scheduled areas notified in ten states, viz. Andhra Pradesh, Chhattisgarh, Gujarat, Himachal Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Odisha, Rajasthan and Telangana.The scheduled areas in these ten states extend in 108 districts (45 fully and 63 partly covered). 124

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(i) Andhra Pradesh and (ii) Telangana: PESA districts (partly covered): five (Visakhapatnam, East Godavari,West Godavari, Srikakulam,Vizianagaram); PESA blocks: 36; PESA panchayats: 588; PESA villages: 1,586. (iii) Chhattisgarh: Surguja district; Koria district; Bastar district; Dantewada district; Kanker district; Marwahi, Gorella-I and Gorella-2 tribal development blocks and the Kota Revenue Inspector Circle in Bilaspur district; Korba district; Jashpur district; Dharmjaigarh, Gharghoda, Tamnar, Lailunga, and Kharsia tribal development blocks in Raigarh district; Dondi tribal development block in Durg district; Chauki, Manpur, and Mohla tribal development blocks in Rajnandgaon district; Gariaband, Mainpur and Chhura tribal development blocks in Raipur district; and Nagri (Sihawa) tribal development block in Dhamtari district. (iv) Gujarat: Uchchhal,Vyara, Mahuwa, Mahuwa, Mandvi, Nizar, Songadh,Valod, Mangrol and Bardoli talukas in Surat district; Dediapada, Sagbara, Valia, Nandod and Jhagadia talukas in Bharuch district; Dangs district and taluka; Bansda, Dharampur, Chikhali, Pardi and Umbergaon talukas in Valasad district; Jhalod, Dohad, Santrampur, Limkheda and Deogarh Baria talukas in Panchmahal district; Chhotaudepur and Naswadi talukas and Tilakwada mahal in Vadodora district; Khedbrahma, Bhiloda and Meghraj talukas; and Vijayanagar mahal in Sabarkantha district. (v) Himachal Pradesh: Lahaul and Spiti district; Kinnaur district; Pangi tehsil; and Bharmour sub-tehsil in Chamba district. (vi) Jharkhand: Ranchi district; Lohardaga district; Gumla district; Simdega district; Latehar district; East-Singhbhum district; West Singhbhum district; Sarikela-Kharsawan district; Sahebganj district; Dumka district; Pakur district; Jamtara district; Rabda and Bakoria panchayats of Satbarwa block in Palamu district; Bhandaria block in Garhwa district; and Sunderpahari and Boarijor blocks in Godda district. (vii) Madhya Pradesh: Jhabua district; Mandla district; Sardarpur, Dhar, Kukshi and Manawar tahsils in Dhar district; Barwani, Rajpur, Sendawa, Bhikangaon and Maheshwar tahsils in Khargone (West Nimar) district; Khalwa tribal development block of Harsud tahsil and Khaknar tribal development block of Burhanpur tahsil in Khandwa (East Nimar) district; Sailana tahsil in Ratlam district; Betul tahsil (excluding Betul community development block) and Bhainsdehi tehsil in Betul district; Lakhnadon tahsil and Kurai tribal development block of Sconi tahsil in Sconi district; Baihar tahsil in Balaghat district; Kesla tribal development block of Hoshangabad tahsil in Hoshangabad district; Kusumi tribal development block of Gopadbanas tahsil in Sidhi district; Karahal tribal development block of Shcopur tahsil in Morena district; and Tamia and Jamai tribal development blocks of Chhindwara district. (viii) Maharashtra: Palghar tahsil; Vasai (Bassein); Bhiwandi tahsil; Murbad tahsil; Dindori tahsil; Igatpuri tahsil; Nasik tahsil; Baglan tahsil; Sakri tahsil; Nandurbar tahsil; Shahada tahsil; Shirpur tahsil; Chopda tahsil; Yaval tahsil; Raver tahsil; Akole tahsil; Ambegaon tahsil; Junnar tahsil; Kinwat tahsil; Maregaon tahsil; Ralegaon tahsil; Kelapur tahsil; Ghatanji tahsil; Gadchiroli tahsil; Armori tahsil; Chamorshi tahsil; and Rajura tahsil. (ix) Odisha: Mayurbhanj district; Sundargah district; Koraput district; Kuchinda tahsil in Sambalpur district; Keonjhar and Telkoi tahsils of Keonjhar sub-division and Champua and Barbil tahsils of Champua sub-division in Keonjhar district; Khondmals tahsil of Khondmals sub-division and Balliguda and G. Udayagiri tahsils of Balliguda sub-division in BoudhKhondmals district; R. Udayagiri tahsil and Guma and Rayagada blocks of Parlakhemundi tahsil of Parlakhemundi sub-division, and Surada tahsil, excluding Gazalbadi and Gocha gram panchayats of Ghumsur sub-division, in Ganjam district; Thuamul Rampur block 125

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of Kalahandi tahsil, and Lanjigarh Block, falling in Lanjigarh and Kalahandi tahsils, in Bhawanipatna sub-division in Kalahandi district; and Nilgiri community development block of Nilgiri tahsil in Nilgiri sub-division in Balasore district. (x) Rajasthan: Banswara district; Dungarpur district; Udaipur district; Pratapgarh district; and Abu Road tahs il in Sirohi district. Against this backdrop, this chapter is an attempt to find out the actual working of the PRIs in tribal areas after the implementation of PESA.

Methodology and context The evidence used in this chapter is based on the research study carried out on the implementation of PESA in the contiguous fifth scheduled areas of Madhya Pradesh, Gujarat and Rajasthan. Primary data, collected from representatives of PRIs on their attitude and perceptions, are analysed in this chapter to comprehend the dynamics of PESA at work, as well as the nature of their changes and development. The selected districts were Jhabua from Madhya Pradesh, Banswara from Rajasthan and Dahod from Gujarat. Ten tribal villages were purposively selected from each district and the total number of villages included in the sample was 30. Seven panchayat raj representatives from each gram panchayat (in all, 210 representatives from 30 GPs) were interviewed regarding the implementation of PESA in their gram panchayats and its impact upon the governance and also on socio-economic and political life.

Participation, attitudes and perceptions regarding implementation of PESA: issues and challenges Exposure towards PESA and ineffective institutional structure The structures under the PESA Act such as the gram sabhas and gram panchayats are not highly effective and have not been able to fulfil their assigned roles in true spirit resulting in an adverse impact on the overall development goals of the panchayats in scheduled areas. Table 9.1 shows that only 23.3% of the respondents across the three states stated that they had knowledge of the special status of schedule five areas thus suggesting that 76.7% of the respondents lacked the competence to perform in these institutions. Such a scenario has hampered the process of institutionalisation and functioning. It is indeed a matter of concern that the majority of the respondents (76.7%) have had very little exposure to the special status of panchayats in fifth scheduled areas. This has a significant meaning since persistent efforts have been made to percolate this message down to the representatives so that they understand the concept of PESA. Insofar as the quality of the information provided is concerned, it was found that only superficial information was made available to them. In scheduled areas, the village-level situation is different from the high expectations created by PESA. State acts are also confronting the provisions of PESA. The issue of tribal vis-avis non-tribal leadership in scheduled areas has created new political equations. The political dynamics at the grassroots level have different dimensions as it has many players in various circles and they throw their weight around according to their influences in the local power dynamics. As a matter of fact, it can be argued that despite the specific provisions provided through PESA, there is a gap between the macro-level framework and grassroots-level reality. Tribal regions have their own peculiarities. The main actors in panchayats are traditional leaders, new entrants, the local bureaucracy, non-tribal society and government departments 126

PESA status of PRIs in fifth scheduled areas Table 9.1 Knowledge and participation of panchayat representatives in PESA areas Particulars

Gram panchayat representatives (%) stating “yes” in the states of Madhya Pradesh (n=70)

Have knowledge on special status of panchayat in V scheduled area Have knowledge that there should be more than one gram sabha in a gram panchayat Sarpanch will preside over the gram sabha meeting Only tribal person can be nominated to preside over gram sabha Presented point of view in gram sabha to solve the village problem

Rajasthan (n=70)

Gujarat (n=70)

Total (n=210)

20.0

27.1

22.9

23.3

55.7

45.7

41.4

47.6

74.3

100.0

74.3

82.9

37.1

37.1

24.3

32.9

52.9

60.0

41.4

51.4

Source: Field survey

like those for forest and revenue. The traditional leadership generally looks at the decentralised process as a rival parallel institution and a challenge to their natural stronghold. The entrants to panchayats are not fully acquainted with the provisions of PESA and therefore their understanding of this aspect needs to be broadened. Planning and the management of minor water bodies are entrusted to gram sabha but there are other institutions as well to look into this matter, and hence it is necessary to create coordination between traditional systems and new schemes. Amendments have been made in acts for mining leases, exploitation of minor minerals, minor forest produce and the prevention of the alienation of land but still there are dilemmas in sharing the stronghold in the implementation process. Non-tribal leadership has been very strong in tribal regions. Although a sizable proportion of them have accepted the truth of the mandatory provision of PESA and extended help to the tribal leadership, there is still a noticeable presence of non-tribal leadership that works as middlemen/agents for development schemes.They have established a good network with local bureaucracy and influence the decision-making process in their favour, negating the tribal leadership at the grassroots level. The non-tribal leadership is strong because most of them are moneylenders, small vendors, contractors, brokers, landholders, etc. and the tribal community has a huge dependence on them for all their economic activities.

Functioning of gram sabha The gram sabha at the lowest rung of the village is the first modern political institution which seeks to place direct political power in the hands of people, without the mediation of elected representatives (Purohit, 2002). There is almost no change in the perception of panchayat raj representatives regarding gram sabha.This is also because the level of exposure among the tribals is very low and female panchayat raj representatives have hardly had any understanding of these issues. The overwhelming majority of the respondents who are panchayat representatives have 127

Yatindra Singh Sisodia

no exposure to special rights. Gram sabha members have a meagre knowledge of the special rights of gram sabha in scheduled areas. Less than half of panchayat raj representatives (47.6%) are aware of the significant aspects of PESA regarding the composition of more than one gram sabha in one gram panchayat (Table 9.1). Government officials were found to be regularly present in the gram sabha as it is a platform from which all the government schemes are initiated and the decisions and programmes of the government are sent down. The will of sarpanch is very prominent in the opinion of the majority (64.8%) and the very important dimension of a process for selecting of presiding person is missing among the tribals. In the opinion of the overwhelming majority (82.9%), the sarpanch presides over the meeting (Table 9.1). An important aspect of PESA regarding the nominations of a tribal person to preside over the gram sabha meeting is known to a small proportion of respondents (32.9%) despite the fact that they were panchayat representatives (Table 9.1). Important reasons why tribal representatives should participate in the gram sabha meeting include spreading awareness of the problems of the village along with knowledge of different schemes and solutions. It is indeed a matter of concern that despite being panchayat members only about half of the respondents (51.4%) presented their point of view in this context (Table 9.1). A significant number of respondents (53.3%) have narrated a point of view in response to the gram sabha meetings regarding the works done and in process. Despite the provision of social audit, only about half of the respondents (52.9%) who are panchayat representatives have the information with regard to the different stages of work. The reason for ignorance on social audit is due to the low level of literacy and limited exposure to the works carried out by the panchayats. A sizeable proportion of respondents (54.8%) have expressed the view that the role played by them is mostly related to the submission of proposals, giving suggestions and discussing proposals; in fact, these are the main roles assigned to panchayat members. Over one-third of respondents (38.6%) tried to enquire about the problems of villagers and place them in gram sabha meetings for the simple reason that it is significant from the point of view of the implementation of PESA (Table 9.2). Decisions in gram sabha are vested either with the majority of gram sabha members or with sarpanch. The majority of respondents (59.0%) receive information related to all important aspects. The overwhelming majority of respondents (83.8%) know the provision that the gram sabha’s decisions are mandatory for implementation. Although nearly 53% of the respondents Table 9.2 Information about various stages of work among panchayat representatives Particulars

Know the cost of work Know the allotment disbursed Know the total expenditure incurred on the work Know the time spent on work Know the availability/quality of work and material Know the agency/contractor Source: Field survey

128

Gram panchayat representatives (%) stating “yes” in the states of Madhya Pradesh (n=70)

Rajasthan (n=70)

Gujarat (n=70)

Total (n=210)

50.0 51.4 42.9

50.0 48.6 45.7

60.0 58.6 52.9

53.3 52.9 47.1

44.3 42.9

41.4 45.7

52.9 55.7

46.2 47.6

42.9

47.1

55.7

48.6

PESA status of PRIs in fifth scheduled areas Table 9.3 Perception of panchayat representatives in PESA areas Particulars

Decisions of gram sabha are mandatory Gram panchayat positive to recommendations of gram sabha

Gram panchayat representatives (%) stating“yes” in the states of Madhya Pradesh (n=70)

Rajasthan (n=70)

Gujarat (n=70)

Total (n=210)

75.7

91.4

84.3

83.8

54.3

51.4

52.9

52.9

Source: Field survey

stated that the grama panchayat is positive to the recommendations of gram sabha, nearly onefourth of them stated that sarpanch plays a vital role in the selection of beneficiaries (Table 9.3). A very significant number (59.5%) were aware of the important fact that the selection of beneficiaries for the welfare schemes is to be done through gram sabha. About 67% of the respondents stated that BPL households benefit through gram sabha in the selection of beneficiaries for welfare schemes. More than half of the panchayat raj representatives (59.0%) felt that the proposals and suggestions of gram sabha are taken into consideration by the gram panchayat. Looking into innovation and its technicality, a sizable number (52.9%) are coming closer to the understanding of the system.The very important aspect of making decisions about village development through gram sabha was endorsed by almost two-thirds of the respondents (67.6%). Nevertheless, the sarpanch still has a very important say in the selection and management of village development work. It has been observed in many cases that the role of the gram sabhas as an institution of promoting direct democracy, managing community affairs and promoting development has been ignored by the local bureaucrats and local political leadership. The functioning of gram sabhas is further diluted by irregular gram sabha meetings, apathy towards overall tribal development issues, inadequate operationalisation, expedient and irregular discussion on the management of natural resources and prevailing political prejudice and interferences. Such a scenario has compromised the functioning of the gram sabhas. The efforts towards analysing PESA in the field clearly indicate the need for improving the coordination of the PRIs with the Department of Tribal Affairs and with the line departments. The quantum jump required from “representative democracy” to the political realm of “participatory democracy” is possible only if the panchayati raj departments and the PRIs in the PESA states imbibe on an understanding of this and make an effort towards operationalising it (MoPR, Devolution Report, 2015–16, p. 98).

Operationalisation of gram panchayat Gram panchayat is the main executing institution of all the work at the grassroots level. The overwhelming majority of the respondents stated that they participate in gram panchayat meetings regularly; this is very significant from the point of view of the tribal situation. A significant majority of the respondents inspected the construction work that was ongoing in the village. The respondents do visit different offices for inspection purposes; however, the schools and anganwadis are specifically under the inspection of respondents.Villages require basic amenities like drinking water, electricity, roads/bridges, etc. on a priority basis. 129

Yatindra Singh Sisodia Table 9.4 Knowledge and perception of panchayat representatives Particulars

No role of gram sabha in solving Problems Knowledge about the responsibility of management of natural resources Belief in traditions and rituals Changes found in the present panchayat system as compared to the earlier one Presented point of view in gram sabha to solve the village problem

Responses (%) of gram panchayat representatives in the states of Madhya Pradesh (n=70)

Rajasthan (n=70)

Gujarat (n=70)

Total (n=210)

47.1

41.4

45.7

44.8

40.0

45.7

54.3

46.7

90.0 71.4

85.7 77.1

71.4 74.3

82.4 74.3

52.9

60.0

41.4

51.4

Source: Field survey

Almost half of the respondents (44.8%) projected a very negative picture of gram panchayat as having no role in solving village problems (Table 9.4).This is because the respondents were gram panchayat members who had already aired the problems in gram panchayat meetings repeatedly. Despite such efforts, no positive or concrete results came out. As a result, villagers lost faith in the ability of gram sabha to solve their problems. The role of the panchayats is quite equivocal in many cases from planning for economic development to management of natural resources.

Management of natural resources The management of natural resources according to tribes’ indigenous knowledge is one of the main activities under PESA. Less than half of the respondents (46.7%) are aware of the provision of the PESA Act of management of natural resources (land, water, and forest) through gram sabha (Table 9.4). Fifty per cent of the surveyed tribal villages had a forest and minor forest produce. As far as control over the forest was concerned, all the respondents categorically opined that the government/forest department has control over it. Only a very small number of villages have minor minerals. The overwhelming majority of villages have water bodies wherein the committee system is functional in managing the water bodies and a considerable number of respondents (71.4%) did not find any arrangement for a water body in their villages. Although the PESA Act highlights the importance of control over natural resources and the management of minor forest produce, it is nevertheless not visible in practice. If PESA recognises the supremacy of the traditional village community over the community resources it has been managing since time immemorial, then the “appropriate” panchayat raj institution for consultation on whether and how the use of these community resources is to be altered for the purpose of a “development project” must necessarily be the gram sabha. It is the gram sabha in which PESA vests this power and responsibility (Report on Land and Governance under the Fifth Schedule, 2016). It is therefore very important in the context of PESA to streamline the issue of natural resource management at the grassroots level and special efforts are needed to engage the tribal community in this area and simultaneously it is also 130

PESA status of PRIs in fifth scheduled areas

equally important to make the forest department understand the privileged position of the tribal community through PESA and the Forest Rights Act so that the land, water, and forests are managed by the tribal community in scheduled areas.

Conservation and protection of traditions and rituals of tribals The overwhelming majority of the respondents (82.4%) believe in local traditions and rituals. Gram sabha has the responsibility for the conservation and protection of traditions, rituals, and cultural identity (Table 9.4). Surprisingly, this fact is not known to the majority of the respondents (61.4%). Issues of the conservation and protection of traditions, rituals and cultural identity in gram sabha were discussed by a limited number of respondents (24.8%). Knowledge about traditions and rituals is confined to very superficial issues and no specific details were discussed in terms of traditions and rituals to be protected by the gram sabha like the traditional pattern of dispute resolution, worshiping natural resources, the traditional method of natural resource management, livelihood patterns, etc. In the majority of cases (72.0%), the gram sabha/jati panchayat/sarpanch looks after the question of dispute resolution. Gram sabha and jati panchayats are considered to be the most effective institutions in the conservation and protection of traditions, rituals and cultural identities. Conservation and protection through gram sabha are influenced by the sarpanch’s decision in the majority of cases (60.5%), while a substantial number favours the villagers’ consent in this matter.The respondents who have made their point of view in favour of jati panchayat for the conservation and protection of traditions and rituals have supported the acceptance of the role of tadvi/patel in all these matters. Social evils in tribal society are plenty which ultimately cause misery in many lives.The PESA Act has the provision of including this matter in the discussion of gram sabha. Over 41% of the respondents endorsed the idea that the social evils plaguing tribals need to be discussed in gram sabha which is indeed good for the tribal society. Nearly 62% of the respondents were of the opinion that all the major social evils need to be reformed/curbed by the gram sabha. They were of the view that dowries and the use of liquor, considered major social evils, need to be banned. About 92% of the respondents did not think that grama sabha will cause harm to local culture and traditions. Almost three-fourths of the respondents (74.3%) were of the opinion that the present panchayat system is different from the earlier one (Table 9.4). Since the PESA Act has categorically empowered the gram sabha with enormous power and the majority of the respondents have accepted this change, this can be considered a positive contribution to the system. Contrary to the earlier panchayat system, more development works are taking place and there is the direct involvement of the villagers in village matters after the creation of gram sabha under PESA. Illiteracy has been termed one of the most crucial and significant problems faced by the panchayat members. Training, an essential tool of equipping the people with the capacity to run panchayat affairs, has not been carried out to make the panchayat representatives aware of the importance of PESA and the procedural aspects of panchayat raj institutions. Respondents have received training mainly from block headquarters. The training was imparted on issues like the workings of the panchayat, information/knowledge about the basics of the panchayat and understanding rules and regulations. The suggestions given for improving the system were related to the regular holding of meetings, the delegation of powers and the devolution of more finances, etc. In fact, the real issues which create hurdles in the smooth functioning of panchayat raj in scheduled areas were not mentioned by the respondents; thus positive efforts are needed for improvement. This is also because the level of understanding and exposure among tribal representatives is comparatively low. 131

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According to a committee appointed by the Ministry of Panchayati Raj to draft model guidelines for PESA, the main reasons for the non-implementation of PESA in the concerned States, on the whole, are: (i) Lack of appreciation about the place of Fifth Schedule read with PESA in tribal affairs and confusion about its legal status; (ii) The formal responsibility of (a) implementation of PESA that stands for total transformation of the paradigm of governance in the Scheduled Areas and (b) dealing with tribal affairs in general is vested with two different Ministries in the Union Government, namely, the Ministry of Panchayati Raj (earlier the Ministry of Rural Development) and the Ministry of Tribal Affairs respectively that are virtually functioning in isolation; (iii) There is lack of information and understanding about PESA in general and its radical character in particular amongst the political executive and even concerned administrators; and (iv) There is virtually no effort to convey and disseminate the message of PESA amongst the concerned people. (Report Sub-Committee- BD Sharma, 2006)

Panchayats in the decentralised planning process and implementation The decentralised planning process at the village level is mentioned very specifically in the PESA Act. However, the participation level of people in gram sabha and gram panchayat in terms of decentralised planning is abysmally low. They lack the vision and articulation for village development planning with regard to the resources available and to prioritising works to be carried out. It is also noticeable that the upper echelons of bureaucracy and political leadership have also ignored the role of gram sabha and gram panchayat in formulating local plans keeping in view the available programmes.The overwhelming majority of the respondents (72.4%) were not aware of or exposed to the process of planning and implementing programmes. The PESA Act has been recognised by many academicians and activists as one of the most progressive laws because it provides many crucial rights to village-level tribal communities to manage their lives and resources. This reflects in the provisions of the act through vesting powers to gram sabhas and gram panchayats in the matters of the planning and programme implementation. However, it has been observed that the schemes and programmes have provided economic benefits but there are serious deviations in the process of implementation of various flagship schemes and programmes.

Conclusion The PESA Act undoubtedly provided an impetus for the functioning of panchayats in the tribal areas. But 20 years of the PESA Act shows little progress with regard to fulfilling the overall development needs of the tribals. The central problem that has dogged the establishment of truly autonomous local governance through effective devolution to PRIs is the reluctance of state governments to part with the powers of governance that they enjoy (Banerjee, 2013). In recent years, many reports – “The Report of Expert Group of the Planning Commission on Development Challenges in Extremist Affected Areas” (2008), “The Sixth Report of the Second Administrative Reforms Commission” (2007), “The Balchandra Mungekar Committee Report” (2009), etc. – have clearly underlined the dismal situation of the implementation of PESA (Choubey, 2015). The importance of PESA has not been internalised into administrative practice, and government officials including forest departments continue to deny access to rights of tribals. Bureaucracies 132

PESA status of PRIs in fifth scheduled areas

and judicial institutions need to be introduced to the changes that PESA has brought to administration and control in fifth scheduled areas (MoTA, Tribal Committee Report 2014, p. 370). Indeed, without operationalising PESA, all increases in budget outlay and tribal-oriented schemes will yield marginal results, the crux of the matter lying in politically and administratively empowering tribal panchayats to take effective charge of neighbourhood issues of tribal welfare and tribal development, particularly those relating to the sectors identified as the PRIs domain in the eleventh schedule of the Constitution (MoPR, Towards Holistic, 2013). In view of the enormous diversity among nearly 700 tribes in India, the second principle to be followed is of area-specific and tribe-sensitive local planning. PESA provides an institutional basis for this (MoTA, Tribal Committee Report 2014, p. 399). The major inference to be drawn in conclusion is that it is indeed a matter of concern that grama panchayat representatives have had much less exposure to the special status of panchayats in fifth scheduled areas. Despite the specific provisions provided through PESA, there is a gap between the macro-level framework and grassroots-level reality. Gram sabha members have a meagre knowledge of the special rights of gram sabha in scheduled areas. The functioning of gram sabhas is further diluted by irregular meetings, apathy towards overall tribal development issues, inadequate operationalisation, expedient and irregular discussion on the management of natural resources, and prevailing political prejudice and interferences. The sarpanch still has a very important say in the selection and management of village development work. The main actors in panchayats are traditional leaders, new entrants, local bureaucracy, non-tribal society and government departments like those for forest and revenue. The entrants to panchayats are not fully acquainted with the provisions of PESA. The non-tribal leadership is strong in scheduled areas because most of them are moneylenders, small vendors, contractors, brokers, landholders, etc., and the tribal community has a huge dependence on them for all their economic activities.Villages require basic amenities like drinking water, electricity, roads/bridges, etc. on a priority basis. Although PESA Act highlights the importance of control over natural resources and the management of minor forest produce, this is not visible in practice. It has been observed that the schemes and programmes have provided economic benefits but there are serious deviations in the process of implementation of various flagship schemes and programmes. The PESA Act has categorically empowered the gram sabha with enormous power and the majority of the respondents have accepted this change, which can be considered a positive contribution to the system. Contrary to the earlier panchayat system, more development works are taking place and there is the direct involvement of the villagers in village matters after the creation of gram sabha under PESA. There is, therefore, an urgent need to opt for an effective device whereby the maximum number of people can be informed, made aware and motivated to come forward for the proper implementation and execution of PESA. There is also an urgent need to break the culture of silence among tribes and to strive for capacity-building, sensitisation and orientation to improve the tribal self-rule scenario.

References Banerjee, Rahul (2013). ‘What Ails Panchayati Raj?’, Economic and Political Weekly, XLVIII(30), July 27. Behar, Amitabh and Kumar,Yogesh (2002). Decentralisation in Madhya Pradesh, India: From Panchayati Raj to Gram Swaraj (1995 to 2001). Working Paper 170. London: ODI. Choubey, Kamal Nayan (2015). ‘Enhancing PESA: The Unfinished Agenda’, Economic and Political Weekly, L(8), July 27. Crook, R. C. and Sverrisson,A. S. (2001).‘Decentralisation and Poverty-alleviation in Developing Countries: A Comparative Analysis or, Is West Bengal Unique?’, IDS Working Papers, 130, February. 133

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Kashyap, Subhash C. (2003). Blueprint of Political Reform. New Delhi: Shipra Publications. Ministry of Panchayati Raj (2013). Report on ‘Towards Holistic Panchayat Raj, Twentieth Anniversary Report of the Expert Committee on Leveraging Panchayats, For Efficient Delivery of Public Goods and Services,Volume I, Policy Issues, Government of India, National Panchayat Raj Day, 24 April. Ministry of Panchayati Raj (MoPR) (2015–16). Devolution Report (2015–16). Carried out by Mumbai:Tata Institute of Social Sciences. MoTA (Ministry of Tribal Affairs) (2014). Report of High Level Committee on Socio-Economic, Health and Educational Status of Tribal Communities of India, May. Mukul (1997). ‘Tribal Areas-Transition to Self-Governance’, Economic and Political Weekly, 32(18), May 3–9. Purohit, BR (2002). ‘Panchayat Raj System in Scheduled Areas of Madhya Pradesh’ in Palanithurai, G. (ed.) Dynamics of New Panchayati Raj System in India,Vol. I. New Delhi: Concept Publishing Company. Report of the Sub-Committee (BD Sharma) (2006). Draft Model Guide-lines to Vest Gram Sabhas with Powers as Envisaged in PESA. New Delhi: Ministry of Panchayati Raj, Government of India. Report on Land and Governance under the Fifth Schedule (2016). An Overview of the Law. New Delhi: Ministry of Tribal Affairs, Government of India. Robinson, Mark (2005). ‘A Decade of Panchayat Raj Reforms: The Challenge of Democratic Decentralisation in India’ in Jain, L. C. (ed.) Decentralisation and Local Governance. New Delhi: Orient Longman. Sisodia, Yatindra Singh (2002). ‘Decentralised Governance in Madhya Pradesh: Experiences of the Gram Sabha in Scheduled Areas’, Economic and Political Weekly, 37(40), October 5. Sisodia, Yatindra Singh (2005). ‘Panchayat Raj in Tribal Regions of Madhya Pradesh’ in Sisodia, Yatindra Singh (ed.) Functioning of Panchayat Raj System. Jaipur: Rawat Publications. Sisodia, Yatindra Singh (2017). ‘Two Decades of Democratic Governance at Local Level: Evidences from the Functioning of Panchayat Raj Institutions in Central Indian States’ in Sisodia, Yatindra Singh, Bhatt, Ashish and Dalapati, Tapas Kumar (eds.) Two Decades of Panchayat Raj in India: Experiences, Issues, Challenges and Opportunities. Jaipur: Rawat Publications. World Bank (2000). Overview of Rural Decentralisation in India, Volume III. Washington, DC: The World Bank, p. 24.

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Part 3

Decentralised rural governance

10 Deliberative democracy through Grama Sabha Progress and issues D. Rajasekhar and R. Manjula

Introduction The 73rd Constitutional Amendment Act (hereafter 73rd CAA), which formally and firmly established the decentralised rural governance in all Indian states and union territories (UTs) in the early 1990s, created the institution of Grama Sabha (GS) or village assembly at the grassroots level with the following vision. First, periodic meetings of GS consisting of all adult voters in the jurisdiction of a Grama Panchayat (GP) will assess the situation of people, identify and prioritise their needs and preferences, prepare need-based plans and implement the same. Such a deliberative process leading to the preparation of decentralised plans contributes to better allocation of scarce resources and the undertaking of development activities that are of paramount importance to citizens. Planning and expenditure priorities arrived at by citizens and local officials through such a participatory procedure reflect citizens’ preferences better. Second, regular meetings of GS will enhance the quality of decentralised rural governance as people participate and seek to ensure accountability through social audit and schematic/programmatic review. By providing a forum to citizens for monitoring the actions of elected representatives, GS may reduce agency problems in politics and the extent of corruption (Besley, Pande and Rao, 2008, p. 253). Third, greater citizen participation in local budget decisions, spending choices and development planning will yield greater citizen satisfaction, improved delivery of public services, inclusion of disadvantaged groups – those belonging to scheduled castes (SCs) and scheduled tribes (STs) and women – and thereby lead to inclusive development. GS thus enables and empowers people at the local level for deliberation – wherein a group of people reach an agreement through discussion and debate (Heller and Rao, 2015, p. 1). Effective deliberation can transform and empower the poor, enhance their capacity for collective action and enable them to manage their own affairs. Deliberation through decentralised governance can result in people’s participation in the decentralised government structures via raising their voices (i.e. voting by participation), enable them to hold both elected and non-elected officials of the local government bodies accountable (Kothari, 1998) and contribute to improved and efficient service delivery. If such empowerment does not take place, the likely result is exit (Hirschman, 1970) of people from the participatory processes, and co-option and capture of benefits through decentralised governance (Lakha, Rajasekhar and Manjula, 2015). DOI: 10.4324/9780429321887-10

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In the literature, the importance given to GS has varied from that of an important institutional mechanism promoting deliberative democracy (Ban, Jha and Rao, 2012) to dismissal that this is only “talking shop” (Fernandez, 2003).The latter is strengthened by the standard narrative in the last 25 years that GS has not functioned to its potential because of irregular meetings, not giving prior and adequate notice, poor attendance, poor representation of women and those belonging to SC/ST community and namesake meetings. Against this background, an attempt is made in this chapter to provide an overview of the performance of GS in the last 25 years in enabling the participation of the people and in improving the quality of decentralised governance and local development in India, in general, and Karnataka and Madhya Pradesh, in particular, with the help of secondary source review. These two states are selected because the former usually obtains one of the top ranks in the devolution index, while the latter obtains a middle rank indicating differing levels of decentralisation. After this introductory section, the chapter discusses the evolution, legal provision, functions and structure of GS in the second section. In sections three and four, the legal status and performance of Grama Sabha in the states of Karnataka and Madhya Pradesh are discussed, respectively. In the penultimate section, issues pertaining to GS are taken up for discussion. The last section concludes.

Grama Sabha: evolution, legal provision, functions and structure Evolution The importance of GS in terms of voter education and the promotion of direct democracy figured prominently in the discussion on decentralised rural governance even before India gained independence. The participants in the discussion, such as Mahatma Gandhi and Jayaprakash Narayan, equated GS with the assembly at the state level and GP with the cabinet, and wished that there was a link between the GS and the national government. According to them, democracy would work from below in every village, and this would be facilitated by GS. Panchayats were introduced in several states in the late 1950s as it was realised that the Community Development Programme was not making much headway in the absence of a local government. Notwithstanding an introduction of the Panchayat system, GS was not active in the decentralised rural governance in the first four decades after independence because it was felt that GS may not be a “sober” institution to arrive at a coherent and practicable decision given heterogeneous community in rural India (Narain, 1962). Hence, some more time was needed to allow GS to function in the existing form of consultative body and become a mature institution. A study team (appointed in 1963) on the “Position of Gram Sabha in Panchayat Raj Movement” led by Diwakar also felt that some time was needed for GS to grow into a fullfledged institution capable of influencing the thinking and decisions of the Grama Panchayat, and that assigning a decision-making function to GS was unnecessary and may act as a fetter on some Panchayats. Instead, measures to strengthen Panchayats were to be undertaken, and these would in turn support the development of GS (GoI, 1963). A dissent note on this was given by G. P. Jain, one of the members of the study team, who stated that GS should have decisionmaking powers to make the idea of power to people a reality with the Panchayats confining themselves to the role of implementing the decisions of the GS (Ibid). The Ashok Mehta committee, which was appointed in 1978 to suggest decentralisation reforms, remarked that efforts made from time to time to revive GS met with limited success because office bearers did not evince much interest in this institution and the public also did not participate. But, this committee did not make any recommendation to put this institution firmly 138

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in the decentralised rural governance structure. Dadda Shiddaraj, a member of the committee and noted Gandhian, wrote in his dissent note that I had pleaded more than once in the Committee for recognition of the village, functioning through its GS, i.e. the village assembly consisting of all voters in the village, as the primary unit of Panchayati Raj and as the foundation on which the upper tiers should rest and from which they would derive strength and vitality. But, unfortunately, apart from a casual and patronizing reference to the GS as “deserving genuine encouragement”, its place as an organic and vital part of Panchayati Raj does not find place in the recommendations. (Dhadda Siddharaj, 1978, p. 11) GS as an integral part of the Panchayat system figured prominently in the subsequent discussion and reforms on decentralisation as it was realised that an institutional mechanism was needed for the participation and involvement of citizens at the grassroots level. Karnataka’s legislation on a decentralised system in 1985 was considered radical at the time (Crook and Manor, 1998). Among several radical features of the 1985 Act, the provision of bi-annual GS meetings to enable people’s participation in the local governance (location of development projects, review of activities and so on) was an important one (Aziz, 2000, p. 3523). As is well-known, the 1985 Karnataka legislation influenced the Indian government in the framing of the 73rd CAA. Several provisions of Karnataka legislation including GS were included in the 73rd CAA. A three-tier structure – Zilla Panchayat at the district level, Taluk Panchayat at the intermediate level and Grama Panchayat at the village level – was provided by the 73rd CAA. Below the Grama Panchayat, GS is institutionalised as a mechanism to facilitate structured interactions between citizens and policy-makers (elected leaders and officials). Article 243 of the 73rd CAA provides for the creation of GS. Article 243 (b) defines GS as consisting of persons registered in the electoral rolls pertaining to village(s) coming under the jurisdiction of the Grama Panchayat. Article 243(a) mentions that a GS may exercise such powers and perform such functions at the village level as the legislature of a state may, by law, provide. So, we do not have information in one place giving details on the functions and structure of GS. Secondary sources on state Panchayats acts are therefore reviewed in the ensuing paragraphs to discuss the meetings and functions of GSs across Indian states and UTs.

Nomenclature Interestingly, the name given to GS differed across Indian states and UTs. The information provided by the Devolution Index report, 2013–14 (Alok, 2014), shows that in 20 out of 31 states and union territories the village assembly is called Gram Sabha or Grama Sabha – the latter being preferred in south India. GS is known as Halqa Majlis in the erstwhile state of Jammu and Kashmir, while it is called Gram Sansad in West Bengal. The nomenclature is “Gram Panchayat” in Andhra Pradesh and Arunachal Pradesh, “Gaon Panchayat” in Assam, “village Panchayat” in Goa and “Village-wise GS” in the union territory of Dadra and Nagar Haveli.The governments of five states and union territories, namely, Gujarat, Andaman and Nicobar, Lakshadweep and Puducherry did not furnish information on this.

Meetings and quorum The number of GS meetings in a year varies across the states, and, in general, ranges between one and four.This, however, excludes special meetings called occasionally to discuss issues relating to 139

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children, projects implemented under MGNREGS and so on. A review of state Panchayat acts soon after the 73rd CAA revealed that meetings are held once in three months in Assam and Bihar; once in four months in Tamil Nadu; once in six months in Himachal Pradesh, Karnataka, Kerala, Maharashtra, Manipur, Punjab, Odisha, Rajasthan, Sikkim and Uttar Pradesh; and once in a year in Andhra Pradesh, Goa, Gujarat, Haryana, Madhya Pradesh, Tripura and West Bengal. Some states may have brought modifications in the number of meetings; but, this information shows that the number of GS meetings in a year ranged from one to four across the states. Different state governments follow different procedures for calling GS meetings. It is mandatory to give prior and adequate notice before calling the GS meeting. The meeting date and time is usually announced by beating a tom-tom or drum (dandora) and the distribution of handbills. In coastal Karnataka, the meeting notice is published in the local newspapers. What quorum is prescribed for the conduct of GS meetings across the states? The states and UTs have prescribed the quorum in terms of proportion of voters, which ranges from as low as one-twentieth (5 percent of voters) to as high as one-third (33 percent of voters) (Table 10.1). In 13 out of 31 states and UTs, the prescribed quorum is one-tenth (that is, 10 percent of the voters), and in 20 out 31 states and UTs, the prescribed quorum is between 10 and 20 percent. GS meetings are presided over by the Chairperson of the Grama Panchayat and, in her/his absence, by the Vice Chairperson. The Secretary of GP, who acts as member secretary of GS, prepares minutes on resolutions made in the GS meeting and places the same before the Grama Panchayat for the follow-up an d necessary action.

Functions of GS Soon after the passing of the 73rd CAA, it was found that the functions of GS included the following: (i) identification of beneficiaries for rural development and poverty alleviation programmes initiated by the central and state governments; (ii) scrutiny of the schemes (ongoing and completed) and the work of GP; and (iii) the examination of the annual statement of

Table 10.1 Distribution of states by the prescribed quorum for GS meetings Prescribed quorum

Names of states

Number of states

One-twentieth One-tenth

Bihar, Gujarat Arunachal Pradesh, Assam, Chhattisgarh, Goa, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Odisha, Tamil Nadu, West Bengal, Dadra & Nagar Haveli, Lakshadweep Tripura Maharashtra Manipur, Punjab, Sikkim, Uttarakhand, Uttar Pradesh Daman & Diu Himachal Pradesh Jammu & Kashmir, Andaman & Nicobar, Chandigarh, Puducherry Andhra Pradesh Rajasthan

2 13

One-eighth One-seventh One-fifth One-fourth One-third Information not submitted Not specified in the act As specified in the act Total

Source: Compiled from Alok (2014).

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1 1 5 1 1 4 1 1 31

Deliberative democracy through Grama Sabha Table 10.2 Major functions assigned to Grama Sabha in different states Functions of Grama Sabha

States

Examine annual statement of accounts and audit report

Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Madhya Pradesh, Punjab, Rajasthan, Sikkim, Andaman & Nicobar Islands Andhra Pradesh, Bihar, Gujarat, Karnataka, Madhya Pradesh, Rajasthan, Andaman & Nicobar Islands Andhra Pradesh, Bihar, Gujarat, Karnataka, Madhya Pradesh, Punjab, Rajasthan, Sikkim, Andaman & Nicobar Islands Andhra Pradesh, Bihar

Discuss report on the administration of the preceding year Review programme of work for the year or any new programme Consider proposals for fresh taxation or for enhancement of existing taxes Select schemes, beneficiaries and locations

Mobilise voluntary labour and contributions in kind and cash for the community welfare programmes Render assistance in the implementation of development schemes and rendering services in villages Undertake programme for adult education, family welfare within the village Promote unity and harmony among all sections of society Seek clarification from the president and members of Grama Panchayat about any particular activity, scheme income and expenditure. Examine last audit note and replies provided Consider the budget prepared by the Gram Panchayat and the future development programmes and the plans for the GS area Consider and scrutinise the existing schemes and all kinds of activities of Panchayat Maintain a complete register for all development works undertaken by Gram Panchayat or by any other government department Scrutinise the completed works and all kinds of activities of the Gram Panchayat

Andhra Pradesh, Assam, Bihar, Karnataka, Kerala, Punjab, Rajasthan, Sikkim, Tamil Nadu and Uttar Pradesh Bihar, Karnataka, Kerala, Punjab, Rajasthan, Sikkim, Uttar Pradesh, West Bengal Assam, Bihar, Karnataka, Kerala, Punjab, Rajasthan, Sikkim, Uttar Pradesh Bihar, Karnataka, Kerala, Punjab, Rajasthan, Sikkim, Uttar Pradesh Bihar, Karnataka, Kerala, Punjab, Rajasthan, Sikkim, Tamil Nadu, West Bengal Bihar, Punjab, Rajasthan

Bihar Gujarat, Haryana, Karnataka, Madhya Pradesh Haryana, Kerala Haryana, Kerala

Haryana, Kerala

Source: State Panchayat Acts: A Critical Review, 1995, VANI-Voluntary Action Network, India.

accounts, the audit report and the annual report of administration of the Grama Panchayat (see Table 10.2 for more details). Social audit function is assigned to GS in most of the states. In 2013–14, GS undertook social audit on its own or in combination with others (such as social audit team/committee) in 24 out of 31 states and UTs. In Andhra Pradesh and Sikkim, GS was not clearly involved in the social audit. The schemes audited by the GS include Mahatma Gandhi Rural Employment Guarantee Scheme (MGNREGS), Indira Awas Yojana (IAY), Sarva Shiksha Abhiyan (SSA), Integrated 141

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Child Development Scheme (ICDS) and so on (Alok, 2014, pp. 58–60). The devolution report for 2015–16 found that 82 percent of the Grama Panchayats in the country undertook the function of social audit (TISS, 2016). The function of planning got more emphasis recently under the Grama Panchayat Development Plan (GPDP). Based on the recommendation of the 14th Finance Commission, grants to the tune of Rs. 200,292 crores were expected to be provided to Grama Panchayats in India during the five-year period of 2015–2020. On average, each Grama Panchayat is expected to receive Rs. 17 lakhs in a year and Rs. 85 lakhs during the five-year period, 2015–2020. Each Grama Panchayat is required to spend this amount on sanitation, drinking water, maintenance of community assets, garbage management, drainage, roads, streetlights and other basic services. As per the guidelines, Grama Panchayats through GS are mandated to formulate planning for all development works including basic infrastructure.

Functions of GS in the fifth scheduled areas The Panchayats (Extension to the Scheduled Areas) Act was passed in 1996 to establish local government systems in the tribal dominant and fifth scheduled areas in ten states of India – Andhra Pradesh, Chhattisgarh, Gujarat, Himachal Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Odisha, Rajasthan and Telangana. The mandatory powers of GS in fifth scheduled areas include (i) managing community resources through traditional management practices, (ii) resolving local disputes, (iii) approving plans, programs and projects for socio-economic development of the villages, as well as selecting/identifying beneficiaries, and (iv) issuing utilisation certificates for funds in their jurisdiction (TISS, 2016, p. 87). In the fifth scheduled areas, prior informed consent of the GS is required for the implementation of Centrally Sponsored Schemes (CSS) such as MGNREGS, IAY, old age pension, Swachh Bharat Abhiyan (SBA), National Rural Livelihood Mission (NRLM), RKVY, National Rural Health Mission (NRHM) and SSA. However, there are variations across the states. No powers are given to GS in Chhattisgarh, Himachal Pradesh, Madhya Pradesh and Rajasthan in the implementation of CSS. In the remaining six states, while GS has a role in all the above CSS in Gujarat, the number varies in the other states; but, in all the states, GS has a role to play in MGNREGS (TISS, 2016).

Grama Sabhas in Karnataka In Karnataka, the KPR Act of 1993 was passed in compliance with the 73rd CAA, and incorporated GS. As per this act, all persons above 18 years and whose names are registered in the village voters list are its members.

Reforms to create Ward Sabhas to facilitate greater citizen participation Initially, GS meetings were held in each revenue village in the jurisdiction of the Grama Panchayat. Having village-level GS and GP level GS created confusion among the people. This also resulted in underrepresentation of vulnerable groups in the meeting of final GS where key decisions were taken. This issue was therefore taken up for a discussion by the Working Group on Decentralisation set up by the Karnataka government in 2002. The Working Group recommended the following changes in the KPR Act regarding GS (GoK, 2002): ••

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In order to clear the confusion about the GS meetings specific to revenue villages and to the entire GP, the committee proposed for the constitution of Ward (vasathi) Sabhas. The

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••

Ward Sabha meetings may be held for the voters of each constituency held by elected ward members of the Panchayat.This forum would give an opportunity for the more intense and meaningful participation of the people. With the introduction of the Ward Sabhas, the committee recommended that the meetings relating to Panchayat as a whole will continue to be called “Grama Sabha”. Thus, the GS consists of all the voters in a Grama Panchayat.

To strengthen these institutions, the state government brought out certain amendments in 2004. As per these amendments, a minimum of two Ward Sabhas at the ward (constituency) level and two GSs at the Panchayat level have to be held per year. Various functions such as the review of Panchayat finances, development plans, audit reports, the implementation and monitoring of programmes, identification of beneficiaries, etc., have been entrusted to the Ward and Grama Sabha.The main intention of such institutions is to involve local people in the Panchayat activities, particularly in plan formulation, implementation and monitoring (Babu, Rajasekhar and Manjula, 2011). Thus, ward and Grama Sabhas play a key role in incorporating governance principles into the implementation of development programmes. Both Ward Sabhas and GSs should be held once per six months. As per the KPR Act the quorum of a Ward Sabha meeting is not less than one-tenth of the total number of members of the Ward Sabha or 20 members, while the quorum of Grama Sabha is not less than one-tenth of the total number of members of the Grama Sabha or 100 members, whichever is less.

Participation in GS meetings In the literature, attendance to GS meetings was used as an important indicator of participation. The information on attendance was collected from minutes prepared by GPs that record the number of persons attending the GS meeting. The second source of information was primary data collected directly from households. Both methods have some defects: while the first source (administrative data) over-reports attendance, the second source (primary data) suffers from the problem of recall. Nevertheless, these data, especially the primary data, are widely used to show the level of participation of citizens in the GS meetings. Soon after the 73rd CAA was passed, it was reported that the participation in the meetings tended to be low in the 1990s on account of irregular conduct of GS meetings (Bhargava and Raphael, 1994; Aziz et al., 2002; Babu, 2005). This seems to have changed after the new millennium. A large survey of Grama Panchayats and households conducted in the four south Indian states (including Karnataka) in 2002 revealed that GS was conducted in 76 percent of the villages surveyed. But the proportion of sample households attending the meetings was only 20 percent, thus indicating that the participation of citizens was low at the turn of the millennium (Besley, Pande and Rao, 2005). There was some improvement in the conduct of meetings and participation in GS by the end of the first decade of the 2000s largely because of the introduction of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) and the requirement to hold GS meetings to finalise the shelf of projects to be undertaken under MGNREGS. Rajasekhar, Babu and Manjula (2018) collected data on the quality of governance in Karnataka for about a decade from ten Grama Panchayats located in five representative districts in the state. These districts are also characterised by different levels of development – most developed, developed, irrigated, transient and backward. Administrative data on participation for both ward and GS meetings were collected by the authors for the two time periods, namely, 2005–06 to 2009–10, and 2010–11 to 2011–12. It is shown that during this period the average number of persons 143

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attending GS meetings went up from 94 to 117, while in the case of Ward Sabha meetings attendance declined from 37 to 28 during the same period. Rajasekhar, Babu and Manjula (2018) also present primary data on the awareness of citizens of Ward Sabha and GS meetings and their participation in these meetings. Nearly 56 percent of the sample households were aware of GS meetings, while close to 30 percent of them were aware of Ward Sabha meetings. Of those who were aware, nearly 39 percent stated that they attended GS meetings and close to 50 percent attended Ward Sabha meetings. Citizens attended the Grama Sabha meetings to ask for government benefits (such as housing, ration cards and so on) or to present problems related to basic amenities (drinking water, streetlights and so on). A few of them stated that they attended the meeting out of curiosity to find out what would be discussed in these meetings. Why do citizens not participate in these meetings? The answer to this question is provided in Rajasekhar, Babu and Manjula (2018). An important reason cited for this was the preoccupation with livelihood concerns. The households seeking livelihood from wage labour and small agriculture stated that they have to spend most of their time attending to their livelihood concerns, and that they do not have time to attend the meetings. The next important reason was the lack of information on the meetings as the efforts to spread awareness were inadequate and meetings were conducted without sufficient publicity. Although there was an improvement in the awareness and participation in GS in the last one decade mainly due to MGNREGS, regional disparities have persisted. The awareness and participation was better in the developed districts as compared to backward districts (Rajasekhar, Babu and Manjula, 2018). A similar conclusion is reached by Manjula (2019). Thus, 25 years of democratic decentralisation in Karnataka has not contributed to reduction in regional inequality. The awareness of people of institutions promoting good governance at the local level, and their participation in them, tended to be high in developed districts as compared to backward districts. Lower levels of participation of people in Grama Sabha meetings in backward districts result in limited interaction between elected representatives and people which, in turn, results in the lack of responsiveness and accountability.

Performance of GS in Karnataka What has been the performance of GS in decentralised rural governance, service delivery and local development? The impression that one obtains from the literature is that GS was playing an insignificant role in improving rural governance at the turn of the new millennium. A study of Panchayats in a large number of villages in four south Indian states, including Karnataka, Besley, Pande and Rao (2011, p. 195), concluded that although the preliminary list of below poverty level (BPL) households eligible to receive ration cards was supposed to be finalised at a GS meeting, in reality politicians enjoyed substantial discretion in selecting BPL households, and villager oversight was relatively limited. In another paper by the same authors based on the same data from four south Indian states, it was noted that although 76 percent of the surveyed villages held a GS in the year before their survey, the beneficiary selection was discussed only in 22 percent of villages (Besley, Pande and Rao, 2005). This was also reflected in the perceptions of the elected representatives: only 9 percent of the 540 politicians surveyed reported that the GS decided the final BPL list and as many as 87 percent of them believed that this power was enjoyed by a Panchayat official. More or less a similar situation prevailed in the decade of the 2000s. A study undertaken in the specific context of watershed development in Karnataka reached the conclusion that the GS played an insignificant role in decentralised rural governance. In the watershed development 144

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programmes, the GS was expected to play a major role in promoting decentralised rural governance. Sivanna (2009), however, found that, in the initial stages of watershed programme implementation, GS meetings were called for selecting and prioritising the works, identifying and selecting beneficiaries and selecting work sites like road-side plantation, check dams and farm ponds. Subsequently, no other GS meetings were called to discuss changes of works, modifications in the list of beneficiaries or the monitoring the progress of the project activities. The functions of changes of works, modification in the list of beneficiaries and addition and deletion of names were undertaken by the GP at the behest of either the elected or non-elected GP officials or the range forest officer. The Forest Department officials also did not adhere to the list prepared by the GS while distributing the plants to beneficiaries. Most of the decisions were taken by the general body of the GP rather than by the GS. In the decade starting with 2010, the GS played a significant role in promoting decentralised rural governance. The evidence in support of the above comes from three studies – Kannan (2013), Harrison (2015) and Manjula (2019). Kannan looked at the role of GS in agricultural development with the help of data collected from 36 GPs in three representative districts of Karnataka in 2011. The effect of decentralised rural governance on agricultural service delivery was captured by asking the following questions: (i) were problems related to village agricultural activities discussed in GSs during the two years prior to the survey? (ii) if yes, which problems were discussed and which actions were taken? and (iii) how were beneficiaries selected for various subsidy-oriented agricultural schemes? It was found that about 78 percent of the sample GPs held GS meetings regularly during the reference period and in 56 percent of these meetings the issues of crop farming were discussed. In 44 percent of the meetings, officers from the agricultural department attended. The regression analysis showed that the coefficients of participation in GS and deliberations on agricultural issues in GSs were positive indicating a significant influence of decentralised rural governance on the delivery of agricultural services. Harrison (2015) examined the functioning of a special GS for children, called Makkala Grama Sabha in coastal Karnataka. She found that children participated in the meetings of GS and benefited from their participation and deliberative democracy – both in material and development terms. Manjula (2019) analyses the participation of citizens in the GS and the impact that this has on service delivery with the help of data collected from about 2,000 households located in nine districts in Karnataka. The regression analysis shows that those households finding the delivery of public water supply to be poor are likely to attend the GS meeting and present their problem. Another important finding is that there is a positive association between the participation in GS meetings and trust in the Grama Panchayat. This indicates that when households have trust on GPs, then they are more likely to participate in Ward and Grama Sabha meetings.1

Grama Sabhas in Madhya Pradesh Legal status of Grama Sabha in Madhya Pradesh In conformity with the objectives, substance and directives of the 73rd CAA, the Madhya Pradesh Panchayat Raj Act, 1993, was enacted and the assent of the governor was received on 24 January 1994. As the per the act, the GS consisted of all voters in a village or cluster of villages and was expected to meet four times per year (with a provision for extraordinary meetings), required a quorum of one-third of members and was presided over by the president or vicepresident of the GP with the secretary acting as convener. 145

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The 1994 act was frequently amended as it was felt to be less helpful in strengthening and empowering the Panchayat Raj system. Here, we have mentioned amendments relating only to the GS. In order to improve the participation of women, the Madhya Pradesh government amended Article 6 of the act, making it mandatory to have one-third of the quorum as female members. An important amendment was the Gram Swaraj Adhiniyam, passed to strengthen the Grama Sabha not only to perform the function of fixing accountability on elected and non-elected officials of Panchayat but also to make it to function as an executive body. For this purpose, separate standing committees were entrusted with several functions. A new section was incorporated in the act to make it mandatory for the Gram Panchayat to accept suggestions given by the Grama Sabha (The Madhya Pradesh Panchayat Raj Avam Gram Swaraj Adhiniyam, Section 7). The amendments related to Gram Swaraj provided for the GS for every village; the date, time and the place of the meeting will be fixed by the president of the GP; the quorum is onefifth of total voters of whom one-third will be women. Insofar as persons belonging to SC/ ST community are concerned, they will be represented in proportion to their population; it is necessary to have a quorum for every GS meeting; the president will preside over the meeting, and in her/his absence the vice-president will preside; and the secretary of the GP will be the secretary of the GS. According to Gram Swaraj, the Grama Sabha will control the secretary and assign duties to her/him. The matters brought before the GS are to be decided, as far as possible, unanimously. If this is not possible, general consensus may be arrived at. GS was assigned with a number of functions including drinking water, sanitation, streetlights, roads, public sanitation and so on (see Sisodia, 2012).

Participation in Grama Sabha Studies on the participation of citizens in GS meetings in the mid-1990s concluded that the GS meetings were not held regularly. From a review of studies on GS meetings in Madhya Pradesh in the mid-1990s or late-1990s (Datta, 2019, pp. 25–26), the following conclusions can be reached. A study of a village in Madhya Pradesh by the Institute of Social Sciences found that only three meetings (as against six) were held in 1995. A study conducted by the Participatory Research in Asia (PRIA), which went into the reasons for the lack of interest in GS meetings, showed that the overwhelming feeling among citizens was that nothing much happens in the GS meetings and this has adversely affected their participation. Whoever participated in the GS meeting did not have a very good idea on the role of this important institutional mechanism. Some of them perceived that GS meetings were political meetings and their only function was to prepare the list of beneficiaries for various poverty reduction schemes of the government. A study by Nirmala Buch in 11 GPs in the state in the late 1990s found that GS meetings were characterised by the non-participation of citizens or ward members as well as the non-adherence of 50 percent of the quorum. The above studies were undertaken before the act was amended and significant powers were assigned to GS. Did the amendment and assignment of significant powers to GS improve deliberative democracy? We answer this question with the help of two studies undertaken nearly a decade after the amendment.The first study by Sisodia (2012) looked at a number of indicators of decentralised rural governance such as participation, rule of law, transparency, responsiveness, consensus-building, equity and inclusiveness, effectiveness and efficiency and accountability among the stakeholders and local political leadership. This study was undertaken in 25 GPs spread over five representative districts of Jabalpur, Gwalior, Satna, Betul and Dewas. Primary 146

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data were collected from 150 members of GS. The study revealed that although 81 percent of the respondents had knowledge of GS, less than one-third of the respondents stated that they received regular information on GS meetings. Of 58 respondents who did not get regular information, nearly 59 percent attributed this to the non-conduct of GS meetings, while 28 percent attributed this to the deliberate attempt on the part of the president and secretary to confine this information to their close associates. About 35 percent of the respondents stated that they regularly attended the GS meetings. Of 98 respondents who did not attend the GS meetings, 56 percent attributed this to livelihood concerns while 22 percent could not attend due to lack of information. The participation of women in the GS meetings was less as compared to men. As noted earlier, the GS was assigned considerable powers especially relating to the preparation, implementation and monitoring of development plans. Sisodia (2012) notes that issues of information provision on government schemes and the selection of beneficiaries prominently figure in GS meetings. The planning and accountability (income and expenditure details) were relatively insignificant aspects discussed in the meetings. This implies that the wider mandate given to GS was not fulfilled. The study also reveals that the president and secretary were decision-makers in the GS, and that members played a relatively insignificant role. The GP president and secretary were key in the process of selecting beneficiaries. As a result, those households who were close to the GP president and secretary got selected as beneficiaries for government programmes. Sisodia (2012, p. 254) concludes that a coterie of the sarpanch, close associates of the secretary and sarpanch, and elite groups played a significant role in GS meetings and cornered benefits that were meant for the poor. Another study by Sisodia, Bhatt and Dalapati (2015) on the functioning of GS in 12 GPs in the three districts of Khargone, Katni and Gwalior in MP, however, found some improvement. In all the GPs, the number of GS meetings was more than the mandatory number of four (Table 10.3). In some Panchayats, additional GS meetings were organised to approve a village development plan or to conduct social audits. The average number of citizens attending GS meetings varied across the districts with as low as 68 in Khargone and as high as 185 in Katni.The attendance of the villagers in the Grama Sabha was low in Khargone district because of poor awareness of GS powers and functions mostly in the tribal-dominated villages. The main mode of communication of GS meetings was by beating drums. The main officials attending GS meetings were nodal officers appointed by Janpad (mostly the Panchayat

Table 10.3 Participation of citizens in GS meetings in Madhya Pradesh Particulars

Khargone Katni

Gwalior

Number of GS meetings in a year across sample GPs Average number of citizens participating in GS meeting GPs (%) where GS was playing a role in planning GPs (%) where GS was playing a role in budget preparation GPs (%) where GS was playing a role in discussion and approval of budget GPs (%) where GS was playing a role in the preparation of beneficiary list GPs (%) where GS was playing a role in Social Audit

5 to 6 68 100 100 75

4 to 5 185 100 0 50

4 to 6 136 75 0 100

100 100

75 75

75 50

Source: Compiled from Sisodia, Bhatt and Dalapati (2015, pp. 98–100).

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Inspector), school teachers, revenue inspectors, auxiliary nurse midwives, Anganwadi workers and elected and non-elected officials of the GP (president, vice-president, ward members, secretary, Gram Rojgar Sahayak, etc.). The GP president presided over the meeting and information about different development schemes was given by the secretary. Table 10.3 also provides information on the proportion of GPs where the GS played a role in key aspects of decentralised rural governance. Insofar as the planning, budget approval, beneficiary list preparation and social audit are concerned, the GS appears to have played a role in most of the GPs. However, only in Khargone district did the GS play a role in the budget preparation. The authors attribute this to the feeling among members that budget preparation was a technical aspect and that government staff is better equipped to deal with such aspects. Sisodia, Bhatt and Dalapati (2015, p. 102), however, conclude that in reality these functions were not undertaken by the GS and that GS meetings were organised only for the sake of organising a mandatory meeting. They found no discussions on the annual budget. The village development plan was prepared by a coterie of people consisting of the sarpanch, secretary and assistant engineer of the Janpad Panchayat. In any case, these development plans were not assigned any value by higher levels of local government. Fund allocation to GPs was made not on the basis of priorities laid by GS members but according to the fund allocated to Janpad under different schemes. In many focus group discussions, the authors found that demands from the marginalised sections were sidelined and not included in the village development plan. In the selection of beneficiaries for developmental schemes, GS members were least aware that they have a role.

Status and performance of Grama Sabha: some issues Did Grama Sabha promote deliberative democracy? The knowledge and awareness of GS is now better as compared to the pre-73rd CAA period. The GS meetings are regularly held especially after the introduction of MGNREGS. Citizen participation in the GS meetings has also gone up because of the efforts made by the state governments.2 In states with a higher devolution index such as Kerala, Karnataka, Sikkim and Maharashtra, the participatory deliberative process does take place.3 It was found that the Grama Sabha has provided the scope for the hitherto excluded groups to raise voices. Tanabe (2007, p. 567) writes in the context of Odisha that Many lower castes and women, hitherto largely excluded from local politics, have become aware of the discrepancy between the prescribed norm and the reality of the political process. As a result, political consciousness and frustration are growing among these groups over the present local political situation. They more often openly voice complaints that the state’s resources still get “eaten up” and that the gram panchayat does not function according to the rules and fails to respond to their views and needs. That such criticisms are possible shows the increase in political awareness among these groups and the growing space for their voices. At the same time, there is a variation across the states (and districts within a state) in the conduct of GS meetings and people’s participation. The participation of men in GS meetings was more than women (Chhetri, 2017). In contrast, the participation of women in GS meetings in Tamil Nadu was found to have gone up because of the successful implementation of a poverty alleviation project (Khanna, Kocchar and Palaniswamy, 2015). In Kerala, the poverty alleviation programme of Kudumbashree improved political participation of 148

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women; but the autonomy of GS as an “invited space” for women is locality- and contextspecific (Williams et al., 2011). The other problems noticed in these states are irregular GS meetings (Patnaik, 2005). Information on GS meetings is not provided to citizens and as a result the citizen participation tends to be low, leading to poor governance in rural areas.The elected leaders to GP and officials would like to avoid the institution of the GS as much as possible in decentralised rural governance. The powerful combination of GP president, officials and rural elite would like to hijack the participatory deliberative process to meet their own self-interests. Nevertheless, the fact remains that there is a realisation among the local vested interests that the institution of the GS is here to stay. In the states with a low devolution index, the local vested interests are compelled to accommodate some semblance of deliberation for their own self-interest. For instance, GS meetings are essential for the preparation of a shelf of projects and social audits under MGNREGS, identification of beneficiaries under the housing programme and so on.With guidelines that video recordings of GS meetings should be shown as a proof of deliberative democracy, the local vested interests grudgingly hold GS meetings and allow some participation. The sarpanch and others in his or her faction effectively fix how much of the state’s resources go to which ward. If the ward members and the villagers feel that they are not getting enough of the benefits, they can hint at the possibility of changing their allegiance and not approving the sarpanch’s suggestions at meetings. As the sarpanch must ensure people’s support in these [GS] meetings, he or she is bound to listen to them. In such a situation, the state’s resources are more equally distributed to different wards and, therefore, to different castes. (Tanabe, 2007, p. 568) Thus, GS promoted some deliberative democracy.

Capture of Grama Sabha by local elite Sisodia (2012) argues that participation in Grama Sabha meetings in MP is low due to the strong and invincible caste, class and gender divide in villages. The GP president and other influential people (including the traditionally powerful groups in the village) dominate the decision-making process. Dominated by these groups, GPs are not adequately accountable to the GS. The GS is also not aware of the functioning of GP. He concludes that “the concept of participation as an important part of panchayat raj has been rarely seen in practice. In fact, in retrospect, it seems inevitable that persons of influence would look at larger community participation with hostility” (Sisodia, 2012, p. 5). At the country level a similar pattern seems to be the case. The devolution report prepared by TISS (2016, p. 85) concluded that the following analytical constructs emerge. Caste inequalities, gender discrimination and conflicts have serious implications with regard to democratisation of governance processes through PRIs. Secondly, corruption and the concentration of real power in the hands of dominant groups acts as a hindrance to effective implementation of local governance. Under these conditions, the emergence of community leaders championing the cause of local people is critical in strengthening democratic local institutions.

Frequent changes in the assigned functions to the Grama Sabha The function of identifying beneficiaries for developmental schemes such as housing in Karnataka was assigned to the GS in 1993. There was, however, a lack of clarity on whether the function was related to the identification or the selection. An amendment to the act in 2003 149

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specified that the GS will identify and select beneficiaries, and prepare the list in order of priority. It was also clarified that once the list of housing beneficiaries is published by the GS, higher levels of the government could not modify the same. In 2007, another amendment was made stating that if the GP is unsuccessful in discharging its duties in the selection of beneficiaries, then a committee headed by the MLA will decide. Reddy and Acharya (2007) noted that several times a GS was not in a position to select beneficiaries due to disruptions by trouble makers, etc., and then the MLA comes into the picture. In 2010, citing irregularities in the selection of beneficiaries, the Karnataka government stated that the MLA will have powers to select the beneficiaries for housing programmes funded by the state government.

Centrally sponsored schemes adversely affect Grama Sabha functioning An important aspect of fiscal decentralisation in India is that Panchayats do not have access to untied funds. Whatever fund that is transferred from the higher-level government is tied. Such funding often comes in the form of centrally sponsored schemes, the number of which is more than 200. Examples of such schemes are MGNREGS, Swachh Bharat Mission, IAY, National Rural Health Mission and so on. These schemes are typically sponsored by the ministries in the central government. The main problem with these schemes is that they come up with their implementation guidelines, which are often non-negotiable, and their own line of budget spending and accountability.These schemes have grown in terms of importance in the sense that a large proportion of the funding that comes to Panchayats is through such schemes. As a result, barring MGNREGS, GPs need not convene GS meetings to discuss the situation, plan activities and implement activities under these schemes. It was found that, although GPs are expected to implement SBM in Karnataka, Annual Implementation Plans were not prepared by 22 out of 30 sample GPs for all five project years (2014–15 to 2018–19). This has adversely affected the quality of SBM implementation (Rajasekhar and Manjula, 2019).The only function that is often given as a part of these schemes is the selection of beneficiaries, although, as discussed above, this function is appropriated by other actors. Given that centrally sponsored schemes cover almost all the 29 development functions transferred to Panchayats, the implication is that the GS need not involve itself in the deliberative process. As a result, the democratic decision-making at the grassroots level through the GS is adversely affected.

Parallel institutions undermining Grama Sabha In the last couple of decades, several institutions parallel to the local government have been created in India typically as a part of multilateral and bilateral aid projects, and central government projects for the organisation and mobilisation of project beneficiaries. Examples of these parallel bodies are watershed committees, joint forest management committees, village water supply and sanitation committees, self-help groups, janmaboomi in Andhra Pradesh and so on. The activities undertaken as a part of these committees are those related to the 11th schedule of the Constitution and these are supposed to be undertaken by Panchayats. They also control considerable funds earmarked for rural development. In most cases, bureaucrats prefer parallel bodies because they can exercise greater control over these bodies as compared to the local government. The planning and implementation of activities for the programmes where parallel bodies have been created are not undertaken by the GS, leading to marginalisation of GS in the eyes of citizens at the local level. Consequently, the participation of citizens will be less in GS meetings. 150

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Conclusions The provision of Grama Sabha resulted in an important benefit, namely, improved participation, and the strengthening of democratic decision-making and politics at the local level. The knowledge and awareness of GS is now better; the frequency of GS meetings improved after the introduction of MGNREGS; and citizen participation in the GS meetings has also gone up. The deliberative democracy in GS meetings has contributed to an improved service delivery and local development. The deliberations on agricultural issues in GS meetings resulted in positive impact on decentralised rural governance and improved delivery of agricultural services. Likewise, the GS meetings improved the delivery of drinking water services. At the same time, there is variation across the states (and districts within a state) in the conduct of GS meetings and people’s participation. In states with a higher devolution index such as Kerala, Karnataka, Sikkim, Maharashtra and so on, the participatory deliberative process does take place. In the states with a low devolution index, GS meetings are not regularly held, information on GS meetings is not provided to citizens and as a result the citizen participation tends to be low, leading to poor governance. The powerful combination of GP president, officials and rural elite would like to hijack the participatory deliberative process to meet their own selfinterests. Frequent changes in the functions assigned to GS, schemes (sponsored by the central as well as state government) and parallel bodies marginalise the role of the GS, and adversely the potential of the GS to undertake deliberative democracy.

Notes 1 A similar finding was arrived by Phan (2014). 2 Maharashtra government took the technological initiative of sending SMS updates on the GS for awareness-building among citizens in 2013. Information provided includes the dates of GS meetings and the respective agenda to all the voters in the GP (Alok, 2014). In Kerala, the large size of the GP posed the problem of getting all the citizens to one place. Hence, the government has effectively used the Kudumbashree microfinance programme to improve awareness of GS meetings and improve the participation of citizens in the meeting. 3 In the Waynad district of Kerala, Grama Sabha played an important role in the provision of individual land rights to tribals (Mathew and Umesh, 2019).

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Besley, Timothy, Pande, Rohini and Rao, Vijayendra (2011). ‘Just Rewards? Local Politics and Public Resource Allocation in South India’, The World Bank Economic Review, 26(2), pp. 191–216. Bhargava, B. S. and Raphel, C. Jos (1994). ‘Working of Grama Sabhas in Karnataka: A Study at Micro Level’, Journal of Rural Development, 13(2), pp. 145–158. Chhetri, Bishnu P. (2017). Peoples’ Participation in Local Self-Government in Sikkim: A Comparative Study of Samsing-Gelling and Rongay-Tathangchen Gram Panchayat Units Since 1993, A Dissertation submitted to Sikkim University for Degree of Master of Philosophy. Available at: http:​/​/dsp​​ace​.c​​us​.ac​​.in​/j​​spui/​​handl​​​ e​/1​/5​​794 (Accessed: 24 October 2020). Datta, P. K. (2019). ‘Rural Decentralization in India at the Cross-roads: The Context, Challenges and Consequences’, Journal of Asian Rural Studies, 3(1), pp. 17–34. Dhadda, Siddharaj (1978). A Dissent Note on the Report of the Committee on Panchayati Raj Institution. 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Sisodia, Yatindra Singh (2012). Dynamics of Local Governance in Post 73rd Amendment Scenario: A Study of Functioning of Panchayat Raj Institutions in Villages of Madhya Pradesh, Report submitted to Indian Council of Social Science Research, New Delhi. Ujjain, MP: Madhya Pradesh Institute of Social Science Research. Sisodia,Yatindra Sing, Bhatt, Ashish and Dalapati, Tapak K. (2015). Research Study to Assess the Actual Status of Devolution to the Panchayat Raj Institutions in Madhya Pradesh, Report submitted to the Ministry of Panchayat Raj, New Delhi. Ujjain, MP: Madhya Pradesh Institute of Social Science Research. Sivanna, N. (2009). Panchayats, Hariyali Guidelines and Watershed Development: Lessons from Karnataka, ISEC working paper 220. Bengaluru: ISEC. Tanabe, Akio (2007). ‘Toward Vernacular Democracy: Moral Society and Post-Postcolonial Transformation in Rural Orissa, India’, American Ethnologist, 34(3), pp. 558–574. Available at: http://www​.jstor​.com​/ stable​/4496833 (Accessed: 24 October 2020). TISS (2016). Devolution Report, 2015–16: Where Local Democracy and Devolution in India Is Heading Towards?Mumbai: Tata Institute of Social Sciences. Williams, Glyn,Thampi, Binitha V., Narayana, D., Nandigama, Sailaja and Bhattacharyya, Dwaipayan (2011). ‘Performing Participatory Citizenship – Politics and Power in Kerala’s Kudumbashree Programme’, Journal of Development Studies, 47(8), pp. 1261–1280. Available at: https​:/​/do​​i​.org​​/10​.1​​080​/0​​02203​​88​.20​​​ 10​.52​​7949 (Accessed: 24 October 2020).

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11 Decentralised governance in India The anticipated and the unanticipated Manish Thakur

The context A quarter of a century is not long enough a duration to do an effective stock-taking of such a complex process as decentralised governance in an equally complex polity and society like ours.Yet, it has occasioned an enormous amount of enthusiasm among the votaries of political decentralisation in the country. This is evident from the growing number of opinion pieces in the popular media as well as a series of reports, seminars, conferences, studies and assessments by independent scholars, development agencies and think-tanks. It is not that such studies have made their appearance all of a sudden. Periodic assessments of decentralised governance have exercised the minds of scholars and think-tanks quite consistently (see Human Development Resource Centre, no date; Manor, 2003; Mullen, 2012; Singh, 2016; Widmalm, 2008; World Bank, 2000). Such reflections contain much value as they surely offer us a broad sense of the trends and the direction in which the project of political decentralisation is moving or has moved so far. In fact, there is a voluminous literature of varying quality on the theme. A scrutiny of this literature reveals a fairly mixed record for the enterprise of decentralised governance in the country in the last quarter of a century. Interestingly, there are agreements by and large among scholars as to the areas where the anticipated progress has been made and the areas where much remains to be done. In this introductory section, we present an overview of the extant literature to set the context for subsequent discussion. The next section moves beyond the apparent success and failure of the project of decentralised democratic governance and looks at some of its unanticipated consequences.This section attempts to read sociologically the processes unleashed by the project of decentralised governance, and discuss their significance at the macro-level of Indian polity and society. The chapter concludes with a set of preliminary remarks about the need for an understanding of the value of the unanticipated for the larger understanding of the emergent configuration of political processes and social structure in the country. The chapter primarily takes up Panchayati Raj institutions (PRIs) for discussion and leaves out of its scope the urban local bodies. Very often, a policy is assessed in terms of the approximation of its outcomes to its stated objectives and goals. If it fails to achieve those objectives, or achieves them only partially, we end 154

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up designating such a policy unsuccessful or partially successful. Conversely, if a policy achieves its goals in a substantial manner or in full measure, it is showcased as a successful policy. Such an analytical framework has no room for the unanticipated outcomes of a policy intervention. It is theoretically possible for a policy to deviate from its stated objectives, and yet bring out a certain amount of public good which its makers had not envisaged. For instance, even if PRI policies lead to a faulty delivery of public services at the grassroots level (thereby failing in one of its stated objectives), it might create an unanticipated public good of making the village stratification system quite malleable by opening up the field of political representation to one and all. Arguably, a change in the village certification system was not one of the stated goals of the PRI policy, but it did come by as an unanticipated consequence of the self-same policies. In other words, an unanticipated consequence of a policy should not always be seen as detrimental to the overall public good even when it might undermine the efficacy of that policy. It is customary to find references in the recent literature on decentralised governance to the 73rd and 74th Constitutional Amendment Acts (which came into force on 24 April and 1 June 1993, respectively). The two amendments led to the creation of two new schedules in the Constitution, which identified areas which would become the domain of the rural and urban local bodies. These are the eleventh and twelfth schedules. They contain a series of mandatory measures to impart substance to the process of democratic decentralisation – elections every five years; reservations for historically marginalised communities such as SCs, STs, OBCs and women; the creation of participatory institutions; the establishment of State Finance Commissions (SFCs); the creation of District Planning Committees (DPCs); and the like. They aim at empowering the local governments with legislative and executive powers. For the sake of brevity, we underline three primary themes/areas out of this literature as a backdrop to what follows in the next section – political representation; devolution of functions and powers; and financial robustness.

Political representation As far as political representation is concerned, there is an appreciative tone in much of the literature. The mandatory reservations guaranteed by the constitutional amendments have been looked at as valuable interventions to establish and nourish the village panchayats and urban local bodies and make them effective-self-governing institutions. They have been seen as heralding an inclusive, responsive, participatory democracy meant to deliver economic development and social justice at the grassroots level. The creation of lakhs of ‘self-governing’ village panchayats and gram sabhas, with over 30 lakhs of elected representatives mandated to manage local development, has been projected as a unique democratic experiment in the contemporary world. Noticeably, out of the 30 lakh elected representatives across all local bodies, more than ten lakhs are women. More than half of these are heading the local body as the sarpanch or chairperson of the district body. Many observers believe that these acts have certainly ushered in the ethos of decentralised governance. They are considered to have made deep inroads into the democratic psyche of the country. From merely 5,000 elected representatives (MPs/MLAs), the PRI Act has created space for a mammoth three million representatives at various levels (Gram Sabha, Panchayat Samiti and Zilla Parishad), thus making it the largest democratic exercise in the world. The second – and the most critical – contribution is that the 73rd Amendment Act has deepened democracy, political inclusion and participation among the most marginalised sections of the society. The mandatory reservations for women, Scheduled Castes (SCs) and Scheduled Tribes (STs) and Other Backward Classes (OBCs) that the 73rd Amendment contained has brought up more 155

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than a million new representatives from these sections to the newly opened up democratic spaces. This is arguably India’s most transformative affirmative action for women in the political sphere. Compared to a measly 8% representation in Parliament and State Assemblies, now a staggering 49% of elected representatives are women. There are 14 lakh elected women representatives now. Out of this, 86,000 chair their local bodies. Indeed, there are plenty of stories about ‘notional’ and ‘proxy’ representation and how female representatives, including those holding sarpanch and Zilla Parishad chairpersonship, are just rubber stamps (proxies for their husbands or other family members) in the hands of male members. In a mocking fashion, in the Hindi heartland, newspapers have invented new terms like Mukhiya-pati, Pradhan-pati and sarpanch-pati to underline the informal powers and influence of the spouses of female elected representatives. Yet, a number of reports and studies in recent times document certain positive outcomes emerging from such a mandatory quota for women in panchayats. For example, Raghabendra Chattopadhyay and Esther Duflo (2004) in their study of panchayats in Rajasthan and West Bengal found that female representation in the local bodies had a positive effect in ensuring adequate delivery of local public goods to the disadvantaged groups. A similar study by Laxmi Iyer et al. (2011) found that having more women in local bodies helps women come forward to report crimes and take up issues beneficial to women. Despite many handicaps borne out of patriarchal social structure and caste hierarchies, the representatives coming out of reserved seats for SCs, STs, OBCs and women are emerging as active agents of social and political change. Of course, they have to confront entrenched interests and the movement from the periphery to the centre of things remains an uphill task with challenges galore. But one should not undermine the value of the marginalised occupying the role of political representatives which is certainly a step in the right direction, with the potential to unleash new forces of social transformation at the grassroots level. The fact that these new representatives come from such communities and groups that have historically been the victims of patriarchal atrocities and caste oppression is rather noteworthy.

Devolution of functions and activities The acts recommend the devolution of funds, functions and functionaries to the third tier of government. This is an area where there is near consensus that much remains to be done. State governments have generally been found to be unwilling to relinquish their power and control over activities and resources to municipalities and panchayats. For instance, while majority of the states appear to have met the mandatory requirements such as the enactment of the State Panchayat Act, setting up of the State Finance Commission, the State Election Commission and the District Planning Committee, a number of them have not been able to devolve requisite power and functions to these bodies. A few states like Kerala and West Bengal have devolved as many as 26 departments to panchayats, and they are the exception rather than the norm. There are several states that have devolved only as few as three functions to panchayats. In a large number of cases, states that have already devolved certain functions, activities and departments to the PRIs hardly honour them in practice. The bureaucrats and line departments/agencies take the decisions and run the show. Some states even continue to create parallel bodies to take over the functions assigned to panchayats. For instance, recently the Haryana government created a Rural Development Agency under the chairpersonship of the Chief Minister to oversee the works of local bodies. In fact, except for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and the Backward Regions Grant Fund (BRGF), other centrally sponsored schemes do not have a specified role for the PRIs. And we keep hearing of leveraging Panchayati 156

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Raj institutions for more efficient delivery of public goods and services. Most of the developmental and welfare activities are still managed by line departments of the respective states. The continuing control of the state government over a range of activities does obstruct the evolution of panchayats into full-fledged self-governing institutions of local governance. Observers have pointed towards the continued resistance of political leadership and bureaucracy to the effective devolution of functions and functionaries to panchayats. What is more worrisome is that despite 25 years of their existence, there have been little efforts to strengthen the functioning and delivery capacities of these institutions. Very few states have done some work on internalising the planning process (activity mapping) of panchayats. Several others have not paid any serious attention to building the capacities of the newly elected representatives, many of whom are first-timers and belong to the most marginalised sections of society. Capacity building of panchayat functionaries and elected representatives is another pressing issue as a lack of professional capacity has undermined the delivery capacity of PRIs. Hence, it is not surprising that many elected representatives remain totally dependent on officials who themselves are ill-trained. There is no dedicated cadre of officers or service to work for PRIs. This makes administrative and documentation work very difficult. Low technical expertise pervades the functioning of PRIs. The lack of training comes as a hindrance in the discharge of duties and responsibilities. Very often, the quality of development work and the delivery of public services suffer. And, ironically, such a lack of trained capacity then gets used as a pretext by the political and bureaucratic leaderships to not devolve many functions to these bodies. In a way, decentralised governance lacks the type of aggressive social constituency that the economic reforms have had. From the beginning, whether it was postponing elections or the failure to constitute SFCs and DPCs, it became evident that states can violate the various provisions of Parts IX and IXA with impunity. The roles and responsibilities of local governments remain ill-defined despite activity mapping in several states. States’ control of funds, functions and functionaries makes meaningful decentralised governance almost unimplementable. Most states continue to create parallel bodies (often fiefdoms of ministers and senior bureaucrats) that undermine the functional domain of local governments. Such parallel bodies weaken the process of decentralised governance.

Financial robustness State governments have equally been reluctant to devolve funds to PRIs. The problem of funding for the local bodies remains a big challenge to this day. Their power of taxation is severely limited. Over the years, finance commissions have devolved meagre funds directly to the third tier. Reportedly, the N. K. Singh-led 15th Finance Commission has proposed to increase the current funding by about 2% of the divisible pool. But urban local bodies and panchayats still largely depend on their respective state governments for all their development and welfare spending needs. Without the meaningful devolution of funds and functions, PRIs remain lame duck institutions. Their inadequate financial powers make them continually dependent on the largesse of state and central governments. While panchayats have been vested with many functions on paper, their power of own resource mobilisation has been very restricted. Even the judiciary has not come to their rescue on this. A case in point is the famous Dabhol incident where the Gram Sabha that tried to impose tax on the Enron project lost its case in the court of law. Notwithstanding many milestones and achievements, particularly the empowerment of women and other marginalised sections, the journey towards decentralisation remains slow, tardy and far from satisfactory. While according constitutional status to these bodies was a great 157

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first step for expanding inclusion and participation in this large and diverse country characterised by systemic discrimination and social structural rigidities, a substantive transformation requires political statesmanship from the states and the centre. In effect, the village panchayats have not succeeded in enhancing the well-being, capabilities and freedom of citizens – the lofty goals that suffuse the discourse of decentralised governance. Following the Constitutional Amendments, Article 280, establishing the Finance Commission, was amended to add 280 (3) (bb) and (c), designed to empower the local-level governance. Even so, there is no credible fiscal database and budget system among PRIs. The 13th Finance Commission made significant steps to carry forward decentralised governance by linking the grants to local governments to the divisible pool via Article 275 besides taking various measures to incentivise the process of decentralisation. The two subsequent finance commissions have continued with that.

The unanticipated1 Of course, the democratic decentralisation has not achieved all that its votaries had expected. There have been many pitfalls along the way, and manifold challenges remain (Mathur, 2013). But our concern is not to create a balance-sheet of its achievements and failures. Instead, the aim is to bring out some of the changes that the processes of democratic decentralisation have set in motion irrespective of whether there have been drastic improvements in the delivery of public services or if panchayats have emerged as the most effective institutions of local governance or if the gram sabhas have become participatory in a real sense. For us, the 73rd Constitutional Amendment Act is a reinforcement of the widely held belief that the state has to play a central role in social transformation. The Indian state has self-consciously taken upon itself the task of the modernisation and development of society. This was natural in the sense that Independence was energised not only by visions of democracy but also by a desire to modernise and develop a society that for so long had been systematically impoverished under colonial rule.Viewed thus, democracy and development were taken to be the cardinal principles of post-colonial nationbuilding. However, the emergence of PRIs after the 73rd Amendment also meant the incorporation and subordination of the village to the state. Thanks to the gigantic development efforts of the state (PRIs being the latest in the series beginning with the Community Development Programme of the 1950s), the village became the site where the transition from tradition to modernity had to take place.

Forging citizenship PRIs have accelerated a process that had its origins in the first few decades after Independence, that is, invoking the protection of the state by the vulnerable and the disadvantaged, and using their rights as citizens to overcome the disabilities which the rest of the village (and its rigid caste hierarchies) had imposed upon them. As early as 1957, in his ethnographic study of a village (Bisipara) in Odisha, Bailey (1957, p. 13) noticed that such social groups ‘are passing beyond the political frontier of the village and seeking to establish themselves as citizens of the state’. Corroborating Bailey’s observations, Srinivas (Foreword in Bailey 1957, p. vii) wrote: It seems as though they [such social groups] are being gradually ejected from the village community of Bisipara into the political society of India. This situation is a familiar one in modern rural India, and if it proceeds unchecked, it is likely to alter the nature of Indian village community. 158

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What Srinivas had foreseen is nothing but the process of political empowerment emanating out of universal adult franchise and the rise of competitive democratic politics. Indeed, citizenship has multiple dimensions, and historically, it has evolved from civil to political to social citizenship (Marshall, 1950). Surely, it is important to take a critical look at the idea of citizenship and not rush for its hasty celebration. It entails substantive rights pertaining to economic well-being, social security and freedom from the abuse of the powerful and the privileged. And as yet, Indian villages may not be the ideal sites for the groundswell of substantive citizenship. One may argue that the idea of citizenship can take roots only when everyone is a full member of the society. In an Indian village where multiple forms of discrimination including caste-based discrimination persist, the idea of citizenship cannot be said to be a living reality. However, such a view negates the historical gains of processes of politicisation. Very often, political empowerment triggers forces of change in a way that not only challenges the extant discrimination but also paves the way for the substantive expansion of the entitlements and rights of the powerless thereby strengthening social citizenship. True, such struggles do not progress smoothly and everywhere the assertions of the underprivileged are resisted by the privileged. That is why one sees so much conflict in the Indian countryside as assertions from people from the lower ends of caste structure are invariably challenged by those of the higher ends. But this only substantiates the point that the very idea of citizenship against a variety of socioeconomic odds is an empowering process for the powerless. Whereas the dominance of the powerful rests on many inherited attributes of caste and land, the assertions of the powerless are per force political and ultimately contribute to the increasing realisation of their citizenship rights. It is this idea of citizenship that was helping low-caste members of the village to move beyond (both spatially and metaphorically) its rigid hierarchies and it is the same idea that is propelling them now to contest such rigidities well within the village. The fierceness and passion with which elections to PRIs are contested and the way it leads to group violence (at times caste-based ones) are testimony to the growing hold of the idea of citizenship over the masses. In this sense, PRIs are forging citizenship in a qualitatively new way by mobilising one and all (irrespective of their position in the caste and agrarian hierarchy) to stand up for one’s rights and one’s share of entitlement to public resources. Whereas in pre-colonial and colonial times the villages were not directly administered by the state, the post-colonial state has been taking an active interest in the welfare and development of the village. This has also led to a change in the conception of the role of the state. The state has come to be seen as a positive agency of welfare and social change rather than an evil necessity. The state, through a plethora of welfare policies and developmental programmes, aims to change the social structure of the village in its entirety. In Bailey’s words (1957, p. 3), Until recent times the state was not concerned with the social and political organisation of the rural communities, nor did it interfere with methods of exploiting the material world. The state was interested in revenue […] The functions of the government were fiscal and pacificatory and seldom reforming. Thus, one sees the unfolding of a process which seems to have facilitated an ever-growing traffic of ideas and interests between the state and the village. To a great extent, the pace of this traffic has been an outcome of the conscious policies of development and change embarked upon by the state. It is not surprising that the villagers now see themselves more as citizens of the state than as members of the village. This is indicative of the centrality of the state in the processes of social change in contemporary India (Thakur, 2014). 159

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Even otherwise, historically speaking, the state has been powerful in relation to the individual village. Traditionally, the central axis of this vertical articulation has been the relation to land, with the state shaping property rights and revenue demands with the objectives of resource extraction as well as political accommodation and containment. Often, the basic unit for this relationship was not the village at all, but smaller estates within the village, or much larger units comprising several peasant settlements at a time. In terms of local political and power structures as well, the village per se was not universally the key unit. In the post-colonial era of state-led development, the nature and direction of resource flows have altered significantly. Besides, land reforms have broken down the earlier units and vested rights in individual peasant households, with the village being the basic unit for economic administration. But, while the entry of the state as a development player might have shored up the village as a unitary entity at an administrative level, other forces and processes have been leading to a progressive loss of the economic and social identity of the village (Breman Kloss and Saith, 1997, pp. 5–6). With the introduction of the 73rd Constitutional Amendment as regards Panchayati Raj institutions, the village is also shaping up as a new unit for political representation. But this unit is not the same as a village in community terms (see Jha, 2013). On the contrary, the demographic–administrative requirements of delimiting a constituency for a panchayat have torn the villages asunder. There have been new alignments of hutments and settlements under the rubric of a new panchayat. This political geography has overshadowed the earlier type of communitarian or substance-based conceptions of the village. Post-73rd Amendment, the village landscape is dotted with agencies of the state. PRIs are the medium through which the relationship between the village and the state is articulated. This leads to the incorporation of the village into the state and the associated conversion of villagers into citizens irrespective of the real progress of democratic decentralisation. This is not to say that the village does not contest and redefine the state: ‘the state is not only present in the village but the village also penetrates into the state’ (Breman, 1997, p. 59). That is, the dynamics between the state and the village are not unidirectional. It is not merely the supra-local sphere such as the state that acts on the village; the village also appropriates the state in its own image. However, the village continues to remain at the receiving end of change-processes which have their origins outside in policies formulated at the higher levels, that is, the state despite the rhetoric of participatory planning and the formation of district planning committees. The panchayats of our times are qualitatively different from the ones that those believing in the Gandhian model of the self-sufficient village economy based on social cohesion and mutual cooperation would envisage and make us believe. PRIs are not instruments to transform the myth of the co-operative peasant village into a reality in the post-colonial era. Whatever the romance of ‘a long-existent village community ethos’ is, the PRIs are not primarily or even mainly directed towards strengthening solidarity and cohesion among local inhabitants, i.e. giving them a feeling that they actually formed a community (see Breman, 1997, p. 36). Nonetheless, the idea, religiously adhered to by many generations of policy makers, that the village constituted a homogeneous peasant class persisted. As Béteille (1980, p. 117) notes: At the time of Independence there was perhaps some hope that Indian villages, battered for two hundred years by the forces released by colonial domination could be reconstituted into peasant communities of a sort, Land reforms, co-operatives, community development were all thought of as a possible means to that end. These and other means have been tried in the three decades since Independence, but there is little indication of villages acquiring the kind of social homogeneity that is typical of the peasant village. The basic mistake lay probably in the assumption that the typical Indian village ever was a community of peasants. 160

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Even the Balwantrai Mehta Committee report admits that ‘the idea that village community in India represented a unity of interests in common developmental objectives itself was a misconception’. Apparently, the village panchayat is a spatio-administrative unit that operates around a welldemarcated human settlement. Pace Daniel (1984), we have seen how the meanings of the village keep fluctuating over, within and around shifting clusters of human settlement. However, once the panchayats become the diorama of democratic decentralisation, the villagers are persuaded, cajoled and coerced into becoming citizens of a modern state. The panchayats also become the site for the manufacturing of disciplined citizens. In this sense, panchayats help extend the sphere of civil society in the countryside by spreading the constitutionally mandated rules of the democratic game to the remotest nook and corner.Viewed thus, the PRIs, in an unanticipated way, offer us an entry point to conceptualise the relationship among the conceptual keywords of citizenship and politics, and not merely of development, participation and distributive outcomes. Howsoever contentious, by creating opportunities for a large number of Indians to hold political offices at the local level and by enlarging the scope of political contestation to press for collective entitlements and differentiated access to public resources, the PRIs have reinforced the already existing idea of citizenship that had started seeping into the mass psyche after Independence.

The increasing malleability of the village social structure Earlier, the village social structure was seen as one of the givens, and scholars/policy-makers were concerned with how to make it amenable to the exogenous processes of change. Thus, there has been a long tradition of work in sociology and political science on factions and the way they shape access to political power. Now, there is an all pervasiveness of the statist-official script of the village. However, these official ideas also have undergone changes.Whether villages are projected as homogenous or united communities or socially stratified ones, their representations have always been vulnerable to the official categories of knowledge. Irrespective of whether PRIs fall short of accomplishing their goals or succeed in accomplishing the progress envisaged, they lead to a certain transformation of the terms or categories of knowledge for one and all. For instance, ‘reserved constituency’ is an accepted term now throughout the country. These new politico-administrative categories are rather progenitors of new social identities even if they are necessarily born out of political alliances and electoral mobilisations. They become a marker of social difference and social classification. As the official-statist script spreads and starts acquiring social substance, more and more people lay claims to it. They also serve political interests. The ways of imagining social difference get associated with political uses of identity (Thakur, 2014). Thanks to the painstaking work of a generation of sociologists/social anthropologists, there has been a progressive deconstruction of the idea of a village as a self-contained totality. The state-sponsored enterprise of democratic decentralisation has furthered the outward-looking character of the village. Undeniably, modern times have witnessed an increasing embeddedness of the village in the state and in this context, PRIs have played a key role. The pre-eminence of the state has, however, resulted in the gradual loss of the defining characteristics of the village as a social universe. In an interesting study of a village in Tamil Nadu, Daniel (1984, pp. 61–104) demonstrates how the statist definition of the village has marginalised the villager’s notion of the village. Contrasting Ur and Kiramam, he shows how Tamil villagers conceptualise the former as distinct from the latter. A Kiramam refers to the revenue village, and thus, to a political unit created for the purpose of taxation and the organisation of local government. Administratively, it is under the jurisdiction of the taluk, which is governed by the district, then by the state, and ultimately by the national government. There is no ambiguity about its 161

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boundaries, as Kiramam refers to the bounded, standard and universally accepted spatial unit.The government determines what a Kiramam is, and it is the same for everyone. There is no contextual variation in the use of the term ‘Kiramam’ even though it is abstract and distant. While ‘Kiramam’ is a term whose meaning is really context-free, universal and fixed, Ur is a person-centric term that derives its meaning from the contextually shifting spatial orientation of the person. In the words of Daniel (ibid., p. 104), ‘Ur is not so much a discrete entity with fixed coordinates as a fluid sign with fluid thresholds’. Ur is always in relation to a given person or jati that is known to have established a special relationship of substantial compatibility with that particular Ur. In the reckoning of the villagers, Ur is culturally more significant as the soil substance of an Ur mixes with the bodily substance of the human inhabitants of that Ur. In essence, Ur is an indigenous concept of territory.Villagers invariably draw the boundaries of the Ur with reference to ‘ritually vulnerable spots, flow and transit of substance, shrines of the sentinel deities, the points at which roads or the village streams enter the village, the haunted tamarind tree at the edge’. In fact, ‘the villager’s concern is not only with what substances enter the Ur and affect its inhabitants but with the effect of these alien substances on the substance of the Ur itself ’ (ibid., p. 79). Despite the fact that Ur and Kiramam are neither semantically isomorphic nor mutually substitutable, villagers misleadingly represent Ur as Kiramam in their routine practices. Irrespective of whether this isomorphism between Ur and Kiramam is apparent or real, it becomes evident that, in terms of scope and political significance, Kiramam has been overshadowing Ur.This reinforces our argument that, in our times, the state has also become a dispenser of socio-political identities.This means that the process of labelling (be it of territorial units or social groups) by the state contains the potential of unleashing new solidarities that the labelling might itself engender. In this sense, to label a given human settlement as a village or a panchayat is rarely just a taxonomic or classificatory exercise. The naming of a village as a panchayat becomes much more than a semantic slot or a lexicographic gloss. It gets firmly entrenched in the dynamics of power/knowledge. Once a particular settlement is labelled as a village panchayat by the state, certain important consequences follow. Although this labelling is an inevitable attribute of any bureaucratic, professional, formal, institutionalised management of public resources, it also, in the process, determines rules of access to particular resources and privileges. It sets eligibility criteria and qualifying attributes for inclusion and exclusion vis-à-vis public resources, utilities and services. Expectedly, people respond to the statist labelling by adjusting their behaviour and redefining their ways of presentation in order to successfully handle their access to the scarce public resources. In the particular context of democratic decentralisation, panchayats as the units of political administration are sought to be incorporated in the state for the advancement of national priorities of decentralised governance. In effect, decentralisation remains a top-down project for expanding the scope of the state administration notwithstanding the rhetoric of people’s participation. It brings panchayats in line with the national standards of desirable decentralisation and governance. More importantly, particular images of the decentralisation or popular participation are produced as representations by the state’s standards of representation. As a consequence, the village prefers to be seen as the village in the eyes of the state so as to get its share of development funds and other attendant benefits.

The ultimate centrality of the state However, the statist labelling is pregnant with fundamental social consequences.Very often, the statist categories take roots in the social imaginary and become the basis for new types of social interaction. In the process, the hitherto existing systems of rural social stratification get modified 162

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if not totally altered. Pre-existing identities, of course, do not go away so easily. But they have surely been rendered weak and fragile. What is noticeable is that old identities are consistently being reworked on the basis of people’s relationship to an actual or potential state activity. The designation of people as councillor, sarpanch, mukhiya, pradhan, ward member, etc. do not merely remain as professional markers but get embedded in the social universe. It is fairly common in Indian villages to come across people who are known more by such sobriquets than by their names or caste identities. Such sobriquets acquire a logic of their own in which specified kinds of behaviour and interaction are demanded or expected of the people possessing them. It reconfigures the hierarchy of social esteem at the village level and beyond. It is almost universal now to extend an invitation to local panchayat functionaries to attend feasts and celebrations associated with life cycle rituals in a village household. Earlier, such invitations would remain confined to the boundaries of castes and kinship. Moreover, at public functions, be they the inauguration of a village road or a prize distribution ceremony in a local school or the public celebrations of religious festivals, local panchayat functionaries are invariably the most visible dignitaries irrespective of the quality of development work done or the improvement in the delivery of public services. Even otherwise, there is increasing evidence to show the growing heterogeneity of elites at the local level (Lakha, Rajasekhar and Manjula, 2015). There is an increasing emergence of politically connected households among the traditionally disadvantaged low-caste groups. Some of them are instrumental in the elite capture of the gains accruing out of various government schemes (Rajasekhar, Babu and Manjula, 2012). Based on their fieldwork in Karnataka, Rajasekhar, Babu and Manjula (2012, p. 8) assert, ‘[T] hus, some SCs who possess small-sized landholdings do have political experience in local institutions, though many of their caste members work as agricultural labour, have little or no land, and lack political connections’. Even as ownership of land remains an important attribute in an Indian village, it is getting increasingly dissociated from authority and rural-agrarian dominance (Gupta and Thakur, 2017). Cumulatively speaking then, one can argue that access to political capital is loosening the older coordinates of dominance such as land and caste, and this process is well underway. It is nobody’s argument that the membership of a high caste or the ownership of land has lost its lustre altogether. But the point remains that an important parallel (and relatively independent of caste and land) avenue of upward socioeconomic mobility has been firmly put in place at the village level by way of the PRIs. A set of people are gaining in importance at the local level whose political apprenticeship through PRIs is turning them into important hinge groups between the villagers and the state. They are the people who have mastered the art of politically negotiating with the state. In contemporary times, PRIs remain the framing architecture through which the village gets constituted as the ultimate end of the modern state’s reach and depth. This appropriation of the village by the modern national state through decentralised governance is nothing unusual.There are myriad practices through which the state intervention encompasses the village materially and symbolically. That has been the general direction of change all over the world. The foregoing discussion, thus, throws up some interesting theoretical questions regarding the implications of administrative categories in relation to social identities, that is, how PRIs have impacted on the conceptualisation of the social–cultural boundaries of the villages and the villagers in the wake of politico-administrative categorisation. Also, it offers certain clues pertaining to the essentialisation of identities which would have remained vacuous had the state not lent its all-pervasive legitimacy to the process. It would be interesting to explore the interface between the state and the community as regards processes of identity formation and boundary demarcation. After all, communities are contentious social groupings forged in the course of day-to-day struggles over resources, meanings and symbols. We do not know of many cases 163

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where the village reaffirms itself as a community with independent initiatives and resources to manage (à la Gandhi) and, thus, refuses the demands and expectations of the state-led decentralised governance. Moreover, we have empirical evidence all over the country indicating the impact of the statist construction of categories on the processes of political mobilisation. Expectedly, the statist vision of democratic decentralisation requires the village to give up its sense of autonomy and community given the top–down approach and centralisation of schemes. It exhorts the village to ally its destiny with that of the nation-state. True, the village does not always conform to the wishes of the state. It has its own ways of bypassing, appropriating and transforming the development impulses emanating from the state. In many ways, it keeps alive locally autonomous concerns. But then, the modernising zeal of the modern state is too strong to leave the village to its own devices. No wonder the community represented by the village slips away in the developmental fantasies of the state and the village becomes the playground for pompous ideologues of varying shades and colours. We have argued that official-statist-administrative categories, once they gain currency, develop a dynamics of their own. They get essentialised in the course of time and acquire the potential to undermine the pre-existing bases of people’s identity. However, the undermining of people’s earlier bases of identity does not necessarily lead to situations of conflict. In the particular context of the village panchayats, people have responded to the statist constructions in innovative ways to further their instrumental interests while continuing with their old ways of identification with the village in magico-religious and kinship terms. This collective splitting of the self in relation to the villages forged through panchayats is likely to be quite widespread. Ethnographers have also reported instances where the long-existing ritual universe of the village appropriates the statist construction of the same in strikingly new ways. However, one should not be misled into believing that the ritual-social universe of the village has successfully weathered the statist interventions through PRIs. On the contrary, there have been enough ruptures in that universe, and the grip of the village over its ritually low members has sufficiently loosened. More than ever, the social position of the low-caste members is predicated less on their ritual integration in the cosmic universe of the village and more on the protection afforded to them by the state through PRIs. Rather than negotiating their ambiguous ritual position within the village, they would prefer to warm up to the promises of citizenship of a modern state. Processes like this would not have been set in motion had the state not intervened in the village. And, one of the most powerful interventions has definitely been the enterprise of decentralised governance. It would not be an exaggeration to say that in our times, decentralised governance seems to have produced the panchayats as ‘governmentalised locality’.

Conclusion Employing Robert Merton’s framework of the ‘unanticipated consequences’ of purposive social action (1968), this chapter attempts to make three interrelated arguments. First, even as substantive decentralisation has been a distant (if not an altogether elusive) goal, PRIs have played an important role in making the rituals, roles and practices of democratic conduct extensive, and have thereby enabled the idea of democratic citizenship to take strong roots in the countryside. PRIs have created a new type of political opportunity structure at the village level in an unprecedented way and have furthered the spread and reach of democratic political contestation to the hitherto politically uninitiated. In a substantial way, PRIs have propagated the idea and practice of rule-based contestations for political power and access to public resources. Democracy is the name of the game everywhere and villages are not untouched by it. PRIs may not have improved the quality of service delivery to the desired levels or may 164

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not have successfully contained the problem of elite capture of government schemes but they have certainly expanded the idea of political citizenship and thus surely enhanced the quality of democracy in this country. Second, and contrary to the rhetoric of establishing the ideals of the age-old village community, PRIs have had a disruptive impact on the earlier types of communitarianism.They have reconfigured the hierarchical arrangements of the village social structure by bringing in a new variable, that is, political office held through electoral contests. Holders of political offices command respect even when they may not possess the other ingredients of dominance like land or the high-caste status. In the process, the supposed harmony and cohesion of the earlier type has given way to manifold conflicts in Indian countryside. Conflict is ubiquitous now. Interestingly, most of these conflicts are being negotiated politically, and the warring factions/groups converse more with the state agencies than with the caste panchayats or the village elders or priests.These changes point towards a certain malleability of the village social structure and the attendant rural-agrarian dominance. At a time when the ownership of land is being delinked from authority at the village level, such changes augur well for a reconfiguration of power relations at the village level. PRIs have certainly released forces that are bound to contribute to the process of altering of power relations even if the emergence of a totally reconfigured authority structure at the village level is yet to come to fruition. Lastly, we see an increasing mish-mash of social and politico-administrative identities. Noticeably, the latter appears to be overwhelming which is indicative of the growing centrality of the state in the affairs of our compatriots. Democratic decentralisation has reinforced this centrality of the modern nation-state and has imparted to it a new type of popular legitimacy. The state has emerged as the principal dispenser of identities and has a major role to play in the nature of community formation at the village level as well. In a way, the ritual cosmology of the village has already given way to the political geography of panchayats.

Note 1 The discussion employs Robert K. Merton’s uses of ‘unintended consequences’ and ‘unanticipated consequences’ in his seminal work Social Theory and Social Structure. He writes (1968, p. 114), ‘The distinctive contributions of the sociologist are found primarily in the study of unintended consequences (among which are latent functions) of social practices, as well as in the study of anticipated consequences (among which are manifest functions)’. For the present purpose, we do not get into the conceptual distinctions between the unintended and the unanticipated, and treat them as synonyms (see Zwart, 2015 for details).

References Bailey, F. G. (1957). Caste and the Economic Frontier. Manchester: Manchester University Press. Béteille, André (1980). ‘The Indian Village: Past and Present’, in Hobsbawm, E. J., Kula, W., Mitra, Ashok, Raj, K. N. and Sachs, Ignacy (eds.) Peasants in History: Essays in Honour of Daniel Thorner. Calcutta: Oxford University Press. Breman, Jan (1997). ‘The Village in Focus’, in Breman, Jan, Kloss, Peter and Saith, Ashwini (eds.) The Village in Asia Revisited. New Delhi: Oxford University Press. Breman, Jan, Kloss, Peter and Saith, Ashwini (eds.) (1997). The Village in Asia Revisited. New Delhi: Oxford University Press. Chattopadhyay, Raghabendra and Duflo, Esther (2004).‘Impact of Reservation in Panchayati Raj: Evidence from a Nationwide Randomised Experiment’, Economic and Political Weekly, 39(9), pp. 979–86. Daniel,Valentine E. (1984). Fluid Signs: Being a Person the Tamil Way. Berkeley: University of California Press. Gupta, Pripanshu and Thakur, Manish (2017). ‘The Changing Rural-agrarian Dominance: A Conceptual Excursus’, Sociological Bulletin, 66(1), pp. 42–57. 165

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Human Development Resource Centre (n.d.). Decentralisation in India: Challenges and Opportunities. New Delhi: UNDP. Iyer, Lakshmi, Mani, Anandi, Mishra, Prachi and Topalova, Petia (2011). ‘The Power of Political Voice: Women's Political Representation and Crime in India’, mimeo, Working Paper No. 11-092, Harvard Business School. Jha, Hetukar (2013). ‘Bihar: Blurred Vision, Mounting Aspirations’, Social Change, 43(3), pp. 461–70. Lakha, Salim, Rajasekhar, D and Manjula, R (2015). ‘Collusion, Co-option and Capture: Social Accountability and Social Audits in Karnataka, India’, Oxford Development Studies, 44(3), pp. 330–38. Manor, James (2003). Democratic Decentralisation in India, mimeo, New Delhi: Embassy of Sweden in India. Marshall, T. H. (1950). Citizenship and Class: And Other Essays. Cambridge: Cambridge University Press. Mathur, Kuldeep (2013). Panchayati Raj. New Delhi: Oxford University Press. Merton, Robert K. (1968). Social Theory and Social Structure. New York: Free Press. Mullen, Rani D. (2012). Decentralization, Local Governance, and Social Wellbeing in India: Do Local Governments Matter? London: Routledge. Rajasekhar, D., Babu, M. Devendra and Manjula, R. (2012). Elite Capture in Gram Panchayats of Karnataka, mimeo, Bengaluru: Institute for Social and Economic Change. Singh, Satyajit (2016). The Local in Governance: Politics, Decentralization, and Environment. Delhi: Oxford University Press. Thakur, Manish (2014). Indian Village: A Conceptual History. Delhi: Rawat Publications. Widmalm, Sten (2008). Decentralisation, Corruption and Social Capital: From India to the West. Los Angeles: SAGE. World Bank (2000). Overview of Rural Decentralisation in India, Vol. 1, mimeo. New Delhi: World Bank. Zwart de, Frank (2015). ‘Unintended but not Unanticipated Consequences’, Theoretical Sociology, 44, pp. 283–297.

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12 Interrogating local democracy Formal and informal local governance in Karnataka1 Kripa Ananthpur

Introduction In 1998, during the initial phase of the implementation of the 73rd amendment and while I was doing field research in Mysore district to understand the ways in which rural citizens were engaging with their local governments, a chance remark by a group of male villagers during the discussion on women’s political participation opened up a whole new dimension of local democracy and governance to me: Women are represented in Grama Panchayats because of reservation, but in our halli panchayati (village council) women are not allowed to participate and even if they participate they are not allowed to speak! These words of Maruti Nayak both appalled and intrigued me.This was my first encounter with the halli panchayati, a village institution that was to become a major fixation in the coming years. Given that these were the early days of decentralisation it was logical that it would require time for pre-existing institutions to give way to formally elected local governments. However, my early research on these halli panchayatis in Karnataka, initially between 2001 and 2004 and in a comparative context from 2005 to 2010, uncovered that rather than retreating, these institutions were ubiquitous and were finding interesting and innovative ways to interface and interact with the formal institutions of governance, namely Grama Panchayats (Ananthpur, 2007a; Ananthpur and Moore, 2010). But around 2010 we noticed that their influence in some arenas was beginning to weaken and wane and it was assumed that with the gradual strengthening and institutionalisation of Grama Panchayats (GPs), these institutions would gradually wither away. However, 25 years after the enactment of the 73rd amendment to the Constitution, an analysis of the local institutional terrain in Karnataka indicates that rather than withering away, these halli panchayatis still exist and operate strongly in many districts of the state.This despite the fact that the Panchayat Raj Act in Karnataka has provided adequate funds, functions and functionaries to strengthen Grama Panchayats to function as local self-governments. So, what then explains the persistence of these parallel institutions at the village level? What are the domains over which these two institutions interact? What is the nature and impact of interaction? These DOI: 10.4324/9780429321887-12

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questions are important to explore and understand further as they have deeper implications for local democracy. This chapter draws from three sets of research data collected over a period of 15 years in Karnataka and will explore the interface between these institutions with particular reference to local elections. The chapter is organised as follows: Section 2 sets the context by looking at the prevalence of informal institutions in local governance internationally; Sections 3 and 4 focus on setting out the methodology and unpacking these institutions in Karnataka – their composition, activities and interface with formal local governments; Section 5 analyses the role played by these institutions in local elections based on data collected over four election cycles; and finally Section 6 contains some concluding thoughts.

Governance and informal institutions The international context The process of deepening democracy through decentralisation has revealed a plethora of informal and/or traditional institutions operating in parallel to formal local governments the world over. This is not a recent phenomenon nor one unique to India. Most countries in the global south have had some form of informality in their governance structures. A range of informal local governance institutions exist in many former colonies of the south. These institutions may range from those rooted in traditions and customs like traditional chiefs and authorities in Africa (Crook, 1986;Keulder, 1998); Ayllus (indigenous communities) in Bolivia (Cusicanqui, 1990); comunidades campesinas (the official term used for indigenous communities) in Peru (Foundez, 2003); Chiefdoms in Polynesia and Melanesia in the Pacific Islands (Sahlins, 1963); CVCs in India (Ananth Pur,2004; Krishna, 2002); Shamaj and Shalishs in Bangaladesh (Adnan, 1997; Blair, 2003; Rahman, 2002); Adats in Bali, Indonesia (Warren, 1993); temple and lineage institutions in China (Tsai, 2002); traditional Pagoda association in Cambodia (Pellini, 2004); and so on. Here, institutions that exercise authority through repressive forms and indigenous institutions that regulate common property resources like pastoral groups are being excluded from the category under consideration. Institutions that we term here Customary Village Councils (CVCs) have territorial authority and provide state-like functions. States in the south – and especially in countries formerly ruled by European colonial powers – often remained relatively incomplete, especially at local levels. It was not worthwhile for the colonial authorities to extend the core institutions of rule, in their standard bureaucratic form, down to the local level (Ananthpur, 2007).They instead practised variants of what was often termed indirect rule, i.e. they used selected powerful local individuals or families to rule locally in a mode that was formally non-bureaucratic. These ‘local notables’ were not public employees, but were represented as exercising ‘traditional authority’ (Ananthpur, 2004).The literature on European colonial rule in Africa, Asia and Latin America is replete with studies of how these local – and mainly rural – mediating arrangements were constructed and how their existence in turn reflected back on local society (Frykenberg, 1965; Mamdani, 1998). In South Asia, while the state relied upon these notables – Zamindars, Jagirdars, Jotedars, Lumbardars (North India and Pakistan) and Mudaliyars (Sri Lanka) – for revenue collection as well as other services (Krishna, 2002; Moore, 1985; Washbrook, 1981), it largely left village-level institutions such as CVCs untouched. A significant distinction among CVCs is visible in the way these institutions have been structured. Under the colonial regime, while in many instances local notables or traditional chiefs were entrusted with authority over the local population, at others, more collegiate and collective institutions were incorporated into colonial rule.With independence, 168

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many countries abolished these individual authoritarian structures, for instance Zamindars, Jotedars and Jagirdars were abolished in India immediately after independence; Mudaliyars in Sri Lanka and some traditional chiefs in Africa met the same fate. However, in much of Africa traditional chiefs continue to be important local governance institutions. Traditional authorities in Africa tend to be hierarchical and pyramidal structures with ‘chiefs’ occupying the supreme position. These tend to be hereditary positions with substantial powers, particularly over land allocations. On the other hand, CVCs in India, Shamaj and Shalish in Bangladesh (Adnan, 1997; Rahman, 2002) and Desa Adats in Bali (Warren, 1993) are more collegiate, corporate and collective in nature where power is shared rather than centred on a single leader. CVCs, especially those rooted in customs and traditions, have been extensively researched in India by anthropologists and sociologists in the aftermath of independence. With democratisation taking root in most countries of the South, these institutions have time and again been at the centre of the debate. The status of these institutions in the modern polity and their role within the democratic context has been extensively debated in social science literature: be it in the context of democratisation, decentralisation and good governance discourse (Brinkerhoff and Goldsmith, 2005; Ananthpur and Moore, 2010; Fox,1990; Helmke and Levitsky, 2004; Hope, 2000; Pycroft, 2002; Ray and Reddy, 2003; Shivakumar, 2003), or in debates on rural or economic development (Cramb, 1990; Pejovich, 1999;Platteau and Abraham, 2002). While in Africa where many countries in the post-colonial period, from as early as the 1950s to as recently as the 1990s, have grappled with the problem of accommodating traditional authorities within a dichotomous framework of common citizenship vs co-existence in a multiparty system of democracy (Ntsebeza, 2003), in India this issue has never been considered or received centre stage even as post-independence India moved towards a common citizenship for all.

The Indian context Today, many of India’s ‘natural villages’ do indeed have ‘traditional local governance institutions’. They do not label them like that: they actually employ a wide diversity of locally specific terms. Labelling for analytic purposes is a difficult issue: every conceivable convenient label might be seen to pre-judge tricky questions about how we actually understand these institutions. I will be as non-committal as possible and call them ‘Customary Village Councils’ (CVCs). CVCs in India, as collegiate, collective and corporate institutions, have a long history and can be traced as far back as the pre-Mughal (Altekar, 1958) and Mughal periods (Habib,1999; Tinker, 1967). CVCs were usually composed of a council of leaders2 who generally belonged to upper castes or founding families, or were large landholders. However, it has been documented that CVCs in South India had more egalitarian councils where representatives from each caste groups including most sub-castes under SCs (except for ‘pariahs’) were members of the CVC (Tinker, 1967, p. 19). CVCs during the pre-Mughal period generally resolved disputes, allocated taxes, managed local schools, constructed tanks and in places also acted as bankers (Altekar, 1958). It is said that some powers of the CVCs were curtailed under the Mughal period (Tinker, 1967) but Habib’s account of CVCs during the Mughal period reinforces the collegiate, collective and corporate nature of these institutions. CVCs collected taxes from the villagers to be paid as land revenue to the Mughal rulers. The remaining funds were often used for productive purposes such as the amount spent in damming water channels (nalas) or in buying musk-melon seeds. Some expenses too were incurred for providing general entertainment or towards 169

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meeting the moral responsibility of the village. So, we find entries concerning payments made to jugglers and minstrels and expenditure on hospitality to strangers and charity to beggars. (Habib, 1999, p. 155) With colonial rule, detailed accounts of the functioning of CVCs became available through the early colonial administrators (Baden-Powell, 1899; Maine, 1881). But these accounts rather than viewing CVCs as a corporate body perceived them mainly as councils involved in dispute resolution (Krishna, 2002). Consequently, many scholars believed that these institutions died down with the introduction of new institutions of governance and regulation and codified law (Mescheiviz and Galanter, 1982; Tinker, 1967). But this view has been disputed by others who illustrate how these institutions continued to function and thrive during and immediately after colonial rule (Cohn, 1987; Frykenburg, 1969; Weiner, 1963). In contrast to colonial accounts of Indian villages, most village studies in post-independence India have depicted a rather contrasting image of the Indian village. In the 1960s, 1970s and 1980s, extensive research was carried out on Indian villages and village institutions under the broad rubric of ‘village studies’ by anthropologists (Archer, 1984; Bailey, 1960; Cohn, 1987; Mandelbaum, 1970), sociologists (Beteille, 1971; Dumont, 1980; Srinivas, 1959), political scientists (Rudolph and Rudolph, 1967), legal experts (Galanter, 1989) and political economists (Wade, 1988).Two streams of arguments dominated these studies. One school of thought identified these CVCs and portrayed their structures and activities in great detail. Mandelbaum’s (1970) detailed analysis of village councils from different parts of India indicates that the composition and activities of these institutions across the country were broadly comparable although their effectiveness showed both intra- and inter-regional variation. The focus of much of this research was on the informal justice dispensation function of these institutions that persisted despite access to formal legal institutions (Archer, 1984; Cohn, 1987; Srinivas, 2002) and not as village governance institutions engaged in corporate or collective actions. Reference, if any, to collective action by the village communities or CVCs was incidental and not central to the analysis (Dube 1955, p.52; Beals, 1963, p.7 in Ananthpur, 2007). At the same time, there has been another school of thought, which has contested the very existence of these CVCs. Dumont (1980), Harriss (1982), Hayden (1999) and others have questioned the extent to which these CVCs exist in reality. They argue that CVCs as institutions do not exist and what one sees in the villages is a caste Panchayat, which if dominated by dominant castes and is adequately powerful, may also take up issues related to other caste groups. Despite these diametrically opposing views, the first set of discourse on the presence of CVCs has been more widely cited and accepted than the second, which is used more as a reference point to critique these institutions. Since the 1990s there has been a visible dilution in the focus on village studies. According to Madan (2002) the villages became the domain or ‘Mecca’ of the NGOs and policy-makers in the 1990s. Few scholarly works on Indian villages emerged in this period (Madan, 2002). This is particularly true after the 73rd amendment to the Constitution in 1992 mandating decentralisation, which saw very little attempt by the social scientists to study the ways in which pre-existing local institutions at the village level had adapted to the creation of constitutionally mandated Grama Panchayats. Equally, those researching local democracy have tended to assume that these formal local governance institutions were filling an institutional vacuum at the local level. The only reference to these institutions comes from the media reports that decry the continued existence of such institutions within a democratic context. One reads largely horrific stories of repression and subjugation of those that defy caste and gender hierarchies 170

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in the media. The post-2000 period saw the emergence of a number of studies analysing the role of CVCs in maintaining community harmony (Krishna, 2002), influencing local elections (Ananthpur, 2002;Yazgi, 2005) and supporting local economic development and collective action (Ananthpur, 2004 and 2010), which brought the focus back to these village institutions and their role, either positive or negative, in local governance.

Area of study and methodology This chapter is based on a longitudinal study of local governance institutions in four districts in Karnataka. During the first phase, from 2000 to 2005, the research aimed to study the interface between the formal and customary governance institutions in Karnataka in 30 villages from Dharwad, Mysore and Raichur districts. In the second phase, the research was extended into a comparative study between Karnataka, Rajasthan and Punjab, Pakistan from 2005 to 2010. An additional 26 villages from Raichur and Gulbarga were studied during the second phase. Subsequently, during the third phase, detailed field research was carried out in all 56 villages prior to 2015 elections to study the interface between the Grama Panchayats and CVCs. The research was designed as a mixed method study using both quantitative and qualitative methods for data collection.

Local governance in Karnataka Karnataka, ranked 12th in the 2011 national human development ranking, is well known for its information technology industries, institutions of higher education, decentralisation efforts and so on. It is marked by relative socio-economic and political equality, a long tradition of democratic contestation and decentralisation (Natraj and Ananthpur, 2004), and experienced progressive reforms, including land reforms, before many other Indian states did (Manor, 1998). In fact, Kadekodi, Kanbur and Rao (2007, p. 649) identify this ‘emphasis on technology-led growth coupled with local government reforms’ as the ‘Karnataka Model of Development’ – an ‘innovative strategy to address the challenge of generating growth with equity’. Karnataka also has a long history of decentralisation dating back to the pre-independence period where attempts were made to devolve powers to the district boards (Natraj and Ananthpur, 2004). Karnataka’s decentralisation history can be categorised into three distinctive periods. These three periods created three distinct sets of local political institutions at the village level, which had different impacts on the nature of interaction between formal and informal local governance institutions. The design of the lowest tier of government varied in terms of (a) the size of population it covered and (b) the extent of powers and finances devolved to it by the state government. Decentralisation reforms after independence – The 1959 Act3 provided for the creation of the Village Panchayat for a single revenue village or group of villages with a population of not fewer than 1,500 and not more than 10,000. During this time both the single Village Panchayat and the Group Panchayat, for a cluster of villages, co-existed. These were essentially weak institutions with an inadequate devolution of powers and resources. A serious effort to decentralise political structures in Karnataka came in 1983,4 with the introduction of a two-tier, elected sub-state level governance structure. The lowest tier of governance under this system was called Mandal Panchayat and it was constituted for a population of 8,000 to 12,000. Adequate powers and resources were devolved to Mandal Panchayats, which 171

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were quite effective and efficient political institutions. These institutions were vested with powers of taxation. The 1983 Act was substituted by a new law in 19935 to accommodate the mandatory provisions brought in by the 73rd and 74th amendments to the Constitution.6 Grama Panchayats – the lowest tier of governance under this system – have a constitutional status unlike the institutions that existed before and are constituted for a group of villages covering a population of 5,000–7,000 in Karnataka. Grama Panchayats receive both tied and untied funds from the state and central governments. In addition, they are also vested with powers of taxation. This indicates that the formal, local institution has undergone various changes both in design and influence in Karnataka over a period of time as it has become institutionalised.

Customary Village Councils (CVCs) in Karnataka It is generally believed that the ‘traditional’ Panchayats, studied and documented by Ishwaran (1968), Srinivas (2002) and others, are no longer persistent in Karnataka. Village elites, instead of the village Panchayat, are now seen as mediators of power relations and influence the process of local governance (Inbanathan, 2000). But field research in 56 villages from four different districts7 in Karnataka indicates that CVCs are not only prevalent but also quite active (though variable across time and place) in all 56 villages. Rather than declining, CVCs continue to be ubiquitous and influential. It is no surprise that villagers use a variety of locally specific terms to describe them in Karnataka.8 Individual CVCs are effectively autonomous; they are not part of any broader institutional network, and answer to no one but themselves or their constituents.

Composition of CVCs in Karnataka9 CVCs differ in composition and procedure from village to village. There is however a clearly defined common core. They have identifiable members – panchas – and are led by a leader who is generally termed the Yajamana. First, I will describe (a) the pattern of membership of CVCs, then (b) the type of leadership and lastly (c) the nature of participation in CVCs. PATTERN OF MEMBERSHIP

Membership is structured by gender and caste.Virtually all panchas are men.They are usually the acknowledged leaders of individual caste groups at the village level, and are clearly understood to represent their caste groups and to be able to make commitments on their behalf (Ananthpur, 2010). According to Srinivas these ‘village councils’ (CVCs) are ‘informal and flexible’ bodies with ‘no hard and fast rule about who should constitute them’. Further, he has also documented a variation in membership over space and context (2002, p. 81).This ability to be fluid and flexible allows CVCs to adapt to changing contexts. Broadly, the size of a CVC is determined by the number of caste groups present in a village. In all villages the CVC consists of (a) a core membership representing mainly the leaders of the major caste groups in the village and (b) occasional other members, invited according to context or need. In most villages, some or all of the core members are viewed as having lifetime tenure unless and until they decide to step down. These are normally people considered to have inherited leadership of a particular caste group (Ananthpur, 2004). CVCs tend to be village-level institutions that are linked ‘downwards’ to caste organisations within individual villages. In single caste villages, the caste organisation also plays the role of the CVC. However, in villages with multiple caste groups, in Karnataka as elsewhere in rural India, each caste tends to have one or more recognised ‘caste leaders’10 who have responsibilities that are both 172

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internal to their own constituency (e.g. in resolving small disputes within the caste group) and external (e.g. mediating relations with other caste groups). Both these roles make them ‘natural’ members of the CVC. Although the CVC broadly represents caste groups in the village it does not represent them equally. For instance, a CVC might have more members from the locally dominant caste group compared to other caste groups considered lower in the caste hierarchy. Krishna finds a similar pattern of representation in his study in Rajasthan (2002, p. 136). CVCs have generally tended to be flexible structures, but their ability to adapt to formal democracy and its plurality of representation is indicated in the inclusion (albeit limited) of women and the Scheduled Castes in its activities. Women continue to be excluded from CVCs. The only exceptions I found were that, in two cases (not part of my sample), elected female members of the formal Grama Panchayat were sometimes invited to join in the deliberations of the CVC for specific purposes. This is a significant development as it is the ‘first recorded’ instance of an intrinsically patriarchal institution such as the CVC inviting women to be part of its deliberation. Marginalised groups such as Scheduled Castes and Scheduled Tribes have relatively better access and representation in CVCs, but the extent of their inclusion tends to vary regionally. In villages where the Scheduled Caste population is considerable, Scheduled Caste leaders are part of the CVC. However, this is restricted to the southern part of Karnataka. During our initial field study in Mysore district, we heard of an unusual phenomenon in one of our study villages where the Scheduled Caste population was able to get the Lingayat CVC leader (Yajamana) replaced as they felt insulted and discriminated against by him during the village festival. They officially ‘cut’ (sic) all direct contact with the Lingayat community. When the villagers discovered that there had been discord between the two communities, a villagelevel meeting of the CVC was called initially. The matter was finally resolved only when the demand of the Scheduled Caste population that the leadership be changed was accepted and the previous Yajamana, also a Lingayat leader, who had stepped down due to personal reasons, was reinstated. This story was told by our interlocutors belonging to different caste groups and was also confirmed by both the dalit community leader and the reinstated Yajamana. In yet another Mysore village, a former Grama Panchayat president and an educated dalit leader is considered by the villagers as one of the CVC leaders. Such cases, while rare and still restricted to villages with substantial Scheduled Caste or Scheduled Tribe populations, are indicative of the changing nature of CVCs. In southern Karnataka, Scheduled Caste leaders are consulted about village development activities by the CVC but we did not witness this in north Karnataka villages where they were either excluded or had limited influence on issues pertaining to them and on those that concerned the entire village. Thus, we are able to see a whole range of situations, from total exclusion to active involvement of Scheduled Caste leaders11 (Ananthpur, 2004). In addition to the core membership rooted in caste, some CVCs have other members whose inclusion is determined by more modern criteria. It is here that the variation in the membership of CVCs is most visible. An interesting phenomenon is the emergence of ‘new leadership’ (not rooted in feudal structures) in most villages. Some CVCs now include new members who are local leaders because of their political linkages, education, mobility and ability to interact with government officials. The experience from Karnataka seems to differ from other studies on new leaderships (Bailey, 1960; Beteille, 1971; Krishna, 2002). The ‘new leaders’ here often find a place on CVCs and play active roles there. Another set of people who are sometimes represented (temporarily) in CVCs are the people elected from the village to the new Grama Panchayats. 173

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CVCs are headed by the Yajamana – the person who usually takes initiatives and plays a major role in framing a consensus in the decision-making process. Despite the diversification of membership, in Karnataka the leadership of CVCs remains in the hands of locally dominant caste groups such as the Lingayats or Vokkaligas.12 But at least in five villages, we found that the leadership was in the hands of Scheduled Castes and Scheduled Tribes. But in such cases, the leadership was shared. This apparent power sharing usually occurs in villages with a numerically dominant population from the Scheduled Castes or Scheduled Tribes. In such instances, the Scheduled Caste or Scheduled Tribe leader is considered a CVC leader along with a leader belonging to another group. In two villages, Muslim leaders were considered CVC leaders along with Scheduled Caste/Scheduled Tribe leaders. In addition, a junior leader (Chikka Yajamana) is usually appointed to take care of such issues as organising meetings and informing the community about meetings. However, the nature of leadership has undergone significant changes in the sense that CVCs are no longer controlled by a single, dominant caste leader or big landowner of the village. It is perceived more as a deliberative forum, where decisions are arrived at after discussions and consensus. This ‘egalitarianism’ is not unique to Karnataka CVCs but is also found in the village councils of Rajasthan where ‘panchas’ (representatives)of all caste groups sit as equals on the central platform (Krishna 2002, p. 136). PARTICIPATION

CVCs generally do not have fixed formal meetings but meet as and when required. The attendance of various panchas in meetings may vary with occasion, circumstances and the nature of business under consideration. The Yajamana is almost always present as only he has the right to endorse decisions. The degree of formalisation of the meeting schedule varied widely. In one Mysore village, the CVC meets every Monday for purposes of dispute resolution. If, however, no cases are notified by 7:30 pm on Sunday, the meeting is cancelled. Participation of ordinary villagers in CVC meetings is closely linked to the purpose of the meeting. For instance, dispute resolution processes (except marital disputes) usually take place in the presence of many villagers, mainly men. Men who are not panchas can plead their own cases before the CVC. Women very rarely do so, but are in most cases silent observers of the proceedings from the periphery of the gathering. However, I did witness one case in a Mysore village where a woman came before the CVC requesting them to enforce the decision taken on a property dispute in a previous meeting as it was not being honoured by her brothers. Where women do not come before the CVC, their issues and views are placed before the CVC by their male relatives. Men’s attendance varies from village to village, but in most villages at least one male member from each family – usually the head of the household – is expected to attend.Young men may attend, but are allowed to participate in the discussions only if expressly permitted. Essentially, older men or male heads of the household are expected to represent and speak for the whole family. However, the level of participation of the community in CVC meetings depends upon the gravity of the issues being debated. The presence of the villagers in CVC meetings is a way of ensuring community endorsement of decisions. LEGITIMACY

While CVCs draw their legitimacy from custom and tradition and are largely rooted in caste, they are not bound by ‘tradition’. They adapt to changing circumstances, as is evidenced by the 174

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appearance in some cases of Scheduled Caste leaders or members chosen by virtue of their election to the formal Grama Panchayat. It is this adaptability and flexibility that allows them to survive. But the change in membership has not extended to include better gender representation. CVCs are still very patriarchal. CVCs in Karnataka continue to be gender-biased. Asking a woman to come before the CVC is considered demeaning for the woman concerned. Women also do not participate in the CVC meeting for fear of being called ‘Bajari’ (brazen) and losing their ‘Maryade’13 (honour of self and family). When I probed to find out if any woman had lost her ‘Maryade’ by speaking up in a CVC meeting, there had been no such instances where the women had been subjugated to such shaming. This proposition does not seem to have been put to test in the villages under study. But the concept is internalised to such an extent that women, especially young, educated women interested in actively participating in the activities of the CVC, are unwilling to take the risk of contesting this myth. Thus, positive changes in the status of women in other socio-political spheres seem to have had minimal impact on this institution. However, the CVC leaders tend to be pragmatic and foresee changes if there are government intervention mandating the participation of women in this forum.

Activities of CVCs14 CVCs meet in public, following advance notification, in defined locations, to discuss, debate and sometimes decide, following established and clear procedures.The meeting itself is expected to occasion respectful behaviour on the part of the public. Some CVCs are procedurally very formal. Although not all CVCs meet frequently or regularly, most of them in our villages meet at least once a month. CVCs in Karnataka are engaged in providing a wide range of useful, collective services to rural citizens. The following is a list of activities performed by CVCs in the 56 research villages in Karnataka. Religious activities: All CVCs were involved in organising religious festivals, rituals and processions (Jathre), temple construction, repairs and maintenance. Dispute resolution: CVCs in all the 56 sample villages were involved in dispute resolution. This is one of the ‘traditional’ activities of the CVC.Villagers do not necessarily see dispute resolution by CVCs as an end point, but rather as the first opportunity for justice because it is quick, affordable and accessible.15 In most villages, villagers approach the police station or the formal legal system if disputes are not satisfactorily resolved by the CVC. On an average, nearly 80% of local disputes were resolved by the CVCs in these 56 villages. Social services and support: Some CVCs also provide assistance – monetary and social – to those in need. There are a number of cases of their helping destitute or widowed women to get a share of their husbands’ property, collecting funds from the villagers to help accident victims (generally from poor families), arranging funeral rites for the insolvent people, organising mass marriages for the poor, donating stationery to local school children, or supporting the education of gifted students. Development activities: Some CVCs have also taken up development activities through partnerships with the formal institutions or through their own initiatives and resources. CVC members have donated or solicited donations of land from villagers or neighbouring villagers for building roads, schools, anganwadis (pre-schools), community halls and/or living quarters for village government functionaries such as local nurses, teachers and doctors. 175

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While the majority of the CVCs we studied were involved in both dispute resolution and organising religious life of the village, the number of CVCs involved in other activities listed above was quite variable. However, most of the CVCs tried to interface with the GP in some form or the other.

CVC–GP interface – shaping local democracy In order to appreciate the interface between the two institutions, it is essential to understand the relative structures and activities of the two institutions. Table 12.1 gives a quick comparison between formal Grama Panchayats and Customary Village Councils in Karnataka. In all our sample villages, in addition to the autonomous activities that the CVCs perform on their own mandate, they also interface with the formal local governments. This interaction/ interface occurs in two phases – (a) prior to the local government elections by contesting election themselves or deciding on the choice of candidates, including encouraging uncontested elections in favour of their candidates and/or (b) after the election phase by influencing decisions about development projects initiated by Grama Panchayats and selection of beneficiaries for government funded anti-poverty projects.

CVCs and electoral competition CVCs in Karnataka play an important role in local elections. While villagers elect their representatives for all the three tiers of local bodies, it is the election to the Grama Panchayat where this choice becomes critical, as this tier is situated closest to them. Significantly it is this electoral space that CVCs seek to influence. CVCs are able to exercise a decisive influence on one or more seats16 and determine the choice of candidates. CVC leaders and members try to impact the local election process by (a) influencing nominations to the Grama Panchayat, (b) contesting Grama Panchayat elections leading to overlap Table 12.1 Structures and activities of GPs and CVCs Grama Panchayats (GPs)

Customary Village Councils (CVCs)

1. Lowest tier of formal, elected village level bodies. 2. Cover 5,000 to 7,000 people, on average each GP has jurisdiction over five or six villages. 3. Elected body with reservation of seats for women, OBCs and other marginalised groups (SCs/STs).

1. Institution rooted in caste. Does not enjoy any legal or formal government sanction. 2. Cover only individual, natural villages.

4. Receive grants from state/central government as well as raise local taxes. 5. Responsibilities include providing local infrastructure and implementing development projects.

3. Essentially a council of caste leaders representing various caste groups existing within the village, virtually all men. Some changes in the traditional membership pattern seen in some cases. 4. Resources generated through donations and fines.

5. Principal responsibilities include justice dispensation and maintenance of internal order and organising religious activities including maintenance of the local temple at times.

Source: Author’s compilation from the fieldwork data.

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of leadership in both institutions, and (c) encouraging unanimous(i.e. uncontested) elections where possible.

Influencing nominations CVCs have actively influenced the choice of candidates for local elections in all 56 under study in some or all of the four elections (2000, 2005, 2010 and 2015) studied. The process of influencing nominations to the Grama Panchayat at times takes place before filing the nomination papers. These negotiations rarely get finalised in one meeting. Our field research indicates that CVCs have as many as four or five meetings to decide on the candidates for elections. At others, this process takes place when the last date for withdrawing nomination papers occurs. Often, the CVC organises a village level meeting after the elections are announced to decide on the list of candidates. Candidates proposed and supported by the CVC file their nomination papers and other interested candidates are discouraged from doing so. In some villages, this decision is taken only when the last date for withdrawal of nominations is announced. At this point, the CVC intervenes, and other candidates are made to withdraw their nomination papers in favour of its candidates. The means of intervention may vary from requests, coercion and payoffs (promises of benefits or the chance to contest the next elections) to threats. I found no hard evidence of direct threats, but heard many suggestions about subtle intimidation, such as ‘if you go ahead against our wishes and contest, we will make sure you lose’. This was evident in some of the local elections that we studied. A large number of successful candidates were those that were originally endorsed by the CVC (Ananthpur, 2007).

Overlap of leadership The control that CVCs exercise over the selection of candidates for Grama Panchayat elections may be used to get the CVC leadership elected to those Grama Panchayats. Overlap among the leaders of Grama Panchayats and CVCs was widespread. In most of our villages, some form of overlap of leadership occurred. In some instances, the Yajamanas of CVCs were either members or occupied the position of president of the GP. We came across a number of CVC leaders who had occupied posts of president of the Grama Panchayat in earlier terms. In several villages, panchas were also members of the Grama Panchayat. A variant of this overlap is likely in the selection of candidates for women’s seats.The chosen candidates were often related to the leader or members of the CVC. For example, there were instances of CVC leaders’/members’ mothers, wives, daughters-in-law or sisters being either unanimously elected or chosen to contest elections to Grama Panchayats. Interestingly, there were also instances of CVC leaders or their relatives losing local elections to non-CVC members. It is difficult to give hard numbers here as this analysis draws from election data for four terms – 2000 to 2015 – and each term the percentage of overlap has varied. But in each term we did find at least one to two seats in each village where there was overlap of leadership.

Unanimous elections CVCs have tried, where possible, to concretise their choice of candidates by trying to ensure ‘unanimous’ (uncontested) elections. In half of our sample villages, some form of ‘unanimous’ elections took place in all four election cycles from 2000 to 2015. Some villages had 100% uncontested elections during 2000 and 2005.The total percentage of uncontested elections was nearly 34% during 2000 and 2005 which gradually reduced to 6% in 2010. In 2015 the 177

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percentage had increased to 11% but was still significantly lower than the earlier two periods. Only one village in Raichur consistently had 100% uncontested elections in all four terms. In general, where there were uncontested elections, it was more likely to be for seats reserved for women. In fact, out of 11% uncontested elections in 2015 in our sample villages, nearly 50% were those reserved for women. In villages where there were contested elections, field data indicates that most of the candidates who were finally elected were those originally chosen by the CVCs. Interestingly, in ten villages in our sample, there were no uncontested elections. In fact, all seats were contested during all four terms. In others, it was variable and some form of unopposed elections took place in one or more elections. However, CVCs’ influence in controlling election outcomes by ensuring unanimous elections is not absolute but subject to a range of factors both external and internal. Involvement of political parties, reservation of seats, village youth aspiring for leadership positions and increased awareness in local political participation and representation have all contributed to a visible decrease in the percentage of unanimous elections. We see this in 2010 and 2015 elections where the percentage drops sharply to 6% in 2010 and then marginally increases to 11% in 2015. This indicates that there is an increase in contestation and the GP elections are seen as important by the rural citizens. The field data depicts a rather negative view of CVCs as institutions undermining local democracy. People representing the CVC do influence the choice of candidates, try to ensure unanimous elections and where possible attempt to occupy formal positions. By denying rural citizens a chance to participate in free and fair elections, CVCs seem to facilitate the ‘elite capture’ of local democratic institutions.This view, by implication, perceives rural citizens as mute, passive recipients of this process. However, the ethnography of pre-election bargaining and negotiation indicates that this process is not dictatorial but tends to be deliberative in nature. However, it is undeniable that these deliberations continue to exclude women.Women neither have a say in influencing the choice of candidates nor do they have agency in decisions related to contesting elections; as data indicates, most women seats tend to be elected unopposed. This has serious implications for building women’s political constituencies in rural areas. During the early phase of research, we found that villagers often actively support the involvement of CVC in local elections. Our survey showed that the role played by CVCs in the election process is perceived by the villagers in different ways: as making the democratic process more efficient; as reducing unnecessary expenditure on election campaigning; as maintaining community peace as elections are seen as fostering factionalism within villages. Even the overlap of leadership many times has the endorsement of the villagers. For villagers this is not ‘elite capture’ but a way of choosing effective and efficient leaders; those capable of performing and serving the village better by bringing development to the village. Unanimous elections were affected and accepted as those reducing costs (campaigning expenses), time and effort by the villagers (Ananthpur, 2007). However, as local governments are getting institutionalised, the role played by the CVC in engineering local elections is also getting challenged. CVCs’ influence on local elections was lowest in 2010 but it seems to have recovered partly during the 2015 elections.We do find that in the 2015 elections, at least one-third of all candidates elected were those that had the endorsement of the CVC. This phenomenon merits further inquiry.

CVCs and local government processes CVCs engage with GPs by (a) participating in and monitoring local development activities initiated by the Grama Panchayat in their villages and (b) through partnerships with formal institutions in contributing (cash and/or kind) to public projects and/or initiating their own development projects. 178

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The CVCs in most of the villages studied were involved in local development activities. The CVC leaders play an important role in negotiating with the formal, local representatives and institutions for benefits to the village even where they have had little involvement in the selection of formal local representatives. In the case of local councillors or representatives handpicked by the CVC, this process becomes more intense. The elected representatives, in all the villages studied, indicated that they were pressured, subtly or overtly, by the CVC to secure benefits for the village. In addition, their performance was regularly monitored by the CVC and erring or inefficient elected representatives were pulled up (Ananthpur, 2007 and 2010). Elected members are often advised and accompanied by the CVC leaders in negotiating with the Grama Panchayat for benefits to the village. The CVC monitors the projects coming into the village and puts pressure on the elected members for development projects and for better service delivery. This was evident in most of our study villages. The focus on improving service delivery benefits the entire community and also helps to make the elected members more accountable to their electorate. Gram Sabha, as a public space, is often used by the CVC not only to monitor village development activities but also participate in the selection of beneficiaries for government programmes. This deliberative forum is often used by the CVC leaders who claim to have better understanding of the local reality to influence decisions on the choice of beneficiaries. Often villagers approach the CVC to intermediate on their behalf with the GP for benefits. The involvement of CVCs in this process has the potential to make it more transparent and prevent patronage by Grama Panchayat members and ensure benefits to the genuine target groups. On the other hand, it also could result in patronage and clientelism by the CVC.While influencing decisions related to village development activities or selection of beneficiaries, the CVC may not always intervene as an institution but may choose to intervene through its Yajamana or individual panchas.This often gets viewed as elite capture. However, in such instances, they are not acting in private capacity but as representatives of the CVC.Their legitimacy derives from their association with the CVC. Despite the deepening of democracy through decentralisation, villagers in general and the poor in particular continue to use CVCs as an intermediary institution for reaching and accessing formal institutions. Villagers in this process are not mute spectators. Their resistance to the attempts by CVC leaders to influence elections does not prevent them from seeking their assistance in accessing state services. There seems to be some sort of pragmatism in approaching different institutions for different purposes as and when required.

Summing up CVCs in Karnataka continue to be significant actors in local governance and local democracy. The institutionalisation and strengthening of formal local institutions of governance has not resulted in CVCs becoming defunct or redundant because while administration became decentralised through the 73rd amendment to the Constitution, judiciary is still not decentralised and remains inaccessible to rural India. It is that gap that CVCs continue to fill. In fact, the process of decentralised democracy seems to have stimulated the CVCs to take on larger roles leading to a widening of their governance frontiers. They not only co-exist but often work in collaboration with the formal elected bodies. They continue to play an important role in maintaining community peace, an essential ingredient for democracy (Krishna, 2002).They do contribute to and influence local democracy; not all of it is negative. CVCs do not fare well if their contribution to democracy is gauged by a narrow definition of democracy in terms of free and fair elections. By intervening in the process of local elections, influencing the choice of candidates or contesting themselves, CVCs appear to be engaged in 179

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the ‘elite capture’ of local democratic institutions. However, it is misleading to brand this influence unilaterally as ‘elite capture’ without analysing the nuances. For instance, rural citizens assess these influences on their merit. Villagers endorse the role of CVCs in local elections if they are satisfied with the choice of candidates, and oppose or even flout the decisions of the CVC and contest elections if they are not happy with the choice of candidates as evidenced from the field. Most rural citizens perceive contesting elections as a right rather than a privilege. This is indicative of the growing importance of formal local democracy in rural areas. CVCs fare better in making the local governments effective and accountable. As mentioned above, they participate and collaborate in local development activities; monitor performances of elected representatives; and initiate development projects on their own by raising resources – cash and kind. In sum, they contribute to the effectiveness of local government processes. The paradox of ‘institutional dualism’ is not restricted to developing countries but is widespread even in developed countries (Brinkerhoff and Goldsmith, 2005). This form of ‘institutional dualism’ – the co-existence of CVCs rooted in traditional values and practices with formal elected local institutions – is likely to persist for a while as CVCs not only intermediate between citizens and GPs but also provide services that have a high utility for villagers. It is only when formal institutions of governance and judiciary get completely rooted, institutionalised and legitimised that these informal/customary institutions are likely to wither away. Local democracy in India is multi-faceted and viewing it from a unidimensional mode prevents a clearer perception of the dynamics of local governance. Rather than branding these interactive processes as a failure of democracy, perceiving them as ‘multiple strands of democracy’ (Yazgi, 2005) helps provide a more coherent picture of the local political process. Local governance in Karnataka is a discursive field of state and non-state institutions and to fully understand the dynamics of local democracy and governance one needs to study this dialectic relationship in depth.

Notes 1 This research draws from three separate research projects on formal and customary institutions funded by the Centre for Future State, IDS, Sussex and has benefitted from the support and advice of a number of scholars to whom I’m deeply grateful. However, the usual disclaimers apply. 2 In some regions these councils were reconstituted annually and had sub-committees to deal with different issues (Altekar, 1958). 3 The Mysore Village Panchayats and Local Boards Act, 1959. 4 The Karnataka Zilla Parishad, Taluk Panchayat Samitis, Mandal Panchayats and Nyaya Panchayats Act, 1983. A notable feature was 25% reservation for women in these bodies even before this was mandated by the Constitution. Elections under this act were held in 1987. 5 The Karnataka Panchayat Raj Act, 1993. Under this act, reservation of seats is provided for women, Scheduled castes, Scheduled Tribes and other backward classes. 6 The 1992 Constitutional amendment (73rd) established an elected three-tier government structure at the sub-state level known as Panchayati Raj Institutions. 7 Ten villages each from Mysore, Dharwad and Raichur districts were chosen to study the interaction between Grama Panchayats and Customary Village Councils (CVCs). Further an additional 26 villages were selected from Raichur and Gulbarga where the interface was studied. 8 In Mysore district, CVCs are known locally as ‘panchayati’(council), ‘Halli panchayati’ (village council), ‘nadu’ or ‘nadu panchayati’ (regional council), ‘nyaya panchayati’ (justice council) or even ‘nyaya samiti’(justice committee). In northern Karnataka, particularly in the area covered by the former Dharwad district, the terms ‘pancharu’ or ‘Hireru’ (village elders) are prevalent, while in one village the CVC is known as the ‘Civic Board’. In Raichur district the normal term is ‘Daiva’ (God). 9 This section has drawn heavily from my previous work titled ‘Rivalry or Synergy? Formal and Informal Local Governance in Rural India’, IDS Working paper #226, 2004. 180

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10 Some caste groups in a few villages have a leadership, that is at times elected, and accounts (of funds collected by that particular caste group for religious and other purposes) that are checked by the people belonging to that particular caste group around every Hindu New Year. Caste organisations have jurisdiction over all families belonging to that caste in the village. These organisations are often quite formal and institutionalised. 11 The relatively better representation of Scheduled Caste leaders in ILGIs in southern Karnataka, to a certain extent, may have its roots in the stronger mobilisation of the Dalit community and a relatively less skewed pattern of land holding there compared to other regions of the state. 12 Traditionally land-owning and numerically strong caste groups. 13 ‘Maryade’ in the local language Kannada is a value-laden word. The closest equivalent in English is ‘honour’. Maryade is actually a combination of honour, self-respect and reputation of self and family. It is often used contextually. 14 For a detailed description of the activities, see Ananthpur (2004). 15 While in most cases villagers respect the CVC as an institution capable of delivering fair judgement, there are instances where CVCs have been accused of being biased and corrupt. 16 Since one representative is elected for every 400 persons, each village will have one or more seats allotted depending upon the size of the village.

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13 Good governance in Gram Panchayats of Kerala Not so good? D. Narayana1

Introduction Democratic decentralisation is taken as a political process where funds, functions and functionaries are devolved to democratically elected lower-level governments, which are largely or wholly independent of central government. Decentralisation affects development outcomes in many ways and it also empowers people. Decentralisation brings the people closer to the government and its activities, they get an actual picture of the projects and schemes that are taking place and it helps in transparent and efficient governance. According to Tiebout (1956) decentralisation increases the likelihood that the government responds to the demand of the local population by promoting competition among sub-national governments. A decentralised provision of social and physical infrastructures is expected to correspond with the diverse demand conditions in different regions based on local knowledge and to match their resource endowments better than a central provision. The provision of not only public goods but also quasi-public goods as well as the identification of target groups of beneficiaries is thought to be easier and implementation of policies more effective when undertaken by decentralised governments (Ostrom, Fenny and Picht, 1993). The 1990s was a period of major transformations in the Indian economic and governance scenario. In 1991, India took a major step toward liberalisation. Soon after, the country also saw an equally major step being taken to create new decentralised governance institutions. The 73rd and 74th Constitutional Amendment Acts (1992) brought into being the third tier of government, the Panchayati Raj and Nagarpalika institutions at the village, block, district and town levels. The amendment made possible the devolution of 29 subject functions to the local governments. It also made possible the devolution of funds and functionaries to the third-tier governments. However, the extent of devolution depended on enabling legislation and practice by the state governments. The Panchayati Raj and Nagarpalika institutions are visualised as self-governing institutions with broad-based elected representation and the powers to raise financial resources.They are the governments closest to the people. Representation in the governments was designed to politically empower women and weaker sections of the population and to foster ‘bottom-up development’. The local governments are visualised to work for the fulfilment of people’s aspirations. 184

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The Indian decentralisation experience is over 25 years old and many evaluations have been carried out. Whether one talks about political decentralisation or fiscal decentralisation, Kerala comes out on top. It is often argued that Kerala’s success is largely owing to the lead it took in democratic decentralisation by devolving between one-fourth and one-third of the plan funds to the local governments. With the devolution of large funds ‘planning development with social justice’ was made possible; the aspirations of the weak and marginalised could be addressed. Plans could be formulated to improve the living environment of vast segments of the population and improve their human capabilities. Early on, the people’s plan campaign sensitised people to the possibilities opened up by the local governments. Kerala, like the other Indian states, is characterised by a stratified society. Scheduled Castes (SC) and Scheduled Tribes (ST) were historically economically backward, poor, largely illiterate and concentrated in low-skill occupations. They were subjected to centuries of systematic caste-based discrimination both socially and economically. The emergence of the local governments made a difference in their lives. But as regards the delivery of public services, Kerala does not rank at the top. There are states like Tamil Nadu and Maharashtra who are not known for devolving a large number of functions or a large volume of funds standing higher than Kerala. Why? This is the issue taken up in this chapter. The answer to the question in one word is that the delivery of services is not exclusively a function of the local governments but of the state governments. So, a combination of the functioning of the line departments and appropriate level of local governments lies behind service delivery. The provisions in the Constitution for the devolution of powers and responsibilities to Panchayati Raj institutions are recommendatory. It is at the State Legislature’s discretion that powers and responsibilities ‘may be’ given to Panchayati Raj institutions. Hence, it is possible that state governments endow the Panchayats with exclusive powers and responsibilities in certain fields of activities and in others the Panchayats are assigned powers running concurrently with the state government departments. Kerala is compared with Tamil Nadu and Maharashtra to build the argument of the chapter. The size of the Panchayat could play a crucial role in assigning functions and responsibilities. The large size of the Gram (village) Panchayat could lead to the assigning of firm responsibilities to them as in Kerala. In the case of concurrent responsibilities or where Panchayats are agents of line departments service delivery will be dependent on the efficiency of governance in the state. The relationship between Panchayats and state administration can take various forms. An example of it is brought by Yu Sasaki (2005). As regards property tax collection, her comparison showed that village panchayats in Madhya Pradesh hardly collect any tax while their counterparts in Tamil Nadu show a very high level of collection […] Ironically, therefore it appears in the Tamil Nadu case in particular that the members of the centralized state administration play a constructive and supportive role in securing accountability of village panchayats as well as improving the performance of Panchayati Raj institutions. Obviously, in Tamil Nadu, the agency function by village Panchayats is performed well because the governance is better. History too plays a part in the provision of services by local governments. For example, Maharashtra had a long tradition with regard to Panchayats even before the enactment of the 73rd and 74th Amendments in 1992. The duties, responsibilities and powers of the village Panchayats were stipulated by the Bombay Village Panchayats Act 1958 and later all-powerful district Panchayats came into being on the recommendations of the Naik Committee in 1961. 185

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These played a part in the formation of the District Planning Committee differently in the state as compared to the other states. But the revenue officials with the District Collector at the head had the most sweeping administrative powers in the state. In terms of the development-adjusted governance index for infrastructure, which reflects the capacity of the states to implement schemes in road construction, electricity generation, etc., Tamil Nadu and Maharashtra are ranked among the top five of the 19 Indian states (Mundle, Chowdhury and Sikdar, 2016). An example of good governance by states is the achievement of Indian Public Health Standards for Sub-centers, Primary Health Centers and Community Health Centers. Goa stands at the top with 100 per cent achievement. Close behind is Tamil Nadu with 39.97 per cent of Sub-centers, 89.44 per cent of Primary Health Centers and 90.65 per cent of Community Health Centers reaching Indian Public Health Standards. In the case of Andhra Pradesh, 67.32 per cent of Sub-centers and 53.88 per cent of Primary Health Centers achieved Indian Public Health Standards. While Primary Health Centers (41.63 per cent) and Community Health Centers (49.31 per cent) in Maharashtra reported better achievement, the Sub-centers (16.50 per cent) have fared poorly. Kerala stands almost at the bottom (Narayana, forthcoming). Obviously, governance at Tamil Nadu and Maharashtra is better. Andrews et al. (2008) argued that only a small and simple government can deliver efficient, transparent and accountable governance. But Kerala had a distinct advantage in that the size of the Gram Panchayats was one of the largest among the Indian states which made many processes viable. The size could bring the lower rungs of the bureaucracy under the control of the local governments, an advantage many other states did not have. Capacity-building too is constrained by the lack of size. Are Kerala’s achievements commensurate with these advantages? Is Kerala an exception for the above arguments of small governments and efficient governance? The chapter is organised into four sections. Following this introduction, Section 2 discusses the size of local governments and devolution of functions, functionaries and funds. Section 3 presents the data on the performance of Kerala in the provision of services from a comparative perspective. Section 4 raises the problem areas as far as Kerala is concerned and analyses the performance of selected Indian states in governance. Section 5 concludes.

Size of local governments and devolution The size of local governments does play a role in the delivery of services as the coverage area of a number of public institutions is larger than the size of the Gram (village) Panchayat. In almost all the states in India, the size of the village Panchayat is smaller than that of a health Sub-centre (Table 13.1). The exceptions are West Bengal and Kerala where the size is larger than the coverage area of Primary Health Centres and primary schools. In a situation where the size of the Gram Panchayat is smaller than the coverage area of the public institution, the local governments will not be able to secure administrative control of the institutions and cannot be held responsible for the delivery of services even when the functions are devolved to them. As regards the devolution of functions too the variation is very wide. While at one end Kerala, Karnataka and West Bengal have reasonably large village Panchayats and a large number of functions devolved to them, at the other end Punjab, Uttarakhand and Madhya Pradesh have village Panchayats of a small size and the functions devolved to them are few. Thus, it is a complex spectrum and relating the delivery of services to the functioning of the local governments is not a simple task. The efficiency of governance of line departments invariably will enter the picture. The delivery of services will not only depend on the devolution of functions but also on the devolution of functionaries and the variation again is very wide among the Indian states (Table 13.2). 186

Good governance in Gram Panchayats of Kerala Table 13.1 Distribution of states by Gram Panchayat size and transfer of tertiary-sector functions Gram Panchayat size (population 2011)

Number of functions

≤10

0 ≤2,000

11–15

Punjab Chhattisgarh Uttarakhand Madhya Andhra Pradesh, Pradesh Haryana, Odisha, Uttar Pradesh Jharkhand Rajasthan

2,001–4,000

4,001–6,000 6,001–8,000 8,001–10,000 10,001–15,000 Assam Bihar ≥15000

≥26

16–20 21–25

Himachal Pradesh Gujarat, Jammu and Kashmir, Maharashtra, Tamil Nadu

Karnataka

West Bengal

Kerala

Source: Population Census, 2011; Ministry of Panchayati Raj and Tata Institute of Social Sciences, 2016. Note: It is possible that the State Legislature has not delegated functions to the Gram Panchayat but executive orders have been issued and operationalised. So, they can be functional. This seems to be the case of Assam, and Bihar.

Largely, the pattern is the same as that of the devolution of functions. Kerala stands at one end with a large number of functions and functionaries devolved to the local governments, Tamil Nadu follows Kerala with regard to the number of functionaries despite the smaller size of their local governments and Punjab and Uttarakhand lie at the other end with an extremely small number of functionaries. Table 13.2 Distribution of states by Gram Panchayat size and sanctioned/own functionaries GP size

Number of functionaries per 1,000 population ≤0.50

≤2,000

Punjab, Uttarakhand

2,001–4,000

Gujarat, Uttar Pradesh

4,001–6,000 6,001–8,000 8,001–10,000 10,001–5,000 ≥15000

Jharkhand

0.51–0.75

0.76–1.00

Andhra Pradesh, Madhya Jammu and Pradesh Kashmir, Odisha Rajasthan

1.01–2.00

≥2.00

Chhattisgarh Himachal Pradesh Haryana Maharashtra

Tamil Nadu

Karnataka Assam, Bihar West Bengal

Kerala

Source: Population Census, 2011; Ministry of Panchayati Raj and Tata Institute of Social Sciences, 2016.

187

D. Narayana Table 13.3 Per capita allocation of untied funds (plan and non-plan) by the State Finance Commission by state across tiers of Panchayat (Rs), 2015 State

Gram Panchayat

Block Panchayat

District Panchayat

Haryana Karnataka Kerala Madhya Pradesh Odisha Tamil Nadu Uttarakhand West Bengal

152.26 150.59 1006.39 180.11 16.54 415.12 108.10 75.99

0.00 46.79 237.27 0.00 5.54 221.57 43.24 10.72

0.00 59.85 338.46 0.00 3.25 55.34 99.64 12.78

Source: Ministry of Panchayati Raj and Tata Institute of Social Sciences, 2016.

Governance at the level of the village Panchayats can only be effective if they have command over resources – the three Fs of functions, functionaries and funds. It is hardly surprising that Kerala reports amounts much higher than those by any other state (Table 13.3). The devolution of funds is to all three tiers of the Panchayat system in Kerala. Tamil Nadu stands close behind Kerala and like the latter has devolved funds to all three tiers of the local governments. The other states do not show a larger devolution of funds. And some states have devolved to the village Panchayats only. Thus, the pattern is as varied as that regarding devolution of functions or functionaries. Overall, it is evident that the village Panchayats in Kerala have the required size and the public institutions can come under their administrative control without any confusion. Functions have been devolved and functionaries and funds provided. With such a confluence of factors, the Gram Panchayats in Kerala can truly be institutions of self-governance and can be solely responsible for the delivery of services.

Achievements of Kerala The Panchayats in Kerala have been active in providing services from the very beginning in the mid-1990s. The boost to the provision of services came with the People’s Plan Campaign in 1996 and the devolution of funds even before a State Finance Commission was set up. The achievements of such beginnings may be seen in the provision of access to sanitation, electricity and other services, especially for the marginalised in society. The lack of access to basic amenities such as electricity, sanitation and water was glaring in Kerala till the early 1990s. For instance, only about 50 per cent of the households had access to electricity. Among the disadvantaged groups, access was significantly lower compared to the others.The gradient was steep. Whereas access to electricity in 1991 among all groups was 50.4 per cent, it was 25.3 per cent for Scheduled Castes and 14.1 per cent for Scheduled Tribes. The period between 1991 and 2001 witnessed a remarkable change in access to electricity. For all groups, the improvement was from 50.4 per cent to 70.75 per cent, for Scheduled Castes from 25.3 per cent to 53.31 per cent and for STs from 14.1 per cent to 37.74 per cent. It may be seen that the gains for the disadvantaged groups were higher than those for other groups.There is no doubt that policy interventions played a very important role in bringing about this transformation. The efforts begun in the 1990s were continued beyond 2001 as is evident from the results of 2011. In 2011, electrification reached close to 100 per cent for all groups and 86.56 per cent 188

Good governance in Gram Panchayats of Kerala

Kerala 100

100

90

90

80

80

70

70

60

60

50

50

40

40

30

30

20

20

10

10

0

1991

2001

2011 ALL GROUPS

All India

0

1991 SC

2001

2011

ST

Figure 13.1 Distribution of electrified houses by social groups. Source: Census of India, Series I-Tables on Houses, Household Amenities & Assets, 1991, 2001 and 2011.

for Scheduled Castes. Only for Scheduled Tribes, around one in three still do not have access to electricity.The difference between Scheduled Castes and other groups which was 25 percentage points in 1991 has come down to around 8 percentage points in 2011. This was made possible by the differential gains made by the Scheduled Castes. In order to understand the significance of Kerala’s achievement, it needs to be placed in an India-wide perspective. In 1991, the percentage of electrified houses of all groups in Kerala was comparable to that at the all-India level and the percentage of houses electrified for SCs and STs in Kerala was lower than those at the all-India level. The social gradient was larger in Kerala. While the improvement between 1991 and 2011 at the all-India level was of the order of 20 percentage points, in Kerala the improvement was above 45 percentage points. The social gradient which was larger in Kerala almost disappeared, except for the Scheduled Tribes. At the all-India level the gradient continued to be as large as that in 1991. The situation with regard to access to sanitation is slightly different compared to that of the electrification of houses.The levels were lower compared to electrification and the gradient was steeper in 1991. The change that occurred between 1991 and 2001 was simply unbelievable: there was an over-40 percentage point increase for almost all social groups. It was over 40 percentage points for the Scheduled Castes and Scheduled Tribes and slightly lower for the others (Figure 13.2). The result is that the gradient came down. This trend continued into 2011 with almost all social groups inching towards 100 per cent coverage of sanitation. No wonder the state could be declared ‘Open Defecation Free’ (ODF) in 2016. It is in recognition of the great work done by all the Gram Panchayats. The significance of the reduction in the social gradient may be assessed by a comparison of the selected states. It may be seen that in every state, except Himachal Pradesh, the distance between others and SC is high (Figure 13.3). It is a lesson that as long as a social gradient exists achieving universal coverage is impossible. That is why, along with Kerala, Himachal Pradesh would soon be ODF. There is not much hope for the other states – despite Swachh Bharat – as the gradient is steep. 189

D. Narayana

Kerala

All India 100 90 80 70 60 50 40 30 20 10 0

100 90 80 70 60 50 40 30 20 10 0 1991

2001

2011

1991

ALL GROUPS

SC

2001

2011

ST

Figure 13.2 Distribution of households by availability of latrine within the house by social groups. Source: Census of India, Series I-Tables on Houses, Household Amenities & Assets, 1991, 2001 and 2011. 100 90 80 70 60 50 40 30 20 10 0

Kerala

Tamil Nadu SC

Gujarat ST

OBC

Himachal Pradesh OTHERS

Uar Pradesh

All India

ALL GROUPS

Figure 13.3 Households using improved sanitation facility (%) by social groups, 2013–14. Source: wcd​.nic​.​in.

The situation has improved with regard to the nutritional status of children below 60 months as well with all the work that was done by the Gram Panchayats with the Integrated Child Development Scheme (ICDS). While the proportion of stunted children is close to 40 per cent in India it is less than 20 per cent in Kerala. More importantly, it is much lower among the Scheduled Castes compared to others suggesting that the gradient has disappeared (Figure 13.4). There is nothing like that to be seen in any other state. Especially pathetic is the situation in Gujarat where the overall level of stunting is high and the gradient is steep. The picture is the 190

Good governance in Gram Panchayats of Kerala 60 50 40 30 20 10 0

Kerala

Tamil Nadu SC

Gujarat ST

OBC

Himachal Pradesh OTHERS

Uar Pradesh

All India

ALL GROUPS

Figure 13.4 Nutritional status of children, 2013–14 – stunted (%) by social group. Source: wcd​.nic​.​in. 50 45 40 35 30 25 20 15 10 5 0 Kerala

Tamil Nadu SC

Gujarat ST

OBC

Himachal Pradesh

Uar Pradesh

OTHERS

ALL GROUPS

All India

Figure 13.5 Nutritional status of children 2013–14 – underweight (%) by social group. Source: wcd​.nic​.​in.

same with regard to underweight children as well. Kerala has brought down the levels and the gradient has disappeared (Figure 13.5). Indicators such as housing with cement and mosaic flooring (Figures 13.6 and 13.7), access to higher education (Figure 13.8) and poverty reduction (Figure 13.9) show that Kerala is far ahead of the other Indian states. But social gradients are present in each of these indicating that the gains of the disadvantaged are lower than those of others in society. It is understandable that these indicators respond only to a limited extent to interventions by Gram Panchayat as there are other larger factors at work. 191

D. Narayana 80

SCHEDULED TRIBE

70

SCHEDULED CASTE

ALL GROUPS

60 50 40 30 20 10 0 Kerala

Himachal Pradesh

Gujarat

Tamil Nadu

Uar Pradesh

Figure 13.6 Percentage of rural houses with cement and mosaic floor, 2011. Source: censusindia​ .gov​.​in. 90

SCHEDULED TRIBE

SCHEDULED CASTE

ALL GROUPS

80 70 60 50 40 30 20 10 0

Kerala

Himachal Pradesh

Gujarat

Tamil Nadu

Uar Pradesh

Figure 13.7 Percentage of urban houses with cement and mosaic floor, 2011. Source: censusindia​ .gov​.​in.

It is evident that Kerala Gram Panchayats have achieved a lot especially in the areas of sanitation, electrification, housing and so on. In poverty reduction and education too, the achievement has to be acclaimed. While in some, such as sanitation and electrification, social gradients have disappeared, in others, such as housing and poverty, social gradients persist. The difference is understandable as local governments have clear limits in poverty eradication. 192

Good governance in Gram Panchayats of Kerala 25

ST

SC

OTHERS

20

15

10

5

0

Kerala

Tamil Nadu

Gujarat

Himachal Pradesh Uar Pradesh

India

Figure 13.8 Population (age 20–24) attending educational institutions by social group, 2011. Source: censusindia​.gov​.​in.

50

SCHEDULED TRIBE

SCHEDULED CASTE

ALL GROUPS

45 40 35 30 25 20 15 10 5 0

Kerala

Himachal Pradesh

Rajasthan

Tamil Nadu

Uar Pradesh

All India

Figure 13.9 Poverty (%) by social group, 2009–10. Source: Panagariya (2013).

The data presented in this section on access to electricity, sanitation, housing and nutritional achievements may be viewed from the perspective of pre- and post-decentralisation. The data pertaining to 1991 reflects the before-decentralisation situation. The general level of access to basic services was low in Kerala and more importantly the social gradient was steep. With the thrust of decentralised planning since 1996 the levels went up rapidly and the gains made by 193

D. Narayana

the socially disadvantaged groups were relatively higher reducing the social gradient. The goal of ‘economic development with social justice’ has truly been achieved. Similar progress has not been made in other states as the comparison with all-India figures show.

Problem areas The first and foremost responsibility entrusted to the Gram Panchayats and Municipalities is the provision of civic services. The range of these responsibilities has been effectively stated by the 14th Finance Commission. These are the delivery of basic services, namely ‘water supply, sanitation including septage management, sewerage, storm water drainage, and solid waste management, street lighting, local body roads and footpaths, parks, playgrounds, burial and cremation grounds’ (14th Finance Commission, p. 113). In Kerala’s hurry to distribute benefits there have been major failures in the provision of these civic services. As discussed above Kerala’s achievements in the area of water supply and sanitation are commendable. We do not have comparable information on street lighting, parks and playgrounds, or burial and cremation grounds. But we do have information on drainage, solid waste management and local roads and our achievements are on the poorer side. Drainage and garbage disposal in both urban and rural areas of Kerala are poor (Figures 13.10 and 13.11). In the urban areas of Kerala, drainage facilities are available for less than 70 per cent of the households whereas it is over 80 per cent in all-India and it is much better in Tamil Nadu or Uttar Pradesh. In rural areas, while the level in Kerala is lower compared to the urban, it is higher than that in many states. In garbage disposal, in both urban and rural Kerala the performance is abysmal. In urban areas, Kerala’s level is around 25 per cent compared to over 70 per cent in all-India (Figure 13.10). In rural Kerala, it is around 10 per cent compared to over 30 per cent in all-India. Kerala is at the bottom compared to the other states. It is clear that local governments in Kerala are not attending to the area of the living environment. The environmental and health consequences are there for everyone to see. 100 90

Improved Drainage Facility

Garbage Disposal Arrangement

No Direct opening to Road

80 70 60 50 40 30 20 10 0

Kerala

Himachal Pradesh

Gujarat

Tamil Nadu

Uar Pradesh

All India

Figure 13.10 Percentage of urban households with drainage, garbage disposal, no direct opening to road, 2012. Source: NSS KI(69/1.2) Key Indicators of Drinking Water, Sanitation, Hygiene and Housing Condition in India. 194

Good governance in Gram Panchayats of Kerala 100 90

Improved Drainage Facility

Garbage Disposal Arrangement

No Direct opening to Road

80 70 60 50 40 30 20 10 0

Kerala

Himachal Pradesh

Gujarat

Tamil Nadu

Uar Pradesh

All India

Figure 13.11 Percentage of rural households with drainage, garbage disposal, no direct opening to road, 2012. Source: NSS KI (69/1.2) Key Indicators of Drinking Water, Sanitation, Hygiene and Housing Condition in India.

Turning to the services offered through the Panchayats, the Devolution Report 2015–16 in Table 3.34 presents data on the particulars. Kerala is slightly better than Uttar Pradesh and Rajasthan as regards the registration and issue of certificates of birth, death and marriage – Uttar Pradesh and Rajasthan register and issue the first two whereas Kerala registers marriage as well. Chhattisgarh and Karnataka do one better by offering sanitation services too. Himachal Pradesh does better than Kerala in that the former issues extracts of records, ration cards and certificates of minor forest produce. Maharashtra is the best among the seven states shown in the table where life certificates, no-dues certificates, land ownership certificates, destitute certificates and widow certificates are all offered by the Gram Panchayat in addition to the services provided by Kerala and many other states. Kerala’s record on preparing integrated district plans is also poor (Table 13.5). Bihar, Chhattisgarh, Gujarat, Haryana, Maharashtra and many other states show a much better performance. District Planning Committees are also functional in these states but not so in Kerala. Of course, things have changed in the last year with the present coalition government taking an interest in decentralised planning. What it shows, however, is that there has hardly been any institutionalisation of local planning. Table 13.6, in a way, summarises the status of the provision of services by the three tiers of Panchayats in different states. The record of Kerala is nothing much to be proud of, especially when the devolution of functions, functionaries and funds is so large. Thus, Kerala’s record in the provision of public services compares poorly with many other states. Services related to the living environment such as waste collection and drainage are almost absent and the breadth of other services is poor.

Conclusions Among the Indian states, Kerala is often credited with taking democratic decentralisation forward and achieving remarkable results in the provision of public services. These achievements 195

196

Registration of birth Registration of death Issue of birth certificate Issue of death certificate Registration of marriage Issue of marriage certificate Streetlight connection Sanitation services Issue of building permit and certificates Issue of trade licences Issue of extract of records E-payment of works Drinking water NOC to electricity service companies Ration card Minor forest produce permit Life certificate No dues certificate Certificate for availability of toilet Land ownership certificate Destitution certificate Widowship certificate Divorce certificate Separation of family certificate

1 2 3 4 5 6 7 8 9

Y Y Y Y Y Y Y Y Y Y

Y

Y Y Y Y Y Y

Y Y Y Y Y

Y Y

Y Y

Y

Y Y Y Y Y Y

Y

Y Y Y Y

Y Y Y Y

Y Y Y Y Y Y Y Y

Y

Y Y Y Y Y Y

GP GP GP GP GP GP GP GP GP GP

GP GP, BP,DP GP, BP,DP GP, BP,DP DP

GP GP GP GP GP GP GP GP GP

Chhattisgarh Kerala Karnataka Himachal Uttar Rajasthan Maharashtra Category Pradesh Pradesh

Source: Compiled from Table 3.34 of Ministry of Panchayati Raj and Tata Institute of Social Sciences, 2016.

15 16 17 18 19 20 21 22 23 24

10 11 12 13 14

Name of service

Sl No

Table 13.4 Services offered through Panchayats by tier in Indian States, 2016

D. Narayana

Good governance in Gram Panchayats of Kerala Table 13.5 Districts (%) with integrated district plans in 2015 by state State

Proportion

State

Proportion

Andhra Pradesh Assam Bihar Chhattisgarh Gujarat Haryana Himachal Pradesh Jammu and Kashmir Jharkhand Karnataka Kerala

0 0 100 100 100 100 0 0 100 83 0

Madhya Pradesh Maharashtra Odisha Punjab Rajasthan Tamil Nadu Telangana Tripura Uttar Pradesh Uttarakhand West Bengal

0 100 100 100 100 100 90 0 0 100 11

Source: Ministry of Panchayati Raj and Tata Institute of Social Sciences, 2016.

Table 13.6 Services (%) offered by states across tiers out of the maximum possible services, 2015 State

Gram Panchayat

Block Panchayat District Panchayat

Chhattisgarh Himachal Pradesh Karnataka Kerala Maharashtra Rajasthan Uttar Pradesh

39 39 26 26 65 17 17

0 33 100 0 0 0 33

0 25 100 0 0 0 25

Source: Ministry of Panchayati Raj and Tata Institute of Social Sciences, 2016.

are often attributed to political decentralisation and devolution of funds and functions. But it is necessary to pursue a slightly different line of argument, namely that of size, subsidiarity and governance, which has a theoretical foundation. A comparison of the success and failure of local governments discussed in Sections 3 and 4 together with the information that over 70 per cent of all local government projects are construction-centric confirms that the findings of Chakraborty and Mukherjee (2017, p. 191) for West Bengal are as much true for Kerala: Government actions favored by the political class generally tend to be biased towards areas where the ratio of visibility to the effort is high. On this count CHCMI2 scores, low-the level of collective effort it requires is rather high while the outcome is far less visible than roads, flyovers or a direct show of patronage by doling out freebies. Along with high-visibility projects, the emphasis seems to be on doling out freebies in Kerala too. Housing assistance, electrification of houses, building toilets in houses, welfare schemes and similar projects fall in this category. The successes documented in Section 3 all fall in this category. 197

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Compared to the high-visibility projects and schemes benefiting individuals or households, waste management would call for a lot of community effort. In cases of success, the result does not have high visibility. Hence, the allocation of funds is low and the expenditure of funds allocated is also low as shown by Nirmala and Mohankumar (2016). Their analysis shows that annual allocation for environmental projects is 5 to 6 per cent of the total in 2012–13 and 2013–14. More importantly, expenditure as a percentage of allocation is very low. A number of other services too fall in this category and Kerala does not seem to be doing well in the provision of them whereas some of the other states like Tamil Nadu and Maharashtra seem to be doing better than Kerala. The better performance of Tamil Nadu and Maharashtra has a lot to do with better governance at the state level. While these states have not devolved functions or funds to the extent of Kerala, the responsibility of the provision of services rests with the line departments and they have responded to it well. The important point that emerges from this discussion is that higher devolution is not the only route to a better performance in service delivery. There are multiple paths to it and whatever the path good governance is the crucial factor.

Notes 1 Views expressed are personal. Paper presented at the Seminar on ‘25 Years of Decentralised Governance in India: Progress, Issues and Ways Forward’, at the Institute for Social and Economic Change, Bengaluru on 28 August 2018. Comments by the participants and anonymous reviewers are acknowledged. 2 The Community Health Care Management Initiative (CHCMI).

References 14th Finance Commission Report, Chapter 9: Local Governments, pp. 112–113. Andrews, Rhys, Boyne, George A., Law, Jennifer, and Walker, Richard M. (2008). ‘Organizational Strategy, Regulation and Public Service Performance’, Public Administration, 86, pp. 185–204. Chakraborty, Achin, and Mukherjee, Subrata (2017). ‘Decentralisation and Health in West Bengal: A Study with Reference to Community Health Care Management Initiative’, in Das, Pranab Kumar (ed.)Decentralisation, Governance and Development: An Indian Perspective. Hyderabad: Orient BlackSwan, pp. 171–194. Ministry of Panchayati Raj and Tata Institute of Social Sciences (2016). Devolution Report 2015–2016. Ministry of Panchayati Raj, Government of India. Mundle, Sudipto, Chowdhury, Samik and Sikdar, Satadru (2016). ‘Governance Performance of Indian States 2001–2002 and 2011–2012’, Working Papers 16/164, New Delhi: National Institute of Public Finance and Policy. Narayana, D. (forthcoming). ‘The Strengthening of Public Health System under NRHM’, in Narayana, D. (ed.) India’s Challenging Journey Towards Universal Health Coverage with Ayushman Bharat. Nirmala, Padmanabhan, and Mohankumar, S. M. (2016). ‘Role of GramaPanchayats in Waste Management and Environment Protection’, Study No: 29 of Policy Advisory Studies of DAC. Thiruvananthapuram: Gulati Institute of Finance and Taxation. Ostrom, V., Feeny, D., and Picht, H. (eds.) (1993). Rethinking Institutional Analysis and Development: Issues, Alternatives, and Choices, 2nd edition. San Francisco: Institute for Contemporary Studies Press. Panagariya, Arvind, and Mukim, Megha (2013). A Comprehensive Analysis of Poverty in India (English).Policy Research Working Paper; no. WPS6714. Washington, DC: World Bank Group. Available at: http:​/​/doc​​ ument​​s​.wor​​ldban​​k​.org​​/cura​​ted​/e​​n​/389​​24146​​82835​​07057​​/A​-co​​mpreh​​ensiv​​e​-ana​​lysis​​​-of​-p​​overt​​y​-in-​​ India​(Accessed: 21 October 2020). Sasaki,Yu (2005). ‘Decentralisation or Retreat of the State? Comparison of House Tax Collection in Village Panchayats in Madhya Pradesh and Tamil Nadu’, Journal of Japanese Association for South Asian Studies, 17, pp. 75–108. Tiebout, Charles M. (1956). ‘A Pure Theory of Local Expenditures’, Journal of Political Economy, 64(5), pp. 416–424. 198

14 Capacity development for good governance in Panchayats Status, effectiveness and issues D. Rajasekhar

Introduction Capacity development is needed to enable the elected leaders of a local government to assume responsibilities and powers devolved and participate in decision-making to respond to citizens’ needs. Studies emphasise that the effectiveness of decentralisation depends on the capacity of the local government’s management and administration to respond to demands (Rondinelli, 1989; Bird, 1995; Crook and Manor, 1998; Litvack, Ahmad and Bird, 1998; Grindle, 2007; Ribot, Agrawal and Larson, 2006; Loayza, Rigolini and Calvo-Gonzalez, 2014; Haase and Antoun, 2015; Bellofatto and Besfamille, 2018), and that capacity constraint is an important institutional characteristic of decentralised government (Prud’homme, 1995; Bardhan and Mookherjee, 2006). In India, the policy of reservation of seats and executive posts for women and those belonging to Scheduled Castes, Scheduled Tribes, Minorities and Backward Castes in the 73rd and 74th Constitutional Amendment Acts (CAA) contributed to the representation of these groups in the local government including in Panchayat Raj Institutions (PRIs) at the village, taluk and district levels. According to the Ministry of Panchayati Raj, there were 2.56 lakh PRIs in the country in 2017; the proportions of Grama Panchayats (GPs), Taluk Panchayats and Zilla Panchayats in the total number of PRIs were 97.2, 2.6 and 0.2, respectively. The total number of elected representatives (ERs) in PRIs at the three levels was 29.50 lakhs in 2014. The proportions of SC/ST representatives and women in the total PRI ERs were 30.4 and 45.9, respectively. Reservations thus increased the representation of disadvantaged groups in the local government and their access to “political decision making” (Duflo, 2005, p. 677); but the policy of reservations may adversely affect the quality of political leadership because of less-educated and less-experienced leaders getting elected due to lack of competition. Secondly, reservations do not automatically lead to the improved participation of elected leaders in the local governance as a large number of first-time representatives without experience in the local governance tend to come to power. In order to improve their participation in the local governance, the capacity development of ERs becomes important. The need to provide continuous capacity development inputs was felt soon after the Constitutional amendment acts were passed in the early 1990s for the following reasons. First, DOI: 10.4324/9780429321887-14

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for the effective participation of ERs in the planning and implementation of activities, training on devolved functions (relating to social justice and economic development and listed in the Eleventh and Twelfth Schedules) and on planning, implementation and monitoring was required. Second, the awareness of and training on mobilisation of own revenue (tax and nontax revenues), and proper utilisation of resources at their command (own revenue, intergovernmental transfers and schematic funds), were also considered to be important. Third, the policy has been such that the reservation in one constituency changes once in every five years leading to considerable turnover in the leadership and thereby necessitating regular capacity inputs. Fourth, frequent amendments to legislations governing the functioning of decentralised government and changes in schemes (and introduction of new schemes) assigned to local government for implementation also necessitated continuous training. In the last two-and-half decades, nation-wide policies and programmes on capacity development such as the National Capacity Building Framework (NCBF) and the Rajiv Gandhi Panchayat Sashaktikaran Abhiyan (RGPSA) were formulated and implemented. In order to provide training to the Panchayat functionaries, the National Institute of Rural Development and Panchayat Raj (NIRD&PR) and at the state and sub-state level, training institutions such as the State Institute of Rural Development (SIRD), the Extension Training Institute (ETC) and district level training institutions were established. Systems to prepare and improve training manuals, conduct the training of trainers, involve non-state agencies and develop different training modes (classroom, electronic media and so on) were also put in place. This chapter aims to i) examine theoretical and policy context for capacity development; ii) discuss the evolution of capacity development policies and programmes for PRI representatives in the last 25 years; iii) examine the effectiveness of these programmes; and iv) discuss the issues involved in capacity development.1 Based on a review of secondary sources and literature, this paper argues that the mere provision of training to ERs is unlikely to result in significant capacity development in the absence of sufficient devolution of powers and an appropriate decentralisation framework.The rest of the chapter is presented in four sections.The importance of capacity building to the ERs of decentralised government in terms of theory and policy is discussed in the second section. In the third section, the evolution of capacity development programmes in the last 25 years is reviewed and in the penultimate section, an attempt is made to assess these training programmes and identify issues in this regard. The final section concludes.

Theoretical and policy context What is capacity development? Capacity development is defined as the process through which individuals, organisations and societies obtain, strengthen and maintain the capabilities to set and achieve their own development objectives over time. Simply put, if capacity is the means to plan and achieve, then capacity development describes the ways to those means […] [Capacity development] must bring about transformation that is generated and sustained over time from within. Transformation of this kind goes beyond performing tasks; instead, it is more a matter of changing mindsets and attitudes. (UNDP, 2009; p. 5) In the context of decentralised government, Fiszbein (1997, p. 1031) defines capacity as “an enabling factor; it is the effective existence, at the local level, of the tools that make it possible for the local government to function effectively.”Three dimensions of local capacity, namely labour, 200

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capital and technology, are viewed as important. Labour is the human dimension of capacity; this is the quality of personnel in the local government which is determined not only by skills and knowledge but also how these skills are utilised in the local political and administrative context. Capital is the physical dimension of capacity, which includes building and transport (Fiszbein, 1997). Leighton (1996) and Smoke and Lewis (1996) include adequate finances. The third dimension is technology which includes the government’s internal organisation and management style. This dimension also includes aspects relating to i) the structure and distribution of functions and responsibilities within the organisation; ii) management, planning, decisionmaking and control and evaluation functions; and iii) information gathering, processing and dissemination (Fiszbein, 1997, p. 1032). When does one say that there is capacity in the local government? According to Fiszbein (1997), an organisation has capacity when it is more open to the outside world rather than inward-looking. When preferences at the local level are heterogeneous and conflicting demands for the resources are common, local governments need to have capacity to mediate such conflicts and generate social consensus for an efficient and fair allocation of resources (ibid). Based on the above, we define capacity development as the process by which ERs achieve the capability to plan for the development of the area and the people residing in the area; mobilise skills, knowledge and funds required for planning; and achieve rural transformation that is sustained in the long-run. Elected representatives, with capacity development inputs thus acquired, are able to participate in decision-making and promote transparency and accountability.

Need for capacity development It is emphasised in the literature that the local government should have sufficient internal capacity for discharging its functions effectively, and needs to have qualified personnel, adequate finances and the ability to organise internal affairs.Whenever such capacity is lacking in the local government, the success of the government in achieving the development outcomes is limited (Fiszbein, 1997; Gow and Morss, 1988; Larson, 2002; Leighton, 1996; Lewis, 2003; Smoke and Lewis, 1996).This is not only because of lack of skills and technical knowledge, but also because of less participation from elected leaders belonging to socially and economically weaker sections in the governance leading to their exit from the local governance. Manor (1999) and Reddy (2003) note that the following are required for the success of democratic decentralisation: i) sufficient powers to exercise substantial influence within the political system and over significant development activities; ii) sufficient financial resources to accomplish important tasks; iii) adequate administrative capacity to accomplish those tasks; and iv) reliable accountability mechanisms to ensure both the accountability of ERs to citizens and the accountability of bureaucracy to ERs. Narayana (2005), after reviewing the experience of decentralisation in the three states of Kerala, Madhya Pradesh and Tamil Nadu, concludes that the devolution of powers and responsibilities as well as the knowledge and awareness of ERs are crucial to empower government at the local level. What should come first – capacity or devolution? A vexed question in the debate on capacity development in the decentralised governance is the following. Should one first devolve functions and develop capacity later? Or, should one develop capacity first and devolve functions later? Arguing for the devolution of powers to local government to precede capacity development efforts, Ribot (2003, p. 61) writes: Implementing decentralisation may require coordination, civic education campaigns, orientation and training programmes for local parties. But, without powers people are less 201

D. Rajasekhar

likely to learn or to even engage in capacity development efforts. Risks must be taken to transfer powers ahead of capacity so that capacity building can have an empowering, rather than a controlling or punitive, meaning. Others highlight the need for gradual implementation of decentralisation over time in parallel with strong capacity development efforts (Loayza, Rigolini and Calvo-Gonzalez, 2011).

Beneficial impact of capacity development Based on a review of 19 developing countries, Jutting et al. (2005) show the mixed impact of decentralisation on poverty reduction. Decentralisation reduced poverty through either participation, a decline in vulnerability or improved access to services. But this was not the case in some poor countries characterised by a lack of institutional capacity and post-conflict situations where decentralisation had a negative impact. Steiner (2010) examines the role of local government capacity for household consumption and enrolment in schools with the help of household data collected in Uganda. She found a positive association between the level of capacity of district governments and household consumption and school enrolment. Loayza, Rigolini and Calvo-Gonzalez (2011) also looked at the relationship between performance in fiscal management and local capacity. They find that four factors, namely i) budget size and allocation process; ii) local capacity; iii) local needs; and iv) political economy constraints affect decentralisation; but the largest determinant of spending ability is the adequacy of the budget with respect to local capacity.

Evolution of capacity development programmes for elected representatives in India Capacity development programmes in the 1990s After the state governments complied with the 73rd and 74th Constitutional Amendment Acts, elections to local government were held in several states from 1993 onwards. In the mid-1990s, the buzzword everywhere was the need to train ERs as they were first-timers in the local political arena and not aware of their development roles. It was also felt that ERs, most of whom were women and from depressed castes, needed soft skills to articulate citizens’ problems and needs in official meetings (Rajasekhar, Bhat and Webster, 1995). Not all of the newly elected ERs, who were estimated to be around 25 lakhs, could be provided capacity development inputs because NIRD&PR, Hyderabad, was the only nationallevel organisation that provided training to ERs. Appendix 14A shows that the number of ERs trained was only 2,392 in 1992–93. The national institute could almost double its capacity in the 1990s, but still the proportion of participants to total ERs was less than 1 percent of the estimated 25 lakh representatives. The proportion of Women Elected Representatives (WERs) trained to total trainees was also less at around 10 percent. In the decade of the 1990s, the central and state governments made efforts to improve the capacity of State Institutes of Rural Development, involve non-governmental organisations (NGOs) in the training of ERs and make decentralised training arrangements at the taluk level. The involvement of NGOs resulted in gains in terms of development of training curricula and methods, and the introduction of training methods that were able to retain the interest of semi-literate and newly elected ERs. These efforts, however, resembled a patchwork-quilt phenomenon – very well-developed training infrastructure in some areas and none or inferior 202

Capacity development for good governance in Panchayats

infrastructure in the other regions.The arrangement to provide training at the taluk (i.e., decentralised) level did not work because the training provided was not continuous, communication between ERs and training coordinators was not proper and there was a problem of coordination between taluk Panchayats and state-level institutes.The involvement of multiple institutions also sparked off a debate on the quality of training by NGOs vis-à-vis the other organisations (Rajasekhar, Billava and Nayak, 2017). Evaluating the impact of capacity development efforts in the 1990s, GoI (2011) noted that PRIs were yet to become strong, inclusive and democratic because of different systemic and social constraints. Of them, a major factor has been the weak capacities of the elected representatives in understanding and implementing the spirit of the constitutional amendments. Many of the elected representatives of India’s PRIs are illiterate and semi-literate. A large number of these are first timers and more than one third are women. With the poor literacy rate among elected representatives, negligible knowledge about PRIs and no operational skills required for local governance, the effective establishment of PRIs as a strong node for local governance remains a distant reality. The capacity development efforts in the 1990s were thus a failure and a lack of capacity adversely affected the decentralised governance system.2

Capacity development programmes in the first decade of the millennium After the UPA government assumed power in 2004, Mr Mani Shankar Aiyar, the Minister of the newly created Ministry of Panchayati Raj, conducted several roundtables with the state ministers of Panchayati Raj focusing on the issues plaguing the decentralised government in India and arriving at a consensus on what ameliorative measures could be undertaken.The Seventh Round Table Conference at Jaipur in December 2004 focussed on capacity development. Based on the deliberations and discussions in this roundtable, the National Capacity Building Framework (NCBF) was prepared to improve the capabilities of PRIs through systematic training with the overall goal of empowering and enabling them to function as institutions of self-government in accordance with Article 243G. The NCBF aimed to i) enable ERs to upgrade their knowledge and skills to perform their responsibilities better; ii) orient key officials associated with the devolved functions so that they are more receptive and learn from the ground level experience of ERs; iii) improve the functioning of the Gram Sabhas so that they can assert their demands and hold their Panchayats to account; and iv) sensitise the media, political parties, CSOs and citizens to promote PRIs as effective local government institutions. There were about 30 lakh ERs in 2008–09; of them, 30 percent were covered by the NCBF in 2008–09, 33 percent in 2009–10 and 66 percent in 2010–11. Thus, the proportion of ERs trained in the country increased by more than two times during this period. This impressive performance is marred by state-wise variations. In order to present them in a sharp manner, we have taken the average number of ERs trained during this three-year period (2008–09 to 2010–11) and worked out a proportion to the total. This analysis, which is presented in Figure 14.1, shows that on average 45 percent of the ERs were trained by the NCBF during this period. The top performer was Kerala where on an average each ER was trained twice during the three-year period. The next best states were Sikkim and Andhra Pradesh where each ER was on average trained once, and the next best performing states were Karnataka, Assam, Haryana and Punjab. The capacity development effort was poor in 17 states 203

D. Rajasekhar 250.0

200.0

150.0

100.0

0.0

Kerala Sikkim Andhra Pradesh Karnataka Assam Haryana Punjab Rajasthan West Bengal Manipur Tripura Bihar Gujarat Madhya Pradesh Chasgarh Total Goa Tamil Nadu Odisha Himachal Pradesh Lakshadweep Maharashtra Arunachal Pradesh Mizoram Meghalaya U‚arakhand U‚ar Pradesh Chandigarh A & N Islands Puducherry D & N Haveli Daman & Diu Jammu & Kashmir Jharkhand

50.0

Figure 14.1 Proportion of ERs trained to total (2008–09 to 2010–11). Source: Compiled from GoI (2011).

and union territories; most of these are from northeast India. However, among the larger states, Uttar Pradesh, Uttarakhand, Maharashtra and Odisha are the ones where the performance was poor. According to GoI (2011, pp. 7–9), states were able to have 100 percent coverage because of factors such as systematic orchestration of resources at the state, district and block levels and strong planning. In the case of Karnataka, the high coverage was due to SATCOM training. The low coverage in Uttar Pradesh was worrying. In order to achieve 100 percent coverage by a state, the following recommendations were made: i) preparation of a comprehensive package of strategies; ii) identification of a cadre of resource teams; and iii) preparation of sound micro-planning. The other areas of concern in the provision of capacity development inputs are the following: i) several states did not have the capacity to assess training needs in a comprehensive manner; ii) gender parity was not maintained despite the fact that 33 to 50 percent of the seats were reserved for women due to non-formulation of gender mainstreaming strategies or activities; iii) training programmes relied on lectures with minimal or no other training material;3 iv) the planning and logistic arrangement4 was poor in some states as it was challenging to ensure this in a block headquarters; v) systematic monitoring and evaluation systems were non-existent in most of the states to collect feedback from participants and analyse the same for learning and improving capacity development programmes; vi) there was a lack of adequate and qualitative pool of resource persons in relation to the requirement in several states leading to short-duration training; vii) most states were making efforts mainly on the provision of training with quantitative coverage as focus; viii) in many states, holistic capacity development approach (use of ICT-based tools, mobile learning, helpline, video conferences, etc.) was not visible; ix) in over half of the states, other capacity development inputs such as exposure visits were not used; and x) there was limited use of outsourcing as an effective mechanism to improve coverage (GoI, 2011). 204

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Capacity development programmes in the decade of the 2010s In response to these key areas of concern, the NCBF was updated using lessons drawn from the experience gained in the implementation in the previous decade and incorporating the initiatives of the state-level rural development institutes. The second most important development in the decade of 2010s was the emergence of an important capacity development programme called the Rajiv Gandhi Panchayat Sashaktikaran Abhiyan (RGPSA).These developments could be attributed to the following. First, the second half of the 2000s witnessed the implementation of a few nation-wide flagship programmes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). Since Panchayats implemented MGNREGS, their capacity development was considered to be essential. Second, a number of centrally sponsored schemes (CSSs) were implemented along the jurisdictional lines of the ministries and departments. In the implementation of these schemes, the participation of citizens and accountability to them were sought to be achieved through Panchayats. However, in view of a concern raised by central ministries and state governments that the capacity of ERs to Panchayats as well as administrative and technical staff within Panchayats was poor, the central government thought that it was important to build the capacity of Panchayats and the related institutions. Third, the government found that the implementation of the Panchayat Extension to Scheduled Areas (PESA) Act was unsatisfactory due to limited interest shown by the state governments concerned and weak Grama Sabha (GS). Capacity development was considered to be important for improving governance and accountability in PESA areas. Fourth, the cause of decentralised democratic governance in the northeast has been taken up in consultation with the state governments since 2011. For this, technical and financial support for democratic decentralisation was considered to be essential. Fifth, the Second Administrative Reforms Commission on local governance noted that capacity development as against mere training was essential and that development of individuals5 as well as organisations6 was an essential component of capacity development. The Ministry of Panchayati Raj implemented the RGPSA for a four-year period (2012– 13 to 2015–16). According to the Annual Report of the Ministry (GoI, 2017), the RGPSA addressed the following constraints of the decentralised government: i) inadequate devolution of powers; ii) lack of human resources; iii) inadequate infrastructure; and iv) limited capacity. The cumulative central release of funds to states during the period 2012–13 to 2015–16 was Rs. 1,253 crores, of which the total amount spent was Rs. 1,089 crores (87 percent). Substantive changes were made in 2015–16 (GoI, 2018). From this year on the state component of scheme (RGPSA) was delinked from central support. In the context of larger devolution of funds made available to Grama Panchayats under FFC (Fourteenth Finance Commission) award support under the scheme was provided for capacity building requirement for Grama Panchayat Development Plan (GPDP), training infrastructure and HR, HR for PESA and e-governance, and for programme management costs. (GoI, 2018, p. 65) Thus, the emphasis on capacity development of elected representations for their participation in the decentralised governance was diluted, and the focus shifted to infrastructure development for the provision of training and so on. 205

D. Rajasekhar Table 14.1 Funds (Rs. crores) released and utilised under the RGPSA/RGSA Years

Funds Sanctioned

Funds Released

Funds Utilised

Proportion of funds released to sanctioned

Proportion of funds utilised to released

2012–13 2013–14 2014–15 2015–16 2016–17

42.90 1,648.93 2,062.17 575.84 973.69

42.90 560.60 481.45 168.47 400.81

42.90 533.34 344.18 91.55 60.19

100.0 34.0 23.3 29.3 41.2

100.0 32.3 16.7 15.9 6.2

Source: GoI (2017, pp. 109–110).

In Table 14.1, we show the trend in funds sanctioned, released and utilised under the RGPSA/ Rashtriya Gram Swaraj Abhiyan (RGSA). This information helps in finding out the preparedness of state governments with micro-plans to demand and utilise central government funds. The gap between sanctioned to released funds, and between released and utilised funds, provides some clues on this. The proportion of funds released to total sanctioned funds was 100 percent in 2012–13 and declined thereafter to reach as low as 23.3 percent in 2014–15 (Table 14.1). The proportion of funds utilised to those released was also high at 100 percent in 2012–13 and declined thereafter to only 6.2 percent in 2016–17. This clearly shows that the capacity to get funds released with sound planning was low among states, so the capacity to utilise the released funds was also low, as the infrastructure was inadequate. The release of funds for capacity development activities increased from Rs. 481.45 crores in 2014–15 to Rs. 621.72 crores in 2017–18, and again declined to Rs. 548.65 crores. There is, however, a considerable variation across the states in the access to these funds during the period 2014–15 to 2017–18. Funds released to each state are added for five years and the proportion of funds released to a state to total funds provided by the central government is examined to present variation across the states better. Figure 14.2, which provides the distribution of states by funds received for capacity development activities, shows that a significant proportion of funds were provided to larger states such as Andhra Pradesh, Madhya Pradesh, Uttar Pradesh and West Bengal. It needs to be noted that Karnataka, Maharashtra and Kerala, the states that have been doing well in terms of devolution index, also accessed a good share of funds. As the funds released for capacity development could also be utilised to improve training infrastructure, we look at the training infrastructure across the states in Chart 14.1. It can be seen that all the 25 states for which information is available have state-level institutes of rural development which are entrusted with the functions of design, implement and coordinate capacity development activities in a state.The training coverage tends to be better if there is decentralised training infrastructure with an identified pool of resources and a satellite training centre. Chart 14.1 shows 18 out of 25 states had decentralised training infrastructure at the sub-state level. As far as the satellite training facility is concerned, only ten out of 25 states had this facility and they could provide the training to ERs at Block Resource Centres (BRCs). Important to note is that decentralised training arrangements and satellite training facilities enable elected women representatives to attend training venues located closer to their residence. In view of this, it can be concluded that the training infrastructure is inconvenient to women representatives in a large number of states. 206

Capacity development for good governance in Panchayats 12 10 8 6 4

0

Andhra Pradesh Madhya Pradesh Uttar Pradesh West Bengal Assam Tamil Nadu Karnataka Maharashtra Chhattisgarh Telengana Jharkhand Odisha Rajasthan Uttarakhand Bihar Kerala Punjab Haryana Arunachal Pradesh Manipur Himachal Pradesh Gujarat Jammu and Kashmir Mizoram Sikkim Tripura Nagaland Andaman & Nicobar Islands Meghalaya Goa Lakshadweep Daman & Diu Dadra & Nagar Haveli Chandigarh

2

Figure 14.2 Distribution of states by proportion of funds accessed for capacity development (2014–15 to 2017–18). Source: Author’s compilation from GoI (2019).

The total number of trainees (ERs, Panchayat functionaries and other stakeholders) was 1.69 crores during the period 2014–15 to 2017–18.The number of trainees gradually increased from 9.30 lakhs in 2014–15 to 56.86 lakhs in 2017–18. Figure 14.3, on the distribution of trainees by state, shows that Maharashtra, Andhra Pradesh, Madhya Pradesh, West Bengal and Uttar Pradesh are the top five states in terms of coverage. Although the RGPSA and RGSA emphasised strengthening decentralised governance in the northeast and PESA areas, one does not get the impression from Figure 14.3 that local government was strengthened in these regions under the new programme. In order to look at the efficiency of training programmes, Figures 14.4 and 14.5 are prepared. In Figure 14.4, the states are arranged on the basis of their share in the funds received and number of trainees to find out whether there is correspondence between these two. If the cost of training one participant remains the same across the states, the direction of these two shares will roughly be the same. On the other hand, if the cost of training is different it implies that the training programmes are not efficiently organised. Figure 14.4 shows that the states fall into three categories. First, states where the share of funds received was lower than their share in total trainees. These states were Madhya Pradesh, West Bengal, Karnataka, Maharashtra, Bihar, Haryana, Assam and Gujarat. One can say that the capacity development programmes are efficiently organised in these states. In the second group of the states, the share of funds received was roughly the same as their share in the total trainees. These states were Andhra Pradesh, Chhattisgarh, Telangana and Kerala. Third, states where the share in funds was more than that of trainees. These states were Uttar Pradesh, Tamil Nadu, Jharkhand, Odisha, Rajasthan, Uttarakhand, Punjab, Arunachal Pradesh, Manipur, Himachal Pradesh, Jammu and Kashmir, Mizoram and Sikkim. In order to shed further light on these state-wise variations, an average amount of expenditure on training across the states is prepared (Figure 14.5). The total amount spent on the provision of training to each participant varied from as low Rs. 574 in Maharashtra to as high as 207

D. Rajasekhar Chart 14.1 Training institutions in states for Panchayats States

Andhra Pradesh Arunachal Pradesh Assam

State training institute

Yes/No

Where

No

No

No

No

17 Extension Training institutes Nil

SIRD

Resource Centres in IT & Yes Skill Development Divisional Training Centres No 6 Extension Training Centres Yes

1 Satellite Hub; 20 BRCs NA 110 BRC

Nil

No

No

Panchayat Training Centre Regional Training Centre

Yes No

226 BRC No

NA

Yes

71 BRCs

RETC

Yes

Central Training Institute Panchayat Training Institute Regional SIRD and PRC 5 SATCOM Training Centres ____ Gramsevak Training Centres and Panchayat Raj Training Centres Panchayat Training Centre

No

6 RRCs under BRGF No

Yes

175 BRCs

No Yes

No 126 BRCs

Yes

313 BRCs

6 DTCs 3 ETCs CRRID PTCs

No No No Yes No No No No No Yes

No No No 200 Blocks No No No No No 341 BRCs

SIRD

Kerala SIRD Maharashtra SIRD

Madhya Pradesh Manipur Odisha Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttarakhand Uttar Pradesh West Bengal

Satellite-based training

AMR-AP Academy of Rural Development SIRD

Bihar BIPARD Chhattisgarh Thakur Pyarelal Institute of Panchayat & Rural Development (TPIPRD) Goa Goa Institute of Rural Development & Administration Gujarat SIRD Haryana HIRD, Nilokheri; RGSIPR & CD Himachal PRTI at Mashobra, Shimla, Pradesh Baijnath, Kangra, Thunag, Mandi Jammu & SIRD Kashmir Jharkhand SIRD; SKIPA (ATI) Karnataka

Regional institutes

SIRD SIRD SIRD SIRD SIRD SIRD SIRD PR Training Institute UIRD SIRD SIRD; Society for Training & Research on Panchayats & Rural Development (STARPARD); State Prog Mgt Unit

RIRDs Extension Training Centres ETCs; DTCs; Dist. Prog Mgt Units

Source: Alok (2014). Note: SIRD (State Institute of Rural Development); DTC (District Training Centre); BRC (Block Resource Centre); ETC (Extension Training Centre).

208

Capacity development for good governance in Panchayats 14.0 12.0 10.0 8.0 6.0 4.0

0.0

Maharashtra Andhra Pradesh Madhya Pradesh West Bengal Uttar Pradesh Karnataka Assam Tamil Nadu Telengana Chhattisgarh Bihar Rajasthan Gujarat Haryana Kerala Odisha Punjab Jharkhand Jammu and Kashmir Uttarakhand Tripura Manipur Himachal Pradesh Sikkim Arunachal Pradesh Mizoram Meghalaya Goa Nagaland Dadra & Nagar Haveli Daman & Diu Andaman & Nicobar Islands Chandigarh Lakshadweep

2.0

Figure 14.3 Distribution of states by proportion of trainees to total (2014–15 to 2018–19). Source: Author’s compilation from GoI (2019).

Rs. 15,697 in Arunachal Pradesh.What explains these differences? The following may be offered as potential explanations. The first explanation is training infrastructure. There are 12 states which spent less than Rs. 1,500 on the provision of training to each participant. These states are Maharashtra, Gujarat, Bihar, Madhya Pradesh, West Bengal, Karnataka, Haryana, Telangana, Assam, Andhra Pradesh, Kerala and Goa. All these states have decentralised training infrastructure. In addition, seven out 12 states have gone for satellite training facilities. GoI (2011) also showed that most of these states have developed good practices such as micro-planning, 14.0 12.0

Funds (%)

Trainees (%)

10.0 8.0 6.0 4.0 2.0 0.0

Figure 14.4 Distribution of key states by total funds received (%) and trainees (%) during the period 2014–15 to 2018–19. Source: Author’s compilation from GoI (2019). 209

D. Rajasekhar

18000 16000 14000 12000 10000 8000 6000 4000 0

Maharashtra Gujarat Bihar Madhya Pradesh West Bengal Karnataka Haryana Telengana Assam Andhra Pradesh Kerala Goa Chhattisgarh Uttar Pradesh Tripura Tamil Nadu Rajasthan Punjab Meghalaya Jammu and Kashmir Odisha Jharkhand Manipur Himachal Pradesh Nagaland Uttarakhand Sikkim Dadra & Nagar Haveli Mizoram Daman & Diu Arunachal Pradesh

2000

Figure 14.5 Distribution of states by amount (Rs.) spent for each trainee during 2014–15 to 2018–19. Source: Author’s compilation from GoI (2019).

orchestration of resources between state- and sub-state-level administrative arrangements, a decentralised pool of resource persons and satellite training facilities. In view of these factors, the training tended to be efficient. The second explanation could be the terrain. In seven states with difficult terrain, the cost of providing training to each participant was more than Rs. 5,000. These were Nagaland, Uttarakhand, Sikkim, Dadra and Nagar Haveli, Mizoram, Daman and Diu and Arunachal Pradesh. Five of them were hilly states and four were from northeast India. The setting up of satellite training facilities will improve the coverage and also the efficiency of training provided.There is, however, a need to improve the situation in four states, namely Uttar Pradesh, Tamil Nadu, Rajasthan and Punjab by setting up decentralised training infrastructure and satellite training centres. These states will also do well if they prepare micro-planning and a good pool of resource persons.

Issues in capacity development of elected representatives Changing focus of capacity development programmes A review of the policies and programmes of the Indian government to improve the capacity of Panchayat functionaries in the last 25 years shows that these relate to capacity development. First, institutional arrangement for capacity development of ERs is provided through the 73rd and 74th Constitutional Amendment Acts and compliance acts by different states. Second, training programmes designed for ERs, including women, sought to improve leadership capacity. In particular, the training focused on powers devolved to ERs, resources available, planning, implementation and monitoring. Third, capacity development programmes sought to provide knowledge and information on the Panchayati Raj Act; different provisions including reservations, elections and meetings; awareness of various programmes of the government; and intricacies on how to implement them. Fourth, capacity development programmes aimed to improve the willingness, ability and capacity of local government to introduce systems and mechanisms of 210

Capacity development for good governance in Panchayats

engagement with people (such as GS, consultations with self-help groups and so on) to capture their interests and secure them in the planning and implementation of development activities. The focus of capacity development programmes, however, changed over time. With the introduction of the NCBF, the scope of capacity development was not restricted to ERs (ward members, presidents, vice-presidents and chairpersons of standing committees) but extended to cover officials (such as panchayat secretary, junior engineer, anganawadi workers, public health workers and other staff in PRIs) as well as pressure groups of GS and self-help groups (SHGs). While this can be interpreted as the NCBF adopting a broader definition of decentralisation covering the transfer of powers as well as empowerment of the community to seize the benefits of transferred powers, the micro-evidence shows that officials received priority in the provision of training especially in the implementation of nation-wide programmes such the Swachh Bharat Mission.7 This indicates the re-usurpation of Panchayat functions by bureaucrats. From 2015–16 onwards, the focus shifted to infrastructure development for the provision of training thus diluting the focus of capacity development.

Capacity development or is it mere training? The implementation of capacity development programmes was such that only training programmes were organised and capacity development in the real sense of the term has not been given the due importance. GoI (2011) noted that the capacity building activities by most of the states aim at training and quantitative dimensions of capacity development. In other words, the number of people trained is tracked rather than quality aspects such as the impact of capacity development initiatives in terms of ability of ERs in participation in the decision-making, planning for development, ensuring transparency and accountability and so on. Often, training programmes were organised as a tick in the box rather than those that result in true capacity development. Those who were already trained by the government training institutes did not have sufficient knowledge and skills to participate in decision-making and planning for local development. When asked, it was revealed that there was overemphasis on lectures. The government (GoI, 2011) also stated that there was overemphasis on lectures without having much regard on quality or the extent to which training inputs made a difference to their functioning at the ground level. As discussed earlier, the programmes were implemented in such a manner that capacity development approach does not appear to be holistic.The newer forms of capacity development such as ICT, use of mobile phones for learning, video conference methods and helplines were not widely used.The leadership development was sought to be done through classroom lectures rather than through exposure trips and handholding. Commenting on the training provided to functionaries of urban local bodies, the Comptroller and Auditor General of the Odisha government observed that the “state neither prepared the model curricula for capacity building nor planned any exposure visits” (Government of Odisha, 2018, p. 52). In the absence of effective monitoring and evaluation, the precise impact of these training programmes is not known.

Is it capacity or training infrastructure development? In the last one decade or so, funds earmarked for capacity development were also used for training infrastructure.This is justified on the grounds that construction of community halls, resource centres and training-cum-production centres is crucial in enhancing the value of capacity development inputs provided to ERs. Important to note here is that bureaucrats would prefer funds for infrastructure not only because of the ease with which these funds could be spent to show 211

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expenditure progress but also for rent-seeking opportunities that such expenditure provides. A detailed analysis of the expenditure on capacity development is needed; however, the available evidence shows that such expenditure is infructuous. The Government of Odisha (2018) reported that a training-cum-production centre, constructed at a huge cost, was kept under lock and key as it was constructed at a place where there is no electricity.

Capacity development: whose need is it? The funds for the capacity development of ERs are justified not to develop their capacity but for the implementation of centrally sponsored schemes through local government. These schemes, which were implemented by the line department a couple of decades ago, are now assigned to the local government to incorporate the good governance principles of participation and accountability in the implementation of these schemes. Funds earmarked to such nationwide flagship schemes, in the implementation of which local government has a role, rapidly increased from Rs. 27,063 crores in 2004–05 to Rs. 137,624 crores in 2010–11 (Alok, 2014). The rationale given for the initiation of the RGSPA was that the Panchayat functionaries need to be provided capacity building inputs if they were to be involved in the implementation of these schemes (GoI, 2013). This therefore raises the question of whether capacity development was needed for the empowerment of ERs of local government or for the implementation of centrally sponsored schemes. This also suggests the re-usurpation of functions of the local government by the staff of line departments.

Capacity development: what for? The above becomes all the more relevant if one were to reflect on for what capacity development inputs have to be used. This point is to be looked at from the angle of limited decentralisation in India. A well-known fact is that there is considerable mismatch between political, administrative and fiscal decentralisation. While several functions are devolved to PRIs, the devolution of funds and functionaries to implement the same are inadequate, leading to a situation where decentralised planning becomes redundant. Elected representatives attending capacity development programmes say that they are unable to effectively use capacity development inputs. Even if ERs are aware of the prioritisation of needs and preparation of plans, they do not have adequate funds to put knowledge and inputs obtained from training into practice. It is well known that PRIs do not have expenditure autonomy as most of the funds are provided by the higher levels of government and they are specific purpose transfers. This then implies that they cannot match citizen needs with purposes for which funds are transferred. Because of constraints imposed by the inadequate devolution of powers, ERs are of the opinion that it is futile to even attend capacity development sessions organised by the government.

Technicalisation of Panchayat functioning Technicalisation in the context of local government refers to the involvement of technical people in the decision-making by marginalising ERs. A good example for this is the national rural employment guarantee (NREG) scheme implemented through GPs. The vision of the NREG is that wage labourers, for whom the scheme is meant for, will conduct social audits to promote downward accountability of GP. However, studies show that the involvement of social audit committees is marginalised as technical assessment by junior engineers is given considerable importance to judge whether the NREG works are well implemented or not 212

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(Rajasekhar, Lakha and Manjula, 2013). Collusion with and co-option of social audit committee members resulted in a tendency where the social audit process is completely discredited (Lakha, Rajasekhar and Manjula, 2015). These studies reveal that social audit committee members were not trained in the social audit process. All these have resulted in the re-usurpation of Panchayat functions by non-elected officials of the local government.

Did capacity development programmes empower the elected representatives? Rajasekhar, Billava and Nayak (2017) look at the impact of capacity development programmes with the help of data collected from 140 past presidents of GPs from Karnataka. Male presidents constituted 56 percent of the total sample. About 98 percent of the presidents attended a training programme usually at the beginning of their term, organised somewhat closer to their GP. A knowledge test conducted among them revealed that most of them, especially male presidents, were aware of the number of GS meetings in a year, who presides over GS meeting, who could sign cheques and suspend GP staff. The knowledge level was, however, less on quorum for GS meetings, statutory committees, minimum age to contest elections and so on. The knowledge level was better among male past presidents as compared to their female counterparts. Likewise, the knowledge level among past presidents belonging to the dominant caste was better as compared to those belonging to the SC/ST community. The limited knowledge among female past presidents seems to have adversely affected them in undertaking development works relating to road development, water supply, drainage and streetlights. Rajasekhar, Billava and Nayak (2017) identified that the limited devolution of powers influenced variation in the knowledge level among past presidents. This implies that training programmes will make some difference in the knowledge levels, but will not significantly contribute to decentralised governance in the absence of true capacity development. This has policy implications on the nature and content of training programmes conducted in Karnataka as well as other states.

Conclusions The policies and programmes of the Indian government in the last 25 years are in line with the concept of capacity development. However, there is a considerable gap between policy and practice.The focus of policies and programmes has also shifted away from developing the capacity of ERs to training bureaucrats and building training infrastructure. In the name of capacity development what is being done is chasing numbers, i.e., the quantitative dimension of training, with less than desired attention being given to training needs assessment; the creation of learning and reflective environments; gender parity; and comprehensive approaches to capacity development, monitoring and evaluation. The technicalisation of Panchayat functioning and the shift in focus away from developing the capacity of ERs resulted in the re-usurpation of Panchayat functions by bureaucrats associated with the local government and line departments. In the absence of adequate devolution of powers to the local government, capacity development initiatives (which are reduced to mere training) did not contribute to the participation of ERs in decision-making on local plans and their implementation for the development of the area and people residing there. This has given rise to an argument among bureaucrats that ERs need to be kept away from the local governance. What is urgently required is comprehensive capacity development with sufficient devolution of powers and appropriate decentralisation framework. As Bockstael (2017) notes, the argument for capacity development was mostly due to the unfounded assumption that there are deficiencies in the ability of actors, and this has contributed to overlooking features that contributed to 213

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the dysfunction of the institutions themselves. It is therefore time that we give utmost priority to making the local government functional through adequate devolution of powers.

Appendix 14A Number of programs organised and participants trained by NIRD (1992–93 to 2016–17) Year

Number of training programs

Number of participants

Number of female participants

Proportion of female participants

1992–93 1993–94 1994–95 1995–96 1996–97 1997–98 1998–99 1999–2000 2000–2001 2001–2002 2002–2003 2003–2004 2004–2005 2005–2006 2006–2007 2007–2008 2008–2009 2009–2010 2010–2011 2011–2012 2012–2013 2013–2014 2014–2015 2015–2016 2016–2017 Total

110 114 116 118 165 139 132 152 127 140 177 188 215 230 271 286 367 554 896 980 998 1130 1286 1263 1463 11617

2,392 2,412 2,577 2,716 4,222 3,412 3,197 4,268 3,563 4,334 5,201 5,387 6,253 6,453 5,959 7,942 10,861 15,376 21,882 27,942 28,210 31,640 31,470 36,351 47,683 298,703

244 323 316 288 582 392 435 166 – 455 703 547 909 809 608 1,871 – 4,834 6,683 8,565 10,769 12,016 5,559 8,693 15,669 72,788

10.20 13.39 12.26 10.60 13.78 11.48 13.60 3.88 – 10.49 13.51 10.15 14.53 12.53 10.20 23.55 – 31.43 30.54 30.65 38.17 37.97 17.66 23.91 32.86 24.36

Source: Annual Report, 2017, NIRD&PR.

Notes 1 The term “capacity development” is used in this chapter in place of the commonly used term “capacity building” because the latter implies that there is no capacity whatsoever at the beginning and that it needs to be built from scratch by external actors. Capacity development, on the other hand, focuses on the need to support and facilitate processes that are already underway. Thus, the approach followed in the capacity development is more accommodative and inclusive. 2 Studies also suggested the same. See for instance, Pal (2003) and Vyasulu (2004). 3 It was generally observed that lectures or PowerPoint slides with considerable text was the dominant mode of training. This was not absorbed by participants with no or minimal literacy, rural backgrounds and no track record of learning based on standard learning methods. So the participation of participants, and the extensive use of films, animation, graphics, storytelling, case studies etc., was recommended (GoI, 2011). 4 Good logistic arrangement includes an easily accessible venue with a vibrant learning environment, proper seating and acoustic arrangements, adequate lighting, fans and ventilation, appropriate 214

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arrangements for lunch and refreshments, drinking water, a first aid kit, a crèche for taking care of the children accompanying the EWRs, separate toilets for men and women, etc. 5 The focus is on enhancing an individual’s knowledge, skills and access to information.This will, in turn, enable an improvement of the performance of an individual as well as that of her organisation. 6 Enabling an organisation to adapt to its external environment and develop harmonious and effective working relationships within the organisation with the help of appropriate personnel policies, organisational structures and re-engineering of work processes. 7 Information collected from 30 Grama Panchayats in Karnataka shows that officials such as the Panchayat Development Officer, secretary, data entry operator, bill collector and watermen were the main people attending the training conducted to implement the Swachh Bharat Mission during the period 2014 to 2019. For details, see Rajasekhar and Manjula (2019).

References Alok,V. N. (2014). Measuring Devolution to Panchayats in India: A Comparison across States: Empirical Assessment −2013–14. New Delhi: Indian Institute of Public Administration. Bardahn, P. and Mookherjee, D. (2006). ‘Decentralization and Accountability in Infrastructure Delivery in Developing Countries’, The Economic Journal, 116, pp. 101–127. Bellofatto, Antonio Andrés and Martín, Besfamille (2018). ‘Regional State Capacity and the Optimal Degree of Fiscal DECENTRALIZATION’, Journal of Public Economics, 159, pp. 225–243. Bird, R. (1995). ‘Decentralizing Infrastructure: For Good or for Ill?’, in Estache, A. (ed.) Decentralizing Infrastructure: Advantages and Limitations, WB Discussion Paper 290. Washington DC: World Bank, pp. 22–49. Bockstael, Erika (2017). ‘Critical Capacity Development: An Action Research Approach in Coastal Brazil’, World Development, 94, pp. 336–345. Crook, R. C. and Manor, J. (1998). Democracy and Decentralisation in South Asia and West Africa: Participation, Accountability and Performance. Cambridge: Cambridge University Press. Duflo, Esther (2005). ‘Why Political Reservations?’, Journal of the European Economic Association, 3(2–3), pp. 668–678. Fiszbein, Ariel (1997). ‘The Emergence of Local Capacity: Lessons from Columbia’, World Development, 25(7), pp. 1029–1043. GoI (2011). Status Report: PRI Capacity Building and Training (CB & T) in India. Learning from Experience Sharing Regional Workshops. New Delhi: Ministry of Panchayati Raj. GoI (2013). Rajiv Gandhi Panchayat Sashasthikaran Abhiyan (RGPSA). Scheme Guidelines. New Delhi: Ministry of Panchayat Raj. GoI (2017). Annual Report, 2016–2017. New Delhi: Ministry of Panchayat Raj. GoI (2018). Annual Report, 2017–2018. New Delhi: Ministry of Panchayati Raj. GoI (2019). Basic Statistics of Panchayati Raj Institutions. New Delhi: Ministry of Panchayati Raj. Government of Odisha (2018). Report of the Comptroller and Auditor General of India on Local Bodies for the Year Ended March 2017. Report No. 1. Bhubaneswar: Government of Odisha. Gow, David D. and Morss, Elliot R. (1988). ‘The Notorious Nine: Critical Problems in Project Implementation’, World Development, 16(12), pp. 1399–1418. Grindle, M. S. (2007). Going Local: Decentralization, Democratization, and the Promise of Good Governance. Princeton: Princeton University Press. Haase, T. W. and Antoun, R. (2015). ‘Decentralization in Lebanon’, in Dawoody, A. R. (ed.) Public Administration and Policy in the Middle East. New York: Springer Science + Business Media, pp. 189–213. Jutting, J., Corsi, E., Kauffmann, C., McDonnell, I., Osterrieder, H., Pinaud, N. and Wegner, L. (2005). ‘What Makes Decentralisation in Developing Countries Pro-Poor?’, The European Journal of Development Research, 17(4), pp. 626–648. Lakha, Salim, Rajasekhar, D. and Manjula, R (2015).‘Collusion, Cooption and Capture: Social Accountability and Social Audits in Karnataka, India’, Oxford Development Studies, 43(3), pp. 330–348. Larson, Anne M. (2002). ‘Natural Resources and Decentralisation in Nicaragua: Are Local Governments up to the Job?’, World Development, 30(1), pp. 17–31. Leighton, Charlotte (1996). ‘Strategies for Achieving Health Financing Reform in Africa’, World Development, 24(9), pp. 1511–1525. Lewis, Blane D. (2003).‘Tax and Charge Creation by Regional Governments under Fiscal Decentralization: Estimates and Explanations’, Bulletin of Indonesian Economic Studies, 39(2), pp. 177–192. 215

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Litvack, J. I.,Ahmad, J. and Bird, R. M. (1998). Rethinking Decentralization in Developing Countries.Washington, DC: World Bank Publications. Loayza, N. V., Rigolini, J. and Calvo-Gonzalez, O. (2011). ‘More Than You Can Handle: Decentralization and Spending Ability of Peruvian Municipalities’, Policy Research Working Paper No. 573,Washington DC: World Bank. Loayza, N.V., Rigolini, J. and Calvo-Gonzalezm, O. (2014). ‘More Than You Can Handle: Decentralization and Spending Ability of Peruvian Municipalities’, Economics and Politics, 26(1), pp. 56–78. Mahi, Pal (2003). ‘Capacity Building of Panchayats: Tasks Ahead’, Economic and Political Weekly, 38(8), pp. 507–510. Manor, James. (1999). The Political Economy of Democratic Decentralization. Washington DC: World Bank. Narayana, D. (2005). ‘Local Governance Without Capacity Building: Ten Years of Panchayati Raj’, Economic and Political Weekly, 40(26), pp. 2822–2832. Prud'homme, R. (1995). ‘The Dangers of Decentralization’, World Bank Research Observer, 10, pp. 201–220. Rajasekhar, D. and Manjula, R. (2019). Assessing the Status of Swachh Bharat Mission in Rural Karnataka. A report submitted to Karnataka Rural Drinking Water & Sanitation Department. Bangalore: Government of Karnataka. Rajasekhar, D., Bhat, M. K. and Webster, Neil (eds.) (1995). People Centered Rural Development NGDOs and Decentralised Government. Bangalore: Consultancy Office. Rajasekhar, D., Lakha, Salim and Manjula, R. (2013). ‘How Effective are Social Audits under MGNREGS? Lessons from Karnataka’, Sociological Bulletin, 62(3), pp. 431–455. Rajasekhar, D., Billava, N. and Nayak, N. S. (2017). Improving the Knowledge of the Functionaries of Decentralised Governance: A Study of Grama Panchayat Presidents in Dharwad District, Karnataka. CMDR monograph. Reddy, M. G. (2003). ‘Status of Decentralised Local Bodies: Post 73rd Amendment Scenario’, Economic and Political Weekly, 38(12&13), pp. 1284–1292. Ribot, Jesse C. (2003). ‘Democratic Decentralization of Natural Resources: Institutional Choice and Discretionary Power Transfers in Sub-Saharan Africa’, Public Administration and Development, 23, pp. 53–65. Ribot, Jesse C., Agrawal, A. and Larson, A. M. (2006). ‘Recentralizing While Decentralizing: How National Governments Reappropriate Forest Resources’, World Development, 34(11), pp. 1864–1886. Rondinelli, D. A., McCullough, J. S. and Johnson, R. W. (1989). ‘Analyzing Decentralization Policies in Developing Countries: A Political-Economy Framework’, Development and Change, 20(1), pp. 57–87. Smoke, Paul and Lewis, Blane D. (1996). ‘Fiscal Decentralisation in Indonesia: A New Approach to an Old Idea’, World Development, 24(8), pp. 1281–1299. Steiner, Susan (2010). ‘How Important Is Capacity of Local Governments for Improvements in Welfare? Evidence from Decentralised Uganda’, Journal of Development Studies, 46(4), pp. 644–661. UNDP (2009). Supporting Capacity Building: UNDP. New York: Capacity Development Group, United Nations Development Programme Bureau for Development Policy. Vyasulu, V. (2004). ‘Transformation in Governance since 1990s: Some Reflections’, Economic and Political Weekly, 39(23), pp. 2377–2385.

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15 ICT for local governance Status, emerging issues and prospects Inderjeet Singh Sodhi

Introduction Governments bring reforms in order to ensure that governance is citizen-oriented, citizencentric and citizen-friendly. It is believed that technology can play an important role in bringing governance and development.Today, technology is widely used for people’s empowerment, with an assumption that the application of technology results in improved economic growth and social gains to people. It is believed that technology will contribute to better decision-making, improved participation and public service delivery, and to transparency, accountability, rule of law – all resulting in good governance in the administration leading to nation-building. “Information technology is created by human beings for the main purpose of facilitating their work and rendering better services to the people” (Sodhi, 2007, p. 809). Almost every country in the world has adopted ICT in all its government system, process, procedures and functioning known as e-government (Sodhi, 2013, pp. 20–21). Effective e-government is based on proper information and communication technologies which have the competency of developing openness, controlling corruption and ensuring accountability which may lead to good governance (Sodhi, 2015b, p. 280).The application of information and communication technology (ICT) for the development of countries opens up a vast range of possibilities. Giving an opportunity to the vast majority of the population living in rural areas to cross the digital divide to obtain access to information resources and services provided by ICT is the next revolution waiting to happen (Mathur and Ambani, 2005). E-governance projects have received sustained policy focus in low- and lower-middleincome countries such as India (Amit Prakash, 2016). E-government with the help of IT is being used in every sector of the economy in India (Sodhi, 2015a). In recent years, many e-government projects were implemented across the developing world (Madon, Sahay and Sudan, 2007). ICTs can provide a broad range of public and social services to the poor in remote and rural areas (Chandra and Malaya, 2011, p. 2,100). Only the transparent and free flow of information could lead to the effective delivery of public services through ICT (Sodhi, 2016). ICT, if applied rightly, can boost the performance of the Panchayati Raj Institutions (PRIs) as well as increase agricultural productivity, deliver public services efficiently and provide timely governmental services. DOI: 10.4324/9780429321887-15

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Most of the reports of Panchayati departments/ministries as well as the websites of these ministries/departments suggest that ICT in Panchayats contributed to people’s participation, better delivery of public services, increased transparency and good performance. Empirical studies, however, show that the performance is not as good as expected. Against this background this chapter looks at the progress and status of ICT in Panchayats in the last 27 years and discuss issues/challenges in the application of ICT in Panchayats with the help of a secondary source review.

ICT initiatives for e-governance After the 73rd Constitutional Amendment Act, several initiatives were taken for ICT and e-governance for PRIs. Bellandur Gram Panchayat1 near Bangalore, which changed itself into the first computerised Panchayat office in the country in 1998, also has the distinction of being the first Panchayat in the country to broadcast the proceedings of the Panchayat meetings and its AGMs to all its residents and nearby 20 villages via television. In 1993, this GP started technology upgradation by moving from a simple typewriter to a computer. Initially, it was just a means to store letters. But by 2004, it held a full-fledged database on the Panchayat. This included information on each of the residents along with all the minute details on land records, property tax records, birth and death records, ration card details and voter lists. Information Kerala Mission (IKM), an autonomous institution under the Local Self Government Department in Kerala2 for the computerisation and networking of local governments, has been in existence since 1999. It is one of the largest computerisation projects in the country envisaging, computerising and networking 1,209 local government institutions.3 It was not only about computerising the information on local bodies; it was the technology application for improving the service delivery and developing productivity that led to objective decisionmaking, thereby ensuring transparency and accountability.This institution developed 17 different software applications for the efficient administration of different functions of local governments. In 2003, Ramchandrapuram village, near Hyderabad, became India’s first e-Panchayat, enabling villagers to settle disputes through an express web-enabled system under the pilot project of the National Informatics Centre (NIC) called the Electronic Knowledge-based Panchayat (EKPanch) project. EKPanch became one of the important information arrangements at the Gram Panchayat level as it consolidated information on agriculture, public service delivery, pensions and assets. A pilot project was started in Chhatarpur District in Madhya Pradesh to develop a suitable GIS-based facility Management Information System (MIS) named e-gram suvidha in 2003. E-gram suvidha is a GIS-based decision support system (DSS) which can provide sectorwise thematic maps at a press of a key. The system provided block-wise thematic maps with Panchayats, as well as views of village boundaries on existing services such as middle school, hand pumps, transformers and markets, computation of distances and village profiles. The Ministry of Panchayati Raj (MoPR), Government of India (GOI), initiated the e-governance scheme known as ePanchayats.4 During 2004, the MoPR organised several roundtable meetings of state ministers of Panchayati Raj. During the 7th Round Table meeting at Jaipur in Rajasthan, the issue of information technology for Panchayats was discussed, and the usage of IT in Panchayats was recommended on several counts. In 2005, the National Advisory Council (NAC) suggested to the government to take up a “National IT for Panchayati Raj Programme,” “which would include setting up a nationally networked/computerised system including Treasuries to monitor fund flows/facilitate devolution.” A year later, the National e-Governance Plan was approved by the cabinet and the e-Panchayats project was one of them. 218

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E-Panchayat, a Mission Mode Project (MMP) under the National e-Governance Programme (NeGP), aims to make Panchayats into efficient and transparent symbols of modernity by leveraging ICT, bringing them to the cutting edge of self-governance and ensuring greater openness through transparency, disclosure of information, social audit, efficient delivery of services, improving internal management, procurement, etc. Under the e-Panchayat MMP, 11 Core Common Software applications are planned. Four of these applications, namely PRIA Soft, Plan Plus, National Panchayat Portal and the Local Governance Directory, have been rolled out. Six more applications, namely Area Profiler, Service Plus, Asset Directory, Action Soft, Social Audit and Training Management, were also launched in April 2012 on the occasion of National Panchayat Day.

Status of ICT infrastructure at the Panchayat level In 2012, a study was conducted in 25 states to ascertain the status of ICT infrastructure at the Panchayat level by the Ministry of Panchayati Raj and the Ministry of Electronics and Information Technology, Government of India. The study looked into various tools/aspects like Gram Panchayats with computers, GPs with internet connectivity, mode of connectivity (broadband, data card, wi-fi,VSAT, etc.) and source of funds.The study shows a wide variation in the proportion of GPs with computers, internet connectivity and mode of internet connection (Table 15.1) indicating that considerable progress is required.

Projects promoting Panchayats through ICT/e-governance The role of information and communication technologies (ICT) as a prominent enabler of sustainable growth has been noted (Greenhill, 2010), as in India it is being applied for the delivery of public services at all levels of government, mainly by the local government including Panchayati Raj Institutions. A number of projects like e-Gram Vishwagram, Vasudha Kendras, E-Mitra, etc. are promoting Panchayat systems through ICT/e-governance. The e-Gram Vishwagram Project was launched in Gujarat. This project has initiated the e-Gram project, connecting 13,716 Gram Panchayats and 6,000 Citizen Common Service Centres as a part of the e-Gram connectivity project by Gujarat, whereas in Guntur district of Andhra Pradesh, 721 Gram Panchayats covering 1,011 villages have been digitised under the e-Panchayat digitalisation programme.This district stood at the top-most position for e-governance projects in Andhra Pradesh. In October 2006, Bihar approved a proposal to introduce e-governance in all its 8,479 Panchayats at a cost of Rs. 252 million. Tata Consultancy Services (TCS) and the Bihar State Electronics Development Corporation, a state-owned IT body, designed the software for the e-governance project. The Infrastructure Leasing & Financial Services (ILFS) monitored its implementation. Under the project, Panchayat information centres or Panchayat portals called Vasudha Kendras were set up. These Kendras were expected to enable villagers to connect with the outside world and provide affordable and easy access to information about the government and its policies. Vasudha Kendras were connected to all state departments through the internet and the government provided computers and internet connections at the Panchayat-level centre. The project aimed at establishing direct contact with villagers and making the functioning of the government more transparent. Gyandoot is an intranet-based government-to-citizen (G2C) service delivery initiative. It was initiated in Dhar district of Madhya Pradesh in January 2000 with the twin objectives of providing relevant information to the rural population and acting as an interface between the 219

220

2,202 8,442 9,734 189 13,777 6,083 3,243 4,128 4,423 5,628 978 23,012 27,920 165 6,236 12,776 9,177 165 12,524 1038 51,914 7555 3351

0

Broadband

District connected by NIC district unit but these connections are not extended to ZP offices 2,202 (100%) 0 Broadband, data card, BSNL 0 0 BSNL’s connectivity available up to block level 887 (9%) 200 (2%) Broadband, data card 189 (100%) 189 (100%) GBBN (Goa Broadband Network) 13,685 (99.3%) 13685 (99.3%) ZP&BP=GSWAN, GP=VSAT 0 0 Broadband & Datacard 3,243 (100%) 885 (27%) HIMSWAN, ADSL 0 0 ADSL 0 0 ADSL 5,628 (100%) 4,900 (87%) BSNL Broadband, Datacard, WLLV-SAT 977 (99.9%) – KSWAN, BSNL 45 – ADSL, Wi-max, VSat 27,290 (100%) 4,774 (18%) BSNL Broadband 165 (100%) 0 data card 6,234 (99.7%) 2,243 (36%) Broadband and data card 0 0 Broadband 2,995 (32.67%) 2,802 (30%) Broadband 157 (95%) 21 (12%) RF 4,421 (35%) 800 (7%) BSNL 913 (88%) 95 (9%) BSNL BroadbandWLL 0 0 Broadband 0 0 ADSL 3,062 (90%) 1,646 (49%) BB-1096/ Wireless-454/ Dialup-96

0

335 (1.5%)

GPs with internet Mode of connectivity connectivity

Source: Ministry of Panchayati Raj and the Ministry of Electronics & Information Technology, Government of India, 2012.

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Arunachal Pradesh Assam Bihar Chhattisgarh Goa Gujarat Haryana Himachal Pradesh Jammu &Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Odisha Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttar Pradesh Uttarakhand West Bengal

2

1,779

21,807

Andhra Pradesh

1

475 (2%)

No. of GPs GPs with computers

Sl. No. State

Table 15.1 Status of ICT infrastructure in Gram Panchayats

12th FC BRGF, 11th FC, other state funds 13th FC Central Fund State Fund State fund 13th FC MGNREGA, RGSY BRGF MGNREGS, BRGF, 13th FC, State Funds Panchayat Fund 13th FC, MGNREGS State Funds 13th Finance Commission Fund MGNREGS 13th FC and MGNREGA 13th FC, MGNREGS MGNREGA, BRGF, CARISMA Project State Funds Panchayat Funds – BRGF, RGSY, MGNREGS Fund source not finalised yet BRGF, RGSY, 13th FC

13th and 12th Finance Commission (FC) No funds

Source of funds

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district administration and the people. The services offered through the Gyandoot network include daily agricultural commodity rates (mandibhav), certificates of income, domicile and caste, public grievance redressal, rural Hindi email and BPL family lists. The Government of Karnataka has been among the front-ranking states in adopting and implementing e-governance based solutions for providing better delivery of services and also improving the internal efficiency of state agencies. The distinguishing aspect of the state of Karnataka is that it emphasised improving the governance practices in rural areas and incorporated ICT-based innovations for effective and enhanced delivery of services. The Pancha Tantra online system is one such innovative ICT-based initiative implemented by the GoK and the RDPR to improve the functioning of the Gram Panchayats through an automated process of accounting and budgeting of rural finances and expenditures. The development and maintenance of the Pancha Tantra online system is funded by the Rural Development and Panchayati Raj Department (RDPR) and the Government of Karnataka (GoK) (GoI, 2013, p. 11). The Pancha Tantra online is a user-friendly application with several built-in features and a simplified process flow which assists in maintaining online financial records and monitoring the functioning of the GP, thereby ensuring transparency and accountability. The Pancha Tantra online accounting system enables the government and the citizens to access all the necessary information about the functioning and performance of the GP and ensure timely redressal.

ICT for enhancing participation and transparency The Government of India as well as state governments have launched a number of information technology-related projects which enhance participation, transparency and accountability for the local government. Some of the important projects are the Common Service Centre, Pradhan Mantri Gramin Digital Saksharta Abhiyan, e-Gram Swaraj, Audit Online, etc. which will be discussed in brief. The government initiated the Common Service Centre (CSC) 2.0 scheme in August 2015 to improve accessibility to technology and digital services for citizens in rural and remote areas of the country (GoI, 2016, p. 9). The CSC 2.0 scheme would consolidate service delivery through a universal technology platform, thereby making e-services, particularly G2C services, accessible to citizens anywhere in the country.5 The key stakeholder of the Common Service Centre scheme is the village-level entrepreneur (VLE), as the CSC operators are known. A network of 2.70 lakh VLEs, of which 1.63 lakh are in Gram Panchayats, is actively providing various online public utility and financial services to citizens and quality healthcare, as well as boosting entrepreneurship and employment in villages and smaller towns across the country.6 The Gram Panchayat plays an important role in the selection of VLE as mentioned in the survey conducted on the assessment study of Common Service Centres for the state of Tripura (GoI, 2014, p. 85). To strengthen e-governance in Panchayati Raj Institutions (PRIs) across the country, the Ministry of Panchayati Raj (MoPR) has launched e-Gram Swaraj, a user-friendly web-based portal. This project was launched by the Prime Minister on the occasion of Panchayati Raj Day, 24 April 2020. E-Gram Swaraj aims to bring better transparency to decentralised planning, progress reporting and work-based accounting.7 The Gram Swaraj Portal and application will provide a boost in transparency in the decentralised planning of development projects, with progress reports updates and increased accountability.8 Audit Online is one of the generic and open-source applications developed as a part of the Panchayat Enterprise Suite (PES) under the e-Panchayat Mission Mode Project (MMP) initiated by the Ministry of Panchayati Raj (MoPR). Audit Online facilitates the financial audit of 221

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accounts at all the three levels of Panchayats, viz. district, block and village Panchayats, urban local bodies (ULBs) and line departments by auditors (state AG/LF). The software not only facilitates the online and offline audit of accounts but also acts as a good financial audit tool and improves transparency and accountability.9 Panchayat funds will be audited online using Audit Online, an open-source application which facilitates the online and offline audit of accounts to improve the transparency and accountability of the utilisation of the funds.10 The auditing of 20% of GPs will be carried out on a pilot basis. The accounts of the panchayat for the year 2019–20 have been completed and closed in e-Gram Swaraj (Simplified Work-based Accounting Application for Panchayati Raj)11. The Government of Andhra Pradesh is delivering a number of social services in which ICT has completely revamped the system of payment to the poor. One of the social service schemes is the National Old Age Pension Scheme (NOAPS). With the ageing of the population, old age social security assumes special significance. The scheme also covers widows and people with physical disabilities. Under this scheme, monthly payments to the identified beneficiaries were made by panchayat functionaries (Subhash, 2014, p. 3), which has led to more participation. Ballari district of Karnataka has been very actively promoting Pradhan Mantri Gramin Digital Saksharta Abhiyan across the district. Most of the events held in the district have seen a huge participation (GoI, 2019, p. 33). Some of India’s smallest local self-governance units are taking their first steps towards promoting transparency through digital empowerment and showing how it can help. Two Haryana panchayats – Chandana and Bibipur – both have young, educated, tech-savvy leaders who are willing to make the extra effort to ensure that the digital strategy is meaningful. The idea is to achieve transparency even without being asked for it. These villages processed scanning and uploading nearly 3,000 pages of official documents on the website to maximise the information available in the public domain (Gaur, 2013). Local government institutions have played a pivotal role in the success of Akshaya e-Kendras in the state of Kerala (GoI, 2014). Kerala is the first state in India to take initiative for the mass transformation of ICT by the implementation of the district-wide e-literacy project Akshaya in 2002. By bringing ICT to all segments of people, Akshaya acts as a vehicle for improved quality of life, accessibility to information, transparency in governance and overall socio-economic growth.12

Performance of ICT in Panchayats There are studies on the performance of ICT in Panchayats as well as applicability of e-Panchayats and e-governance and the participation of people in Karnataka, Gujarat,Tamil Nadu and Bihar.These studies of e-Panchayats are still in the initial stage, some showing good performance and others facing issues particularly in the context of the delivery of services transparency and participation of people. In a survey on the application of the National e-Governance Plan (NEGP) in Panchayats in Tiruppur district of Tamil Nadu, it was found that the progress of e-governance in Panchayat Raj is slow because of inadequate training to employees, lack of computer knowledge among employees, limited network and server-related issues (Karpagavalli, 2018). In another study on e-governance in Tamil Nadu, which is based on e-Seva, the findings say that three key constructs (system stability, service reliability and service quality) were used and it is observed that out of the three constructs, service stability and service quality had relatively fewer positive impacts on consumer satisfaction, indicating that the government definitely has to improve in these areas and that the system reliability is better as far as the satisfaction of the consumers (Senthilnathan and Dhayalan, 2019) is concerned. 222

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An empirical study on the e-Gram Vishwagram project13 in Gujarat reveals that visits to the telecentres varied from zero to 120 people annually. These figures are highly fluctuating in nature, and some intermediaries mentioned that sometimes no one comes, and for some services, people visit telecentres during the early part of the month for example to pay the electricity bill. Not all services are available in all villages; some digital intermediaries are only engaged in a number of activities such as acting as a bank correspondent. Private CSCs tend to provide better services. In general, people are seeking only a few services such as paying electricity bills or obtaining rights of records (RoRs). Some mentioned that updating/loading speeds are very slow on government sites. The delivery of services depends on the service demands in a particular Gram Panchayat. And on paper, services are available but differ from what exactly is demanded. The number of daily transactions by the digital intermediaries fluctuated as per the study (Verma, 2017). A study conducted by the Indian School of Business (ISB) for an impact assessment of the Common Service Centre (CSC 2.0) scheme14 on rural communities collecting data from 1,000+ village-level entrepreneurs (VLEs) and 5,000+ citizens (on behalf of the Ministry of Electronics and Information Technology, Govt. of India) across ten Indian states in the four regions reveals that CSCs are acting as gateways for delivery of various services in far-flung areas. It is evident that the usage of CSCs is a cheaper and more convenient option for these citizens than the conventional means for availing services.The study finds that citizens’ experiences with e-governance initiatives are strongly correlated with citizen satisfaction and participation. By incorporating citizen perspectives on ease of transaction, transparency and interactivity, villagelevel entrepreneurs (VLEs) can become meaningful agents of modernisation for public service delivery and governance (ISB, p. 39). The study further mentions that the top services demanded by citizens do not necessarily align with top services offered by the VLEs. A case in example would be the high requirement of banking, education and job services by citizens. Even though there is a demand for these services, they tend to be lower in the supply list of VLEs. This mismatch in supply and demand becomes even more explicit when we split our analysis by the nature of services. Looking at only the G2C service mix offered by the VLEs, pan card and Aadhaar card services do not form substantial contributions to service offerings while other miscellaneous services provide the bulk of services offered. In contrast, a list of the top G2C services utilised by citizens brings up pan card and Aadhaar card applications as constituting the majority of services demanded as we can see from the pie charts for G2C dissonance (ISB, p.40). An empirical study on the Bhoomi15 project in Karnataka shows that cooperation by staff was higher in the case of Bhoomi compared to the manual system. In the same way, ease of mutation and transfer ownership was easier under the Bhoomi system than the manual system of land records. As it was easier under the Bhoomi system to get RTC, the number of occasions where the farmer forwent services/schemes offered by the government was lesser under Bhoomi (Venu, Bhat and Umesh, 2016).This study shows that there was efficiency in the delivery of services, whereas another working paper on Bhoomi published in 2007 mentions that the Bhoomi program has made life much more expensive for the farmer, especially the smaller farmers: corruption has increased with bribe levels increasing many times over. The time to access records for land transactions has also increased manifoldly (Benjamin and Others, 2007). Another empirical study (conducted on 600 respondents in four districts of Karnataka) on the Bhoomi project reveals that transparency is provided by the mutation request procedure, where a queue discipline is forced by the system and citizens know the status of their requests from the queue details. It further mentions that of the users, who had used the earlier manual system and also the Bhoomi system, 78% found Bhoomi to be simpler to use. About 74% of 223

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users of Bhoomi stated that their documents were error-free, whereas 63% said so for the manual system. Twenty-eight percent of respondents had to make more than one trip to the kiosk. The average time spent in the queue was 27 minutes. Three percent of users had to pay a bribe with the new system, as opposed to 66% in the manual system. The overall result of the study shows less corruption and more transparency (Hampesh and Sathish, 2012). Regarding the participation of people, another study of Bhoomi mentions that for the design of the Bhoomi system, none of the stakeholders on the demand side were included in the requirements determination. Many respondents had not even heard of the system until their manual certificates were declared illegal by the state and new Bhoomi RTCs were given to them. The farmers could not participate in the agenda-setting and design exercise for Bhoomi. The entire system was designed and implemented by the supply-side stakeholders such as the Project Champion and the private partners who implemented the system. Village Assistants (VAs) were included in the data digitisation and error removal phase of the project (De, 2006). In 2011, the Bihar government admitted in the state assembly that more than 6,000 Vasudha Kendras set up for e-governance were not “too much useful” because of the failure to link the data centres with the block offices in the state which were just catering to the recharging of coupons for mobile and e-ticketing of rail tickets and no certificates were being issued by these Kendras at that time.16 One study on ICT in Bengal had main findings that The allocation of computers for GPMS is not proper for all Gram Panchayats under Barasat Block-I. In Barasat Block-1, there are 31 computers which are used by all Gram Panchayats and these are totally unevenly distributed among the said Gram Panchayats comprising with their constituency seats strength. So, it is found that computer inability is the one of the reason for lagging of fund upload status in GPMS. (Dutta and Samanta, 2017, pp. 7–8) A study on empowering rural governance through ICT conducted in rural Rajasthan observed that the status of delivery of services via digital media has a satisfactory situation in the rural area as the availability of internet through smartphones has been increased to a large extent. Most of the respondents were well aware of the existence of E-Mitra as a service delivery centre.The most important factor for the effectiveness of Gram Sabha is the participation of citizens in a transparent manner. The respondents were of the view that the most important information that should be available in the public domain is related to works and funds (Jain, Jain and Joshi, 2017, p. 9).

Issues and challenges to ICT for Panchayati Raj Institutions Despite the limitations in basic infrastructure and the low-level penetration of information technology in India, grassroots projects are establishing information systems for the benefit of rural communities (Rao, 2003). Now more and more e-government projects and services are being launched in the villages. E-governance is a big challenge for the government as it is difficult to provide services to all citizens. Because of overpopulation and widespread poverty, it was difficult for governments to provide the required facilities and education. Even geographical factors have separated the communities living in remote places from mainstream society. The implementation costs will depend on current infrastructure availability, the capabilities of supplier and user and the mode of service delivery (whether through the internet or through telephone hotlines and one-stop shops). The cost is proportional to the sophistication of the services offered by the government. 224

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In India, there is still less involvement of people in developing and designing ICT in Panchayats. The position of India has not improved much in terms of e-governance since 2003 even in comparison with other Asian countries like Singapore, China and Sri Lanka as well as in comparison with European nations. The UN acknowledges that huge population, large area and lack of ICT infrastructure are the key reasons behind it. It is a major challenge before the government to implement ICT projects successfully due to existing problems such as lack of awareness, low literacy, poverty, low network bandwidth, etc. There are several issues and challenges in the effective implementation of e-governance projects for Panchayati Raj Institutions in India.

Lack of infrastructure Information and communication technology infrastructure is required to establish e-governance, especially in hilly and far-flung rural areas which lack this infrastructure.The ICT facilities need to be developed and should be available to all the citizens. Internet connection through satellite/telephone lines should be accessible for all, especially to the people in rural and remote areas. A number of villages in the state of Bihar, Rajasthan, Uttar Pradesh, etc. do not have the proper ICT infrastructure for providing services to the people. In the case of the state of Rajasthan, a number of districts like Banswara, Bhilwara, Bikaner, Dungarpur, Jaisalmer are not equipped with internet connection and technology infrastructure. In the state of Rajasthan, there are two types of e-governance centres/projects being run: Atal Mission Kendra, sponsored by the central government and being run by the government; and E-Mitra, managed/controlled by the state government, but mostly being run by the private sectors. The infrastructure for E-Mitra is not good in many villages in the districts of Udaipur, Dungarpur, Banswara, Bhilwara, etc. in the state of Rajasthan, whereas it is good in the districts of Bikaner, Ganganagar, Hanumangarh, etc.

Lack of sufficient funds E-governance projects are, more often than not, long-term endeavours, requiring large capital infusion in software, hardware, infrastructure and training. It has been observed that due to a paucity of funds, the number of ICT centres in rural areas is low As a result, E-Mitra in Rajasthan, Vasudha in Bihar, e-Sevai Centres in Tamil Nadu, Lokvani and Janmitra in Uttar Pradesh, and Sahaj Tathya Mitra Kendra in West Bengal are not able to cope with the emerging demand by the people.

Lack of pro-rural e-government policies There is no pro-poor or pro-rural e-government policy in India (e-governance and rural commerce) which could re-orient relevant government institutes as electronic service providers to boost rural development; only some private sectors like ITC (the e-Choupal project) have initiated ICT-based projects for rural people. E-Choupalis, an initiative of ITC Limited,17 links directly with rural farmers via the internet for procurement of agricultural and aquaculture products like soybeans, wheat, coffee and prawns. E-Choupal tackles the challenges posed by Indian agriculture, characterised by fragmented farms, weak infrastructure and the involvement of intermediaries. The programme installs computers with internet access in rural areas of India to offer farmers up-to-date marketing and agricultural information.18 The question arises of 225

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to what extent private sectors in collaboration with local government are regularly providing services in villages.

Expensive services for the poor Internet access is too expensive for the poor in India. Installing the necessary telephone lines needed for internet or email access is equally unaffordable. The economic divide has made a particular section of the society unable to have information access as they cannot afford it. It has been observed that poverty affects the rural people as they are unable to understand how much money is to be paid for services through e-governance as the middle agents charge too much from these people as observed in the villages of the districts of Banswara, Bhilwara and Dungarpur in Rajasthan.

Problems in access to computers and internet The access facilities mainly comprise computers and connectivity in rural areas. Internet access and computers are expensive for ordinary citizens. They are often available only in urban centres, where most internet service providers have their market. For example:Vasudha Kendra19 in Kharar village in the block of Minapur situated in Muzaffarpur district in Bihar does not have broadband connection as no such facility is available. Internet is accessed through plug-and-play data cards (which are very slow and not reliable). For Sahaj Tathya Mitra Kendra in West Bengal, some areas (coastal, forest, etc.) have poor connection and sometimes electricity facilities are also interrupted in these areas. Therefore, these areas’ centres are used to accessing the internet through data cards where services are very slow and not reliable.

Charging more fees It has been observed that many ICT centres charge more fees from people. For example: people do not need to run for government office and give bribes to work in Vasudha Kendra in Kharar village in the block of Minapur situated in Muzaffarpur district in Bihar. However, people have to pay an extra fee for each service, which is very nominal. But those in charge at Vasudha Kendra take more than the actual fee. It has been observed that extra money has to be paid for the services through e-governance (the E-Mitra project) as the middle agent charges too much from these people as observed in the villages of districts of Banswara, Bhilwara, Dungarpur, etc. in the state of Rajasthan.

Lack of accountability The introduction of information technologies in a fraught and contested context adds more layers (in terms of bureaucracy and middlemen), which rural citizens have to navigate before they can actually attain services (Raman and Bawa, 2011).There is lack of responsibility and accountability for the bureaucrats as most of the ICT projects for Panchayats are being run by private providers or NGOs. For example: Vasudha Kendra in Kharar village in the block of Minapur situated in Muzaffarpur district in Bihar is run by VLEs, who are not government employee. So, there is no such responsibility, accountability and answerability. Instead of being owned by private individuals, it should be owned by the Panchayat. This Vasudha Kendra is not an effective service delivery system. Similarly, administrators are not ready to take responsibility for the 226

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Lokwani project in Gonda district in Uttar Pradesh; the E-Mitra project in Rajasthan; etc. which means there is less accountability in the e-governance system for PRIs.

Lack of local language information products There is lack of suitable information products tailored to the demands of rural people in India. In order to better adjust their investment decisions, people need updated information on market prices, new agricultural technologies and methods to raise quality of their products, adapted to changing climatic conditions or the demands of agricultural markets. Another factor is the high illiteracy rate among rural people which has affected public service delivery. It is believed that more than 80% villagers are not able to understand the language of the e-governance system either due to a technical issue or an English version of the system. It has been observed that there is a problem of local language in the E-Mitra project in Rajasthan, as most of the people are not conversant in the English language and yet the information/services are in English only.

Lack of communication between various e-governance applications There is a lack of communication between various e-governance applications (each application works independently). Therefore the data requirement for each and every application will be separate and it may cause a high volume of redundant data which results in inconsistent data and information. There should be internal communication between various e-governance applications so that space utilisation as well as data inconsistence can be minimised. Those officials and resource persons who are actively involved in a project do not document their experiences and have not been in touch with others (sometimes intentionally). Officials are sometimes transferred which results in loss of documents and the knowledge base of the project. In the state of Rajasthan, two e-governance projects – E-Mitra and Atal Mission Sewa Kendra – have a lack of communication between various e-governance applications as there are a number of hardware and software issues associated with the projects.

Lack of participation Participation of local communities has been important at least in two domains: (a) rural development processes in developing countries and (b) information systems design.The issue of participation becomes especially important in contemporary context in which the use of information and communication technologies (ICTs) is being integrated within rural development initiatives in developing countries, for example in e-governance (Puri and Sahay, 2007).The potential of community networking for development in rural India is an important factor (Blattman, Jensen and Roman, 2003).The people of the villages of many states like Chhatisgarh, Jharkhand, etc. do not participate in the ICT for the Panchayat which means they do not give their views, do not participate in the decision-making, do not play any important role in the formulation of any policy related to e-Panchayat and even do not make any assessment/evaluation of the implementation. This has also been observed in the cases of Sonapar Village in Gonda district in the state of Uttar Pradesh; Vasudha Project in Bihar; E-Mitra in Rajasthan; and Sahaj Tathya Mitra Kendras in the villages of Dongaria Raipur Gram Panchayat in West Bengal, where, additionally, fewer people participate. 227

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Lack of electricity Almost all villages in India are electrically connected, but the issue is for how many hours electricity is provided in a day. Another issue is whether the ICT centres at the Panchayats are electricity connected. Since a village is considered electrified if just 10% of its households have an electricity connection, there is ample scope that many families may not have electricity despite living in an electrified village. The total number of un-electrified villages in India as of 31 May 2015 was 19,706. The percentage of electrified villages in India as a whole as of 31 May 2015 was 96.7%. The ten states/ UTs with the highest number of un-electrified villages as of 31 May 2015 were Rajasthan, Odisha, Jharkhand, Bihar, Arunachal Pradesh, Madhya Pradesh, Uttar Pradesh, Meghalaya, Assam and Chhattisgarh.20 The highest number of un-electrified villages was 3,860 in the state of Odisha.21 As per data on Pradhan Mantri Sahaj Bijli Har Ghar Yojana – Saubhagya – 17.4% of rural households are yet to be electrified despite the achievement of 100% village electrification.22 The Government of India announced 100% electrified villages in India in December, 2018. The government considers a village “electrified” if power cables from the grid reach a transformer in each village and 10% of its households, as well as public places such as schools and health centres, are connected. Many ICT centres particularly in the states of Bihar, Odisha, Rajasthan, etc. face problems for effective delivery of public services due to irregular supply of electricity as Vasudha Kendra in Kharar village in the block of Minapur situated in Muzaffarpur district in Bihar; and E-Mitra in villages of the Rajasthan. Sahaj Tathya Mitra Kendras in the villages of Dongaria Raipur Gram Panchayat in West Bengal are run by private partners which on average provides more than 23 hours of un-interrupted services per day.

Technical illiteracy As most of the information sources across the world are in English, people who are not Englishliterate are likely to be deprived of information. For example: few people can read English in Kharar village in the block of Minapur situated in Muzaffarpur district in Bihar. The education level of people in this village is as follows: in general terms, more than 50% are literate, or primary-educated and secondary-educated. The literacy rate of Kharar is 50%. Most of the elderly people were educated till primary; the younger people with twelfth pass or even higher educational qualification are comparatively better. Even the technical persons who are maintaining as well as providing the services do not have sufficient experience to run the system; no doubt they may have the requisite qualifications, but lack the actual experience as observed for the E-Mitra project in the districts of Banswara, Bhilwara, Dungarpura as well as many tribal areas of Udaipur.

Lack of political will E-governance means less interaction with government servants, which will be helpful in reducing corruption, redtapism, lack of transparency, etc. Nowadays, corruption is a major concern and e-governance can help in bringing transparency in government processes.The strong objections of the government officers also need a careful and wise approach.This task may require an honest and strong willpower of the politicians and leaders. Lack of political stability contributes to sustaining the digital divide whereas lack of government initiatives indirectly helps increase the digital gap.

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It has been observed that many tribal and desert areas, particularly in the state of Rajasthan like the districts of Jaisalmer (desert), Dungarpur (hill), Udaipur (hill), etc., are lacking the political willpower to encourage the people to get services from E-Mitra centres in these places and even not taking any initiative to look into infrastructural, technical and personnel problems. Other important emerging issues are: 1. 2. 3. 4.

whether common people in the Panchayat know the importance of internet how many people are using the ICT at the Panchayat level whether e-governance has helped the citizens obtain proper information whether electricity is regularly available so that people in the villages can use the internet facilities at the kiosk or at home 5. whether there is any need to look into the application of ICT in the Panchayat 6. how far the ICT has led to empowerment and growth in the villages 7. whether citizens are satisfied with the performance of ICT

Conclusions E-Puruskar was introduced in 2011 with an aim to incentivise the better-performing states/ UTs in the implementation of the e-Panchayat Mission Mode Project and use of information and communication technology (ICT) (GoI, 2017, pp. 44–45). Many states such as Gujarat,West Bengal, Karnataka, Kerala, Andhra Pradesh, Madhya Pradesh and Goa have taken e-initiatives at the Panchayat level, but a nation-wide, integrated and holistic approach is required to make a dent in the functioning of Panchayats and thereby improve the livelihoods of people.The e-Panchayat programme hopes to increase people’s participation in decision-making. To improve the functioning of Panchayats in the country, it is imperative that people should be involved in identifying and prioritising projects, programmes, schemes and welfare activities pertaining to them. Increasing investments in ICT is often premised on the assumption that such investments will lead to improvements in productivity and other aspects of development at the organisational and national levels (Samoilenko and Osei-Bryson, 2018). Affordable use of ICTs in India is critical, not just for the mere ability to transact by electronic means, or to improve the delivery of government and business services in isolated rural and disadvantaged communities, but also in meeting the core objective of empowering people through literacy, education, knowledge, employable skills, poverty reduction and wealth creation (NIRD, 2013). Without disturbing the existing services a smooth transition to new automated services is required which will need capable, skilled and experienced navigation. Most of these goals can be accomplished using the public-private-partnership (PPP) model. Significant benefits can be derived from such projects. The key to e-governance is to improve villagers’ access to service delivery, not further expand the role of government. To make e-governance projects financially sustainable, there must be a revenue/cost-reduction model in place from the beginning. Smaller projects with a clear revenue generation strategy and minimal initial investment are the most likely to be sustainable over the long term. It is expected that the ICT in local government will lead to better public service delivery leading to citizens’ satisfaction and nation-building. The future of e-Panchayats is very good, but depends on the interest of the government, citizen participation and effective rules/ regulations as well as how the government implement the policies of ICT for the Panchayati Raj Institutions.

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Notes 1 https​:/​/ww​​w​.fin​​ancia​​lexpr​​ess​.c​​om​/ar​​chive​​/bell​​andur​​-panc​​hayat​​-take​​s​-the​​-it​-r​​oute-​​t​o​-pr​​ogres​​s​/896​​98/. 2 For detail information about various projects and activities, references may be found at www​.infokerala​ .org. 3 http:​/​/neg​​d​.gov​​.in​/w​​r iter​​eadda​​ta​/fi​​les​/C​​ase​%2​​0Stud​​y​%20-​​%20Su​​lekha​​%​2C​%2​​0Kera​​la​.pd​​f. 4 http:​/​/pan​​chaya​​t​.nic​​.in​/d​​ata​/1​​24357​​98563​​46​~Re​​vised​​%20dr​​aft​%2​​0EFC%​​20Mem​​o​%​20o​​n​%20e​​ -PRI.​​pdf. 5 https://csc​.gov​.in​/scheme. 6 https://csc​.gov​.in​/vle. 7 https://egramswaraj​.gov​.in/. 8 https​:/​/ww​​w​.ind​​iatod​​ay​.in​​/info​​r mati​​on​/st​​ory​/e​​-gram​​-swar​​aj​-po​​rtal-​​all​-y​​ou​-ne​​ed​-to​​-kno​w​​-1670​​749​ -2​​020​-0​​4​-24.​ 9 https://auditonline​.gov​.in/​#about. 10 https​:/​/ww​​w​.fin​​ancia​​lexpr​​ess​.c​​om​/ec​​onomy​​/panc​​hayat​​-fund​​s​-to-​​be​-au​​dited​​-onli​​ne​-to​​-brin​​g​-in-​​ trans​​paren​​cy​-an​​d​-acc​​ounta​​bilit​​y​-o​f-​​funds​​-util​​isati​​on​/20​​34780​./ 11 https​:/​/ww​​w​.fin​​ancia​​lexpr​​ess​.c​​om​/ec​​onomy​​/panc​​hayat​​-fund​​s​-to-​​be​-au​​dited​​-onli​​ne​-to​​-brin​​g​-in-​​ trans​​paren​​cy​-an​​d​-acc​​ounta​​bilit​​y​-o​f-​​funds​​-util​​isati​​on​/20​​34780​./ 12 http://www​.akshaya​.kerala​.gov​.in​/about. 13 E-Gram centres have been established in village Panchayats of Gujarat, providing e-services to the rural citizens. 14 CSC 2.0, approved in August 2015, envisioned the establishment of a self-sustaining network of 2.5 lakh CSC centres at the Gram Panchayat (GP) level to deliver various citizen-centric services. The model of CSC 2.0 has been envisaged as a transaction-based and service delivery-based model, delivering a large bouquet of e-services through a single delivery technological platform, which would increase the sustainability of the CSCs across the country. 15 Initiated in 1991, Bhoomi is a project jointly funded by the central and Karnataka state governments to digitise the paper land records and create a software mechanism to control corrections to the land registry in Karnataka. 16 https​:/​/ww​​w​.gov​​ernan​​cenow​​.com/​​amp​.p​​hp​?ne​​ws​_ur​​l​=gov​​-next​/egov​/vasudha​-kend​ras​-not​-too​ -useful. 17 ITC Limited is a multinational private sector company in India. 18 For detailed information: https://echoupal​.com/ and https​:/​/ww​​w​.itc​​porta​​l​.com​​/busi​​nesse​​s​/agr​​i​-bus​​ iness​​/e​-​ch​​oupal​​.aspx​. 19 Vasudha Kendra is managed by village-level entrepreneurs. 20 https​:/​/co​​mmuni​​ty​.da​​ta​.go​​v​.in/​​un​-el​​ectri​​fied-​​villa​​ges​-a​​s​-o​n-​​31​-05​​-2015​/. 21 http://garv​.gov​.in​/dashboard. 22 http:​/​/tim​​esofi​​ndia.​​india​​times​​.com/​​artic​​lesho​​w​/640​​59307​​.cms?​​utm​_s​​ource​​=cont​​entof​​i nter​​est​&utm​ _medium​=te​xt​&utm​_campaign​=cppst.

References Benjamin, Solomon, Bhuvaneswari, R., Rajan, P. and Manjunatha (2007). ‘Bhoomi: ‘E-Governance’ or An Anti-Politics Machine Necessary to Globalize Bangalore?’, A CASUM-m Working Paper, January. Available at: https​:/​/ca​​summ.​​files​​.word​​press​​.com/​​2008/​​09​/bh​​oomi-​​e​-gov​​​ernan​​ce​.pd​f (Accessed: 20 October 2020). Bhatnagar, Subhash (2014).‘Public Service Delivery: Role of Information and Communication Technology in Improving Governance and Development Impact’, ADB Economics Working Paper Series No. 391, March. Philippines: Asian Development Bank. Blattman, Christopher, Jensen, Robert and Roman, Raul (2003). ‘Assessing the Need and Potential of Community Networking for Development in Rural India’, Special Issue: ICTs and Community Networking,The Information Society, 19(5), pp. 349–364. Chandra, D. G. and Malaya, D. B. (2011). ‘ICT Its Role in e-Governance and Rural Development’, in Abraham, A., Lloret, Mauri J., Buford, J. F., Suzuki, J. and Thampi, S. M. (eds.) Advances in Computing and Communications. ACC 2011. Communications in Computer and Information Science, 191. Berlin: Springer. Avilable at: https​:/​/do​​i​.org​​/10​.1​​007​/9​​78​-3-​​642​-​2​​2714-​​1​_23 (Accessed: 20 October 2020). 230

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De, Rahul (2006).‘Evaluation of E-Government Systems: Project Assessment vs Development Assessment’, in Wimmer, M. A., Scholl, H. J., Grönlund, Å. and Andersen, K.V. (eds.) Electronic Government. EGOV 2006. Lecture Notes in Computer Science, 4084. Berlin: Springer. Available at: https​:/​/ci​​tesee​​rx​.is​​ t​.psu​​.edu/​​viewd​​oc​/do​​wnloa​​d​?doi​​=10​.1​​.1​.10​​0​.537​​​5​&rep​=rep1​&type​=pdf (Accessed: 20 October 2020). Dutta, Saikant and Samanta, Pradip Kumar (2017). ‘ICT Based Accounting and Financial System Implementation in Rural Local Self Governments in West Bengal -A Case Study of Barasat Block-1, North 24 Parganas’, International Journal of Research on Social and Natural Sciences, III(1), pp. 1–9. Gaur, Pradeep (2013). Panchayats Take First Step Towards Digital Empowerment. Available at: https​:/​/ww​​w​.liv​​ emint​​.com/​​Polit​​ics​/t​​z5RTC​​RoW8E​​4Ii75​​OyWYu​​I​/Pan​​chaya​​ts​-ta​​ke​-fi​​rst​-s​​teps-​​towar​​ds​-di​​​g ital​​-empo​​ werme​​nt​.ht​​ml (Accessed: 20 October 2020). GoI (2019). Pradhan Mantri Gramin Disha, May. New Delhi: CSC E Governance Services India Limited, Ministry of Communications & Information Technology. Available at: https​:/​/ww​​w​.pmg​​disha​​.in​/w​​ p​-con​​tent/​​uploa​​ds​/20​​19​/07​​/PMGD​​ISHA-​​bookl​​et​_Ma​​​y_​-Fo​​r​-Upl​​oad​.p​​df (Accessed: 20 May 2019). Government of India (2012). Annual Report 2011–2012. New Delhi: Ministry of Panchayati Raj. Government of India (2013). Case Studies on e-Governance in India (2013–2014). Pancha Tantra Online System, National e-Governance Plan. National e-Governance Division, National Institute of Smart Government. Ministry of Communications and Information Technology. Available at: http:​/​/nis​​g​.org​​/ file​​s​/doc​​ument​​s​/UP1​​4183​0​​3700.​​pdf (Accessed: 20 May 2019). Government of India (2014). Assessment Study of Common Service Centres (CSC) in Seven States. New Delhi: Department of Electronics and Information Technology and Hyderabad: Administrative Staff College of India. Available at: https​:/​/me​​ity​.g​​ov​.in​​/writ​​eread​​data/​​files​​/Exec​​utive​​-Summ​​​ary​-C​​IPS​.p​​df (Accessed: 20 May 2019). Government of India (2016). Annual Report 2015–2016. New Delhi: CSC E-Governance Services India Limited, Ministry of Communications & Information Technology. Available at: https​:/​/cs​​c​.gov​​.in​/a​​ssets​​ /even​​ts​-re​​port/​​Annua​​l​_Rep​​or​t​_2​​015​_1​​6​.pdf​ (Accessed: 20 May 2019). Government of India (2017). Annual Report 2016–2017. New Delhi: Ministry of Panchayati Raj. Greenhill, R. (2010). Preface, Global Information Technology Report 2009–2010. World Economic Forum. Available at: https​:/​/ww​​w​.itu​​.int/​​wsis/​​imple​​menta​​tion/​​2010/​​forum​​/gene​​va​/do​​cs​/pu​​blica​​tions​​/ GITR​​%2020​​09​-20​​10​_F​u​​ll​_Re​​port_​​final​​.pdf (Accessed: 20 May 2019). Hampesh, K. S. and Kumar, Sathish (2012). ‘Bhoomi Project as an E-Governance Initiative: A Study of Select Districts in Karnataka’, International Journal of Scientific Research, 1(5). Available at: https​:/​/ww​​w​ .wor​​ldwid​​ejour​​nals.​​com​/i​​ntern​​ation​​al​-jo​​urnal​​-of​-s​​cient​​​ific-​​resea​​rch-(​IJSR)​/rece​nt_is​sues_​pdf/2​012/ O​ctobe​r/Oct​​ober_​​2012_​​13492​​62935​​_dcda​​2​_50.​​pdf_​_​​50​.pd​f (Accessed: 20 October 2020). Indian School of Business. Impact Assessment of Common Service Centres (CSC 2.0) Scheme. ISB Srini Raju Centre for IT and the Networked Economy. Available at: https​:/​/ww​​w​.isb​​.edu/​​conte​​nt​/da​​m​/sit​​es​/is​​b​ /res​​earch​​-thou​​ght​-l​​eader​​ship/​​resea​​rch​-c​​enter​​/srit​​ne​/sr​​itne-​​image​​-repo​​sitor​​y​/CSC​​%202.​​0​_ISB​​_Impa​​ ct​%20​​Asses​​sment​​_Fina​​l​%20R​​ep​ort​​_Oct%​​2010_​​2018.​​pdf​.c​​oredo​​wnloa​​d​.pdf​ (Accessed: 20 May 2019). Jain, Neelu, Jain, Anubha and Joshi, Umesh (2017). ‘Empowering Rural Governance through ICT with Special Reference to Rural Rajasthan’, International Journal of Advance Science and Research, 3(1), pp. 7–9 . Karpagavalli, V. (2018). ‘November. NEGP in Panchayat—An Overview with Reference to Tiruppur District’, ICTACT Journal on Management Studies, 4(4). Available at: http:​/​/ict​​actjo​​urnal​​s​.in/​​paper​​/IJMS​​ _Vol_​​4​_Iss​​_4​_Pa​​per​_8​​​_874_​​877​.p​​df (Accessed: 20 October 2020). Mathur, Akshay and Ambani, Dhirubhai (2005). ‘ICT and Rural Societies: Opportunities for Growth’, International Information & Library Review, 37(4), pp. 345–351. National Institute of Rural Development (2013). e-Connectivity of Panchayats, Research Report Series 97, March. Hyderabad: NIRD. Prakash, Amit (2016). ‘E-Governance and Public Service Delivery at the Grassroots: A Study of ICT Use in Health and Nutrition Programs in India’, Information Technology for Development, 22(2), pp. 306–319. Raman, Bhuvaneswari and Bawa, Zainab (2011). ‘Interacting with the State via Information and Communication Technologies: The Case of Nemmadi Kendras in Karnataka’, Media Asia, 38(1), pp. 52–64. Rao, Siriginidi Subba (2003). ‘Information Systems in Indian Rural Communities’, Journal of Computer Information Systems, 44(1), pp. 48–56. Samoilenko, Sergey and Osei-Bryson, Kweku-Muata (2018). ‘An Analytical Framework for Exploring Context-Specific Micro-Economic Impacts of ICT Capabilities’, Information Technology for Development, 24(4), pp. 633–657. 231

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Satish, K. Puri and Sahay, Sundeep (2007). ‘Role of ICTs in Participatory Development: An Indian Experience’, Information Technology for Development, 13(2), pp. 133–160. Senthilnathan, C. R. and Dhayalan,V. (2019). ‘November. E-Governance Through e-Seva in Tamil Nadu’, International Journal of Engineering and Advanced Technology, 8(6S3). Available at: https​:/​/ww​​w​.ije​​at​.or​​g​/ wp-​​conte​​nt​/up​​loads​​/pape​​rs​/v8​​i6S3/​​F12​42​​0986S​​319​.p​​df (Accessed: 20 October 2020). Shirin, Madon, Sahay, Sundeep and Sudan, Randeep (2007).‘E-Government Policy and Health Information Systems Implementation in Andhra Pradesh, India: Need for Articulation of Linkages Between the Macro and the Micro’, The Information Society, 23, pp. 327–344. Sodhi, Inderjeet Singh (2007). ‘Role of Information Technology and E-Governance in Effective Delivery of Public Service—Initiatives, Challenges and Prospects’, Indian Journal of Public Administration, LIII(4), pp. 808–818. Sodhi, Inderjeet Singh (2013). ‘ICT Policy for Basic Education in Tanzania: Challenges, Strategies and Prospects’, International Journal of Information Communication Technologies and Human Development, 5(4), pp. 20–29. Sodhi, Inderjeet Singh (2015a). ‘Application of Information Technology to Global Financial Crisis: Policy Response and Reforms in India’, International Journal of Public Administration in the Digital Age, 2(1), pp. 56–74. Sodhi, Inderjeet Singh (2015b). ‘E-Government in Central Africa: Issues and Challenges’, in Sodhi, Inderjeet Singh (ed.) Emerging Issues and Prospects in African E-Government. Hershey, PA: IGI Global. Sodhi, Inderjeet Singh (2016). ‘E-Government in China: Status, Challenges and Progress’, in Sodhi, Inderjeet Singh (ed.) Trends, Prospects and Challenges in Asian E-Governance. Hershey, PA: IGI Global. Venu, B. N., Bhat, Sripadha and Umesh, K. B. (2016). ‘Impact of ICT on Agriculture: Evidences from Bhoomi Project in Karnataka State of India’, International Journal of Mathematics and Computer Applications Research, 6(2). Available at: http:​/​/www​​.tjpr​​c​.org​​/publ​​ishpa​​pers/​​2​-45-​​14655​​52665​​-9.​%2​​0IJMC​​AR​ %20​-​%20I​​MPACT​​%20OF​​%20IC​​T​%20O​​N​%20A​​GRICU​​LTURE​​%20EV​​IDE​NC​​ES​%20​​FROM%​​ 20BHO​​OMI​.p​​df (Accessed: 20 October 2020). Verma, Ravinder Kumar (2017). Sustainability of Digital Intermediaries in Rural Development: A Case Study of E-Gram Vishwagram Project of Gujarat, India. Available at: https​:/​/ww​​w​.cpr​​south​​.org/​​wp​-co​​ntent​​/uplo​​ ads​/2​​017​/0​​8​/Rav​​inder​​-Kuma​​r​​-Ver​​ma​_pa​​per​.p​​df (Accessed: 20 October 2020).

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Part 4

Decentralised urban governance

16 Decentralised governance in urban areas Problems and prospects from a socio-historical perspective1 N. Jayaram

The basic postulate of all democratic dispensations is that people are the real source of power and not hierarchical levels of government. Indeed, many of the problems which assail the decentralisation process arise from the flawed perspective that it is a descending cascade of power from the centre to the states and from the states to the local bodies. But decentralisation is not merely an administrative expedient nor a rearrangement of the financial domain; in essence it moves a people, and thus a society, towards multi-level governance. – K. C. Sivaramakrishnan (2000, p. 240) With urban centres becoming the prime locus of economic development, their governance has attracted the attention of scholars and policymakers alike. In India, decentralised governance of urban areas has been a neglected subject, and whatever little discussion that we have has generally flowed out of the Constitution 74th Amendment Act, 1992, which got the president’s assent on 20 April 1993 and came into force with its gazette notification on 1 June 1993. This chapter traces the idea and practise of urban governance from a socio-historical perspective. It starts with a discussion on the establishment of urban governance institutions in the form of municipalities in the colonial era and the changes this institution underwent in the post-independence period up to the enactment of the 74th Amendment in 1992. It then examines the nature and trends in the decentralised urban governance since the implementation of this amendment in 1993. The thrust of this chapter is on the disjunction between the objectives of the 74th Amendment and the reality of urban governance as has become evident during the last 25 years. Besides the structure and functioning of urban local bodies, this chapter examines such issues as their funding and their relationship with the state government. It will also reflect on the relationship between urbanisation and urban governance and the scope for citizen participation in urban governance. Overall, it reflects on the problems and prospects of urban governance in contemporary India.

Urban governance in the colonial era In India, local government has a long past, but a short history. Scholars tracing its ancient past mention the articulations of the Hindu law-giver Manu (c. 200 BCE) and Kautilya (also known DOI: 10.4324/9780429321887-16

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as Chanakya, c. 350–275 BCE), the Indian statesman and philosopher and the Prime Minister of Emperor Chandragupta, the first ruler of the Mauryan Empire. The Pallavas and the Cholas in the Classical Age, and the Delhi Sultanate, the Marathas and the Mughals in the Medieval Period had introduced administrative machinery for local governance (see Singh, 2009, pp. 195–199. However, the modern form of local government in the country had its origin during British rule. Its foundations were laid ignoring the indigenous institutions which had long served the country. As far back as 1687, on the orders of the Directors of the East India Company, a corporation consisting of English and Indian members was formed in Madras (now Chennai), for the purpose of local taxation. This corporation was superseded by the Charter of 1726. In Calcutta (now Kolkata), Warren Hastings, the then Governor General-in-Council enacted a set of regulations in 1780 to perfect the municipal administration of the town. By the Act of 1852, the Calcutta Municipal Commissioners were declared a body corporate (Misra, 1959). In Bombay (now Mumbai), the Act of 1845 established an executive body called the Board of Conservancy (Coupland, 1943). Thus, through various administrative formulations, the municipalities in the colonial era came to share similarities across presidency towns: ‘A limited electorate, a strong executive in the hands of a government official, certain safeguards for control over finance and auditing of accounts, and statutory provisions for such works as sanitation, water supply, etc.’ (Singh, 2009, p. 205). However, ‘there was no real self-governance in the municipalities and government control was maintained over them in many respects’ (ibid, p. 205). The law governing these municipalities classified their functions as obligatory or discretionary; a classification that has been a legacy in urban governance in the post-independence period. Public health (water supply, drainage, refuse collection and disposal, and registration of births and deaths), medical relief (establishment of hospitals and dispensaries), public works (construction and maintenance of roads, and street-lighting), and education (establishment and maintenance of schools and libraries) were minimum obligatory functions. Town planning and area development were discretionary functions. Overall, there was a general recognition that a municipality or corporation was in charge of the town or the city (Venkatarangaiah and Pattabhiram, 1969). The nature and functioning of the municipalities in the princely states were also significantly influenced by those in presidency towns. As early as 1862, a municipal committee was constituted in Bangalore (now Bengaluru). The princely states of Jaipur and Indore established municipalities in their capitals in 1868; Hyderabad, in 1869; Baroda, in 1877; Jodhpur, in 1884; Gwalior, in 1887; Bikaner, in 1889 and Travancore, in 1900. In most of these municipalities, the members were nominated by the state, though non-officials too were included among them. ‘Local self-government was nowhere introduced save in Mysore’ (Singh, 2009, p. 209). The first major attempt at reform of urban governance by the British colonial regime was to classify the extension of towns and the development of new areas within a town as a separate set of functions in urban governance.These functions, hitherto performed by the municipalities, were entrusted to ‘improvement trusts’. Although these trusts were established as self-financing bodies, a share of the municipal revenue was made available to them for the development of the town/city. Hugh Tinker (1967) remarks that the ‘improvement trusts’ were set up because the municipalities, being over politicised, were regarded as incapable of performing the task of town/city improvement consistently and objectively. The first such Improvement Trust was set up in Bombay in 1898. This trust took up many reclamation schemes and organised several small islands into Greater Bombay. The next one to be set up was in Calcutta in 1911. This trust was responsible for the planning and execution of several projects for the extension and improvement of the city. Soon, these trusts were given 236

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separate taxation powers. The practice of including representatives from the corporation in the trusts and, reciprocally, the chairperson of the trust as a member of the corporation, provided for the symbiosis in urban governance. The concept of ‘improvement trust’ was later implemented in the development of other cities like Kanpur, Lucknow, Madras, and Mysore. It is important to note that the Calcutta Improvement Trust Act, 1911 was based largely on the Housing of the Working Classes Act, 1890 of Great Britain. The concept of ‘improvement trust’ became an important part of urban development programmes in the post-independence period.

Urban governance since independence On attaining independence, India inherited the urban local bodies as a colonial legacy. In due course, legislative enactments were made to suit their organisation and functioning to the federal structure of the republican Constitution that came to be adopted on 26 January 1950. It must be mentioned, however, that urban local government has always been peripheral to the concerns of the central government. In fact, it was only in September 1985, in recognition of the importance of urban issues, that a separate Ministry of Urban Development came into existence; until then the Ministry of Works, Housing and Supply, constituted in May 1952, looked after urban issues. Since its inception, this ministry has undergone several bifurcations, mergers, and renaming, and is now known as the Ministry of Housing and Urban Affairs. This is the apex authority of the Government of India at the national level to (i) formulate policies relating to housing and urban development in the country, (ii) sponsor, support, and monitor programmes therefor and (iii) coordinate the activities of various central ministries, state governments, and nodal authorities in the area. More importantly, local governance as a subject was regarded as the state governments’ responsibility and the central government would act on issues related to it only through the state governments. However, a Central Council of Local Self-Government was established in 1970 as an inter-state body under Article 263 of the Constitution. This council met about once a year under the chairpersonship of the Minister of Works and Housing. The agenda for the meeting usually focused on ‘routine matters like municipal budget, property taxation, etc.’ (Sivaramakrishnan, 2000, p. 12). It was only after the All-India Council of Mayors joined the council meetings that issues such as ‘supersession of elected local bodies and ensuring autonomy and resources for municipalities’ (ibid, p. 12) were discussed and resolutions passed. These resolutions were routinely circulated among the state governments, but the Ministry of Urban Development did not champion the cause of local self-government. As regards generating knowledge on urban governance, the Ministry of Urban Development, which was instituted in 1985, depended on institutions such as the Indian Institute of Public Administration and the National Institute of Urban Affairs. The former set up centres for municipal and urban studies in Calcutta, Delhi, Hyderabad and Lucknow. These two institutes primarily focused on issues such as the extent and dynamics of urbanisation, land development, urban development schemes, and urban poverty alleviation.The Indian Institute of Public Administration conducted courses and workshops on municipal budgetary reforms, municipal personnel management, etc., for municipal officials. Surprisingly, the general body of the National Institute of Urban Affairs did not have representatives from municipalities. In addition, the Ministry of Urban Development (now Ministry of Housing and Urban Affairs) has two other institutions under its aegis: The Town and Country Planning Organisation, which is devoted to the technical aspects of town planning, and the Housing and Urban Development Corporation Limited (popularly known as HUDCO), a public sector enterprise which provides finance for setting up of new towns and consultancy services to housing and urban development projects. 237

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As K. C. Sivaramakrishnan points out, just like the Ministry, all these organisations steered clear of ‘the core issues of local self-government, such as municipal elections, municipal autonomy, urban governance, etc.’ (ibid, pp. 12–13). Viewed in this context, the Nagarpalika Sammelans (conference of urban local bodies), which were held as a prelude to the 74th Amendment to the Constitution, came as ‘a dramatic challenge to the Ministry of Urban Development to focus attention on the critical issues of urban self-governance’ (ibid, p. 13). It is important to mention here that the colonial concept of ‘improvement trust’ was part of urban development in the post-independence period, too. In fact, it was the precursor to the concept of ‘development authority’ that came into existence later. The justification for establishing development authorities in metropolitan cities was that acquisition and development of land for the expansion of the city, as different from the governance of the city, is an entrepreneurial venture. But, gradually, many obligatory functions such as water supply, electricity supply, etc. were also entrusted to special autonomous bodies. For this, ‘the scale of the need, technical expertise required, magnitude of investment, need for distinct cost recovery measures, etc.’ (ibid, p. 131) were cited as reasons. The establishment of such autonomous bodies was also advocated by international funding organisations such as the World Bank and World Health Organisation. The establishment of special autonomous bodies to take care of functions originally performed by municipal bodies was not without its problems. These parastatal bodies came to be afflicted with the same maladies –corruption, unresponsiveness, political interference, lack of accountability, financial mismanagement, etc. – as the municipalities and corporations. Also, there was no symbiotic relationship between the municipalities or corporations and the autonomous parastatal bodies. On the one hand, taking land development away from the purview of the municipal body deprived it of an important source of revenue. On the other hand, the municipal bodies resented having to shoulder the loan liability for schemes in which they had not been involved. These concerns were voiced by representatives of municipal bodies participating in various Nagarpalika Sammelans preceding the drafting of the 74th Constitutional Amendment. The All India Council of Mayors had also made out a strong case of clear listing of the functions, responsibilities and resources of the municipalities and corporations.

The 74th Amendment: The turning point in decentralised governance In the annals of urban governance, the 74th Amendment to the Constitution, which came into effect on 1 June 1993, is a major landmark.2 This amendment sought to redefine urban dwellers as the true basis of state authority in urban areas and granted them some power to determine the destiny and course of development of the areas they dwell in. This amendment warranted the states to enact conformity legislation within one year of its notification. The response of the states was, in most cases, half-hearted. As many as 20 states rushed through the conformity laws just before the end of the one-year limit. Also, the process of enactment of the conformity laws was not based on a serious analysis of local issues. Thus, except in a few cases, the conformity laws merely repeated the provisions of the 74th Amendment. A review of the conformity laws enacted by the states reveals ‘much ambivalence and lack of enthusiasm on the part of many states; very few have been willing to seize the opportunity which the amendment provided for long-pending reforms in municipal law’, observes Sivaramakrishnan (ibid, p. 89). The consequences of this are visible in the way decentralisation has been implemented for urban governance in most states. 238

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Size of the urban area and the classification of urban bodies Not all urban areas are of the same size and, hence, not all urban governments can be of the same type in terms of their functions and functioning. Anticipating this, the 74th Amendment provided for three types of urban governments: •• •• ••

Municipal Corporations, for larger urban areas; Municipal Councils, for smaller urban areas; and Nagar Panchayats, for rural–urban transitional areas.3

According to the Thirteenth Finance Commission, there were 3,842 urban local bodies, of which 139 were Municipal Corporations, 1,595 Municipal Councils, and 2,108 Nagar Panchayats (Government of India, 2009, p. 426). The amendment listed some broad criteria such as population and population density of the area, the revenue generated by it, and the employment of its population in non-agricultural activities. The states were left to define the details of these and other criteria. Thus, there are variations in the way urban governments are actually defined and constituted in different states.4 All the same, all the three types of urban local bodies enjoy autonomy, though the municipal corporation enjoys greater autonomy than the other two. It also deals directly with the state government, whereas the other two have to access state government through the District Collector and Divisional Commissioner and Director of Local Bodies (Golandaz, 1995).

Composition of urban local bodies Urban bodies are mainly constituted by the elected representatives of their respective jurisdictional areas. The provisions governing elections to the urban local bodies are more or less uniform across the states, mainly because of the provision for a State Election Commission (SEC) (under Article 243K of the Constitution) which has been institutionalised by the conformity legislation. The fact that the SEC is an independent statutory authority implies that it is expected to play an axial role in democratising urban local bodies by holding periodical elections. As a constitutionally recognised body, the SEC, by and large, follows the procedures and practices of the Central Election Commission. Although, in theory, the SECs are autonomous, their actual functioning is to a considerable extent influenced by the politics of the state as also the relation between state and the central governments and the relation between the governor of the state and the state government. This is especially the case if the parties in power at the centre and the state are different or antagonistic.There are, no doubt, cases of assertive SECs. For instance, Sivaramakrishnan (2000, pp. 94–95) cites the 1977 case of the Odisha SEC objecting in the high court the state seeking the postponement of the local body elections.5 In some states, a provision is made for co-opting persons with special knowledge and experience in urban administration as members of the urban local bodies. But the membership of Members of Parliament and Members of Legislative Assembly in the urban local bodies has been a vexatious issue. Those against it argue that it is contrary to the spirit of the 74th Amendment, which established the urban local bodies as the third tier of governance. But those favouring it feel that it would create a feeling of participation in local governance among them. States seem to have responded to this differently, some allowing for their full participation, and others allowing their participation without voting rights. The 74th Amendment provides for the reservation of seats for scheduled castes, scheduled tribes and women in the urban local bodies. For the scheduled castes and scheduled tribes, the 239

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reservation is proportional to their population; reservation of seats for the Other Backward Classes is not uniform across states. Reservation of seats has enabled the representation of the relevant categories in urban governance. Unlike in the case of Panchayats, the election of candidates under reservation in the urban bodies has not resulted in any major incidence of social violence. It is important to note that many urban local bodies are headed by a woman. The reservation of the position of chairperson in the urban local bodies and the rotation of this position have yet to be resolved satisfactorily; different states have followed different policies. Sivaramakrishnan observes that the impact of the politics of reservations ‘is more likely to be more divisive and contentious in matters of municipal leadership rather than in the composition as a whole of municipalities’ (ibid, p. 124).

The functional domain of urban local bodies Sivaramakrishnan’s comparative analysis of the functional domain of nagarpalikas (see Sivaramakrishnan, 2000: Table 7.2, pp. 146–155) shows vast inter-state differences in the way various states have addressed the functional issues related to urban governance. Except for the states of Kerala, Tamil Nadu and West Bengal, the functional domain remains an unresolved issue in most states. Some states even include ‘a peculiar provision in their municipal legislation stipulating that specific functions may be assigned to the local governments by the state government from time to time, thereby precluding unambiguous assignment’ (Ahluwalia, 2019, p. 84). Sivaramakrishnan (2000) attributes the failure to address the functional domain to the inhibition and bureaucratic reluctance in many states. As a consequence, most states have let go of the opportunity to address this domain provided by the setting up of the state finance commissions.

The financial domain of urban local bodies Efficient urban governance is built on the availability of funds. However, most local bodies seem to be on the verge of financial bankruptcy (see Mohanty, 2016). The financial crisis facing urban local bodies is not a new phenomenon. Even during the colonial era, the municipalities faced a financial crunch. Soon after independence, the financial problems of urban local bodies were examined extensively by the Local Finance Enquiry Committee of 1950, the Taxation Enquiry Commission during 1953–1955 and the Committee for Augmentation of Financial Resources of Urban Local Bodies (popularly known as Zakaria Committee) of 1963.The Zakaria Committee emphasised that ‘Unless local bodies are given proper attention, it will not be possible to look at urban areas in their proper setting in the country’s political and economic life’ (Central Council of Local Self-Government, 1965, p. 10). In 1983, the Planning Commission’s Task Force on Housing and Urban Development, Shelter for the Urban Poor, and Slum Improvement, headed by Raja Chellaiah, found that ‘local expenditures as a percentage of all expenditures by the Central, State and local governments had fallen to a mere 4.5 percent in 1980–81 as compared to 8 percent in 1960–61’ (Sivaramakrishnan, 2000, p. 161). It observed that assets created by the state governments were transferred to the municipal bodies for maintenance without adequate financial support. More importantly, the report drew attention to ‘the gradual usurpation of local functions by state governments, the ad hoc and unpredictable nature of devolutions depending on the vagaries of the state budget and the total denial to local bodies of access to capital markets’ (ibid, p. 161). Although the idea of municipal finance commissions to periodically review municipal finances and the scope of using devolutions as an instrument for improving them was mooted by the Chellaiah Task Force Report, and reiterated by the 8th, 9th and 10th Finance Commissions 240

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set up by the Government of India, nothing substantial has resulted. In their NITI Aayog Blog, Sanghi, Priyadarshini and Singh (no date) write, The Tenth Finance Commission was the first to recommend grants for rural and urban local bodies. The Thirteenth Finance Commission recommended allocation of Rs. 23,111 crores to ULBs [Urban Local Bodies] with the aim of strengthening municipal finances and urban governance in India. Taking this forward, the Fourteenth Finance Commission awarded total grants of Rs. 87,144 crores to Urban Local Bodies in all States/UTsas Basic Grant (80 percent) and Performance Grant (20 percent) which linked to ULBs increase in revenues, ensuring audit of accounts and notification of Service Level Improvement Plans in respect of basic services. (Sanghi, Priyadarshini and Singh, no date) It is worth noting that a few states have established a Municipal Finance Commission, but as a one-time arrangement. Gujarat is perhaps the sole exception; it established a Municipal Finance Board in 1979 ‘to make grants and loans to urban local bodies out of the allocation of entertainment tax and to recommend measures to improve the financial position’ (Sivaramakrishnan, 2000, pp. 168–169). Since allocation from the Central Government meets only a part of the ever-mounting revenue deficits of the municipal bodies, mainly due to increased pay and allowances, they need to mobilise resources from alternative sources. Accessing the capital market has been one such alternative. For instance, the Ahmedabad Municipal Corporation, in a first such initiative, floated a bond of Rs. 100 crores in the 1990s; it even obtained an ‘AA’ credit rating from Credit Rating Information and Services Limited. Since then, credit rating has been obtained by several other cities like Bengaluru, Kolkata, Mumbai, Pune, Surat and Vijayawada. Recent NITI Aayog data reveals that 94 cities in 14 states have received credit ratings as preparation for issuing municipal bonds (Sanghi, Priyadarshini and Singh, no date). More than the credit itself, the credit rating is helpful in maintaining transparency and standards in account keeping. Public subscription to municipal bonds also implies citizen ownership of city governance. Another alternative explored by metropolitan cities like Bengaluru, Chennai and Pune, as well as small towns like Rajkot and Tirupur, is the arrangements their municipal bodies have made to secure the partnership from the private sector in providing services to the city dwellers. The scope of such a partnership ranges from the operation and maintenance of water supply treatment plants to the construction and maintenance of roads and bridges. On the one hand, this is a move away from total dependence on the public exchequer in running the city administration, and on the other hand, it shows that urban dwellers are willing to pay for the services they get. It is expected that suitable organisational and financial arrangements to strengthen such partnerships will be put in place. The inadequacy of funds for development and maintenance works has been a long-standing complaint of urban local bodies. The repeated recommendation of the finance commission reports that some portion of state revenue must go to the local bodies has not been taken seriously by the state governments. The lack of financial devolution apart, the urban local bodies lack financial autonomy both in mobilising resources and in fixing user charges to cover costs (see Panagariya, 2014). Of course, there has also been inefficiency in collecting the existing taxes. For example, Archana Ghosh of the Institute of Social Studies, Kolkata points out, that though the city limits of Kolkata were expanded in 1984 – from 100 wards to 141 wards – the new areas have never been taxed to date. The proposal to introduce area-based property tax in the city wherein the 241

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tax would be assessed as per real estate value has been successfully opposed by the councillors of the local government, she says (cited in Moyna, 2015). Sujatha Srinivasan of the Institute of Financial Management and Research, Chennai, notes that municipal property assets like land, building, and advertising space are grossly underutilised. Citing a 2007 World Bank report, she says, finances raised through land leases contribute between 50 and 100 percent of municipal infrastructure investment in several urban local bodies globally. But, in India, this hardly amounts to 30–40 percent of the revenue of urban local bodies (cited in Moyna, 2015). In a survey she conducted in Tamil Nadu in 2009–2010, Srinivasan found that the land, buildings, and civil structure assets amount to 34 percent of the total assets in Chennai, 68 percent in Madurai, and 60 percent in Erode. She clarifies that the data on collection shows variations. She quotes the Tamil Nadu State Finance Commission’s report for 2006 which observes that ‘Building complexes constructed by municipal bodies are kept idle for want of lessee or occupier refuses to make payment’ (quoted in Moyna, 2015). The report had also commented that revenue is not collected properly. Ironically, some states are unable to utilise the funds allocated for special programmes of urban development. For example, Karnataka has spent less than 1 percent of the total allocation for seven cities chosen under the Prime Minister’s Smart Cities Mission formally launched in 2015. Seven cities in the state – Bengaluru, Belagavi, Davanagere, Hubballi-Dharwad, Shivamogga, Mangaluru, and Tumakuru – were chosen to receive Rs. 5,000 crores each from the centre and the state under this Mission. Of the 6,462 crores allotted to these cities, only projects worth Rs. 30.97 crores have been completed according to the Urban Development Department. Two cities – Bengaluru and Mangaluru – are yet to complete a single project (Joshi, 2019, p. 1).

The Member of Parliament Local Area Development Scheme Another source of funding for urban development comes from the Member of Parliament Local Area Development Scheme (MPLADS). Introduced in 1993, this scheme was intended to enable the Members of Parliament (MPs) to recommend small works of developmental nature for the creation of durable community assets – for example, drinking water, primary education, public health, sanitation, roads, etc. – to be taken up in their constituencies. Under this scheme, each MP is allotted a sum of Rs. 5 crores6 to be spent on their constituencies through the District Collector as provided in the guidelines (see Government of India, 2016). It could be argued, as Sivaramakrishnan (2000, p. 198) suggests, that since MPs are not a part of the executive and almost all items of works financed are essentially of a local nature and not in the Union List, the whole arrangement is legally untenable. Furthermore, since the funds under the scheme are spent at the discretion of MPs, and outside the statutory budgetary and financial procedures of the government, it may even be considered as extra-constitutional and amounting to diversion of public funds to private control (see Kaushiki, 2011).7As contributions to urban development, the funds under this scheme bypass the urban local bodies. The MPLADS has been criticised for various deficiencies and irregularities in its implementation. As early as 1998, the Comptroller and Auditor General of India had adversely commented upon it. The implementation lapses were also pointed out by the Standing Committee on Finance in 1998–1999 and the then Planning Commission.Without addressing these issues, the amount under the scheme was raised twice.8 Besides, this Scheme has been extended to Members of Legislative Assemblies in many states. Obviously, this 242

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‘discretionary scheme is in glaring contrast to decentralisation and local autonomy’, opines Sivaramakrishnan (2000, p. 198).

Urban local body vis-à-vis the state government The declared objective of decentralised urban governance under the 74th Amendment is to transfer power to the people. One issue that has for long remained contested in this regard is the degree of control to be exercised by a state government over its urban local bodies. Entry 5 of the State List in the Seventh Schedule of the Constitution of India gives legislative power to the states with regard to municipalities. Since state governments have shown proclivity to abuse this power, the idea of these bodies as cradles of urban democracy has often been derailed. Most states have interfered in the functioning of these bodies in the name of efficiency, propriety, and financial discipline. The tendency on the part of the state government to bypass the local bodies has been discussed earlier. What is most harmful has been the frequency and long period of supersession of various urban local bodies.9 Elections to urban local bodies have not been held regularly in some states and not held at all in others on some pretext or the other. In the case of the latter, an administrator appointed by the state government takes over the reins of the local body in the interregnum.10 And, in quite a few cases, the high courts and even the Supreme Court have been approached to direct the State Election Commissions to hold elections.11 Unlike Grama Panchayats, in some states elections to urban local bodies are contested on political party lines. Obviously, the party in power in the state government would be hesitant to hold elections to the urban local bodies if it is not confident of winning.This has been observed in many states, which seem to have no constitutionally valid reason not to hold periodical elections to the urban local bodies.

Urbanisation and governance12 India has been experiencing rapid urbanisation. Over the century, especially after independence, the level of urbanisation13 has steadily increased: From 17.29 percent in 1951 to 19.91 percent in 1971 to 25.71 percent in 1991 to 31.16 percent in 2011. What is noteworthy, for the first time since independence, the absolute increase in population is more in urban areas than in rural areas (see Jayaram, 2017, pp. 5–6). The pace at which India will urbanise in the 21st century is mind-boggling: In an assessment done in July 2010. McKinsey and Company noted Urban expansion in India will happen at a speed quite unlike anything the country or the world has seen before. It took nearly 40 years (from 1971 to 2008) for India’s urban population to rise by nearly 230 million; it will take only half that time to add the next 250 million. This expansion will affect almost every state. For the first time in India’s history, five of its largest states will have more of their population living in cities than in villages (McKinsey and Company, 2010) The World Bank report titled ‘Leveraging Urbanization in India’ observes ‘Difficulty in dealing with the pressures urban populations put on infrastructure, basic services, land, housing and the environment lie at the heart of the relative lack of liveability of [Indian] cities’, fostering ‘messy and hidden’ urbanisation (The World Bank, 2015, p. 1). That India’s urbanisation is ‘messy’ is 243

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reflected in the fact that almost 65.5 million of its people live in urban slums, according to the 2011 Census, and that 13.7 percent of the urban population lives below the poverty line (ibid.: 1). That there is considerable ‘hidden’ urbanisation in India is revealed by the difference in the share of the country’s population ‘living in areas with urban-like features’ (in 2010, it was 55.3 percent) as per the Agglomeration Index14 and that is enumerated by the Census (in 2011, it was 31.16). The World Bank report observes that, for major cities like Delhi, Mumbai, Hyderabad and Kolkata, population growth has been fastest on their peripheries in areas beyond their official administrative boundaries. This is reflected in a large growth differential between the districts in which the cities are located and some of the immediately neighbouring districts. (ibid, p. 2) For example, while decadal population growth for Delhi was 1.9 percent per year between 2001 and 2011, that for the adjacent district of Gautam Budh Nagar15 was 4.1 percent per year. Furthermore, seven of the country’s Million Plus cities – Mumbai, Delhi, Bengaluru, Kolkata, Chennai, Hyderabad and Ahmedabad – dominate its economic landscape. However, between 1998 and 2005, employment in the manufacturing sector within 10 km of the centre of these cities declined by 16 percent; in their immediate peripheries, it increased by almost 12 percent (ibid, p. 2). It must be noted that much of this urbanisation has been due to the urban-ward migration of the rural population in search of livelihood and better prospects of life in urban centres. The urban centres have been the growth engines, not in the secondary sector of manufacturing, but in the tertiary sector, which includes real estate, construction services, and entertainment. The growth in ‘This sector has been all too visible as a magnet for migration’, but ‘the absorption of the migrant into the urban economy and society has been a continuing challenge’, and ‘city governments have no role to play in this regard’ (Sivaramakrishnan, 2015, p. 19). Viewed from this perspective, the breakdown of the urban local bodies by the sheer weight of unregulated urbanisation is a prospect that policymakers must dread. Of course, not all cities are of the same size, both in area and population, and their problems are of varying magnitudes. But in terms of urban governance (or lack of it), they are all moving in the same direction.

Conclusion: Whither citizen participation in urban governance? In a democratic setup, the urban local bodies are ultimately accountable to urban citizens who are their real source of power. It is true that citizens elect their representatives to the urban local bodies, if and when elections are held. We should not, however, conflate democracy with election, regardless of how important election may be as an institution for citizen representation in governance bodies. There is, no doubt, provision for them to express their displeasure about the contesting candidates by casting their vote in favour of ‘none of the above’, popularly known as NOTA. But, formally, that is where their participation ends. Incidentally, in India, under the Representation of People Act, 1951 there is no provision for recall of the representative, that is, citizens do not have the power to remove the elected representatives before the expiry of their usual term; they have no power to de-elect their representatives.16 Thus, it is observed in most urban centres that the existing organisational arrangements preclude any effective participation of the people in urban governance, and as such, the urban local bodies remain unaccountable to them. The provision of Ward Committees in the 74th Amendment was, in fact, designed to meet this need. Ward Committees, it was expected, would operate at the neighbourhood community level, thereby bringing the people closer to their 244

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representatives in the local bodies. This was also an avenue for people to voice their concerns to their representatives and demand accountability on the latter’s part. The ward committee can, thus, be viewed as the urban counterpart of the village Panchayat. Given the flexibility that the law afforded the state governments in regard to the constitution of ward committees, the idea of citizen participation has been interpreted and implemented variously by the states. In Karnataka, after years of struggle by citizen activists, the Bruhat Bengaluru Mahanagara Palike (known popularly in its abbreviated form BBMP)17 set up 198 ward committees (BBMP, no date).18 Of these, about 60 ward committees have begun to meet on the first Saturday of every month since December 2018.19 As emphasised by Srinivas Alavilli, co-founder of Citizens for Bengaluru, who has been spearheading the campaign forward committees, ‘ward committees are the closest forms of “government” to citizens’.The myriad problems of Bengaluru cannot be fixed without getting its citizens’ welfare associations involved; ‘there is a far better chance of success when the issues are raised and resolved locally’ (Deccan Herald, Bengaluru, 10 February 2019). Given the enduring disconnect between most elected representatives and their voters, even at the ward level, people’s scepticism about this initiative is understandable. It is noteworthy that the cause of ward committees for citizen participation has been advanced by a civil society organisation, Citizens for Civic Amenities, in partnership with a local daily, the Deccan Herald (Bengaluru).This seems to emphasise the importance of civil society organisations and the Fourth Estate in promoting people’s participation in urban governance to realise the objective of the 74th Amendment to the Constitution.

Notes 1 This chapter is inspired by the discussions that I had with the late Shri K. C. Sivaramakrishnan (1935– 2015) during the Third Shimla Retreat on ‘The Social Dynamics of the Urban’, jointly organised by the Indian Institute of Advanced Study (Shimla), School of Advanced Studies, University of London and South Asian Studies Council, Yale University at Shimla 10–11 June 2013 which I had the privilege to convene. Described by Pratap Banu Mehta as ‘God’s own civil servant’ (Mehta, 2015), Shri Sivaramakrishnan was an administrator-cum-scholar who, besides serving as secretary in the Ministry of Urban Development, was involved in drafting the legislation to amend the Constitution to provide a framework for decentralisation and empower rural and urban local bodies. The present chapter, which derives from his thoughts and publications – especially, Power to the People? The Politics and Progress of Decentralisation (2000) and Governance of Megacities: Fractured Thinking, Fragmented Setup (2015) – is dedicated to his memory. 2 For a discussion on the process and politics underlying the formulation, enactment, and implementation of the 74th Amendment of the Constitution, see Sivaramakrishnan (2000). Sivaramakrishnan was closely associated with the amendment exercise since 1989. 3 Besides channelising the urban growth impulses in rural–urban transitional areas, the Nagar Panchayats are expected to bring some order in their growth and provision of services. 4 Thus, in its conformity legislation, the Government of Karnataka reconstituted its urban local bodies mainly on the basis of population as follows: (i) Town Panchayats (10,000–20,000), (ii) Town Municipal Council (20,000–50,000), (iii) City Municipal Council (50,000–3,00,000) and (iv) City Corporation (>30,00,000). Additionally, it identified Notified Area Committees for specified areas, like industrial areas, for the provision of municipal services. As in July 2019, there were 90 Town Panchayats, 116 Town Municipal Councils, 58 City Municipalities, 10 City Corporations and 4 Notified Area Committees in Karnataka (see Directorate of Municipal Administration, no date) 5 Similar assertion is noticed in the disqualification by the Kerala SEC of more than 15,000 elected representatives to Panchayats for non-submission of accounts of election expenses (Sivaramakrishnan, 2000, p. 94). 6 In 1993–1994, when the scheme was launched, this amount was Rs 5 lakhs per annum per Member of Parliament. It was raised to Rs 1 crore in the financial year 1994–1995; to Rs 2 crores, in 1998–1999; and to Rs 5 crores from the financial year 2011–2012 (Government of India, 2016, p. 1). 245

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7 Legislation for such appropriation of government spending for localised projects, solely or primarily for the representative’s district, is called ‘Pork-barrel legislation’ in scholarly parlance on American politics (Johnson, 2005). 8 See note 6. 9 The Bombay Corporation Act, 1888, is an exception, as it does not contain a provision for supersession. In the 1970s, the Government of Maharashtra introduced such a provision, but withdrew in response to the popular outcry against it. 10 Ramakrishnan (2019) discusses the resulting imbroglio in Tamil Nadu. Sivaramakrishnan (2000, p. 218) cites the case of Hyderabad in erstwhile Andhra Pradesh where the local body was under supersession for twenty-two years at a stretch. 11 In Pranoy Roy v. State of West Bengal and Others (Writ Petition No. 6063[W] of 2015), the Chief Justice Dr Manjula Chellur and Joymala Bagchi of the High Court at Calcutta ruled, on 16 April 2015, that the decision of [the State] Commission, not to hold elections to the seven urban local bodies … is illegal… [The] Commission is directed to forthwith initiate steps for holding elections to the seven excluded urban local bodies. The entire election process be completed within two months from date in accordance with the procedure contemplated. Pranoy Roy v State of West Bengal and Others (2015). Similarly, in 2015, the Supreme Court of India turned down the Karnataka State’s plea for more time to hold elections and directed the Karnataka SEC to hold elections to BBMP. 12 This section draws from my analysis of the nature of India’s urbanisation (see Jayaram, 2017). 13 The level of urbanisation is defined as the percentage of the total population living in urban areas. 14 The Agglomeration Index is claimed to be a globally applicable alternative measure of urban concentration based on three factors: Population density, the population of ‘large’ city centre and travel time to that large city centre (see Uchida and Nelson, 2010). This index is expected to be useful in cross-country comparative and aggregated analysis, especially considering the absence of a standardised definition of ‘urban’. 15 Gautam Budh Nagar, located east of Delhi, is a largely suburban district of Uttar Pradesh. It is part of the National Capital Region. Greater Noida is the district administrative headquarters. 16 The notable exception to this being the provision of recall of elected representatives of local bodies in the states of Chhattisgarh, Madhya Pradesh and Rajasthan (see https​:/​/bl​​og​.ip​​leade​​rs​.in​​/righ​​t​-to​-​​recal​​ l/ [accessed on 11 March 2019]). 17 BBMP is the urban local body responsible for civic amenities and infrastructural assets of the Greater Bengaluru metropolitan area. It is the fourth largest municipal corporation in the country, responsible for a population of about 7 million (BBMP). Considering that it is an unwieldy and inadequate body to handle the civic affairs of such a vast city, four years ago, the Karnataka government had proposed to amend the Karnataka Municipal Corporation Act to reconstitute the BBMP into two or more corporations. In July 2019, the government decided to withdraw the bill (DH News Service, 2019a). 18 These ward committees were formed following the order of the Karnataka High Court in a litigation spearheaded by the civic society organisation Citizens for Bengaluru. 19 On 14 July 2019, the Citizens for Bengaluru honoured 51 elected representatives of BBMP with Namma Samiti Puraskara (Our Ward Committee Award) for holding at least four meetings in the last six months (DH News Service, 2019b, p. 2).

References Ahluwalia, Isher Judge (2019). ‘Urban Governance in India’, Journal of Urban Affairs, 41(1), pp. 83–102. Available at: https​:/​/do​​i​.org​​/10​.1​​080​/0​​73521​​66​.20​​​16​.12​​71614​ (Accessed: 14 July 2019). Bruhat Bengaluru Mahanagara Palike (BBMP) (n.d.). Available at: http://bbmp​.gov​.in​/en​/home (Accessed: 14 July 2019). Central Council of Local Self-Government (1965). Augmentation of Financial Resources of Urban Local Bodies: Report of the Committee of Ministers Constituted by the Central Council of Local Self Government, November 1963. New Delhi: Manager of Publications, Government of India.

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Coupland, Reginald (1943). The Indian Problem, 1833–1935: The First Part of a Report on the Constitutional Problem in India Submitted to the Warden and Fellows of Nuffield College, Oxford. London: Oxford University Press. DH (Deccan Herald) News Service (2019a).‘State U-turn Over Splitting Civic Body; Bill to be Withdrawn’, Deccan Herald (Bengaluru), 12 July, p. 2. DH (Deccan Herald) News Service (2019b). ‘Corporators Win Awards for Regular Ward Panel Meetings’, Deccan Herald (Bengaluru), 15 July, p. 2. Directorate of Municipal Administration, Karnataka (n.d.). Available at: http://Municipaladmn​.gov​.in (Accessed: 17 July 2019). Golandaz, H. M. (1995). ‘Seventy-fourth Constitutional Amendment Act and Conformity Municipal Legislation in Gujarat and Maharashtra’, Urban India, 15(1), pp. 151–159. Government of India (2009). Thirteenth Finance Commission, 2010–2015 (Volume I: Report), December. Available at: https​:/​/ww​​w​.prs​​india​​.org/​​uploa​​ds​/me​​dia​/1​​3fina​​nceco​​mmiss​​ionfu​​​llrep​​ort​.p​​df (Accessed: 7 July 2019). Government of India (2016). Guidelines on Members of Parliament Local Area Development Scheme (MPLADS). New Delhi: Ministry of Statistics and Programme Implementation, Government of India. Available at: https​:/​/ww​​w​.mpl​​ads​.g​​ov​.in​​/mpla​​ds​/De​​​fault​​.aspx​ (Accessed: 5 July 2019). Jayaram, N. (2017). ‘Introduction: Towards Understanding the Social Dynamics of the Urban’, in Jayaram, N. (ed.) Social Dynamics of the Urban: Studies from India. New Delhi: Springer Nature, pp. 1–14. Johnson, Paul M. (2005). A Glossary of Political Economy Terms. Auburn, AL: Department of Political Science, Auburn University. Available at: http:​/​/web​​home.​​aubur​​n​.edu​/​~joh​​nspm/​​gloss​​/pork​​-barr​​el​_​le​​gisla​​tion (Accessed: 5 July 2019). Joshi, Bharath (2019). ‘State Trips on Smart Cities: Karnataka Spends Just 1% of Allocated Funds in PM’s Pet Plan’, Deccan Herald (Bengaluru), 6 June, pp. 1 and 5. Kaushiki (2011). ‘Do We Need the MPLAD Scheme’, The PRS Blog, 9 March. Available at: https​:/​/ww​​w​ .prs​​india​​.org/​​thepr​​sblog​​/do​-w​​e​-nee​​d​-​mpl​​ad​-sc​​heme (Accessed: 5 July 2019). McKinsey and Company (2010).‘India’s Urbanization: A Closer Look’, McKinsey Quarterly, July. Available at: http:​/​/www​​.mcki​​nsey.​​com​/g​​lobal​​-them​​es​/ur​​baniz​​ation​​/indi​​as​-ur​​baniz​​ation​​​-a​-cl​​oser-​​look (Accessed: 11 October 2016). Mehta, Pratap Banu (2015). ‘K. C. Sivaramakrishnan: God’s Own Civil Servant’, The Indian Express, 29 May. Available at: https​:/​/in​​diane​​xpres​​s​.com​​/arti​​cle​/o​​pinio​​n​/col​​umns/​​k​-c​-s​​ivara​​makri​​shnan​​-gods​​-​own-​​ civil​​-serv​​ant/ (Accessed: 10 July 2019). Misra, B. B. (1959). The Central Administration of the East India Company (1773–1834). Manchester: Manchester University Press. Mohanty, P. K. (2016). Financing Cities in India: Municipal Reforms, Fiscal Accountability and Urban Infrastructure. New Delhi: SAGE India. Moyna (2015). ‘20 Years Down the Line What Ails the Urban Local Bodies: Law of Money, Capacity and States’ Unwillingness to Cede Power’, Down to Earth, 4 July. Available at: https​:/​/ww​​w​.dow​​ntoea​​ rth​.o​​rg​.in​​/news​​/20​-y​​ears-​​down-​​the​-l​​ine​-w​​hat​-a​​ils​-t​​he​-ur​​b​an​-l​​ocal-​​bodie​​s​-383​​43 (Accessed: 6 July 2019). Panagariya, A. (2014). ‘Space, Services and the State’, in Burdett, R., Rode, P., Shankar, P.and Vahidy, S. (eds.) Governing Urban Futures. London: LSE Cities, pp. 39–40. Pranoy Roy vs State of West Bengal and Others (2015). Available at: https://indiankanoon​.org​/doc​ /198968678/ (Accessed: 6 July 2019). Ramakrishnan,T. (2019).‘No Substitute for Local Governance’, The Hindu, 27 January. Available at: https​:/​/ ww​​w​.the​​hindu​​.com/​​news/​​natio​​nal​/t​​amil-​​nadu/​​no​-su​​bstit​​ute​-f​​or​-lo​​cal​-g​​overn​​ance/​​​artic​​le261​​02040​​ .ece (Accessed: 6 July 2019). Sanghi, Sunita, Priyadarshini, Jaya and Singh, Manshi (n.d.). ‘Financially Empowering Municipalities: Way Forward’, NITI (National Institution for Transforming India) Aayog, Government of India. Available at: https​ :/​/ni​​ti​.go​​v​.in/​​conte​​nt​/fi​​nanci​​ally-​​empow​​ering​​-muni​​cipal​​itie​s​​-way-​​forwa​​rd (Accessed: 7 July 2019). Singh, Udai Bhan (2009). Decentralized Democratic Governance in New Millennium. New Delhi: Concept Publishing Company. Sivaramakrishnan, K. C. (2000). Power to the People? The Politics and Progress of Decentralisation. New Delhi: Centre for Policy Research and Konark Publishers. Sivaramakrishnan, K. C. (2015). Governance of Megacities: Fractured Thinking, Fragmented Setup. New Delhi: Oxford University Press.

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The World Bank (2015). Leveraging Urbanization in India, 24 September. Available at: http:​/​/www​​.worl​​ dbank​​.org/​​en​/co​​untry​​/indi​​a​/bri​​ef​/le​​verag​​ing​-u​​rba​ni​​zatio​​n​-ind​​ia (Accessed: 10 October 2016). Tinker, Hugh (1967). Foundation of Local Self Government in India, Pakistan and Burma. Bombay: Lalwani Publishing. Uchida, Hirotsugu and Nelson, Andrew (2010). Agglomeration Index: Towards a New Measure of Urban Concentration. Working Paper No. 2010/29. UNU–WIDER (United Nations University–World Institute for Development Economics Research). Available at: http://www​.rrojasdatabank​.info​.2010– 29​.p​df (Accessed: 11 October 2016). Venkatarangaiah, M. and Pattabhiram, M. (eds.) (1969). Local Government in India. New Delhi: Allied Publishers.

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17 Urban local governance Revisiting the fundamentals Amita Bhide

Introduction This chapter engages with the question of why the issue of urban decentralisation and the implementation of the 74th Constitutional Amendment (CAA) remains such a vexed issue. The unwillingness of the central government to share resources with state governments is matched by the unwillingness of state governments to devolve funds, functionaries and functions to the urban local governments, despite several attempts at reform. At a juncture where the country – which was recognised as a land of villages – is now transiting towards a predominantly urban economy and demography, the stance towards urban governance remains unclear and chaotic. I take this situation as a diagnostic and suggest that there are two basic flaws in our approach to decentralisation.The first is a confusing approach to urban local governance and hence a need to revisit some of the fundamental propositions involved in precepts of decentralisation. These fundamentals involve revisiting each of the terms in the acronym ULBs – i.e., ideas of ‘local’, ‘urban’ and ‘bodies’ conceptually and in terms of their practice. The second is the imposition of a homogenised framework of urban governance. Based on a few cases, I further argue that the dynamics behind urban and decentralisation in India are evolving and yet to be understood fully, but that a homogenous framework of decentralisation may not be suitable for the variegated nature of ‘urban’ in the country. Instead, one may need to understand the historical trajectory of city governance in India and approach autonomy for cities as a political project in ‘process’, and cities as in the process of ‘becoming’ along multiple domains and spaces, as suggested by Bulkeley et al. (2018) and McFarlane (2011). The conventional approach has been to approach local spaces as being nested within larger networks; as ‘self-enclosed political [territories] within a nested hierarchy of geographical arenas contained within each other like so many Russian dolls’ (Brenner, Jessop and Jones, 2003, p. 1). In such an approach, the issue of autonomy for cities becomes a straight zero-sum game where decisions about who delegates/devolves what power to what degree at the local level are involved. However, such an approach fails to recognise that political authority and authority are being significantly reconfigured in recent years (Sassen,2002), and that ‘political spaces are increasingly rhizomatic, interconnected and interwoven relational becomings’ (McFarlane, 2011). This points to the fact that the governance of cities cannot just be a matter of downward DOI: 10.4324/9780429321887-17

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devolution and that cities may be engaged in multiple and intersecting forms of autonomy. The challenge, then, for state-initiated autonomy projects is to create space for such multiple forms to coexist. The chapter is organised as follows – the first section traces the colonial and post-colonial legacies of urban decentralisation and governance. The second section discusses the framework of the 74th CAA and its status 25 years later. The third section discusses the actual state of decentralisation with examples of two critical functions, i.e., control of land use, planning and urban poverty alleviation to illustrate the ways in which local autonomy is being shaped. The next section discusses the fundamentals of urban, local and government and the need to revisit them, following the framework of autonomy discussed above. The penultimate section discusses the approach to decentralisation, while the final section concludes with a discussion of what autonomy for Indian cities may involve.

Colonial and post-colonial legacy The colonial era is often considered to be the ‘long 19th century’, given the significant influence that the era had and continues to have on several aspects of social, economic and political life in India. Urban governance is a domain which is highly influenced by the colonial legacy. The colonial legacy itself is not a linear narrative, but rather a story that illustrates a variegated trajectory.The first local governments were initiated in 1793 in the presidency towns of Madras, Kolkata and Bombay as charter governments that had taxation powers. Lord Mayo, in 1870, moved proposals for local governments but this was subordinate to the tapping of local sources of revenue and of affecting the local economy by decentralised administration (Nath, 2015). In contrast to this, Lord Ripon’s resolution in 1882 allotted definitive functions to local governments; he also introduced the principle of self-government through non-official chairman/ mayor and a few elected representatives, though the franchise was limited to the propertied and in some cases, enlightened1 class. The difference in approach of Lord Mayo and Lord Ripon towards local governments is a debate that still resonates in a democratic versus techno-bureaucratic approach to the issue. Another colonial legacy that lives on is the subordination of local governments to state (then provincial) governments that was introduced via the Government of India and subsequent acts after 1919. Urban local governments were initiated as self-governments with a limited franchise which was gradually expanded after the 1920s, as pointed out by Hayness and Rao (2013). This divide between property taxpayers as the real ‘citizenry’ and those out of its net as ‘non-citizens’ also persists amidst the universalisation of franchise and an increasing importance of the electoral realm in all levels of socio-eco-material life in urban areas in various ways, most importantly the conditional and differential access to services (Bhide, 2016) creating a tension along another axis, i.e., efficiency and equity; a coupling of which is taken for granted (Beard, Miraftab and Silver, 2008). Another feature of the colonial legacy is the differential landscape of legislation governing local governments. As a result, while some cities have laws that establish the sanctity of the municipal institutions, others are relatively weak; legislation also differs in the overall composition of the general bodies and the relative powers of the elected wing and bureaucratic wing. The post-colonial era saw the continuation of several colonial legacies, i.e., (i) the differential landscape of laws pertaining to municipal institutions (ii) the continuation of basic functions and resources of urban local governments as in the past and (iii) the subordination of local governments to state governments. The extension of the adult franchise with the growing importance of electoral democracy and the creation of several parallel governing institutions operating in the same jurisdictions were two new features introduced in this period. The cumulative impact 250

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of these aspects was a progressive disempowerment of urban local governments.While representation became more democratic, the ability of these governments to do justice to the democratised aspirations was severely constrained. In several cases, elections to these bodies became a subject of political manoeuvring;2 elected bodies were suspended for years together. Functions, resources were in any case a matter of decision making by the state governments since the municipal institutions were ‘ultra vires’ i.e., creations of and drawing from the superior body. Some of the municipal governments in states such as Maharashtra, Gujarat were relatively strong in terms of resources and other capacities as a continuation of past legal and administrative legacies. However, an increasing role of state governments in local affairs was seen in these states too. Clearly, the approach was to see urban local governments as nested within the state’s realm and to approach power as a zero-sum game. By the 1980s, the state of urban governance became an increasingly fragmented landscape with divided responsibilities and accountability while the state of services reinforced the divides in the city between the formal and informal. It was in this context that the 74th Constitutional Amendment was introduced.

74th CAA 25 years later The 74th Constitutional Amendment is one of the most transformative sets of reforms in urban governance. Its ambition was not just to give a legitimate place for municipal institutions but also to create capacitated and democratic institutions which would work to change the inequalities in cities and take steps towards sustainability. The 12th Schedule, thus, created a legitimate place for local governments, the creation of election commissions and widening of representation (through the reservation to SC/ST and women and creation of ward committees) was aimed at democratisation; the charting of functions envisaged the shift towards qualitative democratisation and environmental consciousness by including social and economic development, urban poverty alleviation, protection of weaker sections, urban forestry and preparation of an environmental status report in the essential functions to be undertaken by this third stratum of urban governments. Finally, state finance commissions were a mechanism instituted to capacitate the local governments. The 74th CAA, thus, was a project of autonomy initiated from the top and directed downward. However, it also conceptualised the city as not just a local space nested within the state which required recognition but one that was part of other regional networks; the institution of district planning committees (DPCs) and metropolitan planning committees (MPCs) were steps in this direction. A review of changes in municipal laws, the actual implementation of the 74th CAA framework and the state of municipal institutions is highly instructive. It reveals that the most significant change brought in by the amendment is the evolution of a more uniform structure of municipal institutions in all states. Regular elections3 and the constitution of elected bodies based on reservations in seats is now an almost universally adopted principle. The adherence to the amendment framework starts deviating from this point onwards.Thus, some states (West Bengal) have adopted deepening of decentralisation through ward committees in all urban areas instead of the stipulated mark of cities above 3,00,000 population while others (Maharashtra) have completely dodged it by forming wards committees instead of a ward committee.The functions listed in the 12th Schedule have been incorporated in some form or the other by all states but their status is highly variable. For example, Odisha has incorporated these functions as a special list while keeping its earlier list of obligatory and discretionary functions intact.These special functions are expected to be handed over to urban local governments subject to their capacity to take them over while they continue to be performed by the state government in the meantime. In many other states, functions have 251

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been handed over partially. In almost all cases, state finance commissions have been formed but the implementation of their recommendations, their alignment with the overall objective of decentralisation, and the effective transfer of resources to local institutions remain highly incomplete. While rural decentralisation is plagued with multiple issues, it has received more academic and analytical attention. There are however very few efforts to systematically measure the extent of urban decentralisation. Bagchi and Chattopadhyay (2004) prepared an urban devolution index based on seven parameters – (i) the number of elections held after the passage of the Constitution; (ii) constitution of state finance commissions (SFC); (iii) promptness in implementation of SFC recommendations; (iv) progressiveness in the devolution of functions; (v) constitution of District Planning Committee (DPC); (vi) constitution of Metropolitan Planning Committee; and (vii) financial index of decentralisation. This devolution index, which gives priority to financial decentralisation through the weights assigned, finds the states that performed relatively well were Andhra Pradesh, Odisha, Haryana, Maharashtra and Rajasthan. However, this approach has also been critiqued for its lack of attention to the actual transfer of functions (Chaubey, 2003). There have been some efforts to make states more compliant with the 74th Constitutional Amendment. This has been done by the central government via a system of financial incentives plus conditions attached to such incentives.The most prominent of these efforts is the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) which explicitly declared that one of its objectives was to create effective decentralisation. JNNURM insisted that cities that would-be recipients of funds via the mission would be compliant with the 74th CAA. States and cities were to, thus, sign memorandums of association (MoAs) and give undertakings to this effect. Programme evaluations of JNNURM (Grant Thornton, 2011) indicate that out of 25 states reviewed, only eight states had transferred the 12th Schedule functions to urban local bodies, while one state i.e., Rajasthan did so after the JNNURM. However, in most states, such devolution continued to be partial. A detailed status is given in Table 17.2. While Table 17.2 indicates that several states have begun the actual task of transfer of functions to urban local governments, studies indicate that JNNURM also generated a Table 17.1 An index of urban devolution* State

a

b

c

d

e

f

g

Comprehensive score

Andhra Pradesh (AP) Assam Gujarat Haryana Himachal Pradesh(HP) Karnataka Kerala Madhya Pradesh(MP) Maharashtra Odisha Punjab Rajasthan Tamil Nadu Uttar Pradesh(UP) West Bengal

2 1 2 2 1 1 2 2 1 2 1 2 1 2 2

2 1 1 2 1 2 2 2 2 1 1 2 2 2 2

5 5 0 0 5 3 4 4 1 4 4 5 5 3 4

0 9 2

0 1 1 0 1 1 1 1 1 1 0 1 1

NA NA 0 NA NA 1 1 NA 0 0 NA 0 1

1

1

0.24 0.02 0.56 0.07 0.02 0.11 0.08 0.11 2.26 0.06 0.29 0.27 0.46 0.12 0.45

0.200 0.138 0.147 0.200 0.154 0.146 0.147 0.163 0.170 0.181 0.165 0.185 0.148 0.155 0.148

4 3 5 3 1 0 4 0 5 4 5

Source: Bagchi and Chattopadhyay (2004, p. 5255) * For more details on methodology, kindly refer to the original paper cited here.

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Gujarat, Assam, HP, Chhattisgarh , MP, Maharashtra , Tamil Nadu, West Bengal

Transfer of city planning

Source: Adapted from Grant and Thornton (2011, pp. 80–81).

Transfer of water MP, Gujarat, Bihar, UP supply and Chhattisgarh , Haryana, sanitation Maharashtra , HP, Punjab, Tamil Nadu, West Bengal

AP, Karnataka

Chhattisgarh, Maharashtra, Tamil Nadu, Karnataka, West Bengal, MP, AP, Gujarat, Odisha, Assam, Bihar, HP, Kerala, Rajasthan

Formation of DPC

Formation of MPC

Chhattisgarh, MP, Gujarat, HP, Uttarakhand, Kerala, Maharashtra, Jharkhand, Manipur, Bihar, Tripura, West Nagaland, Punjab, Bengal Haryana, AP, Arunachal Pradesh, Mizoram, J&K West Bengal Maharashtra, Gujarat

Transfer of XII Schedule functions

Post JNNURM

Pre JNNURM

Item

Uttarakhand, Manipur, Nagaland, Punjab, Haryana, Tripura, Arunachal Pradesh, UP, Mizoram, J&K Chandigarh, Uttarakhand, Manipur, Kerala, Puducherry, Sikkim, Tripura, Arunachal Pradesh Bihar J&K, Rajasthan Uttarakhand, AP, Kerala, Odisha, Rajasthan, Sikkim, Tripura, Arunachal Pradesh, Assam, Mizoram, J&K

MP, TamilNadu, AP, Karnataka, Rajasthan, Mizoram, Punjab

Tamil Nadu, Odisha, Assam, Karnataka, Rajasthan, UP

In progress

Table 17.2 Status of implementation of decentralisation reforms post JNNURM

Meghalaya, Nagaland, Jharkhand, Punjab, Odisha, Haryana Mizoram Uttar Pradesh Delhi Manipur, Meghalaya, Nagaland, Jharkhand, Karnataka Delhi

Jharkhand, Sikkim

Jharkhand, Haryana, UP

Not done

HP, Uttarakhand, Manipur, Meghalaya, Nagaland, Chhattisgarh, Kerala, Odisha, Arunachal Pradesh, Assam, J&K, Mizoram, Sikkim, Tripura Meghalaya

Meghalaya

NA

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more complex scenario where state governments shifted their role trajectory from being executors to being directors deploying strategic control or where the municipal corporations were unleashed into a path of debt markets and bankruptcy (Maringanti, 2012; Nath, 2015; Bhide, 2017). The contemporary scenario of urban governance at the city/town level is highly complex and hence we analyse the experience of two diverse functions to illustrate the actual nature of what devolution involves, the emerging complexity of governance arrangements and their outcomes and contemplate what autonomy or decentralisation would mean in relation to these contexts.

The actual state of devolution Land-use planning and building control Land-use planning and building controls are instituted to ensure public health, safety, welfare and the environment (Ley, 2000). Land-use planning involves the spatial planning of a town. This is an important function as it provides the basis for current and future provisioning of space for critical infrastructure needs such as roads, water supply, drainage for the local population. Such provisioning requires a long-range view, it also mandates an extension of the geographical limits of a town/city. The capacities required for executing this function are the presence of planners at the city level, the institution of procedures that give sanctity to the plan, a legal backup to undertake required actions. Most importantly it also requires the availability of resources to back up the plan and the ability to enforce compliance of all construction and other developmental activity in compliance with the plan. Regulation of building is closely associated with land-use planning. Building activity is frequently in the private domain and regulation of the same requires an interface with the municipal institutions for permissions, approvals and penal mechanisms for violation of the same. The first is a strategic function while the other is a routine function that complements the former. Conventionally, the regulation of building is a function performed by many municipal bodies; on the other hand, land-use planning is usually done by state planning directorates – an expert body or by development authorities, which prepare plans and these are then approved by the city councils/corporations with a final stamp of approval by the state governments. The constitutional amendment included this as a 12th Schedule function perhaps in recognition of the critical role played by land as a resource in urban development and the need to integrate land-use planning with the regulation of building control. Post the 74th CAA, several states included both land-use planning and building control as functions of local governments in the compliance legislation but failed to actually transfer the land-use planning to local governments. Various reasons are cited for unwillingness to transfer this function. These range from lack of capacity in local governments to undertake planning to the narrowness of interests at a local level which may undermine public interest. This approach does not give any space to local governments as entities that are ‘becoming’ and, hence, can develop capacities, which are assumed as either present or absent. Preparation of plans by a state-level authority often means plans not being prepared in time, and a non-appreciation of local needs with due gravity. Further, many states have prepared standardised building controls for application across various classes of towns with their enforcement left to the municipal bodies. Such frameworks do not recognise the diversity of terrains, nature and scale of construction activity within and across towns. Kumar and Pushplata (2017) argue that such homogenised and uniform frameworks are 254

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inadequate to deal with diverse local conditions and lead to unsustainable built environments. Such plans and building codes are then delegated to municipal governments for enforcement. The delay in preparation of land-use plans and extensions to land boundaries results in the shortage of land and overcrowding, the rigidity and irrelevance of codes result in high transactional costs in producing a rule compliant regime.Very few towns have planning officers, thereby compelling one to approach officers at a district level. The outcomes are informality in the creation of residential and industrial neighbourhoods, unauthorised layouts and construction. Nair (2013), while tracing transformations in Bangalore’s built environment, discusses how expanding the ruling regime is accompanied by regularisation and accommodation of the informal. Bhide (2014) discusses how, in Maharashtra, municipal governments become part of a ‘land grab’ regime in which private lands are plotted, sold and developed without permission – flouting planning and building control regulations to form settlements called gunthewaris. While land development networks operate outside the law, municipal governments do not engage in effective penal action. This is a result of multiple factors – low numbers of personnel and a lack of tools to track such developments in their early stage; the necessity to coordinate with several agencies such as police (who are under the command of the collector or district magistrate) to undertake penal actions and the system of incentives – and. risks associated with undertaking actions that encourage looking the other way. In such localities, pressures from the political wing and relationships between the deeply embedded bureaucracy and local communities direct the system towards providing services such as water, sanitation to the settlements and, thereby, help them to sustain and grow. As informality grows, the regularisation of such neighbourhoods itself becomes a significant economic enterprise. Evidently, the divided accountability created by such a vertical division of roles facilitates the emergence and spread of informality. The fragmentation of authority and accountability is a deterrent for realising the full potential of land resources as a source of revenue for local governments. The division of the two functions, thus, enables the sustenance of a political economy of informality that has roots at the local level but also operates at the state level. In the case of large cities, the state governments often look at land as a course of revenue for themselves. The Government of Maharashtra, thus, earns significant revenue from premiums on redevelopment schemes in Mumbai.These obviously are factors that shape the unwillingness to transfer the control on land. Autonomy, in the case of land-use planning and building regulation, has been approached as a zero-sum game with state governments clearly unwilling not just to devolve planning at the local level, but also rulemaking as seen in the creation of standardised building control rules across the state. The emergent complexity is one in which there are two projects of autonomy that intersect and overlap. The first, in which the state government and the local government interact to produce delayed plans, standardised building control rules and enforce these lackadaisically. The other, a project that operates through networks involving officials and non-officials, links lands in and outside the city, develops them informally and brings them into occupation and uses the local government to provide services. The bifurcation of land-use planning and regulation of building control, the centralisation at the state level have produced a system that is neither responsive to local building needs; nor gives the local governments any incentives to produce a rule and plan compliant regime. Instead, private rent-seeking is encouraged at multiple levels, producing a political economy that is becoming more entrenched and expansive by the day. Autonomy, thus, involves not just the transfer of the function but the transfer of capacity, of space to take timely decisions and allowing towns and cities to grow differently, appropriate to their growth. 255

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Poverty alleviation It is now being recognised that urbanisation in India is also associated with the urbanisation of poverty. This has resulted in a plethora of urban poverty alleviation schemes, beginning in the mid-1980s. The need to institute urban poverty alleviation programmes was first recognised by the National Commission on Urbanisation (NCU) in 1986. After this, schemes have followed a trajectory from Nehru Rozgar Yojana (NRY) to Suvarna Jayanti Shahari Swarozgar Yojana (SJSRY) to Urban Basic Services Programme (UBSP) and the more contemporary National Urban Livelihood Mission (NULM). Poverty alleviation is not one of the conventional roles of urban local governments in India. Local governments were identified as the desirable institution for implementation of NRY due to the highly disappointing but brief experience of implementing the Self-Employment Programme for Urban Educated Youth (SEPUP) through nationalised banks. Banks did not have any outreach or contact with urban poor communities and the scheme ended up with several badly targeted bad loans. It was at this juncture that the decision to move poverty alleviation to municipal institutions was taken, following the recommendations of the NCU. Large and powerful corporations like the Mumbai Municipal Corporation, in fact, resisted the implementation of NRY because this was not a municipal function. It was taken up only after significant political pressure, more than a year after it was implemented in other urban areas.The 74th CAA included poverty alleviation and protection of weaker sections in the list of functions in the 12th Schedule. However, the state of this function across all municipal institutions, with the exception of Kerala and a few cities, is dismal. Poverty alleviation in urban areas is basically driven by central government schemes. These schemes themselves had very little continuity in terms of institutional mechanisms envisaged. While NRY left it to cities to create an institutional framework within a budget of 30 percent programme cost, SJSRY gave detailed guidelines for creating neighbourhood groups and committees coalescing to form community development associations at the city level and reduced the component of staff expenditure. Further modifications to the scheme expected the appointment of community organisers to be employed on a contract basis with payment linked to targets achieved in terms of the number of poor people identified, the number of self-help groups formed and so on. The emergent NULM expects an active involvement of non-governmental organisations (NGOs) and public–private partnerships. Most state governments have not invested in thinking through these institutional mechanisms or giving resources to the local governments for the same. The central government schemes further micromanage several aspects of content too. For example, the identification process and determination of the poor does not discriminate between high migration cities and those with more settled populations. Both these kinds of cities are expected to undertake house to house surveys to identify the poor and prepare a list that remains static for years. The entrenched belief in the narrowness of interests at the local level further translates into only data collection processes at the town/city level; the processing and analysis of survey forms are undertaken by the state governments and such approved lists are then given to local governments for execution. The same centralisation process also influences the programmatic agenda and results in a non-creative, top-driven implementation of highly relevant and politically sensitive functions. In this case, too, the city has been approached as a nested space where both the central government and the state government devolve only an execution responsibility to the city. Other projects of autonomy do take shape, but are mediated through the central government to produce disastrous results. For example, in the shift from NRY to SJSRY, the Kerala model 256

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was considered as a best practice and, thus, the institutional structure of NHGs–NHC–CDA was imposed on every urban area in the country. Similarly, Kerala’s definition of poor, using participatory parameters was also considered a best practice and propagated, omitting the participatory part. The expression of urban poverty, the footholds that the poor are able to gain in cities, the extent of their economic, social, spatial and political inclusion in cities and patterns of exclusion are highly contingent upon local conditions. Hence, this is a function where autonomy would mean creating a space for local initiative, programming and channelling local opportunities as well. In doing so, it can also improve the local economy, well-being and resilience. However, under highly centralised management and with very little resources, local governments treat poverty alleviation as a subject that is external to their core functions and where central and state government whims and fancies are to be tolerated. It is a punishment posting for bureaucrats, offering few incentives, a department where excess posts are absorbed for a temporary period. There is no recognition that poverty alleviation requires a distinct set of knowledge and competencies that could be institutionalised and contribute to the city at large. Interestingly, in several cities, poverty redressal departments have become the hub of gendered politics with women being targeted as beneficiaries of schemes and giving scope for women corporators elected to the local governments through reservations. While there is an active and almost parallel political economy that encourages informal settlements and the interests of the poor, poverty redressal is a marginalised function that is currently not seen as a powerful resource for the mobilisation of such interests. Poverty alleviation is, thus, an example of how the devolution of a function that was introduced by the 12th schedule unfolds at the ground level. The execution of a function requires the creation of a cadre, a set of resources that one can command and the institution of objectives against which performance can be measured. Instead, the function has been ‘schematised’, there is no institution building though more than 30 years have passed since the launch of the first urban poverty alleviation scheme and, overall, no local government has developed an idea of what poverty means in the city, identified the urban vulnerable or how it would like to reduce the poverty in its jurisdiction. The culprits here are the central government as well as state governments4 that have preferred a directive role more than an enabling role and have been informed by short-term agendas rather than using long term, institutional visioning.

Revisiting the fundamentals The analysis of the state of governance linked to land-use planning and regulation/control of building and poverty alleviation reveals that not only is the status of devolution poor but that 25 years after the 74th Constitutional Amendment, we have created a highly complex, fragmented and confusing system of urban governance that produces poor outcomes on the ground. I argue that we are not clear about either ‘urban’ or ‘local’ or the ‘nature of the institution at the local level’. The definition of ‘urban’ is currently highly contested. The Indian definition of ‘urban’ as a minimum population of 5,000, a density of more than 400 persons per square kilometre and more than 75 percent of an adult male working population in non-agricultural activity is a highly conservative definition but one that was considered perhaps relevant to a dense, and patriarchal society where women’s mobility was highly constrained. The question that is being asked in several quarters (Mckinsey, 2010; Ellis and Roberts, 2016) today is whether this conservative definition acts as a barrier to unlocking development potential. Further, Pradhan (2013) points out that even the application of this conservative definition is met with resistance 257

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towards acknowledgment the urban. As a result, several towns are urban in definition but administratively rural. Sivaramkrishnan (2011) explores this resistance to ‘becoming urban’ and offers the following explanations for the same – (i) becoming urban implies having higher taxes, more regulations and (i) there is no concomitant increase in resources; as most development schemes are directed towards ‘rural’ areas. While these explanations are highly insightful, they are also a point of concern. These contestations over becoming urban sometimes emerge from the top – where state governments do not want to declare urban areas due to political interests, but mostly because of a reluctance that stems from the ground. Is there no desire for a more planned environment that enables a better quality of life among ‘rurban’5 citizens? The answer to this rhetorical question would be negative; perhaps a better explanation is that citizens do not foresee that the advent of municipal governance, plans and new rules are a guarantee for an improved quality of life. Hence, the reluctance for higher taxation; there is a greater preparedness to dodge the rules and carve out private enclaves instead.While this is a speculative proposition, and not a highly researched finding, it is one borne through the author’s interaction with several inhabitants across small towns/cities in India. There are some basic underlying assumptions behind the concept of the urban, especially when it comes to the design of a policy. In more recent times, such conception has tended to recognise urban as a site of concentration of economic activity, land markets are vibrant and active and where residents are aspirational and upwardly mobile. The task of governance systems is to tap into such resources and use them to contribute towards infrastructure systems and maintain them. While these assumptions may be true to a certain extent, current frameworks of dealing with varying scales of the urban hardly recognise the differences across them and all ‘urban’ is being seen through a homogenised frame. There is also a disconnect between the economic and political realms on one hand and the socio-cultural realm of the city on the other.This was particularly seen in the JNNURM but has also been continued thereafter. Thus, ULB level reforms were uniform across the length and breadth of the country. As a result, small towns with very little computer literacy and infrastructure, and where recovery has been conventionally achieved through personal outreach, were expected to engage with a tax regime that would interface with citizens through computers failed to do so.The concept of the urban, thus, needs revisiting along several lines –alignment between the administrative and census definitions, recognition of diversity and creating the appropriate rule, tax frameworks and bringing in more flexible regimes that will bring in better alignment between the informal and formal economies. Another basic concept that needs revisiting is the conception of local. The contemporary ‘local’ cannot be a space that is independent of several networks (regional, provincial, national, global) within which it is embedded. Yet, there is significant literature from the early 1920s to contemporary times on places that asserts the relationship between inhabitants and places and their shaping of the environment and life around them. The colonial legacy saw some cities of interest as independent of other regional networks; thus, cities like Bombay, Bangalore were given unprecedented powers to predate over the regional resources. Others were deprived of critical resources. The emergent scenario is one in which such negotiations over resources are placed in the hands of state governments. The large size of wards has also created tremendous distance between institutional mechanisms, representatives and citizens. The multiplicity of institutions, fragmentation of responsibility, authority and accountability also have implications for the way in which the ‘local’ is experienced today in Indian cities. Joshi (2017), based on studies in West Bengal and Delhi of elections and voting behaviour, argues that the ‘local’ in urban India is blurred , and hasa high degree of overlaps with higher levels of politics. Bhide (2018) analysing the experience of policies that were initiated in Mumbai argues that the presence of a local policy space 258

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that can contend with conditions on the ground, adapt guidelines and even add local content to the same is more effective in terms of reaching objectives, the efficiency of resources. Contemporary trends, however, point to a shrinking of this space over the years due to ongoing incursions by the state government and the central government in the functioning of the strong municipal corporation of the city. The 74th CAA envisages the local at three levels –(i) sub-ward in cities above 300,000 population, (ii) electoral ward and city level and (iii) district and metropolitan level. Further reforms suggested in the 74th CAA framework in the JNNURM also added another level i.e., the electoral booth level called the area Sabha. The focus of the framework is to ensure that a better dynamic of not just providing services, but ensuring that a city as a social, economic entity working towards equity and sustainability is created at the city level. The DPC and MPC were to be resource coordinating mechanisms while the sub-ward institution was just another rung. There was inadequate thought given to the sub-ward mechanisms and their linkage to the other rungs of governance. On the issue of coordination at a higher scale, no state has effectively ushered in DPCs and MPCs. Hence, Sivaramakrishnan, recognised as one of the drivers behind the 74th CAA, argues for a modified framework of governance for metropolitan areas (Sivaramkrishnan, 2013). Evidently, there is a need to revisit and reaffirm the understanding of local. It needs to be reconceptualised as part of a series of scales from sub ward, to administrative wards to zones, city and metropolitan level, with spaces for engaging with state, national and global levels; with each scale having a distinct role and contribution to governance. Such scales need to be created with varying sizes of cities and other rural local governments in mind. The critical question to be asked at each of these levels is – what does this level of the local mean? Who are the actors, institutions which may have access to the scale? What and whose interests are involved at that level? The execution of any function involves sub-tasks. It requires funds and functionaries, but, beyond that, there is also a requirement for a local policy space where decisions can be taken, initiatives launched, and schemes can be designed and operated. A system of incentives and penalties that is designed around the production of desired outcomes is essential as well. The third part of the trinity of terms in ULB is an equally important fundamental that requires revisiting.The term ‘body’ used to refer to municipal institutions is a term of unknown origins. Does it mean the integral nature of the services, rules, bureaucracy, democratic oversight i.e., a fully functioning entity with a physical presence, mind and ability? Its treatment, as discussed, has most often been as a physical body that lacks mind and hence deprived of agency, a body that can only execute commands given by higher bodies that can think, decide and delegate. The term is not only derogatory but also serves the self-fulfilling judgement of relative capacities at varied scales of governance. Several reports suggest that urban governance in India is a field with serious capacity gaps at multiple levels including local governments, state governments and central governments (NIUA, 2015). Such a singling out of local governments then translates into the creation of parallel institutions of governance operating at the city level with none of them expected to be accountable or in coordination with the local governments. Some of them are more powerful in terms of resources than certain city governments. Such a system produces poor service and governance outcomes. There is a need to conceptualise ULBs as city governments and build their capacities for the same as part of a process, but with a firm commitment to devolution of powers and resources.This would mean recognition of them as agencies in charge of ‘cities’, a single window for governance that is responsible for coordination with all other agencies operating in the city space. An absence of such a space at the current moment compels many to ask the question ‘Who is in charge of our cities?’ (Tewari, 2017). 259

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Revisiting the approach to decentralisation A review of the status of devolution and state of governance following the 74th CAA reveals that fundamental concepts such as urban, local and the idea of urban local institutions as bodies are being contested and need to be revisited. However, an even more critical issue that needs to be revisited is the approach to decentralisation and weave it around the idea of autonomy. In the 1980s, the World Bank and several bilateral agencies identified ‘decentralisation ‘as a mantra for improving outreach and efficiency of development projects. Decentralisation in several of these projects was also conflated with democracy (Rondinelli, 1989). Slater (1989), responding to this argument, identified several reasons for why state power in peripheral states was centralised in the first place. Decentralisation in such contexts, he argued was not a panacea for either democracy or empowerment or efficiency. The approach to decentralisation would, therefore, need to be historical, embedded in local socio-eco-politico realities and explicitly political (Beard, Miraftab and Silver, 2008). The Indian approach to decentralisation has been put in place through the mechanics of making it a constitutionally mandated and politically legitimate provision but it largely remains a bureaucratic exercise where exchange of power sites and resistance to the same is a matter of intergovernmental relations.There has been no exploration of exercising and working on other spaces of city autonomy such as citizen relationships, forums of political representatives at varied levels, engagement with local industry and business forums. In fact, the experience of such forums to forge city level partnerships influencing and transforming governance6has been disappointing. The higher bureaucracy and political class have clearly entrenched interests in the centralisation of power; it is only in the sphere of informality and local bureaucracies that some evidence of local autonomy is seen. The recent past has also seen some evidence of a shift to ‘enclave autonomy’ from neighbourhood association (Bulkeleyet al., 2018) in the form of resident welfare associations in some cities like Delhi and Bangalore. In such cases, there is a demand for efficient, transparent governance; such demands have an underlying concept of the ‘consumer citizen’ rather than the democratic citizen with local governments being posed as service providers. Such enclave autonomy can prove antithetical to the cause of democratisation. Democratised local governance is one that essentially requires bottom-up and inclusive governance which gains strength through multiple lateral networks across the city to reach upwards to counter the centralising and homogenizing forces. It needs to explicitly address both efficiency and equity issues. Otherwise, it would be hijacked by the existing tendencies towards centralisation, patronage and clientelism. The discussion of the two functions (i) land-use planning and building control and (ii) poverty redressal brings out why city autonomy is important. They illustrate that centralisation has been entrenched in multiple ways; it diminishes the capacity of the city to respond meaningfully to critical issues in time. In the case of land-use and building control, the city’s built environment is increasingly fragmented due to a parallel process of informal urban development while its politicaleconomy flourishes on rentier interests. Centralised poverty redressal leads to greater inequity and creates greater barriers for the productive engagement of the vulnerable. The discussion of the two functions further illustrates what would it mean to forge projects of autonomy. Given that every function is complex and involves a range of coordinated sub-tasks; autonomy would require the consideration of the same and creation of requisite capacities in the city governments, handing over powers, enabling the creation of resources for execution and a legislative framework that is based on subsidiarity. The capacities of city governments are uneven but as the discussion reveals, control by higher-level governments does not produce more efficient or effective outcomes. This does not imply that there 260

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is no space for top-down efforts for forging a local autonomy. Rather the above discussion is a warning that top-down efforts are likely to encounter resistance at multiple levels and prone to manipulation and co-option to produce a highly complex and fragmented political space; unless accompanied by moves to encourage a simultaneous bottom-up demand for local autonomy.

Conclusion: What kind of autonomy for cities? And how? The state of urban decentralisation and local autonomy remains disappointing twenty-five years after the passage of the 74th CAA. The discourse propagated in recent years has seen the central government promoting decentralisation, while state governments actively oppose the same. The detailed analysis of the state of devolution of the two functions reveals that the central government too is a party to direction, micromanagement and withholding key powers from local governments without devolution. There is also a significant reconfiguration of the roles of the state government and local government. As states become more urban, the stakes at the higher level of governments in cities have begun to shift, and urban issues have begun to occupy the centre stage in at least a few states. This is, therefore, an appropriate juncture to revisit some of the fundamental ideas behind local governance. This chapter approaches the issue of local governance as an issue of ‘urban autonomy’. Several projects of autonomy pitch the city against the nation-state or as ‘local’ against or in alignment with the global economic forces. However, we view the city as an ‘epistemologically specific site with specific histories and livelihoods closely linked to the performance and governance of a particular territory, even as that territory is relationally produced’ (McCann and Ward, 2012, p. 48).This leads to a notion of autonomy that has varied interwoven strands in relation to the state, comprising both elements that produce order and those that are more transformative (Bulkely et al., 2018). These include spaces that enable several forms of networks between not just units of governments but also across varying constituencies and at multiple scales. Forms of autonomy can be thus multiple, evolving and intersecting; the task of the governance framework is to enable such forms, create a space for them and integrate the same at the city level. Viewed through this lens, the changes proposed by the 74th CAA represent a highly progressive agenda but one whose unfolding has been seriously undermined by varying centralising forces. Efforts such as JNNURM whose stated aim was to implement the 74th CAA provisions approached the issue of decentralisation in a bureaucratic manner and resulted in large scale cooption. A highly complex and fragmented scenario of governance systems exists in most urban areas of the country today, in which local autonomy is highly compromised. Simultaneously, networks of an informal economy have arisen with scales that increasingly threaten the very notions of order and integrity of a city. Such governance systems not only produce poor qualities of life and livelihoods for their inhabitants, but also significantly impact the ability of cities to participate in economic and other domains in the world system. A change in this situation is not possible through the pursuit of bureaucratic reforms alone but needs to be supplemented by an active bottom-up and multi-tiered political engagements with citizens, local economies and civil society.

Notes 1 In places like Bombay, the franchise was extended to graduates of Bombay University. 2 One of the best-known cases in this matter is that of the Chennai Municipal Corporation which was suspended for over 13 years when the DMK Government came to power. 261

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3 There are exceptions to this. One of the most famous examples is that of Jamshedpur which does not have an elected municipal body. SEZ townships were also seen as exceptions to the principle of democratically elected local bodies. 4 Kerala is the only state where several central and state government schemes have been merged; there has been a systematic investment in the creation of a cadre for urban poverty alleviation and where local governments have been encouraged to develop local processes for identification of the poor and building institutions of the poor. 5 Rurban refers to a continuum between the urban and the rural. I use the term here to refer to places and citizens in a transitory space. 6 Two known cases linked to this are Bangalore Agenda Task Force and Mumbai First. The first succeeded for a brief time when it was headed by the Chief Minister; the other created a lot of rhetoric but did not prove very effective.

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National Institute of Urban Affairs (NIUA) (2015). A Study to Qualitatively Assess the Capacity Building Needs of Urban Local Bodies. New Delhi: NITI Aayog. Pradhan, Kanu (2013). ‘Unacknowledged Urbanization’, Economic & Political Weekly, 48(36), p. 43. Rondinelli, Dennis, McCullough, J. and Johnson, R. (1989). ‘Decentralisation in Developing Countries: A Political Economy Framework’, Development and Change, 20, pp. 57–87. Sassen, Saskia (2002). ‘Locating Cities on Global Circuits’, Environment and Urbanization, 14(1), pp. 13–30. Sivaramakrishnan, K. C. (2011). ‘Urban Development and Metro Governance’, Economic & Political Weekly, 46(31), p. 49. Sivaramakrishnan, K. C. (2013). ‘Revisiting the 74th Constitutional Amendment for Better Metropolitan Governance’, Economic and Political Weekly, XLVIII(3), pp. 86–94. Slater, David (1989). ‘Territorial Power and Peripheral States: The Issue of Decentralization’, Development and Change, 20, pp. 501–531. Tewari, Piyush (2017). ‘India in 10 Years: Who Is in Charge of Our Cities?’, Live Mint, February 5.

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18 Intergovernmental transfers to urban local bodies in India Issues and directions for reforms Shibani Mishra, Alok Kumar Mishra and Prerna Panda

Introduction Indian municipalities are amongst the weakest globally in terms of access to resources and fiscal autonomy in relation to their mandates. The precarious state of municipal finances in the country is a cause of serious concern as urbanisation is increasing, and so too is the contribution of cities to Gross Domestic Product (GDP). Indian cities are the drivers of economic growth as seen elsewhere in the world. In 2007, 62–63 per cent of the country’s GDP was generated by cities and towns, with an estimated 3 per cent of geographical area and 30 per cent of the population.This contribution is projected to rise to 75 per cent by 2021 (Planning Commission, 2008). In this projection, urban areas will generate 70 per cent of net new jobs through 2030. About 80–85 per cent of India’s tax revenues will come from cities in the next two decades (McKinsey, 2010). However, unless cities are in a position to meet the ‘backlog’, ‘current’ and ‘growth’ demands of households and firms for civic services and infrastructure, they will not be able to sustain their contribution to growth, employment and public finance for socioeconomic development, including rural development and poverty alleviation. This consideration alone underscores the importance of strengthening the financial position of Indian Urban Local Bodies (ULBs) through meticulous reforms. The rich literature in fiscal federalism, starting with Tiebout (1956), Musgrave (1959) and Oates (1972) and in urban economics, including Henderson (1974), Duranton and Puga (2004), Rosenthal and Strange (2004), Brueckner (2011) and Glaeser (2011) present lessons for designing reforms, apart from practices followed internationally. Intergovernmental transfers to ULBs constitute an important source to finance city infrastructure and services in both developed and developing countries. Such transfers take the form of sharing the tax base, tax yield and general or special revenues of higher levels of government with local bodies. They are often built into the constitutional framework of fiscal federalism in countries. They have a significant importance in the framework of urban public finance. The key arguments in favour of intergovernmental transfers to ULBs include correcting for vertical and horizontal imbalances; compensating municipalities for inter-jurisdictional spill-overs of benefits and costs of public services; funding national goals and priorities including merit goods; core infrastructure facilities impacting growth, human development 264

DOI: 10.4324/9780429321887-18

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and poverty alleviation and enhancing the efficiency in collection of taxes. In the Indian context, vertical imbalance is deeply rooted in the very structure of fiscal federalism; horizontal imbalance is also conspicuous as a result of many state-specific reasons, including historic, geographic and economic factors. Core urban infrastructure needs to be developed to catalyse the agglomeration of externalities and growth. The reasons which justify fiscal transfers from the central government to state governments also call for intergovernmental transfers to municipalities. Within India’s current framework of fiscal federalism, intergovernmental transfers to municipalities will continue to play an important role in financing urban infrastructure and services. While the theory and practise of intergovernmental transfers to local bodies underscore the importance of objective principles and criteria for the design of such transfers, the systems practised in India are largely ad hoc. They are in a highly unsatisfactory state (Mathur, 2013). Even after two and half decades of enactment of the historic Constitution (74th Amendment) Act 1992, municipal corporations and municipalities continue to have a gross imbalance between their finances and functions. In many states, they even depend on the state government for disbursing staff salaries and pensions, and discharging their most basic functions. India is unique in that its Constitution provides for two review channels to address the problem of responsibilityrevenue mismatch in local bodies – the State Finance Commission (SFC) and the Central Finance Commission (CFC). However, the institutions of SFCs and CFC have not been able to make the desired impact on municipal finances. India is far from an objective, formula-based, efficient and equitable structure of fiscal transfers to local bodies.The issues of intergovernmental transfers to ULBs in India are closely linked with the country’s fiscal federalism framework. This research suggests that the country needs a robust municipal finance framework, including ‘own’ taxes, sharing of tax base or tax yield at state level, sharing of the divisible pool of taxes at central level and a partnership-based approach to finance urban infrastructure.We suggest that a statutory sharing of at least 25 per cent of state Goods and Services Tax (GST) with urban local bodies could perhaps be the most appropriate alternative to strengthen municipal finance in the present context. The intergovernmental transfer system in vogue needs to be reformed. The design of such a transfer will be critical for its success. An objectively determined intergovernmental transfer formula with weights assigned to fiscal needs, fiscal capacity and fiscal effort could, apart from meeting the grant objectives, ensure predictability, a key factor necessary for any transfer programme to be effective. SFCs may consider formula-based sharing of a state’s own tax, as was the case with the third SFC of Karnataka. The Fifteenth CFC may significantly contribute to the development of a robust municipal finance framework, including intergovernmental transfers in the GST era based on the ‘principles’ of public finance. India needs to shift from the present ad hoc system of city financing to a robust framework rooted in theory and international practice of city financing in the interest of economic growth and resource mobilisation for socio-economic development. The aim of this research is to develop a foundation paper on the theoretical and practical issues of reforming intergovernmental transfers to ULBs in India and suggest directions for action. This chapter recognises that reforms in the system of fiscal transfers to municipalities need to be designed in the overall contexts of urban public finance and fiscal federalism in India. The research is guided by the limited data available on the transfers to local bodies. To the best of our knowledge, the present research is unique in its approach as it considers theory as well as practices so as to suggest reforms in the intergovernmental transfer system keeping in view the need to develop a vibrant third tier in India in the interest of economic growth. It is also useful for policy-makers at the state and central levels to implement reforms in the system of intergovernmental transfers to municipalities in India in the context of the new 265

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GST regime. Our research pools together the practices and experiences from many sources, and examines their implications for Indian ULBs. This chapter is organised as follows. The next section depicts the state of municipal finances in India; it focuses on the sources of municipal revenue and challenges of resource mobilisation. The third section provides a broad picture of intergovernmental transfers to ULBs, including transfers from state and central governments. It highlights the key issues in such transfers. The fourth section discusses the theory of intergovernmental transfers; it outlines the key principles for the design of fiscal transfers to local bodies in a federation. The fifth section deals with the approaches adopted by State Finance Commissions to address the precarious municipal finances in India. The sixth section presents the recommendations of the Central Finance Commissions regarding fiscal transfers to municipalities. The seventh section presents international practises on fiscal transfers to local bodies from higher levels of government. The penultimate section, by drawing lessons from theory and practise, presents a roadmap for reforms in the system of intergovernmental transfers to municipal bodies in India. The final section concludes.

State of municipal finances The state of municipal finances in India is precarious. The ‘own’ revenue base of municipalities is not only narrow but also non-buoyant. It is also shrinking. Municipal fiscal autonomy is facing progressive erosion. In 2002–2003, ‘own revenues’ constituted 63 per cent of total municipal revenues in India. The share went down to 55.7 per cent in 2007–2008, and 51.6 per cent in 2012–2013. The share of tax revenues decreased from 37.2 per cent to 32 per cent between 2007–2008 and 2012–2013. Non-tax revenues accounted for an 18.5 per cent share in 2007–2008 and 19.7 per cent in 2012–2013. The share of central transfers increased marginally from 9.1 per cent to 9.5 per cent. That from state government sources went up from 32.4 per cent to 34.5 per cent between the two years. Key municipal fiscal autonomy ratios – including own revenues-GDP, own taxes-GDP and property tax-GDP – declined between 2007–2008 and 2012–2013. Table 18.1 depicts the trends in municipal revenues in India by source. India is far behind both developed and comparable developing countries with regards to fiscal decentralisation to local bodies. Municipal expenditure-GDP ratio in India is estimated at 1.0 per cent in 2012–2013. In contrast, local expenditure-GDP ratios in predominantly-urbanised Organisation for Economic Co-operation and Development (OECD) countries in 2010 were as follows: Belgium (7.0), Germany (7.9), Austria (8.2), France (11.8), United Kingdom (14.0), Italy (15.9), Finland (22.6), Sweden (25.1) and Denmark (37.3). The ratio of municipal revenue to GDP in India is estimated at 1.03 per cent for 2012–2013 – compared to Poland (4.5), Germany (7.3), South Africa (6.0), Brazil (7.4), United Kingdom (13.9), Austria (7.8), Italy (15.3), Norway (14.2), Denmark (37.1) and Finland (22.4) (Mishra and Mohanty, 2018). Municipal revenue-GDP ratio in India declined from 1.08 in 2007–2008 to 1.03 in 2012– 2013 (Mishra, 2017). In contrast, local revenue-GDP ratio in many OECD countries in 2010 exceeded 6 per cent, with the figure at 37.1 per cent in Denmark (Table 18.2).

Fiscal transfers to municipalities Fiscal transfers to ULBs in India come from both the state and the centre.These were artificially divided into plan and non-plan grants in the past. Plan grants included centrally sponsored schemes, Planning Commission dispensations and state plan programmes. Non-plan grants cover (i) assigned revenues and compensations from state government; (ii) grants from state government 266

Government of India transfers Central finance commission transfers State assignment/devolution State grant-in-aid Others Total other source revenues

Total taxes Property tax Other taxes Non-taxes Total own source revenues

Sources of revenue

4,582,086

3,515 986 9,342 6,653 1,355 21,851 49,351

18,366 8,159 10,207 9,134 27,501

0.18 0.40 0.60 0.10 0.35 1.08

7.10 2.00 18.90 13.50 2.70 44.30 100.00

37.20 16.53 20.68 18.50 55.70

9,388,876

5,387 3,760 18,537 14,809 4,234 46,727 96,640

30,912 15,110 15,801 19,002 49,913

Total (Rs. Crore)

Total (Rs. Crore)

% of total municipal revenue (%)

2012–2013

2007–2008

0.16 0.33 0.53 0.10 0.36 1.03

5.60 3.90 19.20 15.30 4.40 48.40 100.00

32.00 15.64 16.35 19.70 51.60

% of total municipal revenue (%)

Source: 2007–2008 to 2012–2013; ASCI (2014) – based on data furnished by state governments to the Fourteenth Finance Commission of India; Indian Public Finance Statistics 2013–2014.

Gross Domestic Product at Factor Cost in Current Prices (GDP) Property tax as % of GDP Own taxes as % of GDP Own revenues as % of GDP Govt. of India/Central Finance Commission transfers as % of GDP State Government/State Finance Commission transfers as % of GDP Municipal revenue as a % of GDP

C. Total revenues

B. Other sources 1 2 3 4 5

2

A. Own sources 1.

Sl. No.

Table 18.1 Trends in municipal revenues in India

Intergovernmental transfers

267

Mishra, Mishra and Panda Table 18.2 Distribution of local government revenues: Select OECD countries 2010 Country

Local government revenues as % of GDP

Taxes and user As % of total local government revenues fees as % local Taxes User fees Transfers Other spending revenues

Austria Czech Republic Denmark Estonia Finland Germany Hungary Ireland Italy Luxembourg Norway Portugal Slovenia Spain United Kingdom

7.8 11.6 37.1 10.4 22.4 7.3 11.5 6.7 15.3 5.2 14.2 6.3 9.9 6.4 13.9

68.7 55.3 39.1 54.6 66.9 51.3 28.6 23.7 45.3 49.2 50.1 40.7 51.3 47.5 25.4

62.0 40.7 34.3 44.6 46.2 40.0 21.2 13.4 40.1 31.2 41.1 34.3 42.0 45.1 12.7

10.2 16.1 4.9 9.0 21.4 15.5 10.2 9.2 7.0 18.1 12.7 12.6 11.4 8.9 12.9

18.7 41.7 57.5 44.6 29.6 40.6 67.1 67.2 50.9 49.2 42.2 43.2 45.3 44.4 71.8

9.1 1.5 3.2 1.8 2.8 3.9 1.5 10.1 2.0 1.5 4.0 9.9 1.3 1.6 2.6

Source: OECD (2012): ‘General Government Accounts: Public Finance and Employment: Revenues’, OECD National Accounts Statistics

based on the State Finance Commission (SFC) recommendations and (iii) grants from the central government based on the Central Finance Commission (CFC) recommendations. Table 18.3 shows the major sources of assigned revenues and compensations and Table 18.4 shows general and specific-purpose transfers to municipal corporations in India. As the tables indicate, there are significant interstate differences in the pattern of intergovernmental transfers. Table 18.3 Major sources of shared revenues and compensations in municipal corporations of India Name of state

Name of municipal corporation

Shared municipal taxes/compensations in lieu of taxes

Gujarat Karnataka

Ahmedabad Bengaluru

Maharashtra Odisha

Greater Mumbai Bhubaneswar

Punjab Tamil Nadu

Ludhiana Chennai

Telangana

Hyderabad

West Bengal

Kolkata

Entertainment tax, octroi compensation Entertainment tax, surcharge on stamp duty, octroi compensation, motor vehicle tax compensation Non-agricultural assessment tax, entertainment tax Compensation in lieu of octroi, duty on transfer of property, entertainment tax Excise auction amount, excise tax on alcohol Duty on transfer of property, entertainment tax, assignment from state tax revenues Surcharge on stamp duty, Profession tax, entertainment tax, octroi compensation, property tax compensation, motor vehicles tax compensation Motor vehicles tax, entertainment tax

Source: Budgets of municipal corporations

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Intergovernmental transfers Table 18.4 Major sources of general and specific-purpose transfers in municipal corporations of India Name of state

Name of municipal corporation

General/specific-purpose transfers

Gujarat

Ahmedabad

Karnataka Maharashtra Odisha

Bengaluru Greater Mumbai Bhubaneswar

Tamil Nadu Telangana Uttar Pradesh West Bengal

Chennai Hyderabad Kanpur Kolkata

Education grant, family planning grant, small savings grant Family planning scheme grant Primary education grant, secondary education grant Salary and dearness allowance grant, primary education grant, secondary education grant Health grant, family welfare grant, flood grant Per capita grant, road grant Salary grant, education grant, medical grant, road grant Grant for increased cost of pay, dearness allowance grant, grant for payment of dues to Kolkata Electricity Supply Corporation, pension relief

Source: Budgets of municipal corporations

These have evolved over time in an ad hoc fashion – without regard for the principles of intergovernmental transfers. Fiscal transfers from central government sources accounted for 9.5 per cent of municipal revenues and transfers from state government sources, 34.5 per cent on an all-India basis in 2012–2013. The pattern of fiscal transfers, however, varies drastically between states and cities. Table 18.5 presents data on the distribution of municipal revenues by source in 18 states of India in 2012–2013. Except Maharashtra and Punjab, the dependency of ULBs on intergovernmental transfers is very substantial, exceeding 70 per cent in Himachal Pradesh, Jammu and Kashmir, Kerala, Bihar, Madhya Pradesh, Uttarakhand, Odisha and Karnataka. The Maharashtra case is explained by the presence of Octroi in Mumbai and Local Body Tax (LBT) in other municipal bodies in 2012–2013; the LBT has since been abolished. In the case of Punjab, the municipalities have access to excise revenues. Like municipal ‘own’ revenues, the system of municipal ‘transfer’ revenues in India remains grossly deficient. Transfer revenues constituted only about 0.46 per cent of India’s GDP in 2012–2013, comprising 0.36 per cent from state sources and 0.10 per cent from central sources. In contrast, transfers to local bodies amounted to 21.3 per cent of GDP in Denmark, 9.9 per cent in the United Kingdom, 7.8 per cent in Italy, and 6 per cent in Norway. In contrast to the estimated municipal revenue-GDP ratio of about 1 per cent, municipal own tax-GDP ratio of 0.33 per cent and municipal own revenue-GDP ratio of 0.53 per cent, the central own tax-GDP ratio stood at 10.41 per cent and state own tax-GDP ratio at 6.83 per cent in 2012–2013. The combined central and state taxes-GDP ratio in 2012–2013 is estimated at 17.25 per cent (Table 18.6). While the municipalities in India are statutorily required to balance their budgets, the central and state governments can resort to debt and have budget deficits. In fact, the combined central and state government expenditures-GDP ratio for India as a whole stood at 26.62 per cent in 2012–2013. These comparisons amply demonstrate that municipal finances are in a deplorable state. This is a cause of serious concern as urbanisation is increasing and so too is the contribution of cities to GDP. It calls for urgent reforms and concerted actions at many levels, including the State 269

Mishra, Mishra and Panda Table 18.5 Distribution of municipal revenues by source in India (%): 2012–2013 Sl. No.

State

Taxes

Non-taxes

Central transfers*

State transfers**

Others

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Andhra Pradesh Assam Bihar Gujarat Haryana Himachal Pradesh Jammu & Kashmir Karnataka Kerala Madhya Pradesh Maharashtra Odisha Punjab Rajasthan Tamil Nadu Uttar Pradesh Uttarakhand West Bengal All India

33.5 14.9 13.2 18.8 18.5 – 6.1 20.2 9.8 10.0 53.2 10.2 69.2 7.0 21.6 10.8 5.9 20.1 32.0

24.3 14.7 5.2 12.1 24.3 – 5.5 8.8 5.9 8.6 29.9 9.2 16.8 32.1 12.0 5.6 3.4 19.1 19.7

7.5 11.9 28.4 5.4 14.9 55.8 31.5 17.8 39.1 8.8 3.8 41.4 8.9 12.0 6.6 10.4 7.6 13.7 9.5

34.7 23.3 52.5 57.1 37.6 44.2 56.9 53.2 45.1 69.2 9.8 33.7 2.8 47.7 56.6 54.7 69.3 46.2 34.5

– 35.2 0.8 6.5 4.9 – – – – 3.4 3.4 5.5 2.3 1.3 3.2 18.6 13.8 0.8 4.4

Source: ASCI (2014) – based on data furnished by state governments to the Fourteenth Finance Commission of India. * Government of India transfer + Central Finance Commission transfer ** Assigned revenues from state governments + devolution through State Finance Commission + state government grants-in-aid

Table 18.6 Central and state tax–GDP ratios 1950–1951 to 2015–2016 Rs. Crore Ratio

1951–52 1991–92 2002–03 2007–08 2012–13 2015–16 BE

Gross central tax-GDP ratio State share in central taxes–GDP ratio Net central tax-GDP ratio State own tax GDP ratio State total taxes GDP ratio Total tax–GDP ratio

4.63 0.48 4.15 2.05 2.53 6.69

10.00 2.55 7.44 5.32 7.87 15.31

8.51 2.21 6.30 5.53 7.75 14.05

11.89 3.08 8.81 5.56 8.64 17.45

10.41 2.96 7.46 6.83 9.79 17.25

10.27 3.75 6.52 6.87 10.63 17.15

Source: Indian Public Finance Statistics 2015–2016.

Finance Commission, Central Finance Commission as well as municipality, state and central governments. In India – a large country and one that is under-urbanised – the ULBs are bound to play a crucial part in the structural transformation of the country. India needs to have a vision of fiscal decentralisation and take all the necessary steps to achieve it.

Fiscal transfers to municipalities: Theory The need for intergovernmental transfers primarily arises due to local bodies not having access to buoyant ‘own’ revenue base commensurate with their expenditure needs. 270

Intergovernmental transfers

Why intergovernmental transfers? Intergovernmental transfers to local bodies in a federal country like India are necessary to meet a number of objectives. These include (i) correction of vertical imbalances between tiers of government, (ii) correction of horizontal imbalances between jurisdictions in the same tier, (iii) internalisation of intergovernmental externalities and addressing inter-jurisdictional spillovers of benefits and costs, (iv) encouragement of activities of national importance such as economic growth, human development and poverty alleviation and (v) establishment of an efficient and equitable tax system with centralisation of tax collection to exploit scale economies in administration and revenue sharing (Oates, 1972).

Types of intergovernmental transfers Internationally, three principal mechanisms are adopted to address the functions-finances mismatch for local bodies. These are (i) the sharing of the tax base; (ii) sharing of tax yield; and (iii) sharing of revenue. Transfers can be ‘general purpose’ or ‘special purpose’.

Sharing of the tax base The sharing of the tax base provides local bodies with an access to buoyant tax bases of higher levels of government.Typically, taxes are collected at a higher level and municipalities are allowed to ‘piggyback’ or levy a ‘city surcharge’ on such taxes. The proceeds are shared between levels of government depending on prior arrangements. This method aims at according the financial autonomy to local bodies.

Sharing of tax yield In the case of tax yield sharing, the higher levels of government (centre or state) collect the shared taxes and assign a predetermined percentage of the collected amount to municipalities. Tax-by-tax sharing is widely practised internationally.This promotes collection efficiency, while ensuring transparency and predictability in transfers.

Sharing of revenues Revenue-sharing enables municipalities to have access to a predetermined share of state or central government revenues as a grant. Usually, not all revenue sources of a higher level of government are shared with ULBs. Only some sources are drawn into a distributional pool and a percentage of the same devolves on local bodies.The advantage of revenue-sharing lies in that transfers to municipalities automatically increase as the yields from revenue sources increase due to economic growth. Revenue-sharing instruments are divided into general-purpose or unconditional or nonearmarked, and specific-purpose or conditional or earmarked grants.

General-purpose transfers General-purpose or unconditional transfers take the form of budgetary support. They aim to preserve the autonomy of local government. They increase the resources of the recipient and may be used to provide any local service, or be used to reduce local taxes.

Specific-purpose transfers Specific-purpose transfers (also called conditional transfers) aim at incentivising local bodies to undertake pre-defined activities. They specify the expenditures eligible for grant financing 271

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(input-based conditionality): capital expenditures, operating expenditures, or both. Some transfers also require the attainment of specified results in service delivery (output-based conditionality).

Matching and non-matching transfers Conditional grants can be matching or non-matching. Matching grants require municipalities to finance a certain part of expenditures from their own revenues. Non-matching grants provide funds without any matching by the recipient government, so long as amounts are spent for the specified purpose. Conditional non-matching transfers are called ‘block’ grants when used to provide broad support in a general area of expenditure (e.g., health, education, transport, etc.) rather than a specific programme.

Open-ended and closed-ended transfers Matching transfers can be open-ended or closed-ended. In open-ended transfers, the grantor government matches whatever resources a municipality provides. In closed-ended transfers, the grantor matches the funds of the recipient only to a specified limit.

Principles of intergovernmental transfers Box 18.1 presents some guidelines for the design of intergovernmental transfers to local bodies, based on the literature on public finance. As expected, some criteria are likely to conflict with others. Rarely will any fiscal transfer programme subscribe to all the principles advocated by theory. In particular, a trade-off exists between the autonomy of the local body and its accountability to the grantor government and the public for utilisation of grant funds. In this regard, it is the grant objective that should guide the grant’s design.

Box 18.1 P  rinciples of design of intergovernmental transfers to local bodies Clarity in objectives: Grant objectives should be clearly and precisely spelt out to guide the design of the grant programme. Autonomy: Local governments should have complete independence and flexibility in setting their priorities, and not be constrained by the categorical structure of grant programmes. Revenue adequacy: Local governments should have adequate revenues, including intergovernmental transfers to discharge their assigned responsibilities. Efficiency: The grant design should be neutral with regard to the choices by local governments for the allocation of resources to different sectors or types of activities. Equity: Allocated funds should vary directly with fiscal needs and, inversely, with the fiscal capacity of each jurisdiction. Predictability: The grant programme should ensure predictability and stability in the revenues of local governments so that they can budget and plan for future expenditures. Simplicity: The grant allocation should be based on objective factors over which individual units have little control. The formula should be easily understood by all stakeholders. Incentive: The grant design should incentivise sound fiscal management and resource mobilisation effort. There should be no specific transfers to finance local government deficits or bailout non-performing entities.

272

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Accountability: The grantor must be accountable for the design and operation of the grant. The grant recipient must be accountable to the grantor and citizens for financial integrity, service performance, achievement of grant objectives and adheren ce to grant conditionalities. Sources: Bird and Smart (2002); Shah (2013)

Role of the State Finance Commission Provision for the organisation of State Finance Commissions (SFCs) every five years is made by the Constitution of India in Articles 243(I) and 243(Y). Similar in its role to the Central Finance Commission (CFC), the objective of the SFCs is to evaluate the financial position of the local bodies, both rural and urban, and recommend the framework or degree of resource devolution to local governments from the state governments. The primary role of SFCs is to review the processes and principles behind the revenue system and resource distribution between the state and local bodies. They review the resources, taxes, duties, tolls, fees to be assigned to or raised by local governments. They also evaluate and make recommendations regarding the grants-in-aid to be made available to the local bodies from the state’s consolidated fund. The SFCs are further vested with the responsibility of recommending reforms or directions to strengthen the local bodies financially. Based on a study of reports of the first-, second-, third-, fourth- and fifth-generation SFCs, the SFC recommendations can be divided into three broad groups: (i) global sharing, i.e. sharing a percentage of state revenues with local bodies; (ii) assignment or sharing of a percentage of specific taxes; and (iii) ad hoc or lump-sum transfers. SFCs of states like Tamil Nadu, Karnataka, Andhra Pradesh and Madhya Pradesh have recommended global sharing. In Maharashtra and Punjab, SFCs have recommended the sharing of specific taxes. SFCs of Gujarat, Odisha and most other states have recommended ad hoc transfers, adopting a gap-filling approach. Most SFCs have not paid attention to reforms in the system of municipal finance, including intergovernmental transfers. As they have not relied on a normative analysis, the transfers recommended by them turn out to be highly unpredictable as a source of municipal finance. Almost all SFCs have stressed that local bodies need to mobile their own resources. They have suggested measures to incentivise local bodies to promote resource mobilisation. Incentives in the forms of matching grants, performance grants or cash awards may be given to local bodies. SFCs have further recommended the formation of IT-enabled databases on municipal finances and regular updating of the same, for informed decision-making. Additionally, transparency can be ensured by providing public access to this database. SFCs were required to address the revenue-responsibility mismatch among the state governments and ULBs. However, after two and half decades of the enactment of the 74th Amendment Act, this objective is yet to be fulfilled. While prior to the Act, the resource distribution system between state and local bodies was unsystematic, subjective and dependency-promoting, most SFCs have failed to address these shortcomings. Transfers recommended by many SFCs are not based on robust principles. They are inadequate apart from being poorly designed and targeted, leading to large unfunded mandates to municipalities. Due to the vast differences between states with regard to the timing of constitution of SFC, submission of report by SFC, ‘action taken’ report presented by the state government to the legislature, approach adopted by SFC, nature of recommendations and many other factors, the CFCs in the past were not in a position to make recommendations based on the SFC reports. 273

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Hence, suggestions regarding ad hoc grants for local bodies prevailed. A study of CFC and SFC reports and research papers on the subject leads to the following observations: ••

••

••

••

••

••

274

Constitution of SFCs The constitution of SFC has been time-consuming due to the lengthy process followed by state governments, with many stages and each stage involving delay. There is a lack of synchronisation of the periods covered by state and Central Finance Commission reports. Composition of SFCs The Constitution of India does not lay down the guidelines regarding the composition of the SFC. In some states, serving officers of the state government machinery were inducted into the SFC.This renders the recommendations for devolving state resources to local bodies biased, and often superficial. State support to SFCs Many states have not taken action to provide logistic support, including qualified staff, to make the SFC fully operational. The lack of updated and reliable data on the receipts, revenue and expenditure of the local governments adversely affect the studies and recommendations of SFCs. Approach towards study Most SFCs in the past adopted a gap-filling approach. They did not dwell on the key principles of municipal finance and state-local fiscal transfers.The criteria recommended for the distribution of state resources to ULBs vary between SFCs reports. While some are simple others are complex; some are straightforward and subjective while others use formula-based measures. SFC reports are not completely transparent. Neither the SFC reports nor the data provided by state governments allow for quantifying the supplementary resources to be distributed to local bodies. Presently, there is no mechanism in place to allow the SFCs to verify the data related to the fiscal performance of local bodies. However, CFCs can crosscheck the data related to the finances of state governments. Typology of recommendations Not only the approach but also the recommendations of SFCs vary widely between states. They have not adopted comparable approaches to analyse municipal finances so as to enable the CFC to make recommendations. As they have not relied on a normative analysis, the transfers recommended by them turn out to be highly unpredictable as a source of municipal finance. This contrasts with the fact that CFC recommendations on centre states transfers are always based on objective formulae. The Wicksellian Connection, which emphasises a close link between revenue-raising abilities and expenditure responsibilities, has been completely neglected by the SFCs. The Wicksellian Connection is instrumental in inducing fiscal responsibility. Impositions of a hard budget constraint and fiscal management dimensions have been overlooked. The budgetary and accounting processes of local bodies require a number of alterations. Multiple channels of devolution to local bodies exist, such as line departments, planning commissions, the State Planning Board, district agencies, members of parliament or member of legislative assemblies, centrally sponsored and state plan schemes, SFCs, CFC, etc. No attempt has been made to reduce the number of channels. Action taken reports Significant divergence has been observed among the states in terms of submission of SFC reports as well as ‘action taken’ report, making it difficult for the CFC to derive meaningful inputs to make recommendations. Furthermore, only a few states accepted their SFC recommendations, implemented the awards and released funds as per such recommendations.

Intergovernmental transfers

The implementation of SFC recommendations has also been adversely affected in the absence of coordination among the finance department and urban and rural affairs departments. The Twelfth Finance Commission made the following observations regarding the implementation of the SFC reports. 1. Several states failed to undertake a follow-up action regarding the recommendations of SFCs; 2. Recommendations were not brought into implementation and thus, met with a ‘natural death’ eventually; 3. Recommendations made to release additional resources were mostly disregarded; 4. Budgetary provisions on recommendations have fallen short; 5. Despite being enthusiastic to constitute SFCs initially, the states were reluctant in implementing the recommendations since they would have to undergo additional pressure financially.

Issues raised by SFCs The chairpersons of SFCs had raised two categories of issues before the 14th Finance Commission. The first category included (i) setting up of an independent national agency for the support of a common platform for exchange of information between SFCs; (ii) designing simpler accounts and data formats; (iii) studies on governance issues with respect to local bodies; and (iv) supporting studies on standards of essential civic services to help future SFCs to assess the performance of local bodies in discharging their core functions. In the second category, the 2011 Census data was suggested for use while allocating grants for knowledge transfer and capacity enhancement.There was also a request by the SFCs for taking steps to sensitise the local bodies on the purpose of Finance Commission grants (RBI,2016). Successive SFCs have stressed the need for a reliable and up-to-date database regarding local government finances so as to be able to make informed suggestions. This requires compiling and auditing accounts. A study of the SFC reports reveals that some SFCs did refer to laudable principles covering revenue-sharing, tax-sharing, general grants, special grants, financial management, etc. For example, the third SFC for Karnataka recommended 33 per cent of a state’s own revenue receipts to be devolved to Panchayati Raj Institutions (PRIs) and Urban Local Bodies (ULBs) in the ratio of 70:30 based on a sound revenue-sharing principle. While there is a need to study the reports of all SFCs appointed so far to list out the principles they have referred to, a strong case also exists for looking at theories of public finance and international practices of municipal finances and transfers to draw lessons for the development of a robust system of intergovernmental transfers to ULBs in India.

Role of the Central Finance Commission Following the provisions in the 73rd and 74th Amendment Acts, the Government of India has constituted the Central Finance Commission (CFC), starting with the 10th, with additional terms of reference for considering the recommendations of SFCs for devolving the state resources to local governments. All CFCs, excepting the 13th CFC, have recommended transfers to local bodies through state governments on ad hoc basis – on the grounds that data on local finances and SFC reports are not available. The Thirteenth Finance Commission broke new ground by linking recommendation to a percentage of the divisible pool of taxes (over 275

Mishra, Mishra and Panda Table 18.7 Distribution of grants to states for urban local bodies: Criteria and weights (%) adopted by the Finance Commissions of India %

Population Geographical area Distance from highest per capita income Index of decentralization Index of devolution Index of deprivation Revenue effort Finance Commission ULB grant utilisation index

Eleventh

Twelfth

Thirteenth

Fourteenth

40 10 20

40 10 20

50 10 20

90 10 –

20 – – 10 –

– – 10 20 –

– 15 – – 5

– – – – –

Source: Eleventh, Twelfth, Thirteenth and Fourteenth Finance Commission Reports

and above the share of states) to be transferred to urban and rural local bodies as grant-in-aid through state governments, observing that the local bodies be allowed to benefit from the buoyancy of central taxes and the Constitutional design of supplementing the resources of panchayats and municipalities through grant-in-aid. The grant-in-aid recommended for municipalities for 2010–2015 amounted to Rs. 23,111 crores. The Fourteenth Finance Commission did not choose to link grants-in-aid for local bodies to a formula. While recommending a quantum jump in the share of states in the divisible pool of central taxes from 32 per cent to 42 per cent, the Commission recommended Rs. 2,87,436 crores as grant-in-aid for local bodies, including Rs. 87,144 crores for municipalities. As regards the distribution of CFC grants for ULBs between states, different CFCs have adopted different criteria and weights. These are summarised in Table 18.7. A study of the CFC reports suggests that due to the limitations placed by the Constitution of India under Article 280, the CFCs could not recommend a formula-based share in the divisible pool of central taxes for ULBs. They did recommend some measures to augment the finances of municipalities. However, none of the commissions has dwelt upon a suitable architecture for organising municipal finances in India with a rightful place for central and state fiscal transfers therein.

Fiscal transfers to municipalities: Practices Countries around the globe assign more expenditures than revenues to their sub-national governments. Vertical imbalance is built into their fiscal federalism. Intergovernmental transfers finance 59.5 per cent of sub-national expenditures in developing countries, 44.1 per cent in transitional countries and 50.3 per cent in developed countries (Alam,2014). They accounted for more than 40 per cent of the revenues of the local government in 13 out of 15 OECD countries in 2010, the figure being more than 50 per cent for Denmark, Hungary, Ireland, Italy and the United Kingdom (OECD,2012). As regards metropolitan cities, at one end of the spectrum, Addis Ababa, Tokyo, Pune, Seoul, Pretoria, Melbourne, Copenhagen and Busan finance more than 80 per cent of the budget with their own revenues. At the other end, 81 per cent of revenue in London came from national grants. 276

Intergovernmental transfers

Transfers versus own revenues Table 18.8 presents the picture of intergovernmental transfers versus own-source revenues in select metropolitan areas around the world. The importance of intergovernmental transfers to ULBs varies between countries depending on their constitutions, contexts, policy priorities, historical evolution and other factors. Internationally, countries can be categorised into two groups in terms of their municipal finance regimes. In a large number of federal and unitary countries, the municipalities have access to high-yielding taxes like income tax and goods and services tax. In a small group of unitary countries like the United Kingdom, where property tax is the dominant local tax, municipalities receive substantial formulae-based grants from the central government. Paradoxically,

Table 18.8 Inter-governmental transfers versus own-source revenues in select metropolitan areas* Metro area

Addis Ababa Bangkok Berlin Brussels Beijing Busan Cape Town Canberra Copenhagen Istanbul Jakarta London Melbourne Mexico City Montreal Prague Pretoria Seoul Shanghai Tokyo Toronto Washington, DC Chennai Delhi Hyderabad Kolkata Mumbai Pune

As % of total municipal revenues Shared taxes*

General – purpose transfers

Specific – purpose Total transfers transfers

Own – source revenues

– 24.0 39.1 36.1 29.2 3.0 – – – 65.0 46.3 – – – – 40.4 – 0.8 32.9 – – – 24.0 17.9 25.0 – – –

– 7.0 18.3 3.0 16.6 2.0 20.0 27.8 7.0 – – 25.6 0 38.0 – – – – 24.7 – – 12.0 – – – – – –

– 20.0 21.9 – 5.2 13.0 – 14.6 10.0 5.0 – 53.0 0 32.0 – – – – 1.5 – 24.0 14.0 – – – – – –

96.9 49.0 20.7 61.0 49.0 82.0 80.0 57.6 83.0 31.0 53.7 19.4 85.8 30.0 76.0 40.3 90.1 90.9 40.9 94.3 76.0 74.0 66.0 73.1 60.0 41.6 80.0 91.0

3.1 51.0 79.3 39.0 51.0 18.0 20.0 42.4 17.0 69.0 46.3 80.6 14.2 70.0 24.0 59.7 9.9 9.1 59.1 5.7 24.0 26.0 34.0 26.9 40.0 58.4 20.0 9.0

Source: Shah (2013, pp. 226, 230). * Data pertain to the period 2001–2010 ** May include tax-base sharing

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municipalities in India have access neither to a broad-based basket of own taxes nor to a sizable pool of fiscal transfers from central and state governments through general or specific transfers.

Patterns of fiscal transfers Tax base sharing is highly prevalent in the United States, Eastern Europe and East Asia, but almost non-existent in developing countries of Africa and Asia. Municipalities in the United States can resort to ‘piggybacking’ on state income, payroll and sales taxes. The Bangkok metropolitan area is empowered to levy origin-based surcharges on central taxes such as Value Added Tax (VAT), excise tax, specific business tax, liquor tax and gambling tax on horse races and gambling license fees.Taxbase sharing is also prevalent in Seoul and Tokyo. Tax revenue sharing is the most significant source of revenue in metropolitan cities of Europe and East Asia. The Bangkok metropolitan area receives a share of 5 per cent of the national personal income tax. In accordance with the Decentralisation Act, 1999, 18.5 per cent of VAT revenues are made available to local governments in Thailand based on a formula. Local governments in Jakarta receive, by origin, 12 per cent of personal income tax and 64 per cent of other taxes.They also get 12 per cent of natural gas and 6 per cent of oil revenues. In OECD countries, approximately 50 of the grants provided by central governments to sub-national governments belong to the non-earmarked category. About 30 per cent of the earmarked grants are with matching requirements; the rest 70 per cent are non-matching transfers.

Determinants of fiscal transfers The amount of fiscal transfers to local bodies in a country depends on (i) legal-institutional framework for determining and implementing transfers; (ii) size of distributional pool; (iii) formula for distribution of transfers; (iv) conditionalities for grant utilisation; and (v) mechanisms for compliance. In some countries, the legal-institutional framework is prescribed under the Constitution or law. In others, transfers are handled through the annual budgetary process. The distributional pool is determined based on one of the following methods: (i) as a share of the grantor government’s total revenues or pre-identified taxes; (ii) on ad hoc basis; or (iii) based on cost reimbursement.The distribution of transfers to eligible entities occurs on the basis of one of the following methods: (i) on derivation basis, i.e., retention of a share of taxes collected within the recipient’s jurisdiction; (ii) formula-based sharing; (iii) based on cost reimbursement;(iv) subject to the specific design of transfer programme; or (v) ad hoc.

The formula for intergovernmental transfers Most countries allocate some portion of intergovernmental transfers to municipalities on the basis of a formula to ensure objectivity, transparency and predictability of funds being made available to recipients. Fiscal capacity, fiscal needs and fiscal effort are the key ingredients of such a formula as discussed below:

Fiscal capacity This aims at measuring the grant recipient’s revenue capacity relative to expenditure needs, i.e. cost of providing a standardised basket of public goods and services. Revenue capacity is the potential revenue the jurisdiction can mobilise on its own by exploiting taxes, user charges and other revenue sources. 278

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Fiscal needs These are defined by the funding necessary to discharge the expenditure responsibilities assigned to a local government, adopting some standard levels of service or service level benchmarks.

Fiscal effort Often used interchangeably with ‘revenue effort’ this is the degree to which a local government utilises the revenue sources assigned to it. Revenue effort reflects the extent to which any local body is exploiting its revenue-raising potential in relation to its revenue base. In addition to these transfer distribution formulae sometimes include variables representing fiscal management, performance accountability and social objectives. In the United States, the municipalities have the authority to levy property tax, local option income tax, local option sales tax, excise tax, payroll tax, gasoline tax, hotel tax, and a number of impact taxes. Yet, they also receive 20–30 per cent of revenues through fiscal transfers from federal and state governments. Apart from property tax, municipalities in Brazil have access to revenues from state and federal value-added tax, service tax, federal income tax and federal financial transactions tax. In China the municipalities have access to property tax, business taxes, fixed assets capital gains tax, valueadded tax, personal income tax, stamp taxes, resource taxes etc. Not just developed countries, rather many developing countries also have far more robust systems of tax assignment and intergovernmental transfer systems than in India. Table 18.9 bears testimony to this.

Table 18.9 Distribution of tax revenue sources of select metropolitan cities* Name of city

Year of data Composition of municipal tax revenues (% of total )

Barcelona

2009

Beijing

2009

Buenos Aires Cape Town Chicago

2007 2009 2009

Lima

2010

Sao Paulo

2010

Tokyo

2008

Delhi

2010

Property tax (64.7); VAT share (12.0); sales tax (11.8); vehicle tax (8.6); construction tax (2.9) Sales tax (39.3); corporation income tax (22.5); VAT share (9.4); individual income tax (9.3); property tax (8.1); deed tax (5.4); construction tax (3.7); stamp tax (1.7); vehicle tax (0.6) VAT share (78.5); property tax (9.0); vehicle tax (8.7); stamp tax (3.8) Utilities tax (68.2); property tax (31.8) Property tax (39.3); state sales tax share (9.6); sales tax (8.5); utilities tax (8.3); state income tax share (8.2); gasoline tax (6.7); telecommunications tax (6.0); transportation tax (4.0); amusement tax (3.3); excise tax (2.7); hotel tax (2.0); other taxes (1.0) Property tax (58.8); vehicle tax (22.6); excise tax (8.3); gambling tax (7.9); other taxes (2.5) Sales tax (53.9); property tax (38.2); individual income tax (6.6); other taxes (1.4) Individual income tax (42.4); corporation income tax (23.9); excise tax (5.6); vehicle tax (2.0); other taxes (7.2) Property tax (88.8); utilities tax (11.2)

Source: Martinez-Vazquez (2013), p. 204. * includes both own and assigned tax revenues.

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Reforming intergovernmental transfers Not only do the ULBs in India have a narrow tax base, they also do not have access to a formula-based sharing in buoyant national and state taxes as in other multi-tier countries. India presents a peculiar case of progressive decline in the fiscal powers of municipalities in spite of increasing urbanisation and the rising contribution of cities to economic growth. Table 18.10 presents a summary of recommendations of major official Committees and Commissions set up by the Government of India. These expert groups did recommend certain principles that subscribe to the theory of local public finance. The High Powered Expert Committee Report (2011) examined the issues of revenue assignment to municipalities, including feasible alternatives to octroi. The HPEC proposed Table 18.10 Recommendations of local finance committees and commissions in India Report of committee/commission

Principles recommended

Local Finance Enquiry Committee, 1950

Sharing of motor vehicles tax, compensation in lieu of local taxes taken over by the state Basic grant – to be such that after taking into account its own resources, the local body will have fairly adequate finances for discharging its obligatory and executive functions and specific conditional grants linked to specific services and local resource mobilization; sharing of motor vehicles tax Grants for public health and amenities; sharing of motor vehicles tax and entertainment tax

Taxation Enquiry Commission, 1953–1954

Committee on Augmentation of Financial Resources of Urban Local Bodies, 1963 (Zakaria Committee) Rural Urban Relationship Committee, 1966 Municipal Finance and Financial Administration (High Powered Committee), Government of Andhra Pradesh 1971 Municipal Finance Commission, Government of Maharashtra, 1974 West Bengal Municipal Finance Commission, 1980 Gujarat Taxation Enquiry Commission, 1980 Municipal Finance Enquiry Committee, Government of Tamil Nadu, 1980 Karnataka Taxation Review Committee: Report on Local Finance, 1983 Committee on Urban Local Bodies, Karnataka, 1986

Source: Various committee/commission reports.

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Sharing of motor vehicles tax and entertainment tax; allocation of receipts from fines to local bodies Basic grant based on population, sharing of motor vehicle tax, state excise duty and state electricity duty, 5% surcharge on sales tax Grant-in-aid in accordance with a code, sharing of entertainment tax and motor vehicles tax Single deficit grant, education grant, other special grants, Madhya Pradesh-type entry tax, sharing of motor vehicle tax and entertainment tax Sharing of motor vehicle tax, entertainment tax and Profession tax Sharing of entertainment tax (95%) Sharing of professional tax; 10%growth in octroi compensation, entry tax – delinked from octroi compensation Per capita grant-in-aid, sharing of motor vehicles tax, entertainment tax (90%), duty on transfer of immovable properties (10%), surcharge on sales tax (10%), octroi compensation with a 20% hike annually

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sharing of all taxes on goods and services levied by the State Government for ULBs. Among the major recommendations, it has proposed the incorporation of a ‘Municipal Finance List’ in the Constitution of India with the following components: •• •• ••

Exclusive Taxes which must be levied and collected by the local bodies. This could include tax on property and vacant land. Further, entertainment tax, professional tax and advertisement tax should be part of this list. Revenue raised by the State Government by levying taxes on goods and services, must be shared with the local bodies. Some non-tax revenue sources like user charges, Floor Space Index (FSI) charge or development charges or impact fees or betterment charges, trade licensing fee etc.

The following are some key lessons from theory and international practice to guide the design of intergovernmental transfers to municipalities in India: •• •• •• ••

•• ••

••

•• •• ••

••

Municipalities must have clearly-defined functions and revenue sources to match their mandated expenditure responsibilities; A good municipal finance system, including a broad-based basket of ‘own’ municipal taxes, is a fundamental requirement for a well-functioning intergovernmental transfer regime; Objectivity, transparency and predictability need to be built into municipal budgeting within medium-term expenditure management and revenue mobilisation frameworks; One size does not fit all; a range of fiscal transfer programmes is needed depending upon the context of fiscal federalism and the objective of the grantor government.The predominant emphasis in grant financing should be on closing the vertical gap.The objectives to be served should assume significance; Specifying too many objectives in a single programme of intergovernmental fiscal transfers is not desirable. One category of grant is appropriate for attaining one type of objective; The design of grants is a critical factor for its success. An objectively determined grant formula with weights assigned to fiscal needs, fiscal capacity and fiscal effort can, apart from meeting the grant objectives, ensure predictability, a key factor necessary for any transfer programme to be effective; When the grantor’s objective is to promote performance and accountability in local government while preserving autonomy, output-based conditionality is most appropriate. If designed well, output-based transfers can lead to excellence in service delivery and attainment of desired outcomes; General purpose transfers, though formula-based, predictable and transparent, often adopt ‘one size fits all’ formula for all types of local governments. They fail to cater to the special needs of cities, e.g. rail-based mass rapid transit in the case of metropolitan cities; A mix of formula-based unconditional revenue grants and conditional capital grants is desirable to address vertical and horizontal imbalances and the much-needed investments in regional and urban infrastructure simultaneously; Allocative efficiency ought to be combined with inter-jurisdictional equity. Unless higher transfers are followed and matched with a contribution by local governments – however small that may be in the case of the poorest jurisdictions, the total benefits and objectives of decentralisation are hard to realise; Transfers should not allow the incompetent and irresponsible local bodies to escape as in the past. Hard budget constraint should be the rule, and soft financing options must be avoided; 281

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••

Fiscal autonomy cannot be developed in a culture of dependency-promoting grants. Thus, municipalities must be enabled to progressively rely on taxes and user charges. They must have an alternative to octroi and adopt land value tax, beneficiaries pay, polluters pay, congesters pay, growth pays and value-capture instruments. If a suitable tax alternative to octroi or a city GST rate is not possible, a formula-based share in the state GST will be most appropriate in the present context of India’s fiscal federalism.

Several theories have vouched for a strong role of local government, with well-defined fiscal arrangements, for ensuring efficiency, accountability, manageability, and autonomy in the delivery of public services. The public finance literature suggests that in order to establish strong local governments they should be able to raise adequate revenues on their own without having to depend on the higher levels of government. The principle of benefit taxation presents an elegant strategy to cities to raise resources while also enhancing accountability and transparency in public service delivery and addressing resistance from taxpayers. While the entire municipal revenue system in India in the post-GST era needs to be drastically overhauled, paradoxically, cities in India have not harnessed the instruments of benefit taxation to generate resources for financing planned urban development. In particular, they have not exploited land and property taxes already assigned to them. These are important benefit taxes suitable for local governments to finance collective services and infrastructure facilities in cities, creating direct, indirect and induced benefits to land and property owners and the city residents in general. However, the subject of benefit taxation in India is grossly neglected by research, as is urban public finance. The principle suggests that ‘beneficiaries pay’. This includes ‘users pay’, regarded as the ‘first-best’ principle to finance public services. By corollary, those who create dis-benefits to the society pay for the mitigation costs; congesters pay, polluters pay and growth pays. The fiscal equivalence, correspondence and subsidiarity principles in fiscal federalism consider the internalisation of benefits and costs in a geographically defined area as a sound basis for local government organisation. If the benefit principle in this sense of a link between taxation and spending – the Wicksellian Connection – is central to achieving the aims of fiscal decentralisation, charging for public services and earmarking revenues to the services provided should be equally central to a sound local finance system. In such a system, expenditure responsibilities would be matched with revenue resources, revenue capacities matched with political accountability, and benefit areas matched with financing areas (Bird and Slack, 2014). Whenever possible, services provided by the public sector should be sold to those who receive them and the revenues yielded by such sales should be sufficient to pay for the cost of providing the service. International practice on intergovernmental transfers to municipalities suggests that the most effective programmes have simple objectives and transparent criteria, while conditionalities are imposed on outputs or attainment of standards rather than on inputs and processes. The formulae for grant distribution are also simple and well-understood. Clarity of purpose, adequacy of revenue and incentives for own revenue mobilisation are key factors behind the success of fiscal transfers to sub-national governments, including local bodies. Clarity in objective is a key requirement for the effective design of intergovernmental transfers, including the quantum of grants and formulae for distribution. Conditional non-matching output-based transfers are more desirable over other categories in order to ensure that local bodies are responsible, accountable and result-oriented. Outputbased transfers grant independence along with budgetary flexibility to local bodies. These also incentivise local governments for efficiency in delivery of services. These transfers are suitable for financing infrastructure, education, health and public transit. Conditional capital grants are 282

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good tools to address infrastructure deficiencies; they promote national standards in service quality and access of citizens and businesses to critical infrastructure facilities. As regards the design of fiscal transfers, a study of the past CFC reports suggests that they have not considered the factors of ‘fiscal needs’, ‘fiscal capacity’ and ‘fiscal effort’ together while recommending fiscal transfers to local bodies. The Fourteenth CFC has confined itself to fiscal needs only. No CFC has dwelt on the issue of fiscal capacity. India may perhaps set a road map to achieve a 3 per cent ‘transfers to municipalities-GDP’ ratio by the time the country reaches 50 per cent urban mark – 1 per cent through central channels and 2 per cent through state routes, including city GST rate within state GST rate or a formula-based share in state GST (Mohanty, 2016).Based on a study of ULBs in Maharashtra, a statutory share in state GST for ULBs to the tune of 25 per cent could perhaps be appropriate, to start with.

Conclusion The chapter argues that a sensible approach to reform the complex intergovernmental transfer system in India revolves around the basic questions: Why transfers are needed and whether the transfer design is capable of addressing the intended objectives? In this regard theory and practice, especially the models adopted by multi-tier countries like Brazil, South Africa, Nigeria, China and the Philippines can be of good guidance. The theory and practice of urban economics and public finance suggests that the municipal finance system must be viewed as an integrated whole rather than as a bundle of disjointed components. Each component of the system, including user charges, benefit charges, benefit taxes, general taxes, intergovernmental transfers and borrowings has a distinct place and a designated role to play. Direct user charges act as prices for public services. Benefit charges and taxes act as surrogate prices. General taxes are warranted when user charges, benefit charges and benefit taxes are not able to mobilise adequate revenues to meet the costs of public services and infrastructure. Intergovernmental transfers are required to address vertical and horizontal imbalances and correct for externalities. Borrowing is the only practical way to meet the cost of lumpy infrastructure facilities that require huge upfront investment and yield benefits that spread over generations (Bahl and Linn, 1992).These principles provide useful hints for designing the system of municipal finances, including intergovernmental transfers in India in tune with the demands of economic growth and structural transformation. The systems of fiscal transfers to ULBs in India are not based on known principles or practices. They are dependency-promoting and against the spirit of decentralisation envisaged in the Constitution (74th Amendment) Act 1992.They need to be reformed, taking into account the fiscal federalism framework mandated by the Constitution of India. A bulk of central revenues originates from cities and broader public interest calls for supporting cities as engines of agglomeration-driven and knowledge-led economic growth and generators of public finance for socioeconomic development. Taking these factors into consideration, the profound observation of the Thirteenth Finance Commission that local bodies be allowed to benefit from the buoyancy of central taxes needs to be given due weight. This is an important recognition for the design of municipal finance reforms in India. A formula-based share for ULBs in the national divisible pool of taxes and state revenues is highly desirable.This needs to supplement the strengthening of ‘own’ taxes and other revenue sources of ULBs. A municipal finance list in the Constitution of India, as recommended by HPEC (2011), is worth considering. The deepening mismatch between municipal functions and finances is a primary reason justifying intergovernmental transfers in India. However, while systemic reforms need to be 283

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pursued, the reduction of vertical imbalance through internal resource mobilisation and sound financial management ought to be the first resort for the ULBs. Local bodies in India often clamour for more and more resources from the state and central governments without making genuine efforts to exploit the fiscal instruments already available with them or reduce costs.This situation must be avoided and the ULBs must not be subject to a soft budget constraint. Fiscal transfers leading to additional sources (through measures such as sharing of stamp duty, devolution of profession tax, sharing of motor vehicles tax, sharing of GST, general grants, special grants, etc.), if only linked to ‘own’ source mobilisation or municipal share for capital projects mobilised through measures such as property tax reform, exploitation of land use planning and development as resource, rationalisation of user charges and benefit taxes including impact fees and betterment levies, can play a key role in leveraging the devolved funds. This model can deliver results only under a hard budget constraint for the ULBs. India needs a robust framework of municipal finance. Octroi, despite being criticised as a bad tax, was a major source of revenue for the local bodies. For example, the compensation from the erstwhile state government of Andhra Pradesh to the Municipal Corporation of Hyderabad for the loss of octroi and toll tax has remained below Rs. 50 lakhs for many years, although the yield from octroi alone could have been Rs.1,000 crores annually had the tax not been abolished. Similarly, octroi constituted about 42 per cent of total municipal revenues for Greater Mumbai, yielding about Rs. 7,000 crores annually. With octroi and entry tax subsumed under the GST, a statutory sharing of at least 25 per cent of state GST with urban local bodies seems to be the most appropriate alternative in the present context. It may be fair to suggest that the central GST rate be reduced by at least 1 per cent and state GST rate be increased commensurately to enable states to effect formula-based sharing of GST with cities and towns, the engines of national and state economic growth. Further, the sharing of state revenues and allocation of state grants to ULBs need to be based on sound principles and practices. India needs to shift from the present ad hoc system of city financing to a robust framework rooted in theory and international practice of urban public finance.

References Administrative Staff College of India (ASCI) (2014). Municipal Finances and Service Delivery in India: A Study Sponsored by the Fourteenth Finance Commission, Government of India. Hyderabad: ASCI. Alam, Munawwar (eds.) (2014). Intergovernmental Fiscal Transfers in Developing Countries: Case Studies from the Commonwealth. London: Commonwealth Secretariat. Bahl, Roy and Linn, Johannes (1992). Urban Public Finance in Developing Countries. New York: Oxford University Press. Bird, Richard M. and Slack, Enid (2014). ‘Local Taxes and Local Expenditures in Developing Countries: Strengthening the Wicksellian Connection’, in Kim, J., Lotz, J., and Mau, N. J. (eds.) Interaction between Local Expenditure Responsibilities and Local Tax Policy – The Copenhagen Workshop 2013. The Korea Institute of Public Finance and the Danish Ministry for Economic Affairs and the Interior. Bird, Richard M. and Smart, Michael (2002). ‘Intergovernmental Fiscal Transfers: International Lessons for Developing Countries’, World Development, 30(6), pp. 899–912. Brueckner, Jan (2011). Lectures in Urban Economics. Cambridge, MA: MIT Press. Duranton, Gilles and Puga, Diego (2004). ‘Micro-foundations of Urban Agglomeration Economics,’ in Henderson, J. Vernon and Thisse, Jacque (eds.) Handbook of Urban and Regional Economies, Vol. 4. Amsterdam: North-Holland, pp. 2063–2117. Glaeser, Edward L. (2011). Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier. New York: Penguin Books. Henderson, J.Vernon (1974). ‘The Sizes and Types of Cities’, American Economic Review 64(4), pp. 640–656. HPEC (High Powered Expert Committee) (2011). Report on Indian Urban Infrastructure and Services. The High Powered Expert Committee (HPEC) for Estimating the Investment Requirements for Urban Infrastructure Services. New Delhi. 284

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Martinez-Vazquez, Jorge (2013). ‘Local Non-property Revenues’, in Bahl, Roy W., Linn, Johannes and Wetzel, Deborah L. (eds.) Financing Metropolitan Governments in Developing Countries. Cambridge, MA: Lincoln Institute of Land Policy, pp. 183–211. Mathur, Om Prakash (2013).‘Finances of Municipalities: Issues before the Fourteenth Finance Commission’, Economic and Political Weekly, XLVIII(22), June 01. McKinsey (2010). India’s Urban Awakening: Building Inclusive Cities, Sustaining Economic Growth. Mumbai: Global Institute. McKinsey and Company. Mishra, A. K. (2017). Reforming the System of Intergovernmental Transfers to Municipalities in India. HUDCO Chair Research Programme. School of Economics, University of Hyderabad, July. Mishra, A. K. and Mohanty, P. K. (2018). ‘Urban Infrastructure Financing in India: Applying the Benefit and Earmarking Principles of Taxation’, Journal of Social and Economic Development, 20(1), pp. 110–128. Mohanty, P. K. (2016). Financing Cities in India: Municipal Reforms, Fiscal Accountability and Urban Infrastructure. New Delhi: SAGE. Musgrave, Richard A. (1959). The Theory of Public Finance. New York: McGraw-Hill. Oates, Wallace E.(1972). Fiscal Federalism. New York: Harcourt Brace Jovanovich. OECD (Organisation for Economic Co-operation and Development) (2012). ‘General Government Accounts: Public Finance and Employment: Revenues’, OECD National Accounts Statistics.Paris: OECD. Planning Commission, Government of India (2008). Eleventh Five Year Plan 2007–2012. New Delhi: Government of India. Reserve Bank of India (2016). State Finances: A Study of Budgets of 2015–2016. Mumbai, April. Rosenthal, Stuart S.andStrange, William C.(2004). ‘Evidence on the Nature and Sources of Agglomeration Economies’, in Henderson, J.Vernon and Thisse, Jacque (eds.) Handbook of Regional and Urban Economics, Vol. 4.Amsterdam: North-Holland, pp. 2119–2171. Shah, M. Anwar (2013). ‘Grant Financing of Metropolitan Areas: A Review of Principles and Worldwide Practices’, in Bahl, Roy W., Linn, Johannes and Wetzel, Deborah L. (eds.) Financing Metropolitan Governments in Developing Countries. Cambridge, MA: Lincoln Institute of Land Policy, pp. 213–242. Tiebout, Charles M. (1956). ‘A Pure Theory of Local Expenditures’, Journal of Political Economy, 64, p. 416.

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Part 5

Sectorial aspects of decentralisation

19 Implementing workfare through decentralised government for poverty reduction R. Manjula

Introduction The concept of livelihood security has emerged from Sen’s capabilities approach. In the early 1990s, Chambers and Conway (1992) defined livelihoods as the capabilities, assets (stores, resources, claims and access) and activities required for a means of living; a livelihood is sustainable when people can cope with and recover from stress and shocks, maintain or enhance their capabilities and assets, and provide sustainable livelihood opportunities for the next generations. (cited in Lindenberg, 2002, p. 304) Frankenberger (1996) (cited in Lindenberg, 2002) defined household livelihood security as the ability of a household or community to maintain and improve its income, assets and social well-being. Lindenberg (2002) applied the concept of livelihood security to specific interventions aimed at promoting secure livelihood options for the poor. Citing various papers, Lindenberg (2002) notes that poor households in developing countries often maintain a fragile equilibrium. Households in a fragile equilibrium may be in a position to meet basic needs, but they may require external assistance during certain times of a year, for instance, during the agriculturally slack season when the poor may experience hunger and face vulnerability for between one and three months in each year on account of lack of adequate employment. Hence, workfare becomes a relevant policy and programme to promote livelihood security for the poor. The concept of workfare refers to mandatory work programmes for those people who depend on state welfare.The term is the combination of work and welfare.Workfare has become a widely practised policy tool in both developing and underdeveloped countries for poverty reduction. Workfare programmes are not new and have been implemented for a long time under different names – wage employment schemes, food for work programmes, employment guarantee schemes, etc.1 Workfare programmes are commonly used both for short-term relief and long-term development purposes. While short-term relief is provided in the form of income through wage DOI: 10.4324/9780429321887-19

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employment, long-term development is seen in the form of undertaking work that promotes natural resources in a locality. These programmes typically aim to provide participants with at least the minimum quantity of food necessary to maintain good nutrition. Second, an important characteristic of these programmes is the provision of benefit in exchange for the work. This implies that only those who are able to undertake manual work will be in a position to participate in the programmes. As a result, targeting beneficiaries tends to do better (Besley and Coate, 1992), and benefits from such programmes are more likely to reach the poor. Third, the decentralised targeting of beneficiaries and the prioritisation and management of public works projects is possible as the local information is used to plan and implement public works for employment. Finally, harnessing available local resources is possible to advance long-term development objectives such as employment promotion, asset creation and poverty alleviation in food-deficit areas. Workfare programmes, thus, have the potential for poverty reduction,