34

Decentralized Planning and Local Governance in India

E. M. Thomas

The decentralization and devolution of powers and functions, to the grassroots level of organizations was a dream of Mahatma Gandhi, who ardently believed in the concept of Gram Swaraj. Even though the self-governing village committees existed in India from the earliest times of the Rigveda (1200 BC), the British transformed them to the present type of accountable, representative institutions (George, 2000). Sir Charles Metcalf, the Provisional Governor General of India (1835–36) called the Indian village committees as ‘the little republics’. Moreover, the term ‘self-government’ had begun to gain currency in the country, with the famous 1882 resolution of Lord Rippon, which is hailed as the Magna Carta of the local government in India (S. S. Singh 1997).

This chapter makes an attempt:

1. To study the evolution of panchayati raj and decentralized planning in India.
2. To evaluate briefly the performance of various Indian states, in the implementation of decentralized planning programmes.
3. To identify the issues and problems related to the practice of decentralized planning in the country, so that they can be resolved with suitable policy measures, without delay.

The post-Independent India’s efforts at decentralized planning started with the First Five Year Plan. Since then, the government has appointed a number of committees, to study the viability of decentralized planning. The genesis of the Panchayati Raj systems in post-Independent India is attributed to the Balwant Rai Mehta Report (1957), which favoured the block as the basic unit of decentralization. Later, the Ashok Mehta Committee (1997), the M. L. Dantawala Committee (1978) and the Hanumantha Rao Committee (1984) favoured the district, as the primary unit of decentralization. Further, the G. V. K. Rao Report (1985) and the L. M. Singhvi Report (1986) on the Panchayati Raj system, paved the way for the 73rd and the 74th Constitutional Amendment Acts, which are responsible for the present system of decentralized, democratic local self-government in India. Moreover, the 64th Constitutional Amendment Bill (1989) provided the true basis for the introduction of Panchayati Raj in the country. As our late Prime Minister, Rajiv Gandhi remarked in 1989, India was the world’s largest, as well as the ‘least representative democracy’. This was the time, when a mere 5,000 or so elected representatives in the parliament and state assemblies, represented nearly a billion people. Now, thanks to the constitutional amendments of 1992, initiated by the then Prime Minister, Rajiv Gandhi in 1989, we have nearly 32 lakh elected representatives, including 12 lakh women and members of the scheduled castes and scheduled tribes and, in many states, other backward classes. These are represented in proportion to their share of the population in each ward, and in the elected rural and urban local bodies, that is, the panchayats and the municipalities (The State of Panchayats 2006). The present size and dimension of the representative democracy, facilitated by the 73rd and the 74 th Constitutional Amendment Acts, can be observed from the Table 34.1.

TABLE 34.1 Number of Panchayats and Elected Representatives in the Three Levels of Panchayats, States and Union Territories in India as on 1 December 2006

The history of decentralized democratic self-government in India is also the history of continuous clashes between the decentralization optimists and the decentralization pessimists. As mentioned earlier, Sir Charles Metcalfe, Lord Rippon, Mahatma Gandhi, and others who followed the Gandhian principles, can be called decentralization optimists. They coined terms like ‘little village republics’ and ‘Gram Swaraj’. At the same time, the die-hard advocates of centralized planning, and several others who feared that panchayati raj will create a large number of ‘Little Hitlers’ (Arun Ghosh 1989) represent the group of decentralization pessimists. Even now, several people allege that the practice of decentralized planning is a part of the evil designs of the west, to destabilize the developing and emerging economies of the world.

34.1 Meaning and Principles of Decentralized Planning

The word decentralization has its roots in Latin. According to Mac Makon A. W. (1961), the word’s Latin roots convey its meaning as ‘away from centre’. To some others, like Leonard D. White (1959), decentralization denotes ‘the transference of authority, legislative, judicial or administrative, from a higher level of government to a lower level. There are four types of decentralization (D. A. Rondeneli et al. 1984), namely, deconcentration, delegation, devolution and privatization. Decentralization is the transfer of powers and functions by administrative means, to the local representatives of the central government, or handing over of some amount of administrative authority or responsibility, to the lower levels within the government ministries or agencies. Delegation refers to the transfer of powers and functions either to the local governments or the local representatives of the central government, which is undertaken by administrative means, that is not irrevocable. Devolution is the legal transfer of powers or functions to a locally elected public body. Privatization refers to the passing of all responsibility or functions, to the non-governmental organizations or private individuals, and enterprises independent of the government.

Local planning is based on two concepts, namely: (a) development from below, and (b) development from within (Sundaram 1995). Development from below is by and large a government-initiated planning venture, with a modicum of people’s participation. The projects initiated by the sectoral departments belong to this category. In the case of development from within, people initiate the projects. The projects that are planned by a local community with untied resources, coming to them from above, and the resources that are generated within the local community, belong to this category. The decentralized planning is a planning process involving negotiation, in which the different actors involved interact, discuss and determine the matters relating to the allocation of the resources, and the projects to be implemented.

The smooth functioning of a decentralized planning system requires the adherence to certain basic principles. Amitava Mukherjee (1990) presents these basic principles as follows: (a) the principles of functional decentralization, (b) the principle of financial decentralization, (c) the principle of mobilization of local resources, (d) the principle of planning location, (e) the principle of decentralized administration, (f) the principle of public participation, and (g) the iteration principle and the principle of nesting and integration of plans.

The basic principles of decentralized planning as laid down by J. B. Sen (1996), in connection with the decentralized planning in Kerala give more clarity in this direction. They are the principles of autonomy, subsidiarity, role clarity, complementarity, uniformity, people’s participation, accountability and transparency. These principles can be explained briefly as follows:

• Autonomy: Local self-government institutions are to be autonomous functionally, financially and administratively.
• Subsidiarity: What can be done best at a particular level should be done at that level, and not at higher levels. All that can be done at the lowest level should be reserved, for that level.
• Role clarity: There should be clarity at the conceptual and the operational levels, regarding the role of each tier in the development process, and a clear division of powers between them.
• Complementarity: The functions of different tiers should not be overlapping, but should be complementary to each other.
• Uniformity: There should be uniformity of norms and criteria, for the pattern of assistance or selection of beneficiaries, for all the programmes.
• People’s participation: The functioning of local self-government, should be such that it facilitates maximum direct participation in the developmental process. The participation should be empowered and deliberative.
• Accountability: The accountability of the elected representatives is usually confined to periodic electoral verdicts. Instead, there should be continuous social auditing of performance.
• Transparency: People should have the right to information regarding every detail of administration.

34.1.1 Decentralized Planning and Panchayati Raj

The new era of decentralized planning in India began with the 64th Constitution Amendment Bill. It insisted that panchayats would have the powers and the responsibility, for the preparation of plans for economic development and social justice (Article 243 F).

The 73rd Constitution Amendment Act, 1992, (Article 243 G) also entrusts the panchayats with the responsibility, for the preparation of plans for economic development and social justice, and the implementation of schemes for economic development and social justice, as may be entrusted to them including those in relation to the matters listed in the Eleventh Schedule.

34.2 Decentralized Planning: Experience of Various Indian States

Even before the 73rd and the 74th Constitutional Amendment Acts, several Indian states had experimented with the various types of decentralized planning. Gujarat was the first state to initiate decentralization of planning. In 1973, a three-tier Panchayati Raj system was introduced in the state. Rajasthan introduced a multilevel planning system, beginning with the Fourth Five Year Plan in 1965. Karnataka started its decentralized planning experiment during the Sixth Five Year Plan period, with a two-tier system of planning. They started the process of decentralization of planning, with the implementation of the Integrated Rural Development Programmes through village panchayats in 1977. Maharashtra introduced decentralized planning at the district level in 1975.

None of these states, experimenting with the different models of decentralized planning under serious constraints, imposed by the diverse social and political conditions, has attempted to implement a truly democratic form of decentralized planning, by empowering the people at the grassroots level to formulate and implement their own development plans, with the state government remaining as the custodian of funds, and playing the role of a facilitator for decentralized planning, by providing the local level agencies with financial support. All these decentralization ventures have been more administrative, rather than democratic (Gopinathan Nair 2000).

But, the 73rd Constitutional Amendment Act, 1992, is an attempt to institutionalize participatory democracy and decentralized planning, in the rural areas. As mentioned earlier, Article 243 G mandates that panchayats should prepare plans for the economic development and social justice, and Article 243 ZD endorses the strategy of spatial planning. In spite of the wide acclaim, the 73rd Amendment received in India, not many states have given adequate importance to decentralized planning.

The states actively practicing decentralized planning in India are Kerala, Karnataka, West Bengal and Sikkim. Several other states like Maharashtra, Madhya Pradesh, Himachal Pradesh, Rajasthan and Tamil Nadu are earnestly taking initiatives to improve their performance, in the proper implementation of plan programmes (George 2000).

At present, the Ministry of Panchayati Raj is engaged in urging the states to set up District Planning Committees (DPCs) as quickly as feasible. The Constitution enjoins that all the states and union territories (except Meghalaya, Mizoram, Nagaland, Jammu and Kashmir, the hill areas in Manipur, the hill areas of the district of Darjeeling for which the Gorkha Hill Council exists, the NCT of Delhi and the sixth schedule areas where autonomous district councils have been constituted) are required to set up DPCs, to draft development plans for the district. The DPCs also have to oversee the matters of common interest between the panchayats and the municipalities, including spatial planning, sharing of physical and natural resources, integrated development of infrastructure, environmental conservation and assessment of the extent and type of available resources, both financial and otherwise. But, even now, 11 states and two union territories do not have DPCs. Tables 34.2 and 34.3 show the current status of DPCs, in various states and union territories.

TABLE 34.2 States and Union Territories that Have Not Set up District Planning Committees

TABLE 34.3 States and Union Territories that Have Constituted District Planning Committees in Accordance with Article 243 of the Constitution

The union government has instituted three awards to induce the state governments to promote Panchayati Raj. Last year, Kerala was selected for the Rs 5 crore award followed by Karnataka and Sikkim who bagged Rs 3 crore and Rs 1.2 crore awards respectively. The major criterion for selecting these states, according to the judging committee, were, the timely conduct of elections, the extent of devolution of functions, funds and functionaries, the steps taken to facilitate proper functioning of the gram sabhas, and the effective participation of the marginalized sections.

Several studies have been conducted on the performance of various states in the implementation of decentralized planning in India. Timothy Besley et al. (2007), after conducting a research study covering 522 villages in Karnataka, Andhra Pradesh, Kerala and Tamil Nadu, found considerable differences between these states, in the implementation of decentralized planning. The study found that Karnataka was one of the pioneers of the panchayat movement, and was the first state to mandate regular panchayat elections. Fiscal decentralization has advanced most in Kerala, where the panchayats are characterized by high levels of participation and regular meetings. Andhra Pradesh took a different route, and till recently sought to energize a political alternative to the panchayat system— the Janmabhoomi Programme. Tamil Nadu continues to have relatively weak panchayats, with limited devolution of powers.

Even in Karnataka and Kerala, where the panchayati raj institutions had materialized, the agenda and implementation plan for the rural local finance is not clear (World Bank 2004). Karnataka has burdened the district and block levels with state personnel, and earmarked the use of resources in such a manner that elected representatives are treated as service agents. The panchayats have been left with barely any resources and little discretion in expenditure. Kerala, on the other hand, has a better-designed and more mature decentralization system, but is captive to the fiscal situation of the government. The result is again under-funding of the decentralization initiative. Other states would appear to share several of the problems, outlined above.

Despite India’s commitment to rural decentralization, the panchayats cannot live up to the potential because the structure of the fiscal decentralization system is flawed (World Bank 2004). Moreover, the World Bank study pointed out, that the official data on local finance is not reliable in Karnataka and Kerala. Most often, official records of the panchayat resources are based on budgeted allocations, rather than cash received. Again, significant irregularity in the timing of transfers and their amounts, distorts the actual expenditure pattern and the reporting of these expenditures. Weaknesses in the record-keeping systems and practices are prevalent in several cases. It is also noted that the rural local governments, for the most part, do not have an adequate capacity to deliver services, collect taxes or keep a track of their financial affairs. The state governments are not yet up to implementing the inter-governmental system or to a full tracking and monitoring of the financial performance of their local governments. The central government still plays a role in the sub-state fiscal relations, and this helps and confounds the problems. On the top of this, the overall government deficit limits the extent of the devolution of resources.

The percentage of local government expenditure in relation to the total government expenditure, has declined significantly from 1998–99 to 2002–03. The progress of expenditure decentralization in 11 out of 15 states, appears to be on the decline (Oommen 2006). The 15 states are Andhra Pradesh, Assam, Bihar, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh and West Bengal. The revenue decentralization trend is also no better. That the average rate of growth in the tax revenue of the panchayati raj institutions and the urban local bodies in most states, is negative, or declining, provides a wrong signal.

At the same time, it is improper to reach the conclusion that decentralized planning and local governance could not contribute to the well-being of the people. The highly admirable success stories of the decentralized planning projects were reported from Chhattisgarh, Goa, Odisha, Karnataka, Kerala, Punjab, Sikkim, Rajasthan and West Bengal (The State of Panchayats 2006). For example, decentralized planning could provide lasting solutions to various problems of rural Kerala. The achievements of local planning in providing houses, sanitation facilities, clean and safe drinking water, and road connectivity are praiseworthy. The plan projects of the village panchayats in Kerala stand testimony to this. The achievement of Kerala in the housing sector is envious. Again, while 75 per cent of the households in Kerala were living inpucca houses, at the all-India level it was only 63 per cent in 2003. As regards the rural households, the percentage of people living in pucca houses in Kerala was 66 per cent, while it was only 44 per cent at the all-India level (Kerala Economic Review, 2005).

Likewise, Kerala has the largest coverage of individual household lavatories in India. Out of the 65.95 lakh households in the state, 55.4 lakh (84 per cent) have sanitary lavatory facilities. Also, in Kerala 82.59 per cent of the urban and 62.24 per cent of the rural population were covered by piped water supply by 2004–05. The overall water supply coverage in the state is 67.52 per cent as against 65.2 per cent during 2003–04. The road length in Kerala during 2004–05 increased to 154,679 km from 145,704 km in 2003–04, registering an increase of six per cent. The roads maintained by the panchayats, have also increased by 5.34 per cent in 2004–05. Out of the total length of roads in Kerala (154,679 km), the panchayats occupy 104,257 km or 67.54 per cent. Village roads received unprecedented boost during this period, due to decentralized planning.

Kerala’s decade-long history of decentralized planning also exposes vital problems and issues related to it. One of the pioneering studies, on the evaluation of performance of decentralized planning in Kerala (Thomas 2004), covering the period of 1997–2001, revealed that in the case of the beneficiary and development projects, the number of incomplete and dropped projects together, always outnumbered the completed projects. The spill-over ratio is particularly high in the case of development projects. The main reasons attributed to this are the delay in getting finance, inefficient beneficiary committees, boundary disputes, political disputes, inter-panchayat disputes, unviable projects, ignorance, seasonal changes, and delay from government offices and poor management.

Plan projects belonging to production, service and infrastructure also show a comparatively high ratio of spill-over projects. Another study (Prakash 2005) conducted in 10 districts of Kerala, covering 36 panchayats, disclosed the inter-sectoral disparities in the spill-over ratio of plan projects, and proved that it is high for infrastructure projects. The inefficiency of the panchayats in facilitating time-bound formulation and implementation of projects is the main reason for the presence of the large spill-over of the projects, in the study area.

Social capital formation in the form of increased trust, reciprocity and collective action, could be observed from the attendance of people in the gram sabha meetings. But, the response of people to such meetings fell below the expectations of the government (Thomas 2004, 2006–07). Further, the lack of integration—both vertical and horizontal, at various levels of planning—is another important problem associated decentralized planning in Kerala.

In India, the constitutionally mandated panchayati raj institutions have already moved into their second decade. The focus now is to ensure a sustainable foundation for empowerment, such that panchayats become the principal authority for planning and implementation at the grassroots levels, through the effective devolution of functions, finances and functionaries. For this purpose, we have to overcome the following five challenges, namely, the challenges of the election reform, financial accountability, monitoring and vigilance by panchayats, administrative decentralization, and retreat from devolution (The State of Panchayats 2006). The local self-government institutions should have a sufficient and accurate database regarding its resources, both natural and human. Likewise, the decentralized planning cannot be successfully practiced without the proper participation of people. Strict adherence to the principles of decentralized planning is another important precondition for its practice, particularly in a three-tier system of Panchayati Raj.

To conclude, a decade of decentralized planning and local governance, necessitated by the 73rd and the 74th Constitutional Amendment Acts could expose the Indian polity to the various opportunities and challenges, offered by the new experiment. The new panchayati raj system enabled India to transform automatically from the least representative democracy, to the largest democracy with the maximum representation of people. Several Indian states could show marvellous performances in the field of decentralized planning. But, their success stories were confined to certain sectors and projects. Hence, to ensure a sustainable foundation for the panchayati raj and decentralized planning in India, we had to overcome various challenges related to election reform, techniques of decentralized planning, fiscal decentralization, financial accountability, monitoring and vigilance, administrative decentralization and retreat from devolution. It depends on the earnest efforts of the government to devolve functions, functionaries and finance to the local selfgovernment institutions without delay. The proper monitoring systems and social auditing also should be ensured, so that the public money is effectively used by the local selfgovernment institutions.

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