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Centre for Policy Research 
Dharma Marg, Chanakyapuri 
New Delhi 110021 
www.accountabilityindia.org
Created by 
T.R. Raghunandan
Part 1: 
Introduction and background to 
decentralisation & Local Governments 
in India
A brief history 
• Existence of self-governing village communities across sub-continent 
that over millennia, served as ma...
Local governments in British India 
• 1687: Municipal corporation of Madras constituted, on the British 
model of a town c...
The Indian freedom movement and local 
governments 
• Indian freedom movement starts demanding “self-government” as 
the f...
The first constitutional steps 
• Mahatma Gandhi: 
– The entire edifice of Indian democracy should be based upon 
one popu...
More history.. 
• 1953: Autonomous councils set up in tribal areas 
• 1955: Balwant Rai Mehta Committee submits report and...
Panchayats 
& 
Nagarpalikas 
•24 States, 
•5 Union 
Territories 
Local government structures in India 
Fifth 
Schedule 
Ar...
Salient features of the 73rd Constitution 
Amendment Act, 1993 
• Constitutional status for Gram Sabha (assembly of the co...
Salient features of the 74th Constitution Amendment Act, 
1993 
• Different kinds of urban local bodies 
– (a) Nagar Panch...
Article 243 G reads as under, 
Powers, authority and responsibilities of Panchayats.- 
Subject to the provisions of this C...
Eleventh Schedule lists 29 matters as below 
Land improvement, 
land reforms, consolidation 
soil conservation. 
Family we...
Burial and burial grounds, 
cremations, 
crematoriums 
Public amenities, incl. street lighting 
parking lots, bus stops 
T...
Part 2: 
Merits and demerits of Panchayati Raj in 
India
Inclusion of people in governance: Statistics 
on Panchayats… 
• 537 District Panchayats, 15,694 elected 
representatives....
Modes of functional assignments impact 
expenditure assignment design 
Delegation 
Deconcentration 
Devolution 
Passing do...
What are the dividends from decentralisation? 
• Political? 
– Politicians have always led decentralisation: 
– Yet eviden...
Transfer of political, administrative and fiscal 
responsibilities to Panchayats not achieved. 
• Formal strong legal fram...
Reality concealed by political 
rhetoric and official reporting… 
• Replication at Panchayat levels of political and 
admi...
The difference between real and not-so-real 
devolution 
Real Devolution: 
• Clear role assignment, 
• Power to spend mone...
Elements of good design for 
devolution 
• Role clarity, 
• Finance to follow function, 
• Rules of devolution to be clear...
Thank you
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Local Governments and Decentralisation in India

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Local Governments and Decentralisation in India

  1. 1. Centre for Policy Research Dharma Marg, Chanakyapuri New Delhi 110021 www.accountabilityindia.org
  2. 2. Created by T.R. Raghunandan
  3. 3. Part 1: Introduction and background to decentralisation & Local Governments in India
  4. 4. A brief history • Existence of self-governing village communities across sub-continent that over millennia, served as main interface between predominantly agrarian village economies and • Custom and tradition elevated these earlier councils or assemblies called “sabhas” to a position of considerable authority. • “Panchayat” (an assembly of five respected elders) became pivot of administration, focus of social solidarity and principal forum for dispensation of justice and resolution of local disputes. • Characteristics of village panchayats remained unchanged during medieval and Mughal periods.
  5. 5. Local governments in British India • 1687: Municipal corporation of Madras constituted, on the British model of a town council, with powers to levy taxes and deliver services, comprising of nominated members. • 1870: Revival of traditional village panchayat system in Bengal • 1882: Ripon Resolution, providing for rural local boards with two-thirds of membership to be composed of elected, non-official representatives and presided over by a non-official Chairperson.
  6. 6. The Indian freedom movement and local governments • Indian freedom movement starts demanding “self-government” as the first political goal, before evolving to demand for independence. • 1909: Royal Commission on Decentralisation recognises importance of Panchayats in the governance of India. • 1919: Government of India Act 1919, brings in system of ‘dyarchy’, and transfers self government to the domain of Indian Ministers in the provinces. • 1935-39: Provincial Autonomy under the Government of India Act, 1935 results in popularly elected governments in Provinces, who in turn enacted legislation for further democratization of local self-governments,
  7. 7. The first constitutional steps • Mahatma Gandhi: – The entire edifice of Indian democracy should be based upon one popular election to the Village Panchayat and indirect elections from panchayats to State Assemblies and from the State Assemblies to the Parliament. • Article 40 of the Constitution: – The State shall endeavour to constitute village Panchayats as institutions of local self government
  8. 8. More history.. • 1953: Autonomous councils set up in tribal areas • 1955: Balwant Rai Mehta Committee submits report and recommends three tier system of local governments in rural areas, • 1959 to 1965: LGs set up in the first flush of enthusiasm, but then further elections are delayed, except in a few States, Gujarat and Maharashtra. • 1972:West Bengal constitutes Panchayats at three levels and undertakes election, • 1977: Ashok Mehta Committee, recommending two tier Panchayats, • 1987: Big-bang devolution to Panchayats in Karnataka • 1989: The failed 64th and 65th amendments
  9. 9. Panchayats & Nagarpalikas •24 States, •5 Union Territories Local government structures in India Fifth Schedule Areas Areas of 9 States •AP, •Chhattisgarh •MP •Rajasthan •HP •Jharkhand •Maharashtra •Gujarat •Orissa Sixth Schedule Areas Areas of Assam, •Meghalaya, •Mizoram, •Tripura Others systems established through State laws •Hill areas of Manipur, •Nagaland, •Darjeeling Gorkha Hill Council; (Exempt from ZPs) •J&K Environmentally sensitive or resource rich areas have diverse LG structures
  10. 10. Salient features of the 73rd Constitution Amendment Act, 1993 • Constitutional status for Gram Sabha (assembly of the community), • Three tier Panchayat system at the village, intermediate and district levels except in State with populations of less than 20 lakhs, where intermediate Panchayats may not be constituted, • Reservation of seats and leadership positions for SCs/STs and women, • Regular elections every 5 years, • Establishment of independent State Election Commission, • State Finance Commissions to be set up once in 5 years, • Powers to be so devolved upon Panchayats as to enable them to functions as institutions of self government (Article 243 G read with Schedule XI).
  11. 11. Salient features of the 74th Constitution Amendment Act, 1993 • Different kinds of urban local bodies – (a) Nagar Panchayat for an area in transition from a rural area to an urban area; – (b) Municipal Council for a smaller urban area; and – (c) Municipal Corporation for a larger urban area, – Industrial townships exempted from Municipalities. • Reservation of seats and leadership positions for deprived communities and women, • Regular elections every 5 years through independent State Election Commissions, • State Finance Commissions to be set up once in 5 years to recommend financial share of LGs, Central Finance Commission to do the same, from central revenues, • Powers to be so devolved upon ULBs to enable them to function as institutions of self government. • Wards committees to be set up for peoples’ participation • Other committees can also be set up by the government
  12. 12. Article 243 G reads as under, Powers, authority and responsibilities of Panchayats.- Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow the Panchayats with such powers and authority as may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the devolution of powers and responsibilities upon Panchayats at the appropriate level, subject to such conditions as may be specified therein, with respect to- (a) the preparation of plans for economic development and social justice; (b) 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.
  13. 13. Eleventh Schedule lists 29 matters as below Land improvement, land reforms, consolidation soil conservation. Family welfare Minor irrigation, water management watershed devpment Agriculture, incl. extension Animal husbandry, dairying and poultry Welfare of the weaker sections, in particular of SCs and STs Markets Fairs Technical training vocational education Khadi, village and cottage industries Fisheries Social forestry farm forestry Minor forest produce Rural housing Drinking water Fuel and fodder Maintenance of community assets Roads, culverts,bridges, ferries, waterways other means of communication Small scale industries, food processing industries Non-conventional energy Education, including primary and secondary schools Poverty alleviation programme Rural electrification, distribution of electricity Health and sanitation hospitals. Primary health centres dispensaries Cultural activities Libraries Adult and non-formal education Public distribution system Social Welfare, Welfare lf handicapped and mentally retarded Women and Child development
  14. 14. Burial and burial grounds, cremations, crematoriums Public amenities, incl. street lighting parking lots, bus stops Twelfth Schedule Regulation of land use and construction of buildings Planning for economic and social development Urban Planning, incl. town planning Safeguarding interests of weaker sections, including handicapped and mentally retarded Provision of urban amenities and facilities such as parks and playgrounds Urban forestry, environmental protection and promotion of environmental aspects Regulation of Slaughter houses and tanneries Fire services Water supply for drinking, industrial and commercial purposes Roads and bridges Promotion of cultural, educational and aesthetic aspects Urban Poverty alleviation Public health, sanitation Conservancy and solid waste management Cattle pounds, prevention of cruelty to animals Slum improvement and upgradation Vital statistics incl. registration of births and deaths
  15. 15. Part 2: Merits and demerits of Panchayati Raj in India
  16. 16. Inclusion of people in governance: Statistics on Panchayats… • 537 District Panchayats, 15,694 elected representatives. (37 % women, 17 % SC, 11 % ST) • 6094 Intermediate Panchayats, 1,56,609 elected representatives. (37 % women, 21 % SC, 7 % ST) • 2,33,913 Village Panchayats, 26,56,476 elected representatives. (37 % women, 19% SC and 12% ST) At the Village Panchayat level, each elected representative’s constituency comprises of about 340 people, (70 families)
  17. 17. Modes of functional assignments impact expenditure assignment design Delegation Deconcentration Devolution Passing down of authority and responsibility from a superior to an agent to carry out specific tasks. Levels of territorial and functional administration of Centre at lower levels carrying out central functions. Powers and authority endowed by higher government level of government to lower government level through statute (including Constitution) backed by financial resources, & considerable autonomy; accountability largely to citizens.
  18. 18. What are the dividends from decentralisation? • Political? – Politicians have always led decentralisation: – Yet evidence is that political benefits are shortlived for the visionary who triggers decentralisation. • Efficiency? – Bureaucrats have generally resisted decentralisation: • Feeling that too many levels of decision are slowing down decisions; that we are paying a ‘democracy tax’ in the form of delays, the belief that corruption is decentralised. – Economists are newcomers; • Lack of data and good research prevents serious in depth examination of economic arguments • Equity? – Civil society remains skeptical of benefits: – Elite capture hinders better targeting through Panchayati Raj
  19. 19. Transfer of political, administrative and fiscal responsibilities to Panchayats not achieved. • Formal strong legal framework hides reality of marginalisation of Panchayats. • Poor definition of and considerable overlap in their roles among Panchayat levels. • Poor fiscal decentralisation • Panchayats supplanted by parallel institutions, to which entitled funds of Panchayats are diverted, • Large measure of centralisation in plan formulation, with virtually no local discretion leading to tendency to divide funds equally among elected representatives for their constituencies, which limits the size, scale, reach and effectiveness of projects. • Empowerment of communities to exert control over Panchayats still weak, • Failure of Gram Sabhas to ensure downwards accountability and good social audit. Deformities
  20. 20. Reality concealed by political rhetoric and official reporting… • Replication at Panchayat levels of political and administrative distortions existing at higher levels, • Rising of power centres usually occupied by elites within the Panchayati system, undermining the spirit of democratic decentralization. • Unchanged power relations among Panchayats, the bureaucracy, MLAs and MPs • PRI functioning sometimes beset with patronage politics. • Insufficient attention to decision-making details, leading to poor quality of decision-making. Deformities
  21. 21. The difference between real and not-so-real devolution Real Devolution: • Clear role assignment, • Power to spend money, • Power to tax, • Discretion in spending money, • Power to hire fire and control staff, • Direct Accountability. Not-so-real devolution: • Scheme bound expenditure, • Staff on deputation, • Limited power to collect resources • Somebody else (above or below) acting for the Panchayats • Somebody else (above or below) responsible for Panchayat performance
  22. 22. Elements of good design for devolution • Role clarity, • Finance to follow function, • Rules of devolution to be clear, • Clear accountability for devolved responsibilities, • institutions able to respond to the emerging demand for capacity support, • a minimum level of capacity to absorb a program of capacity building,
  23. 23. Thank you

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