Mumbai: In April 2018, India marked the silver jubilee of the passing of the 73rd Amendment to the Constitution, which formalised the decentralisation of governance through panchayat raj institutions (PRI) across the country. Part IX of the Amendment made state legislatures responsible for devolving powers to PRIs.

Over the years, the southern states have done better than others in doing this. Kerala, Tamil Nadu, Maharashtra and Karnataka topped the aggregate index for devolution in a 2015-16 report entitled ‘Where Local Democracy and Devolution in India is Heading Towards?’ issued by the Ministry of Panchayati Raj (MoPR). Jammu and Kashmir, Uttar Pradesh, Punjab and Jharkhand were poor performers, it added.

There are exceptions such as Tripura, which has the highest-spending rural bodies in India, as IndiaSpend reported in June 2015. Its per capita spending is almost double that of states with more money and financial powers. But overall, there are challenges of finances, transfer of functions and capacity of local governments to handle the work given to them.

This stems from the fact that politicians and bureaucrats are unwilling to relinquish power, said T.R. Raghunandan, an expert on decentralisation and a former joint secretary in the MoPR, who took voluntary retirement after serving 26 years in the Indian Administrative Service. After retirement, Raghunandan helped establish the initiative in 2011, which crowd-sources reports on corruption from citizens. He also co-founded a non-profit to work in the areas of decentralised public governance and heritage preservation. He was a member of the committee on decentralisation, a member of the state planning board in the government of Karnataka, as well as principal consultant to several expert committees constituted by the government of India on decentralised public governance.

In an email interview with IndiaSpend, Raghunandan talked about the hurdles faced by local governments in rural and urban areas, the reluctance of politicians and bureaucrats to allow the devolution of powers to panchayats, and his perspective on corruption in India.

States such as Kerala, Karnataka and Tamil Nadu are among the top five for transferring functions, institutions and finances to PRIs. Lately, the details related to the weightage given to 2011 population in the 15th Finance Commission (FC) has received a backlash from the southern states. Do you think their reservations are relevant? What effect can it have on rural and urban local governance and the process of decentralisation?

The backlash from South Indian states certainly has plenty of substance. They are protesting because the 15th FC will take into account their 2011 populations when suggesting formulae for horizontal and vertical transfers [of central funds] to states.

These states say they are being punished for more effective population control ever since the family planning programme was announced in 1971. That is bound to have a bearing on the actual proportion of allocations these states receive from the central government’s revenues divisible pool, both for their own use and to supplement local governments’ finances.

The 14th FC was of the view that the use of dated population data is unfair and concluded that a weight to the 2011 population would capture the demographic changes since 1971, both in terms of migration and age structure.

However, this is not directly relevant to the issue of whether south Indian states are doing better than northern ones in the devolution of powers and responsibilities to local governments. Arguably, even if they were not, the use of 2011 population data will harm them.

While there are variations across states, the economic survey 2017-18 noted that urban local governments in India generated 44% (in 2015-16) of their total revenue from their own resources compared to panchayats which overwhelmingly (about 95% in 2014-15) depend on devolution of funds from the Centre. What are the challenges and solutions for resolving challenges to cooperative fiscal federalism?

While urban local governments earn a higher proportion of their revenues on their own as compared to panchayats, the fact remains that both rural and urban local governments are significantly underfunded to perform the tasks that are devolved to them under the law.

This does not mean that there is no scope to raise more revenues at the panchayat and municipality levels. In this regard, it is true that the panchayats have generally failed to utilise the revenue handles that have been given to them by state governments under the law. While some states, such as the southern states and Maharashtra, have had a generally better track record, and Chattisgarh and West Bengal have been able to undertake effective reforms in this regard, there is tremendous scope for panchayats to increase their own revenues.

Unfortunately, it is quite often the lack of capacity of states that has come in the way of panchayats raising their own revenues. Tax administration needs human resources and funds, but where states have not posted panchayat secretaries, or have one-person panchayat offices, panchayats cannot be blamed for not collecting taxes.

Most of the solutions for strengthening fiscal federalism have been repeated ad nauseum over the past two decades. They comprise of (a) a clear assignment of functions, powers and responsibilities to the local governments through activity mapping, (b) a clear budget window in state budgets assigning funds to the panchayats to match the devolved functions, (c) adequate staffing at the panchayat level, either through the state assigning staff on deputation or enabling the panchayats to recruit their own staff, and (d) the state being willing to provide capacity on tap to panchayats to enable them to perform their functions, instead of running low-quality, discontinuous, and haphazard one-off training programmes that deliver homilies to elected representatives instead of squarely addressing the administrative weaknesses of panchayats.

The biggest challenge is that higher-level politicians and bureaucrats don’t want to devolve powers and responsibilities to local governments, because they fear competition and being outclassed by the latter in the delivery of essential goods and services. Higher level politicians and bureaucrats have a vested interest in mystifying governance simply to protect their monopoly.

In a 2015 article, you mention, “Over the last decade, the amount of money that goes to one [panchayat] has increased tenfold but the staff has remained nearly the same.” There seems to be very little in terms of building the organisational capacity of PRIs and strengthening the skills of functionaries. What sort of investments are needed to improve this?

To put matters bluntly, states do not know the meaning of the word ‘devolution’. It means that exclusive powers and authority are transferred to local governments, along with adequate fiscal allocations, capacities (in terms of people and systems to perform, not in terms of training alone) and accountability systems to ensure that people can hold their local governments accountable.

What we run in India through the panchayats is an extension office of the rural development department in villages. Panchayats are basically run as agencies of the state government, implementing rigid schemes through officers nominally posted at that level who owe allegiance to higher official channels than to elected representatives.

The elected representatives are scoffed at, ignored, or treated with hostility, particularly if they are outspoken. They are universally condemned as being transactional and corrupt. They are not at the table when crucial policy decisions are taken on how panchayati raj should be reformed. This is hardly devolution.

One of the big weaknesses of Indian administration is that it is under-capacitated in many ways. While many departments are top-heavy and centralise their administration through multiple levels of scrutiny in order to give something to do to redundant higher-levels officers, at the field level they typically suffer from grievous shortages of staff. This shortage pans itself across both local governments and departments that are not decentralised.

In such circumstances, the finance, planning and personnel departments of states need to take a serious look at how much investment needs to be put into the hiring and placement of well-qualified staff, regardless of whether they wish to run a decentralised or centralised system. Sadly, not one state thinks of these matters in the long term. Interim solutions include hiring people on contract, and even running departments through consultants hired through external funding. There cannot be a greater abdication of responsibility by states.

New Zealand has a remuneration authority for setting remuneration for elected members of local authorities. Would a similar body in India help uniformly establish honorarium/salary and benefits from panchayats to state legislatures and members of parliament? What has been the effect of the non-uniformity in salaries at different governance levels?

New Zealand is a unitary country. India is a federal country with huge variations in culture, democratic practice, habitation patterns, climatic conditions, service-delivery requirements and cost of service delivery. In such circumstances, having a single remuneration authority will not make sense.

Having said that, there is indeed a need to establish a set of norms for how much legislators and other elected representatives ought to be compensated. Politics is no longer to be wholly regarded as selfless public service. There is an opportunity cost to be considered if politics is to attract quality professionals. Otherwise, even the best are likely to become corrupt, first, in order to catch up on the lucrative incomes that they may have foregone to join politics, and then, to rake in the moolah while the good times last.

I have been involved in research studies of panchayat members, which show that while they are under pressure from their voters to perform, they do not have the staff to competently deliver services.

In such circumstances, panchayat members themselves take on quasi-executive duties and incur expenditure to undertake legitimate governance activities. As the sitting fees paid to them are not adequate to cover such expenses, even the best of them are drawn to indulge in need-based corruption, by which they skim off just enough money from government contracts and procurements to compensate for the expenditure they incur.

Such practices also open them to blackmail by corrupt officials who are often on the lookout for chinks in the armour of honest elected representatives.

Having state-wise remuneration authorities would be a good way to bring these issues out in the open and take pragmatic decisions based on the fundamental principle that everybody involved in governance, whether as elected representative or staff, ought to be compensated adequately. Only then will we be able to take a hard line on curbing corruption.

India was ranked 81st among 180 countries in the global corruption perception index 2017, after falling two places from the previous year. What has been the effect of corruption on local governance?

There is an oft-repeated statement that decentralisation amounts to only decentralisation of corruption. When this argument is made by those in the upper echelons of power, it reeks of hypocrisy and condescension. So what do these people mean, exactly? That corruption is better when centralised?

India’s ranking of corruption is hardly based or dependent on whether it has decentralised (which it has not). India is corrupt because we have no clue how to address corruption in a holistic or comprehensive manner, and instead, we merely engage in discontinuous, random steps to curb it.

What India needs is an anti-corruption strategy; one which takes a systems approach to curbing and eliminating corruption. We will be condemned to languish at the 80th position or so, for the next decade, if things don’t change.

The Pathalgadi movement in Jharkhand is an assertion of local governance where in some parts stone slabs have been inscribed with features of the Panchayat Extension of Schedule Areas (PESA) Act. While the state government is wary, how do you view such attempts to self-rule or govern? How can contestation of land and approach to local governance be resolved in such contexts, where development is low due to historic and socio-economic reasons?

This was bound to happen. I think it’s a natural outcome of having strong laws but very weak implementation. If the PESA were implemented with sincere intentions, it would have given tribal communities some chance at true self-governance in the spirit of their traditional approaches to participatory governance. However, the oppressive capturing of the spirit of PESA and its overturning by the same bureaucratic system that it aimed to supplant, will eventually lead to people repudiating the state.

I don’t believe that local governance can be weak simply because development as we observe it is measured to be low. I find that tribal communities have a greater sense of self-governance as compared to so-called developed communities, say, in urban areas, who are only too willing to be led by the nose by higher-level governments and who hardly have any understanding of the potential of local governments as a way to seize and decentralise power to enable local action.

Although on paper the law provides for decentralised decision-making at the gram panchayat level for many policies and schemes of the central government, overarching policies such as Aadhaar tend to centralise the entire process. Under such circumstances, would you believe that the spirit of decentralisation has been repeatedly affected due to unclear policy paths?

Till now, I would say that the progress of decentralisation was stymied by unclear policy paths. But we must remember that decentralisation is always in transition as capacities change and new techniques and technologies emerge that make the delivery of services efficient at some level other than the local. This has been predicted in the literature on fiscal federalism.

[Public economics expert Albert] Breton observed, in competitive governments, from a fiscal and service delivery perspective, decentralisation is about managing externalities in service delivery and governance action. As a logical extension of this argument, Jack Weldon, an academic who worked on decentralisation, observed that if at any time a higher-level government was in a position to manage all externalities, then the rationale for multi-level governance would disappear. While I am personally very wary of Aadhaar as I believe it seriously compromises privacy, I cannot but concede that Aadhaar is arguably one such instrument that can change the scales of service delivery dramatically.

Therefore, it is bound to have an effect of decentralisation of service delivery to local governments. I also anticipate that the future, with its reliance on artificial intelligence, blockchain, and other technologies that transcend national boundaries, will not only affect the way we look at local governments, but also how we consider national sovereignty. It is likely that in future the only real justification for local governments will be our enduring need to stick together on the basis of identity, culture and commonality of political beliefs, rather than on economist-generated ideas of efficient service delivery.

We’ll have panchayats in future because they represent our identities, not because they can deliver water or education or sanitation services better. That may be an additional benefit, but it might not be the glue that holds us together in our local governments.

The government has allowed lateral entry into the bureaucracy to bring in specialists. Is it a step in the right direction?

Yes, I think it’s a good thing, though I have serious misgivings about the rather non-transparent way in which this is being tried out at the moment. Monopolies are never good for incentivising the striving for more quality.

When an individual, however gifted, is guaranteed a certain measure of stability and assured progress in her career, you can bet that she has no incentive to improve. The bureaucracy must be kept on its toes and lateral entry is a good way to do that. Have you noticed that nearly all articles critical of lateral entry have been written by former or serving bureaucrats?

(Paliath is an analyst with IndiaSpend.)

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