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1 The promise of decentralization
Fifty years of development planning, anti-poverty programs, and education and health programs have brought few welfare improvements to the village of Palanpur in the northern Indian state of Uttar Pradesh. Despite being located close to railroad tracks and only a couple hundred kilometers east of Delhi in a relatively rich agricultural area, most inhabitants of Palanpur are not significantly better off than they were several decades ago, and the poor continue to barely make a living. Central government programs aimed at rural development and the provision of a safety net for the poor through public works projects are virtually unseen in this village of nearly 2,000 inhabitants. The Public Distribution System (PDS) has been in place for decades and is intended to give indigent populations monthly rations of subsidized goods including wheat, rice, oil, and kerosene. When PDS goods are distributed in Palanpur (thrice a year at most), only a fraction of the goods are actually given out. The poor, who are also generally illiterate, often do not know their entitlements. They do not realize that their PDS ration booklets have been stamped to indicate that they have received the full monthly PDS allowance. And even if they did know, to whom would they complain without fear of losing the meager rations they do get? Officials in the district capital 20 kilometers away? Government, for most of Palanpur's residents in the early 1990s, was an entity physically and socially far removed.
Over the past three decades, decentralization – defined as the transfer of political power to citizens and/or their elected representatives at lower levels of government – has been attempted by developed and developing countries alike. Decentralization has been touted as the means for shifting power away from the inefficient, corrupt, and rent-seeking central states towards more accountable local governments and for encouraging the deepening of democracy and the building of village communities. It has also been a way of addressing the inefficiencies of central states in reducing poverty by enabling better local targeting and delivery of social services.
Scholars from different ideological backgrounds, from neoliberal economists to civil society organizers, have viewed the increased power given to local governments through decentralization as holding great promise for changing the efficacy of government. Advocates of decentralization argue that local governments would help democracy take root and be more effective at improving the wellbeing of their citizens. Yet critics countered that decentralization might lead to widening disparities between localities – mainly, that lack of local capacity among illiterate and poor population groups might lead to local elite capture of public resources and an inability to implement central government programs. Three decades into the political decentralization of power, it is appropriate to ask whether the shift towards local governments has actually mattered in average citizens’ lives.
Few in rich countries who have not spent time in a developing country can imagine the absolute poverty in which one-sixth of the world's population lived at the beginning of the twenty-first century. Not only do the world's absolute poor generally lack access to basic education, health services, and safe water, they often do not have enough resources to get the three meals a day that would prevent chronic hunger. But the dynamics of poverty are not static and vary by time and place.
While the twentieth century saw large gains in living standards in some countries, poverty and other indicators of social wellbeing continued to remain poor in much of the developing world. Some countries, such as South Korea, which were considered “developing” countries 50 years ago, are now in the middle-income league with low poverty rates. Others, like India, have seen high economic growth rates over the last few decades, but these growth rates have not “trickled down” enough to pull over 300 million poor people out of poverty.1Development theorists have hypothesized that the solution to decreasing poverty lay in open markets, social-democratic regime types, and pro-poor policies. Yet in a developing country like India one finds that pursuit of all three development policies at different times has not radically reduced poverty. Nor has pursuit of these policies alone been able to explain the variance in social outcomes between different regions in India. In a country that is home to more than one-fourth of the world's poor (Deaton 2002) it is important to understand why some Indian states have improved indicators of social wellbeing more rapidly than others. It is also important to better understand whether functioning local governments are at least partly responsible for more rapidly improving social wellbeing in some states, along with making government more accountable and bringing government closer to the people. This research's findings show that a state's history of decentralization, political competition, and social mobilization are key ingredients in determining the ability of village governments to deepen democracy and have an impact their citizens’ wellbeing. Different combinations of these key ingredients have led to varying degrees of democratic rooting and efficacy of local governments in implementing decentralization in India.
Findings from this study also explain the mixed results of decentralization programs across the globe. From Mexico to Uganda and India to Indonesia, the promise of greater accountability, efficacy, and citizen-wellbeing has brought different results in different places (Blair 2000; Oxhorn et al. 2004; Bardhan and Mookherjee 2005). In seeking to explain decentralization's differential outcomes, most studies have been macro-level, inter-country studies of decentralization with a focus on the implementation of decentralization programs by central government. Many of these studies therefore tend to locate the causes of differential effectiveness within the underlying structure and process of decentralization. Such studies fail to consider the arena where political power has been relocated as a result of decentralization – the local level – and thereby fail to account for in-country variations in the effectiveness of political decentralization, particularly with regard to local government implementation of social welfare programs.
Decentralization is about redistribution of political power, yet the reallocation of power does not happen in a political vacuum. If decentralization occurs in a context where political power is concentrated among a narrow group of village elites and in an area with little history of local governments and political competition, local governments’ ability to enact change leading to enhanced social outcomes is circumscribed; at least, results are likely to be delayed. Conversely, when local governments are not captured by dominant local elites, when there is a politically competitive environment, and when there has been some experience with local government, then decentralization is likely to lead more expeditiously to improved delivery of social services, thereby resulting in better social indicators and enhanced social wellbeing.
Historical context matters. For the inhabitants of Indian villages, having a history of already functioning local governments is a significant factor influencing their awareness of how local governments should function and how they might ensure access to social services particularly for disenfranchised groups. The overall nature of social cleavages, particularly caste and religious differences, and dynamics of local political mobilization are also factors that influence the effectiveness of local governments and in turn are determined by the interactions with local governments.
I argue that a focus on national-level factors fails to account for variation within countries. There is, furthermore, little analysis of the wide variance – either between or within countries – of effective social-service delivery after decentralization or of citizens’ perceptions of these services. This book examines constitutionally mandated political decentralization across India to identify the circumstances under which local government structures can lead to improved social services and societal wellbeing. It offers a countrywide analysis of the decentralization process in India with village-level case studies in three Indian states. It demonstrates that contextual differences, particularly the distribution of power among local elites, political competition, and the nature of civil society activism, seriously affect the ability of decentralized local governments not only to function democratically, but also to pursue their mandate of alleviating poverty and improving the health and education of their citizens. Over the next few chapters I grapple with an under-studied issue in the field of decentralization, namely why the implementation of the same political decentralization program leads to differing degrees of success in subnational states.
While political decentralization has been heralded by some as the cure for the inability of large, bureaucratic states to target social services to the poor, others have argued that it is more likely to lead to the capture of power by local vested interests. Nevertheless, the efforts of the international community to help root democracy and improve social-service delivery throughout the developing world have been focused on supporting decentralization with billions of dollars of technical assistance and development aid. After three decades of decentralization programs, the record of improvements in the social wellbeing (poverty, health, and education indicators) of people in the developing world is decidedly mixed. Identifying the context in which political decentralization is likely to succeed is key both to understanding the theoretical question of why decentralization brings about social change in some situations but not in others, and also to devising policy tools to support effective decentralization.
As the first systematic analysis of the impact of decentralization on the delivery of social services at the local level within one country, this volume draws on case studies and national data to argue that decentralization is not simply a function of the structure of the decentralization program or of the relationship between higher-tiered and local governments. Rather, the possibility of decentralization affecting social phenomenon depends on several interacting factors: how broadly political power is distributed at the village level, dynamics of political competition, and the level of social capital.
This book builds on the work of economists and political scientists who argue that decentralized governments can deliver greater benefits than “statist” governments. While economists base their advocacy of decentralization on ideas of better information flow and enhanced efficiency, political scientists marshal arguments dating back to de Tocqueville, Montesquieu, and Jefferson on the benefits of decentralization for deepening democracy and bettering social outcomes. I draw on the work of political scientists who argue that the corruption and ineffectiveness of the centralized state has discredited the statist structure (Rondinelli et al. 1989). I also build on the work of scholars who have argued that greater pluralism and competitiveness among state structures would give voice to more citizens, thereby deepening democracy (Lieten 1996a; Schoenwalder 1997; Crook and Manor 1998, 2001; Aziz 2000; Johnson 2001; Bhattacharyya 2002). As such, the book speaks to the question posed by a recent World Bank study, Does Decentralization Enhance Service Delivery and Poverty Reduction? (2010). Yet this book differs from the World Bank study by focusing on a single country, teasing out why a single nationwide system of decentralization might lead to differential outcomes within that state. By revealing local political dynamics that condition the differential impact of decentralization for social wellbeing, this study complements recent work – such as Merilee Grindle's on Mexico (Grindle 2007) – that explains why the theoretical benefits of decentralization are not inevitable in practice. While Grindle focuses on factors such as public sector modernization to explain decentralization's differing results, this book highlights the unfolding of decentralization in unique local contexts. As my case studies illustrate, the degree of concentrated political power, the extent of political competition, and the mobilization of civil society all come to bear on the ability of local governments to function democratically and translate their local knowledge into better delivery of social services.
This research contributes to the theory and practice of governance in three main ways. First, it broadens our understanding of decentralization and the factors contributing to its efficacy. By holding the structure of decentralization constant by focusing on one country, I illustrate that judgments about the efficacy of decentralization need to take local contexts, including cultural and institutional legacies, into account. Second, this work contributes to our understanding of democracy and its depth. This research builds on Amartya Sen's idea that democracy should be thought of as being intrinsically valu able to a person's wellbeing, instrumentally important in providing political incentives for greater government accountability, and providing a constructive framework that forms societal values and helps prevent economic disasters – all of which improve socioeconomic wellbeing (Sen 1999). The following chapters on each state case study illustrate how decentralization can help democracy take root and improve social outcomes at the local level – and how the local context of existing allocation of power, political competition, and lack of political and social mobilization might prevent it from doing so. Finally, this work argues that scholars of decentralization and democracy, as well as policy makers and development aid specialists, should pay closer attention to the local setting in which top-down political decentralization takes place. Complexity of political and institutional factors might lead the designers and implementers of decentralization to reinforce clientalistic mechanisms, thereby disabling decentralization from affecting people's social wellbeing. Overall, these findings can be used to assess decentralization's merits generally and to better understand the barriers to decentralization in countries from Mexico to Ghana and Pakistan to Indonesia. If the wave of decentralization that has swept the developing world is to really matter for its most vulnerable citizens, we need to understand the main local contextual factors that drive successful decentralization programs.
Decentralization as a tool for reforming the state
The past three decades have seen a global wave of efforts to reform the state in order to make it more effective and accountable. In the literature on transforming the efficacy of the state, decentralization has become a dominant theme (Bardhan and Mookherjee 2005). It has been considered or implemented in a large array of developed and developing countries, since “out of 75 developing and transitional countries with populations greater than five million, all but 12 claim to be embarked on some form of transfer of political power to local units of government” (Dillinger 1994). As states are increasingly pressured by outside international agencies and greater pluralist policies from above, as well as from domestic forces from below, leading scholars in political science focus their research on the interactions between the state and subnational governments. This newer focus is both the result of political events and an increasingly global development paradigm, which posits that subnational governments are more efficient and capable than formerly as sumed. The disillusionment with state capacity and the decrease in state legitimacy owing to its many failures (Bardhan 2002), together with the fact that an improvement of an individual's social well-being requires local structures that are focused on and effective at delivering social welfare programs, has over the past decades ushered in a trend towards decentralizing political power to local governments. Centralized states have been attacked in the development paradigm advocated by aid agencies and development institutions (Parker 1995; Manor 1999; Parker and Serrano 2000; Work 2002a, 2002b; World Bank 2003), as well as the political structures that are de facto advocated by the United States government through their public policies in post-conflict countries such as Afghanistan (Mullen 2006). These critics of state planning assert that centrally administered bureaucracies are inefficient at allocating resources (Lal 2000; World Bank 2000a).
Besides being heralded as the cure to governance problems in a variety of states (Tanzi and Ahmad 2002), decentralization has been promoted by a variety of interest groups, including multilateral development banks. This case for decentralization is based on the assertion that a more decentralized state would be closer to citizens and thus more responsive to local needs (Crook and Sverrisson 2001). And by being closer to the people, government would be more accountable to them and more effective for the local population (Crook and Manor 1998; Manor 1999; Blair 2000). The economic argument for decentralization is often expressed in terms of reducing information and transaction costs (Marschak 1959) and improving allocation (Cohen and Peterson 2000).
While decentralization has been implemented in many countries, it has meant different things in different places, and the results have rarely been analyzed systematically through comparative, intra-country case studies. Decentralization is more than mere delegation of power to lower levels of government; it implies more than the de-concentration of power to lower levels of administrative agencies (Crook and Manor 1998); and it goes beyond devolution, where subnational units of government are created or strengthened (Crook and Manor 1998; Blair 2000). Decentralization has been interpreted as meaning fiscal decentralization, administrative decentralization and/or democratic decentralization or devolution (Rondinelli 1990; Crook and Manor 1998; Manor 1999; World Bank 2000b; Johnson 2003). Clearly local governments, even if democratically elected and representative of their constituents, will fail in the longer term without administrative, and some financial, decentralization. Administrative decentralization provides local government with specific responsibilities and bureaucratic resources for implementing these new tasks, while fiscal decentralization enables local governments to have the financial wherewithal (Manor 1999) to undertake more autonomous projects. Yet political and administrative decentralization on their own also change the locus of power, empower people at lower levels of political engagement, and lead to a more accountable and effective local government.
During the late 1980s and early 1990s, in the wake of the dissolution of the Soviet Union, many countries decentralized state powers to subnational governments. Much of the impetus behind changing the nature of the state and decentralization has been based on an understanding of the state, which locates the state at the center and attempts to improve its efficiency and accountability by shifting some of its power to the periphery. Although most advocates of this shift agree on a general understanding of the state, not all come from the same background. Decentralization has found support among a wide political spectrum. Neoliberal thinkers have seen decentralization as a means of moving power away from ineffective, overbloated, and often corrupt central states who are responsible for market failures to subnational governments where the transaction costs are lower and public service delivery can be better targeted (Manor 1999; Bardhan 2002).
Civil society and social welfare advocates and researchers have viewed decentralization as a possible means for decreasing poverty and enhancing social wellbeing due to local governments having greater information to better target social and anti-poverty programs to the poor. And some democracy advocates have promoted decentralization as a means for deepening the roots of democracy. Decentralization, according to this line of argument, brings government closer to the people, thereby fostering greater citizen participation, civic virtue, protection of civil liberties and government accountability. On the other hand, critics of decentralization have pointed out that the formal process of decentralization matters less than the underlying power relationships in rural societies (Slater 1989; Peterson 1997; Cross and Kutengule 2001; Harriss 2001; James et al. 2001). Other critics have pointed out that the net effect of increasing local governments’ share in revenue-raising and fiscal autonomy is indeterminate; that greater local participation in government could lead to greater civic engagement or greater corruption; that it was unclear why voters would necessarily be better informed about local versus central government performance; that local governments that succeed in obstructing central government interventions are as likely to protect individual freedom as they are to protect local corruption (Treisman 2007). Scholars have argued that in India there needs to be a genuine change in power relations of disadvantaged groups through land reform (among other programs), before these groups can benefit from decentralization (Kohli 1987; Echeverri-Gent 1992). Yet despite decentralization being ever-present in much of the world and advocated by a diverse group of people, systematic comparative wit...
