Handbook of Decentralised Governance and Development in India

D. Rajasekhar

• Publisher: Routledge India
• Year: 2021
• Print ISBN: 9780367337698
• eBook ISBN: 9781000425345
• Edition: 1
• Topic: Política y relaciones internacionales
• Subtopic: Estudios asiaticoamericanos

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.

Part 1

The setting

1 Decentralised governance and development in India

An introduction

D. Rajasekhar

DOI: 10.4324/9780429321887-1

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 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 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 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 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 enhan...

Table of contents

• Cover
• Half-Title
• Title
• Copyright
• Contents
• List of tables
• List of figures
• List of contributors
• Preface
• PART 1 The setting
• PART 2 Dimensions of decentralisation
• PART 3 Decentralised rural governance
• PART 4 Decentralised urban governance
• PART 5 Sectorial aspects of decentralisation
• Index