Cooperative Federalism and Decentralisation
Cooperative Federalism || Decentralisation and Panchayati Raj

Decentralisation and Panchayati Raj

6.35 India has a long history of village panchayats. The framers of the Constitution were aware of this Indian heritage in village panchayat system. Accordingly, they provided for Village Panchayats under the Directive Principles of the Constitution. Thus, Article 40 of the Constitution requires that "the State shall take steps to organise village panchayats and endow them with such power and authority as may be necessary to enable them to function as units of self-government".

6.36 Many State governments attempted to translate this Directive Principle into practice by enacting necessary legislation and creating Panchayati Raj Institutions (PRIs) but with limited success; such efforts were confined to selected States. Against this background the need for providing a firm Constitutional status for PRIs became necessary. And after a great deal of efforts the 73rd and 74th Amendments to the Constitution have been passed which provide Constitutional status to the PRIs and Urban Local Bodies (ULBs). As per the 73rd Amendment, the PRIs are the local level institutions comprising of elected representatives entrusted with the responsibility of identifying, formulating, implementing and monitoring the local level developmental and welfare programmes. The Constitutional provisions expect the State governments to enact necessary legislation not only to create PRIs but also to endow them with such financial powers and functional responsibilities as they may deem appropriate. They are also required to appoint a State Finance Commission (SFC) to recommend adequate devolution from the State Governments to PRIs and ULBs. The State governments are also expected to create District Planning Committees (DPCs) in each district to formulate local level development plans for both rural and urban areas.

6.37 The First Plan recognised the need for a disaggregated planning exercise through a process of democratic decentralisation incorporating the idea of a village plan and of District Development Councils. The Second Plan made some headway with the emergence of Community Development and the National Extension Programme. However, micro-level planning did not go beyond identification of activities, as neither village nor district plans were prepared. The Balwant Rai Mehta Committee (1957) recommended the block as the unit of planning with the Panchayat Samitis as the executive body for planning. It also suggested the setting up of Village Panchayats, Taluk Development Boards and Zilla Parishads. The government accepted these recommendations and the State government enacted appropriate legislations to usher in a new era of PRIs. However, the PRIs worked well only in a few States like Gujarat, Maharashtra, Karnataka and West Bengal.

6.38 The Third Plan reemphasized decentralised planning in many sectors, but the absence of a planning machinery resulted in poor planning. During the Fourth Plan the emphasis shifted towards district planning. The Planning Commission also took interest in helping the States in initiating decentralised planning. Accordingly a scheme of strengthening regional/district planning units was initiated by the Planning Commission. The concept of an integrated area approach was adopted and several States did prepare district plans. But once again the success was limited to three or four States. Two other initiatives were taken -- the `Lead Bank' scheme was introduced for preparation of `district credit plans' and agencies for specific programmes like Command Area Development, Small Farmer Development and the development of Marginal Farmers and Agricultural labourers were set up. However in the Fourth and Fifth Plans little progress was made towards decentralising the planning process. In 1977 the Ashok Mehta Committee was set up to examine the functioning of PRIs and to suggest measures for making decentralised planning effective. The Sixth, Seventh and Eighth Plans reemphasised district planning within a multi-level planning framework. However, proper administrative arrangements were not made to facilitate this process; there was also a lack of technical expertise and an absence of financial devolution, both of which acted as impediments in the process of democratic decentralisation.

6.39 As we enter the Ninth Plan, democratic decentralisation has been given a boost with the enactment of the 73rd and 74th Constitutional Amendment Acts. Consequent to this, most of the State Governments/UTs have enacted enabling legislations, providing for elected bodies at the village, inter-mediate (Taluka) and district levels with adequate representation from the weaker sections and of women. (In case of some UTs only a two tier. structure has been recommended) Most of the States have constituted State Election Commissions and State Finance Commissions (SFCs) as stipulated. Almost all the States have constituted panchayati raj bodies as per the new provisions with the exception of Bihar, where elections have not been held so far, and Goa, where the Zilla Parishad level panchayats have to be constituted. Elections are also due in the UT of Pondicherry.

6.40 Today, PRIs are Constitutional entities. The State Governments have to endow these panchayats with powers and authority necessary to enable them to function as institutions of local self-government with the responsibility of preparing plans for socio-economic development and for implementing them. The Eleventh Schedule has identified 29 subjects which have to be brought under the purview of the panchayats. However, in order that the PRIs are able to undertake the responsibility entrusted to them they require both financial and functional autonomy. It is necessary not only to ensure flow of funds to them from the Consolidated Funds of the States and from the Central Government via the Centrally-Sponsored Schemes (CSS), but also to give them independent revenue raising powers of their own. The SFCs were set up with this objective of making specific recommendations for making the panchayats financially viable.In many States, the SFCs have submitted their reports and in some of the States their recommendations have been accepted. However, in some States the recommendations of the SFCs have either not been received at all or they are still under the consideration of the State Governments. It is hoped that all SFCs submit their recommendations expeditiously and the State Governments will initiate appropriate action to devolve adequate funds to the PRIs by the end of the current year.

6.41 While resource mobilisation by PRIs is generally limited, it is imperative to provide PRIs with revenue-raising powers of their own in order to reduce their excessive dependence on the State and Central Governments. There are taxes which can be collected by local bodies. By way of illustration, in case of West Bengal the SFC has recommended that a substantial part of the plan expenditure be given to the districts in the form of untied funds; for this a formula has been developed by the SFC to work out the entitlement' of each local body. In addition, grants for specific schemes entrusted to the panchayats will be given to them by the State Government. Funds from Centrally Sponsored Schemes will also be in the form of a grant but those would not be a part of the untied pool. Sixteen per cent of the net proceeds of all taxes collected by the State in a year will be transferred to local bodies. Certain taxes like entertainment tax will be handed over to them. Irrigation rates would be collected by Zilla Parishads and resources generated in regulated markets will be brought within the purview of District Planning Committees (DPCs). Further, the three tiers of panchayats have been empowered to raise taxes, levies and tolls on a variety of activities. Incentive schemes have been suggested to encourage benefits to increase their incomes. These are some of the ways in which the resource position of panchayats would be strengthened. In Kerala too untied funds have been provided to each gram panchayat/ block panchayat and municipalities for the first time. Here too certain taxes have been assigned to village transferred the accrual of income from minor minerals, fisheries etc. to the panchayats. Untied grants to panchayats by sharing of tax and non-tax revenues and the flow of programme funds to the panchayats has been mandated. Various forms of cesses on land revenues, agriculture and other fees have also been earmarked for PRIs.

6.42 In other words, it is imperative that the PRIs raise their own resources. But until such time that they are financially dependent on funds from the State government, these should be in the form of untied funds. The State budgets should specify the amount earmarked for district sector plan under panchayati raj as also the distribution of this among the three tiers. It is suggested that 30 - 40% of a State's plan be devolved on local bodies.

6.43 In the case of urban local bodies too they would be permitted to levy their own taxes and cesses at the local level which could include professional tax, property tax, entertainment tax and motor vehicle tax etc. In addition, there is considerable scope for them to levy user charges and licence fees.Wherever feasible elected bodies should be allowed to borrow for productive infrastructure projects subject to credit worthiness. Urban local bodies may be allowed to raise loan funds through bonds for financially viable economic activities like water supply, sewerage system etc.

6.44 Based on the recommendations of the Tenth Finance Commission these elected local bodies both rural and urban would receive Rs.5381 crore as grant-in-aid to supplement their resources over a four year period from 1996-97. When the Eleventh Finance Commission considers this issue the State Governments may ask for more resources provided that their elected bodies are by then functioning well and are able to plan and implement various development works entrusted to them.

6.45 In so far as Centrally-Sponsored Schemes are concerned, it is proposed that in the case of selected schemes funds flow directly to PRIs. In case of such schemes, if they are transferred to States, funds would be earmarked for elected local bodies. Furthermore, States would be required to earmark resources out of the total plan of the States for decentralised planning.

6.46 Along with financial autonomy, functional autonomy of the PRIs must also be clearly delineated. Even in respect of the 29 subjects identified in the Eleventh Schedule it is necessary for the State governments to clearly identify what would be done by the three tiers of panchayats at their level. Detailed instructions and guidelines would have to be issued by the concerned departments to their field officers in this regard as it has been done in Karnataka. Furthermore, departmental functionaries required to implement the programmes at the panchayat level must be placed under their overall supervision and control. In some States like Gujarat, Maharashtra, Karnataka, Kerala, Tripura and West Bengal detailed instructions have already been issued and in several cases departmental functionaries have been placed with the panchayats. It must be reiterated here that under no circumstances is it necessary to create new administrative structures and hire staff for undertaking the planning and implementation of these works. Only redeployment of the existing staff in various departments is required. More recently in Madhya Pradesh 18 Departments have been transferred to the PRIs at various levels.

6.47 As has already been stated one of the major tasks of the PRIs is the preparation of plans for fostering economic development and social justice. The district development plans would have to be prepared through the institution of the DPCs which are mandated. However, in many States the DPCs have not been set up so far. This should receive top priority and DPCs should be in position to formulate local level plans before the end of the current year. It is expected that Gram Sabha would list out priorities and assist in the selection of beneficiaries for various programmes and schemes. In this way, the aspirations of the people would be articulated. Thereafter, village level plans will have to be prepared which would be incorporated in the intermediate plans and finally merged into a district plan. Moreover, broad principles have to be laid down for assigning the functions of each of the three tiers; this should be based on the rule that what can be done at the lower level should be done at that level and not at the higher level. Some States have already identified the works/schemes of sectoral/departments to be undertaken at the different levels. For instance, in the case of Andhra Pradesh maintenance of community assets, poverty alleviation programmes, sanitation, markets, internal roads have been devolved at the gram panchayat level. The intermediate level would be responsible for block component of Primary Education, Women and Child Welfare and Jawahar Rozgar Yojana. At the Zilla Parishad level drinking water, rural roads, secondary education and the district component of JRY would be implemented. The DPCs should not only consolidate plans from below but should take decisions on the development of the district within the given resource potential and identified needs and constraints.

6.48 A core planning team comprising of experts from various disciplines needs to be formed for every district which could help in the preparation of plans keeping in view the physical and natural resource endowments of the area and the funds available, as also the priorities of the people. In addition, experts could be hired on a consultancy basis if expertise is required in a specific area. In Kerala, a Voluntary Technical Core (VTC) has been created consisting of about 10,000 technical experienced people to vet and re-work projects prepared by the panchayats. These include retired persons with technical expertise, bank personnel and officials of government departments. One VTC would be created for each block with the BDO as its Secretary. The District Planning Officers would scrutinise the document submitted to them by the panchayats as prepared with the help of VTCs and would see if it can be accommodated within the overall sectoral allocation. While the plan funds flowing to the districts would be untied, they would thereafter be project linked in order to ensure that the works in the plan are executed properly. In addition, several well-known institutions of Kerala like Centre for Developing Studies and Kerala Sastra Sahitya Parishad (KSSP) have provided support to the programme, particularly in the sphere of literacy and land mapping. Similarly in other States voluntary groups and institutions need to be identified for providing services, training and support for effective implementation of programmes at the local level.

6.49 However, in order to make decentralised development a success, a time bound training programme would have to be initiated as majority of the new entrants into the panchayati raj system may not be familiar with the various programmes of the government, the available technologies and requisite information. In addition, training of trainers would be given priority through identified national level institutions like the NIRD, LBSNAA and IIPA and other State level institutions. To the extent possible NGOs would also be drawn into the training programme.

6.50 In the process of transferring of power to the local level democratic institutions there are bound to be conflicts of various kinds; most importantly between the democratic institutions and the bureaucracy. Hence, it is necessary to institutionalise the link between the two in order to facilitate harmonious functioning by formulating appropriate rules of business. There are alternative models where such a link has been attempted. In the case of Karnataka, the Collector is outside the system of elected local governments but the Chief Executive Officer of the Zilla Parishad is a bureaucrat. In West Bengal, the Collector is the Member Secretary of the DPC with the chairman of the Zilla Parishad as the chairman of the DPC. In Gujarat, both the Collector and the President of the District Panchayat are co-vice chairmen of the District Panchayat Board. In Madhya Pradesh one fifth of the Sarpanchas have been made members of the intermediate panchayat by rotation each year and all the Adhayakshas of the inter-mediate panchayats are representative in Zilla Parishads. Each State would have to evolve its own administrative arrangements to make democratic decentralisation functional on the ground. There would also be conflict between different political formations at the State and local level as also within a local area. These would have to be ironed out within the democratic political process itself. Moreover, a greater involvement of people in the running of institutions and services through PRIs would also have a positive impact on the quality of life of the local population.

6.51 Interest of the weaker sections of the society have been safeguarded under the PRIs. The 73rd Constitutional Amendment Act provides for mandatory reservation for Scheduled Castes/ Scheduled Tribes in every panchayat in the same proportion as the population in the panchayat area. In addition to this one-third of the seats would have to be reserved for women. What is more, one-third of the total number of offices of Chairpersons in the panchayats at each level shall be reserved for women.

6.52 It is hoped that the elected representatives of panchayats would articulate the felt needs of the community more accurately and will be able to mobilise local resources both physical and financial in a better way. They should be able to educate women about their own rights and other issues concerning them. As chairpersons, they can act as catalysts in the implementation of various development programmes. However, in many States where women are reluctant to participate in the affairs of the panchayats, it is necessary to ensure that they atleast attend Gram Sabha and panchayat meetings.

6.53 So far, we have been concerned with the process of democratic decentralisation involving the people through their elected representatives. However, it is recognised that in the final analysis the people themselves must be involved in the process of development. Therefore there is an urgent need to empower the village community through the Gram Sabhas. For this more powers have to be vested in the Gram Sabhas who should be have the authority to sanction and disburse benefits in open meetings, to decide on the location of various community assets and to have control over common property resources. At present the Gram Sabha has powers in so far as it can scrutinise the annual accounts, expenditure, audit notes etc., of the gram panchayat. But this is not enough to persuade people to attend Gram Sabha meetings. Steps have to be taken to ensure that the minimum number of Gram Sabha meetings take place in all villages in a year and that these are well attended. Village development plans must be placed before the Gram Sabha. Selection of beneficiaries and choice as well as location of works may be done as far as feasible according to the wishes of the villagers. This would also bring about greater transparency in the functioning of the Gram Sabhas and a system of social audit would evolve. Display of information regarding schemes and the budgets may be placed on the bill boards outside the gram panchayat offices and right to information may be facilitated by provision of photocopies of certain documents on nominal payment and availability of records for inspection. In fact, the initiative taken in Kerala towards making a Gram Sabha more dynamic and transparent system of democratic decentralisation where the power goes to the people and not the people's representatives' is the ideal perspective but as it a new process time will tell if it can be successfully pursued.

6.54 The Panchayati Raj system has now been extended to Scheduled Areas. The Provisions of the Panchayats (Extension to Scheduled Areas) Act, 1996, provides that State legislations should be in conformity with traditional practice and systems. The Gram Sabha in every village should safeguard these customs and traditions. It would identify beneficiaries and approve programmes for socio-economic development. The panchayats should be endowed with ownership of minor forest produce and should be consulted for grant of prospecting licences or mining lease of minor minerals and also in the case of acquisition of land. The State Governments will have to take appropriate action in this regard.