What Ails Panchayati Raj A Review of the Weak Process of Devolution in India.

. Abstract Two decades have elapsed since the 73rd Constitutional Amendment institutionalised Panchayati Raj as the mandatory third tier of Governance in India. Yet due to a lack of extensive devolution of the three Fs functions, functionaries and funds, most Panchayati Raj Institutions (PRI) are still operating as poor adjuncts to the bureaucracy and higher level governments, rather than as independent self government institutions. The present paper reviews the process of devolution of power to the PRIs in India and pinpoints the main obstacles in the path of establishment of truly self governing local bodies in rural areas. On the basis of this analysis, recommendations are made for making PRIs more effective institutions of local self governance. Keywords: Panchayati Raj, Devolution, Local Self Governance Rahul Banerjee Social Activist and Development Researcher Dhas Gramin Vikas Kendra 74, Krishnodayanagar, Khandwa Naka, Indore Madhya Pradesh 452001 email: rahul.indauri@gmail.com website: rahulbanerjee.notlong.com blog: anar-kali.blogspot.com cell no: 09425943023

What Ails Panchayati Raj A Review of the Weak Process of Devolution in India. 1.Introduction The debate on the form of democracy to be followed in India dates back to the Constituent Assembly. The debate arose because India is a large and diverse country and so there was from the beginning the problem of ensuring the effective and widespread participation of its citizens in public affairs. Gandhi had initially thought of autonomous village republics which would be federated into a national government having authority and jurisdiction delegated upwards to it from below (Gandhi, 1909). Gandhi spelled out the formal mechanism for this to his biographer Louis Fischer, thus - "There are seven hundred thousand villages in India each of which would be organised according to the will of the citizens, all of them voting. Then there would be seven hundred thousand votes and not four hundred million votes. Each village, in other words, would have one vote. The villages would elect the district administration; the district administrations would elect the provincial administration and these in turn would elect the President who is the head of the executive"(Fischer, 1982). This would have been a system in which direct voting would take place only at the village level and all the higher levels would be beholden to the villages. This was in fact similar to the originally envisaged Soviet system proposed by the Communists in Russia wherein all power was to vest in the small soviets or workers or cultivators and delegated upwards to higher levels (Pirani, 2008). However, this was a radical departure from the centralised system of top down governance that had been put in place in India by the British and which had culminated in the Government of India Act of 1935. The Congress party had participated in the elections and the subsequent governments formed under this Act and so most of its leaders were in favour of a centralised system of governance. Initiating a bottom up system of governance as envisaged by Gandhi would have required the complete discard of the prevailing British system and the setting up of a corresponding new bottom up administrative structure. Consequently after considerable debate the Constitution adopted in 1951 adopted the framework of the Government of India Act of 1935 which had a centralised system of governance with most powers concentrated with the Union and some at the provincial level but there was no provision in it for local governance at the village level (CAD, 1949). Instead organisation of panchayats was put in Article 40 as a directive principle of state policy.
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This is how a situation was created wherein there arose very soon the need for devolution of powers to the third tier of governance at the local level. The results of the top down Community Development Programme initiated in 1952 were unsatisfactory and this led to the formation of the Balwant Rai Mehta Committee to suggest means of effective local self governance in 1957. This committee categorically recommended the devolution of functions, functionaries and funds to a three tier Panchayati Raj system and the report was accepted by the National Development Council. Thereafter there were many more committees making similar suggestions but it was only in 1992, after an aborted attempt in 1989, that the 73rd Constitutional Amendment Act (CAA) inserted Panchayati Raj as part IX of the Constitution and it was established as a mandatory third tier of governance. The main reason for this reluctance to transfer powers for local self governance after independence is the same as that at the time of framing of the constitution it requires a radical restructuring of the prevailing governance institutions to ensure greater participation of the people. It is in this historical context of reluctance on the part of centralised governments to allow local self governance, that devolution to Panchayati Raj Institutions (PRI) has to be critically evaluated. This paper first tests the validity in the post independence Indian context of a theory of devolution arrived at from a review of various such theories. The report of the Government Taskforce of 2001 on devolution is then critically discussed in detail. The status of devolution as delineated in the State of Panchayati Raj Report 2010 is discussed thereafter. A review of The Panchayat Empowerment and Accountability Incentive Scheme Assessments that have been carried out over the last few years follows. Finally on the basis of this review suggestions have been made for the future. 2. A Theory of Devolution and its Validity in the Indian Context Worldwide there has been a significant trend towards regionalism in government resulting in a widespread transfer of powers downwards towards regions and communities since the decade of the 1990s (Keating, 1998). This process, which involves the creation of new political entities and bodies at a subnational level and an increase in their content and powers, is known as devolution (Rodriguez-Poes & Gill, 2003). Devolution has been characterised as being made up of three factors political legitimacy, decentralisation of authority and decentralisation of resources (Donahue, 1997). Political legitimacy here means a mass demand from below for the decentralisation process which is able to create a political force for this decentralisation to take place. In many cases decentralisation is initiated by the upper tier of government without sufficient political mobilisation for it at the grassroots level and in
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such cases the decentralisation process often does not fulfil its objectives. Thus, political legitimacy arising from active mass participation at the lower level is the most important factor in determining the extent and success of devolution. This requires an institutionalised democracy to be in place which provides for the free expression of people's will. The extent of this popular demand for devolution is determined by historical, cultural, societal and economic factors. The next important factor is the decentralisation of authority required to be able to govern over the sub-region or community along with the decentralisation of the control over resources to be able to exercise this authority in an effective manner. In many cases decentralisation of authority is not accompanied by the decentralisation of resources resulting in a weak devolution due to a lack of political legitimacy at the grassroots. The post independence Indian context amply validates this theory. Historically the level of mass participation in governance has been low and so there was not a strong enough support for the radical bottom up system of democracy that Gandhi had suggested. Nor was there mass support for the soviet system of the Communists. The social and economic exclusion of a vast section of the people meant that even though a formal centralised democratic framework was in place these marginalised sections could not participate freely in the democratic processes (Chandra, 1988). Even though there was substantial economic growth in the first decade after independence due to the import substitution thrust the benefits of this did not percolate to the vast majority of the poor. The historically strong forces of social and economic exclusion prevented effective land reforms from taking place and also falsified the expectations of the planners that macro-economic growth would trickle down to the poor (Chakraborty, 1987). Consequently there was considerable dissatisfaction among the people from the mid-nineteen sixties as the economic growth rate slowed down and the economic condition of the poor deteriorated further. Thus, peasant struggles, industrial workers' strikes, student movements and environmental mass movements began to proliferate. This created a mass upsurge from below for better governance which resulted in the introduction of Panchayati Raj by the state governments of West Bengal and Karnataka. This process was later adopted by other states and finally culminated in the CAA of 1992. Even though the CAA made detailed provisions for devolution of powers and funds to the PRIs, it did not address the problem of the conflict that would arise between a centralised
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system and a new local government system. In most places the political mobilisation at the grassroots level was not strong enough to take advantage of the CAA to pressurise the state governments to devolve enough authority and funds to the Panchayats. State Governments are starved of funds due to the Indian federal fiscal system being skewed heavily in favour of the Union Government, as will be detailed later. So they are reluctant to give away their meagre own resources to the Panchayats and even exert considerable control on the funds devolved under the Centrally Sponsored Schemes directly to PRIs. Moreover, the bureaucracy is reluctant to come under the administrative control of the PRIs. The biggest sructural problem was that ideally the PRIs should be planning and implementing their own work at their level and this comes into conflict with the centralised top down administrative and planning process. So the devolution process in India has remained a weak one as predicted by the theory above. 3. The Task Force on Devolution 2001 The CAA had made clear provisions that the power and authority for local governance of 29 subjects mentioned in the XIth schedule would be completely devolved to the PRIs and adequate financial provisions would be made for them. However, by the turn of the century in the year 2000 it had become clear that in most states these provisions had not been implemented because the state governments and the bureaucracy were reluctant to empower the PRIs. Consequently a conference of the State Ministers of Panchayati Raj was held on 11th July 2001 in New Delhi to discuss the measures to be taken to devolve functions and powers in accordance with the provisions of the Constitution. The conference resolved that a Taskforce consisting of senior officers of the Central Government and the State Governments should be set up to draw up a plan to effectively devolve functions, functionaries and funds to the PRIs for effective local governance. This task force set up by the order no. 12011/2/2001-PR dated 16.7.2001 had the following terms of reference (GOI, 2001) (i) To analyze all the 29 subjects mentioned in the XI Schedule of the Constitution, identify specific activities under these subjects and suggest inter-se division of these activities among the three tiers of Panchayats; (ii) To suggest devolution of functions into specific operational and activity-related responsibilities; (iii) To suggest measures to operationalise administrative decentralisation and rationalisation of delivery mechanisms;
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(iv) To suggest requirement of financial resources of Panchayats to implement the functions devolved upon them; and (v) To suggest the manner of transfer of functions and functionaries to each tier of PRIs. The task force in its report correctly pinpointed the most important aspect of devolution as the restructuring of the district administration and making the government functionaries at the district and lower levels subservient to the PRIs so that these institutions could develop their distinct identities and reflect the aspirations of the people and carry out planning and implementation of development in accordance with local specificities. In the absence of a strong demand for such a crucial restructuring from below, the report exhorted the State Governments to ensure this so as to implement the CAA provisions in letter and in spirit. The report, thus, recommends that a separate administrative system should be put in place at the district and intermediate panchayat level that will follow the lead of the elected PRIs at their levels. In addition the report set out the following conditions for proper devolution (a) Allocation of functions, functionaries and funds and the transfer of programmes and schemes along with budget and staff for the activities within the 29 subjects that have been devolved to PRIs even if this means that the existing line administrative hierarchy has to be substantially restructured. (b) Freedom to take administrative and financial decisions at local level and control staff for proper planning and implementation. (c) Capacity building of elected representatives and staff. This is an extremely important provision because there is a serious lack of expertise at the PRI level to undertake the increased planning and administrative responsibilities envisaged. Noting that the recommendations of the State Finance Commissions for transfer of funds to PRIs had not been implemented by most state governments and that they had not on their own devolved tax and non-tax levying powers to them the Task Force recommended that laws and rules should be enacted to ensure that this was not left to executive decision making which tended to go against the PRIs. Finally, the Task Force undertook a detailed activity mapping exercise for each of the 29 subjects in which devolution was to take place for each tier of PRI under the principle that the work that could be done at a particular level should be given to that level and not to a higher level.
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4. The Sandwich Effect The expectation of the Task Force that the State Governments would pro-actively implement its recommendations was belied very soon and PRIs continued to languish in the absence of devolution of powers and funds. A detailed analysis is necessary as to why there is this reluctance on the part of State Governments to implement the provisions of Part IX of the Constitution in letter and spirit. The Constitution has left it to the States to enact legislation and effect administrative changes to implement its provisions because of the delicate balance that is there between the powers of the Union and the States in the Constitution. The Union Government has much more powers than the States and there has been a tendency on its part to acquire more powers through legislation. One very important example being the enactment of the Environment Protection Act 1980 which took away the lucrative power to divert forest land for non-forest use from the State Governments. Since the Union Government is itself not devolving important powers to the the States, the latter are wary of ceding what little powers they have to the PRIs. The political power of the States vis-a-vis the Union Government is much greater than that of the PRIs vis-a-vis the State Governments. So the State Governments have consistently ignored the directives of the Union Government to implement the Constitutional provisions with regard to Panchayati Raj without facing much opposition from the PRIs and their elected representatives. This scenario was confirmed by the report published in 2001 of the Task Force on Panchayati Raj Institutions set up by the Planning Commission in 1998 to suggest ways in which PRIs could be made more effective (Planning Commission, 2001). An important point brought out by this other task force is that various international donor and central government sponsored schemes tend to create parallel local governance institutions like watershed development committees and the like and give these the responsibility of planning and implementation of their programmes, thus, by passing the PRIs. The World Bank too in 2001 had in its World Development Report (World Bank, 2001) stressed that political participation was a must for proper planning and implementation of development projects as it ensured greater accountability. However, in the development projects that it has funded it has continually promoted the setting up of parallel institutions of local governance rather than strengthen the PRIs. In fact the World Bank provides for the enrolment of NGOs for the mobilisation of people at the grassroots rather than let the PRIs do
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this work. In general the NGO-PRI interface is not a very happy one (Planning Commission, ibid). The most important inhibiting factor against devolution, as mentioned earlier, is that the State Governments, themselves, have limited fiscal powers and are strapped for funds most of the time. In the fifteen years from 1989 to 2004 the fiscal deficit of the States had increased due to higher debt burden and as a result interest payments constituted the single largest item of revenue expenditure (Dholakia and Karan, 2005). So they have to rely heavily on grants and transfers of their share of the taxes levied by the Union Government. This too makes the State Governments chary of devolving fiscal powers and funds to the PRIs as this will further erode their own financial buoyancy. The Union Government has further compounded matters by tying up transfer of substantial funds in innumerable Centrally Sponsored Schemes (CSS). The contribution of the Union Government to the State Governments in 2001 was 52% as direct transfers, 30% as support to state plans and 18% in the form of CSS (Saxena, 2004). The CSS funds were 45% of the States' own resources. With the initiation of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in 2006 the proportion of tied transfer through CSS has gone up substantially to 75 % of the States' own resources. Consequently the State Governments are funds starved and can initiate little development on their own. Given this situation there is an understandable reluctance to constitute State Finance Commissions as mandated and after that to implement their recommendations regarding funds devolution. Finally, the Union Government has formulated guidelines that a substantial portion of the funds for the CSS is to be spent by the PRIs and rigidly restricted the interference of the State Governments in this regard (Planning Commission, 2011). However, the Central departments overseeing the implementation of these CSS have not always been very diligent in ensuring that these guidelines are adhered to. Consequently, the State Governments have got around the CSS provisions for involvement of PRIs in implementation by retaining line control of the bureaucracy of the various departments responsible for the implementation of the CSS and have thus been able to indirectly have a say in the spending of these funds. This is an important reason for the lack of adequate devolution of activities and functionaries to PRIs.

Nevertheless, the elected members of the PRIs have been empowered over the years because they have had some say in the planning and implementation of CSS due to the continuous stress of the Union Government that they should be involved to ensure better utilisation of the funds, especially in the flagship MGNREGS. This has helped in increasing the political power of the PRIs as over the years a larger and larger number of people and especially women have become experienced in democratic governance and development implementation and begun creating bottom up pressure on the State Governments and sandwiching them into reluctantly devolving more powers. The result of this three way tug of war for sharing of power was that the Union Ministry of Panchayati Raj (MoPR) was established on 27th May 2004 to specifically look after the implementation of the provisions of the Constitution in this regard. The ministry has carried out various capacity building programmes, conducted research and evaluations and instituted reward schemes to promote devolution. It has also organised Ministerial and lower level conferences to cajole the State Governments towards more devolution. The new MoPR organised a conference of Chief Ministers in New Delhi on 29th and 30th June 2004 to chalk out a roadmap to make PRIs more effective institutions of local governance. Seven round table conferences of the Minister, MoPR and the state ministers of Panchayati Raj were organised, thereafter, around the country on various issues and the first one was in Kolkata on 23rd-24th July 2004 on devolution of functions, functionaries and funds and empowerment of Gram Sabhas. The principal recommendations of the Kolkata roundtable conference mirrored those of the task force mentioned earlier regarding detailed activity mapping to divide work between the state and the three tiers of PRI and corresponding devolution of functionaries and funds. A standing committee of the Central Minister for Panchayati Raj and the State Ministers was constituted to ensure that these recommendations were indeed implemented. A roadmap for effective devolution was prepared by the MoPR which was to be continually evaluated to determine how much progress was being made (MoPR, 2011a). The roadmap was as below

1. All central ministries were to revise the guidelines for implementation of the CSS of their ministries to include the PRIs in accordance with the activity mapping done and

provide for funds to be devolved directly to the appropriate level of PRI for the work to be done at that level. 2. The Central Finance Commissions and the State Finance Commissions (SFC) were to allocate untied funds to the PRIs to improve their financial autonomy. The State Governments had to act in accordance with the recommendations of the State Finance Commissions that were accepted by them. 3. State Governments should complete the legislative and executive devolution process for all the 29 subjects in the XIth schedule and also the activity mapping. The State budgets should provide funds to the PRIs to implement the activities mapped to them and also provide untied funds in accordance with the provisions of the SFCs. 4. The Planning Commission should also take the agency of the PRIs into account while preparing the Five Year Plans and allocate responsibilities and funds to them. 5. Given that the elected representatives in PRIs and the staff are not likely to have the skills to handle this enhanced level of work and funding, intensive training programmes should be conducted to bring them upto par. The MoPR conducts two annual independent assessments of the performance of the State Governments on the progress on this roadmap - the State of the Panchayat Reports (SoPR) and the calculation of a devolution index for the Panchayat Empowerment and Accountability Incentive Scheme (PEAIS). Thus, an irreversible process of greater and greater devolution to PRIs has been set in motion which, though slow, is an inexorable one. 5. The State of the Panchayats Reports The fifth round table conference of Ministers in charge of Panchayati Raj, held on 28th-29th October 2004 at Srinagar, adopted a resolution for preparation of annual reports by the States and also for annual reports called the State of the Panchayats Reports (SoPR) by the Union Ministry of Panchayati Raj. The first such report for 2006-07 was published by the MoPR and it noted that (MoPR, 2007) 1. Devolution of functions had taken place to some extent in all states and union territories and the average was about 21 out of 29 functions.

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2. Activity mapping also had taken place in 16 States and 3 Union Territories but in many states this had not been notified. Activity mapping was progressing tardily at the Centre as the departments were not revising the CSSs to devolve work and responsibility to the PRIs relating to the 29 functions and neither were they incorporating this new framework in the new Schemes being launched. The primary obstacle was the mindset of the bureaucracy which was against devolution of functions to PRIs. Thus, apart from the MGNREGS, for which there are clear provisions in the Act itself for devolution of functions and funds, the other CSSs still had not involved the PRIs in their implementation to the extent desired. 3. The creation of dedicated Panchayat account heads in the State Budget for each of the departments concerned with the 29 subjects to conform with the acitivities devolved had not taken place in most cases and neither were untied funds being given in any substantial way as a proportion of the tax receipts of the State Government. The most notable performance in this regard was that of the state of Kerala which was giving close to 40% of its tax receipts to the PRIs. Other states with commendable performance in this regard were West Bengal, Karnataka and Andhra Pradesh. 4. A "big bang" approach was recommended for overcoming the sluggishness in the devolution of 3Fs to the PRIs. The logic was that if substantial functions, functionaries and funds were devolved at one go with accompanying investment in capacity building and training of staff and elected representatives to handle the greatly increased responsibilities then this big bang would blow away much of the inertia and inexperience that were proving to be the major hurdles. The success of PRIs in Kerala where this approach was first followed was held up as an example. Subsequently it was felt that the SoPR should be prepared by an independent agency to ensure greater validity of the evaluation and so in 2007-08 and 2008-09 the SoPRs were prepared by the Institute of Rural Management Anand. These too advocated the big bang approach as they found that there was still considerable resistance in both the Central ministries and the State governments to devolve 3Fs and more importantly create an alternative administrative system under the executive control of the elected representatives of the PRIs (IRMA, 2009, 2010). The main points made in the second of these reports regarding devolution of 3Fs are as follows

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1. The 15 states studied revealed that on an average about 16 functions had been devolved and activity mapping done for them. This amounted to a slippage from the situation in 2006-07 due to the fact that many States had withdrawn the devolution to PRIs in some departments. 2. None of the States studied had Panchayat windows in their state budgets and so there was no devolution of funds taking place in support of the functions that had been devolved. 3. Apart from Haryana and Punjab where Panchayats had considerable earnings from rent on the use of common lands, the other states studied had less than 5% of their funds from own revenues. The average annual per capita expenditure in the PRIs remained less than Rs 1000. 4. Transfer of functionaries had not taken place in any significant manner except at the lowest Gram Panchayat level in some states. At the higher levels the elected members had very little or no control over functionaries and so the implementation of the CSS also was controlled by the latter in addition to their own departmental work. 5. Externally funded programmes had set up separate village, intermediate and district level institutions further undermining the authority of the Gram Panchayats. The report concluded that it was difficult to say that Panchayats had evolved into institutions of self governance as the control of functions, functionaries and funds still remained substantially with the State Governments. Evidently the big bang approach had not been replicated in most of the States. Though in most States there were legislative and executive orders for devolution of functions, there was no accompanying devolution of functionaries and funds thus rendering the orders ineffective. So much so that even the MGNREGS, which has in built provisions for local governance and audit, was being implemented on the directions of the bureaucracy and the State government without much involvement of the people. Other CSS with in built PRI participation like Sarva Shiksha Abhiyan, Integrated Child Development Scheme and the National Rural Health Mission too had been similarly weakened. The SoPR 2009-10 has also critically reviewed the functioning of the State Finance Commissions (SFC). Four SFCs should have been formed and should have submitted their reports by 2010 but in reality only three had been formed in some states. Even in these states there was a lack of appreciation on the part of the SFCs regarding the large extent of financial
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devolution that was required for the PRIs to be able to function effectively. The Eleventh National Finance Commission had classified the 29 functions given in the XIth Schedule further as follows (GoI, 2000) 1. Core Functions -Drinking Water,roads, culverts, bridges, ferries, waterways and other means of communication, rural electrification, including distribution of electricity, health and sanitation, including hospitals, primary health centres and dispensaries, maintenance of community assets. 2. Welfare Functions - Rural housing, nonconventional energy sources, poverty alleviation programme, education, including primary and secondary schools, technical training and vocational education, adult and nonformal education, libraries, cultural activities, family welfare, women and child development, social welfare, including welfare of the handicapped and mentally retarded, welfare of the weaker sections, and in particular, of the Scheduled Caste and the Scheduled Tribes, public distribution system. 3. Agriculture and Allied - Agriculture, including agricultural extension,land improvement, implementation of land reforms, land consolidation and soil conservation, Minor irrigation, water management and watershed development, animal husbandry, dairying and poultry, fisheries, social forestry and farm forestry, minor forest produce,fuel and fodder, markets and fairs. 4. Industries - Small scale industries, including food processing industries, khadi, village and cottage industries. It is clear that even to perform the core functions properly the PRIs need considerable untied funds as a proportion of the tax revenue collected by the state government. While for the welfare, agriculture and industries categories, Panchayat heads would have to be created in the State Budget for the concerned departments. The SFCs have mostly failed to provide adequate untied funds either as lumpsum amounts or as a proportion of the revenue of the State Government. Nor have the SFCs insisted on Panchayat heads being created in the State Budgets to facilitate the work of the other categories. Due to a lack of collated data on the finances of the PRIs the SFC have been handicapped in formulating proper criteria for allocation of funds and also for decentralising the power to levy taxes. Nevertheless, there has been little emphasis laid by the SFCs on the setting up of an extensive and reliable data base
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of PRI finances. All these problems can be traced to the reluctance on the part of State Governments to devolve funds and the decision on their use to the PRIs. Ideally the State Governments should enact a law setting down the constitution, selection criteria and operational procedures of the SFCs so as to free them from executive arbitrariness and also make it mandatory for the recommendations once accepted to be implemented. Only such a system will ensure that adequate funds are available to the PRIs. However, this hadn't been achieved anywhere. The MoPR issued guidelines on the formation and functioning of the SFC and also dealt with the subject in a separate chapter on SFCs in the model Panchayati Raj and Gram Swaraj Act (MoPR, 2009). The two most important provisions made for SFCs in these documents are as follows 1. There should be a permanent data and analysis cell of the SFC under a full time Secretary level officer that will collate and analyse all the financial data related to PRIs so as to provide a solid basis for the deliberations of the SFC. Moreover, such a permanent secretariat would provide continuity between one SFC and the next. 2. The SFC should take into consideration all the activities devolved to the PRIs under Schedule 11 as also the other basic activities that they have to carry out and make adequate financial provisions for their implementation, including the provision of adequate infrastructure and staff, by allocating a share of the own revenue of the State Government, transfers from the State Consolidated Fund and prescribing the taxes that can be exclusively levied by the PRIs.

The detailed review of the status of devolution in the States that follows in a later section reveals that neither of these two important provisions have been implemented in any of the States. A related issue is the most important need for the radical restructuring of the district administration so as to make the government functionaries at the district and lower levels work under the control of the elected representatives of the PRIs and make them true institutions of local self governance. This issue has been highlighted by the second Administrative Reforms Commission (ARC) (GoI, 2007) which has noted the reluctance of State Governments and the bureaucracy to let PRIs become independent self governing entities in accordance with the "principal of subsidiarity" which states that any activity that can be done at a lower level should not be delegated to a higher level. The ARC report also
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blames the skewed concentration of political power at the higher levels for the prevailing sorry state of affairs. 6. The Panchayats Empowerment and Accountability Incentive Scheme The MoPR introduced the PEAIS from 2005-06 onwards to encourage the state governments to bring about greater devolution of powers to the Panchayats. The basis for the evaluation is a devolution index (DI) that is estimated by an independent agency. Initially the estimation work was done by the National Council for Applied Economic Research upto 2008 (NCAER, 2008) and subsequently by the Indian Institute of Public Administration. The DI as it has evolved is a comprehensive estimator that takes into account the various components of devolution of functions, functionaries and funds and weights them according to their importance (Alok & Chaubey, 2010). The latest estimate for 2010-11 also estimates progress on the legal and administrative framework mandated to be put in place by the Constitution. The estimate is based on independent field verification of the data sent by the states and so is more authentic (MoPR & IIPA, 2011). A baseline has also now been constructed for all the parameters for all the states so that incremental improvements can be measured in future. The index addresses the important issue of the restructuring of administration to accord with the paramountcy of the PRIs. In the table of questions regarding the control of functionaries, the District Collector or Deputy Commissioner is also included and it is asked as to whether the District Panchayat has powers of appointment, transfer and disciplining over this post. This can only be possible in an autonomous PRI system. However, the index is calculated mainly on the basis of data provided by the State Governments themselves. The field verification that is done is in the best performing Panchayats chosen by the states and so has a limited validity. Thus, there is considerable scope for doubting whether the actual situation is as good as the indices indicate. Moreover, the incentive amounts provided are miniscule as compared to the funds that have to be devolved by the State governments to the PRIs for the latter to function properly as autonomous institutions of local government. So the DI values and the PEAIS have only a symbolic value and may not push the states to substantially increase devolution. Given the immense scope for misreporting favourably, the chances are that the achievements will be exaggerated by the State Governments in their reports leading to a more flattering DI.

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19 States from the mainland and 5 States from the North East, which has a separate Panchayat system, responded to the questionnaires and the estimates show that Kerala had the highest DI of 70.01 out of a maximum possible 100 among the mainland States. At the bottom lay Jharkhand with a DI of 11.70 while the average DI is 40.44 which is quite low. Sikkim tops the Northeastern States with 60.22 while Arunachal Pradesh is at the bottom with 19.70 and the average for the Northeastern States is 39.18. The DI has been calculated as a composite weighted average of the indices for four different aspects of devolution- Framework, Functions, Finances and Functionaries. The framework refers to the legislative and executive frame that has been put in place, functions refer to those functions that have been devolved, finances refer to the financial provisions that have been made for the PRIs to function autonomously and functionaries refer to the staff that are exclusively under the control of the PRIs. Interestingly while the national average index value for framework and functions are 51.32 and 50.55 respectively, for finances and functionaries they are 37.67 and 34.67 respectively. This lagging behind in the devolution of finances and functionaries is true of Kerala also. Thus, while some compliance has been achieved with regard to putting in place the legal and executive framework and passing orders for the devolution of functions, this has not been accompanied by corresponding devolution of funds and functionaries. Actual values of DI will obviously be even lower if a more detailed, independent and rigorous exercise is conducted. MoPR has recently prepared a road map for Panchayats (MoPR, 2011b) based on the recommendations of the ARC and the various task forces constituted from time to time. This takes into consideration all the major obstacles to devolution detailed above and tries to address them 1. The important issue of the lack of political power of the PRI representatives is sought to be addressed through the formation of federations of PRI representatives. Though, this is a difficult exercise given the transient nature of the tenure of the representatives and their party affiliations, nevertheless some specific financial provisions could enable this. At present the representatives can voice their grievances only in periodic meetings or training workshops. A federation would considerably increase their political power vis-a-vis higher levels.

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2. The powers of recruitment and administrative control of all staff of PRIs and functions devolved to them should be with the PRIs and a distinct and autonomous administrative structure should be put in place from the district level downwards. 3. Adequate untied funds should be provided to the PRIs through NFCs and SFCs. The CSS and Additional Central Assistance funds should be given to the PRIs for the work in these schemes that is to be done at their level. Parallel institutions should not be set up for implementing these programmes. A Panchayat window in state budgets for the 29 subjects devolved to PRIs must be made mandatory. 8. Conclusions and Recommendations The central problem that has dogged the establishment of truly autonomous local governance through effective devolution to PRIs is the reluctance of state governments to part with the powers of governance that they enjoy. Even the better performing state governments of Kerala and Paschim Banga have retained substantial control of functionaries and funds and made the PRIs subservient to them. Most States have just completed the formality of devolving functions and mapping activities through laws, rules and executive orders but have not followed this up with effective devolution of functionaries and funds. Despite continuous efforts by the MoPR since its inception and several recommendations by the eleventh, twelfth and thirteenth Central Finance Commissions, States have neither standardised the accounting systems and data bases of PRIs so as to provide the CFCs and SFCs with a solid foundation for recommending devolution of funds nor created Panchayat windows in the budgets of the departments from which functions are to be devolved to the PRIs (Rao et al, 2011). The main reason as explained in the introductory sections is that the State Governments have limited powers as compared to the Central Government in the Indian system. If the PRIs at the district level and below were to indeed become autonomous local governments with full control of the departments that are to be devolved to them as per the eleventh schedule then these departments would have very little left to do at the state level as the bulk of the staff and activities are concentrated at the district level and below. It is true that the overall guidance would still be provided by the higher level staff of the State departments but this would not compare with the huge responsibility currently being shouldered by them regarding the overall planning and implementation right down to the ground level. In other words the Ministers, Secretaries, Directors and the like in charge of these departments at the higher levels would lose considerable power. Moreover, the control over a substantial portion
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of the state tax revenue also would go to the PRIs and the State Governments would be left with even lesser financial leeway than they have at present. Another interesting observation made in this regard is "Thus, it is natural that an MLA feels insecure about a ZP member being allowed all resources and thus expanding his circle of influence. This needs to be addressed in an imaginative manner for both to function effectively without eroding each others mandates and functions." (State of Panchayati Raj Report Goa 2011). This crucial clash of political interests between the State Government and the PRIs remains unaddressed. Initially the MoPR started off with the "big bang" strategy and now in the latest roadmap it has gone ahead with what can be called the "oceanic circle" strategy following on the path chalked out by the second Administrative Reforms Commission. The ARC has approvingly quoted Gandhi's concept of oceanic circles wherein the whole governance system consists of a series of concentric circles with the village republic at its centre delegating only as much authority to the outer circles as it wanted to (Gandhi, 1959). However, both these strategies have their limitations given the reality that the awareness and mobilisation of the politicians and the people at the PRI level is much less than that of the State level politicians. In fact what little awareness, governance skills and political power have been garnered by politicians at the PRI level is due to the management of the increased works and funds under the CSS and especially the MGNREGS and this too has not been without contradictions with State level political leadership and the bureaucracy. In fact given a situation in which presently the CSS funds are equivalent to 75% of the State Governments' own revenues, these funds are a major bone of contention between the State Government and the PRIs. By keeping the PRIs starved of infrastructure and manpower the State Governments effectively ensure that the expenditure of CSS funds remains in their control. Nevertheless, as expressed by the elected PRI representatives during the surveys, the latter are making all efforts to tilt the balance in their favour. One area of concern arising from this tug of war is the adverse effect it has on the provision of civic amenities by PRIs and especially the crucial ones related to water supply and sanitation. The highest mortality in India is due to water borne diseases and these can be prevented by ensuring potable water supply and sanitation. With time as rural habitations have become more congested potable water supply and sanitation have become more
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expensive. The capital and overhead and maintenance costs of community water supply and sanitation systems have escalated considerably. Thus, the lack of funds with the PRIs and especially the Gram Panchayats has adversely affected their ability to provide good water supply and sanitation services. Even though there is a CSS on total sanitation and the 12th Finance Commission had sanctioned funds for water sector work, nevertheless this is not sufficient and so PRIs are failing badly in providing adequate and quality water supply and sanitation services with grave consequences for public health in particular and the economy in general through lost workdays. Consequently, for effective devolution to take place and true local self governance to materialise in the long run, there has to be a three way dialogue between the Central, State and PRI level politicians to allay the fears of the Sate level players regarding their marginalisation. A drastic reorganisation and redesigning of the political and administrative system at the state level is required to accommodate strong district and lower level PRIs on the principle of subsidiarity otherwise the model PR Act will never be accepted by the State Governments due to the fear of their own redundancy. Ultimately there has to be greater political pressure from the people at the grassroots as this is what has brought about the better devolution in Kerala and Paschim Banga. However, this is a long term process which is evolving with time and for immediate improvement in the extent of devolution the recommendations are as follows 1. The role of the PRIs and the State Governments in the planning and implementation of CSS must be institutionalised properly by the central Ministries that are in charge of them. Specifically it must be ensured that parallel institutions are not created at the village and intermediate levels for the implementation of these schemes. This can be achieved relatively easily and the MoPR has already initiated a process for getting this done that has to be further mainstreamed with support from other Ministries. This will help in building up the administrative and political capacity of the PRI representatives and help them to exert pressure from below for greater devolution. 2. The MoPR should begin a programme of trainings for the PRI representatives to focus on the importance of devolution of 3Fs for proper local self governance to be possible. This will create a greater awareness regarding this important issue among the PRI representatives and enable them to climb out of their current narrow understanding of themselves as being beholden to the higher level authorities for funds and functions.
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3. The PEAIS exercise should be conducted with greater independent verification to arrive at a more realistic assessment of the status of devolution than is now being done. This will put more pressure on the State Governments to move forward with greater alacrity on this front. References Alok, V.N. & P.K Chaubey (2010): Panchayats in India: Measuring Devolution by States, Macmillan, New Delhi. CAD. 1949. Constituent Assembly of India Debates Vol IX, http://www.indiankanoon.org/doc/25415/ Chakravarty, S (1987): Development Planning: The Indian Experience. Oxford University Press. Delhi. Chandra, N (1988): The Retarded Economies. Sameeksha Trust and Oxford University Press. Delhi. Dholakia, R & N Karan (2005): Consistent Measurement of Fiscal Deficit and Debt of States of India. Economic and Political Weekly, Vol. 40 No. 25. Donahue J D (1997): Disunited States Harper Collins Publishers Inc., New York. Fischer, L (1982): Gandhi: His Life and Message for the World. Mentor. New York. Gandhi M.K. (1959): Hind Swaraj(Indian Self Rule), (in Hindi) Navjeevan Publications, Ahmedabad. GoI (2001): Report of the Task Force On Devolution of Powers and Functions To Panchayati Raj Institutions, Ministry of Rural Development, Government of India, Delhi. GoI (2000): Report of the Eleventh Finance Commission for 2000-2005, Government of India, Delhi. GoI (2007): Local Governance An Inspiring Journey into the Future. Second Administrative Reforms Commission: Sixth Report. Government of India, Delhi. IRMA (2008): The State of Panchayats: 2007-08. An Independent Assessment. Vol I Thematic Report, Ministry of Panchayati Raj, Delhi. IRMA (2010): The State of Panchayats: 2009-10. An Independent Assessment. Vol I Thematic Report, Ministry of Panchayati Raj, Delhi. Keating, M (1998): The New Regionalism in Western Europe , E. Elgar, Northampton, Mass.

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MoPR (2009): Draft Model Panchayat and Gram Swaraj Act, Ministry of Panchayati Raj, Government of India, New Delhi. MoPR (2011a): Annual Report 2009-10, Ministry of Panchayati Raj, Government of India, New Delhi. MoPR (2011b): Roadmap for Panchayati Raj 2011-16, Ministry of Panchayati Raj, Government of India, New Delhi. MoPR & IIPA (2011):. Empowerment of Panchayats by the States through Devolution. Ministry of Panchayati Raj and Indian Institute of Public Administration, New Delhi. NCAER (2008): An Index of Devolution for Assessing Environment for Panchayati Raj Institutions in the States: Empirical Assessment 2008. Planning Commission (2001). Report of the Task Force on Panchayati Raj Institutions, New Delhi. Planning Commission (2011): Report of the Committee on Restructuring Centrally Sponsored Schemes, New Delhi. Rajaraman, I & D Sinha (2007): Tracking Functional Devolution By States To Panchayats, National Institute of Public Finance and Policy, New Delhi. Rao, M. Govinda and U A Vasanth Rao (2008): Expanding the Resource Base of Panchayats: Augmenting Own Revenues, Economic and Political Weekly, 26 January. Rao M. Govinda, T. R. Raghunandan, Manish Gupta, Polly Datta, Pratap Ranjan Jena & H. K. Amarnath (2011): Fiscal Decentralization to Rural Local Governments in India: Selected Issues and Reform Options, National Institute of Public Finance and Policy, New Delhi. Rodrguez-Pose A & N Gill (2003): The global trend towards devolution and its implications, Environment and Planning C: Government and Policy 21(3) 333 351 Saxena, N C (2004): Central Transfers to States and Centrally Sponsored Schemes at http://www.esocialsciences.com/data/articles/Document1992005150.5028498.pdf viewed on 23.7.2012. World Bank (2001): World Development Report 2000:Attacking Poverty, World Bank, Washington DC. World Bank (2004): India: Fiscal Decentralisation to Rural Governments. Volume I Main Report. Report No. 26654-IN. Rural Development Unit, South Asia Region.

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