Journal of Business Management & Social Sciences Research (JBM&SSR) ISSN No: 2319-5614

Volume 5, No.11, November 2016

Causes For Decentralization And Its Upshot

On Poverty In India
S. Thowseaf, Research Scholar, A lagappa Institute of management, Alagappa University, Karaikudi
K. Karthick,
R. Karthick,
Abstract
Decentralization was always been myopically debated topic when comes to administration, though it has its own merits
and demerits. Although effective management can be made possible through decentralization, corruption and misappro-
priation is indeed doable. Decentralization is all about delegation of power and authority to local bodies for effective exe-
cution of programs. India having 2nd largest population around the world can never manages its people by giving solu-
tions to every economic problems operating from centre, hereby it adopted democratic decentralization for the purpose of
effective administration of country. Vocalizations about important economic problem of India i.e. poverty, the decentrali-
zation and various Amendments such as 73rd and 74th should produce an effect on poverty, but unfortunately the impact
value is slightly above threshold limit or not up to expectation on closer insight. The study was conducted by considering
three types of decentralization that exist in India namely; political, administrative and fiscal, and its impact on poverty
reduction is made through various secondary data and literature reviews. Hereby exploratory research design was adopt-
ed, thus a conceptual framework based on review of literature has been proposed and with the framework as a base the
study was proceeded. The study conducted in lights of political, administrative and fiscal spheres of decentralization cumu-
latively have fairly less impact on poverty reduction in India. While considering individual spheres, decentralization im-
pact value on poverty reduction is unrecognizable. Cognitive on considered sphere indicates; corruption, misappropria-
tion of public resources by local bodies, more than required employees and employers as public agent and admin, week
coordination between state and central government, tall political and administrative structure and weak fiscal policies
towards education, health and agriculture are found to be major issues.

Keywords : Decentralizat ion, Decentralization in India, Decentralizat ion and Poverty reduction

Introduction
Decentralizat ion can be interpreted as a political process
wherein the responsibilities in relation to public admin is-
trative and utilization of public resources are reassigned
to lower level governmental bodies or non-governmental
bodies, such as Non-Govern mental Organizat ions
(NGOs) or private sectors from Central government au-
thority (Manor, 1998).
Consequently, reassigning of such powers will provide
the acquired bodies to make decision in regards to allo-
cation and distribution of public resources, elevate the
power to implement policies and programs, afford au-
thority to spend public revenue. Technically these three
powers are classified as political, ad min istrative and fis-
cal decentralization (World-Bank, 2000). Critically,
democratic decentralization indicates more than delega-
tion of power, to the authority down the line. Thereby
the citizens residing within the system are provided with
the rights elect their public officials through election,
grievance meetings and by other democratic means
(Blair, 2000). Thus, Democrat ic decentralization can be
defined as a mean ingful authority developed for local
governance which is accountable and accessible by the
citizenry therein. Afar, these basic principles, democratic
legislation entails wide set of norms, customs and rules
through which citizen could exercise effective control
over the appointed public officials. The effective control
are laid through independent judiciary, free press, trans-
parency in system operations and freedom of association
and speech (R. Luckham, 2000)
Causes For Decentralization
In relative context discussed by (Besley, 1997) who
thrown an ideas for poverty reduction through techno-
cratic and institutional was the base for conceptual de-
sign made for the purpose study. The study conducted,
emphasized on exploring and targeting programs that
hinders the poor and individuals from backward society
fro m getting resources that is of greatest need. The study
was not intact in portraying basic amenit ies need but the
political power and admin istrative incompetence, which
are hinders to weaker section of individuals due to cor-
ruption. Poverty reduction thereby requires developing
institutions, change in political structure from the unit
level, imp roved governance and attitude change towards

The Author Blue Ocean Research Journals

www.borjournals.com Open Access Journals Blue Ocean Research Journals 328
 Journal of Business Management & Social Sciences Research (JBM&SSR) ISSN No: 2319-5614
Volume 5, No.11, November 2016

poor and people of backward society (Grote, 2000). De- it offers better legal framework and serves people in the
centralization has its imp licat ion in above stated ap- society therein. Thereby political, ad min istrative and
proaches; decentralization undeniably facilitates effec- fiscal decentralization is scrutinized and thus the frame
tive technocratic programs and better administration also work is designed.

Figure 1 Conceptual framework

Source: (Grote, 2000)

Decentralization In India underlies that reform transpire in 1993 in form of 73rd

Indian central constitution, according to 73rd Amend-
ments have given considerable power to its allied bodies
down the line in the states for governing bureaucratic
authority and administration of agrarian institutions such
as agricultural labors, land tenancy and land (Mukarji,
1999). On closer insight the 73rd and 74th Amendments
are designed to provoke state potential and promote self
government through local bodies (Jha, 1999).
In order to justify the hypotheses in relat ion to Indias
decentralization process and its relationship with 73rd
amend ments, many scholarly literatures where consid-
ered, which resulted towards congruous direction. The
study made by central Govern ment of Ind ia (GoI) fu rther
amend ments produces ultimate distribution of powers
and resources to the rural authority on existing pattern of
social inequality which are based on religion, class,
caste, gender, and other forms of do minations, thus 73rd
amend ments can be clearly understood as decentraliza-
tion. According to 73rd A mend ment, confirmatory leg is-
lation are outlined in terms of power, functions and pro-
cedures of local government at village, district and in-
termed iate level. On cognitive look the delegation leg is-
lation thus emerged through government order, which in
actual fact the state control over panchayats which is
depicted in Table 1 indication level of power posses by
various southern states of India.

The Author Blue Ocean Research Journals

www.borjournals.com Open Access Journals Blue Ocean Research Journals 329
 Journal of Business Management & Social Sciences Research (JBM&SSR) ISSN No: 2319-5614
Volume 5, No.11, November 2016

Table 1 Decentralization in Southern states of India

State Powers Andhra Pradesh Madhya Pradesh Kerala Karnataka Tamil Nadu

State reserves pow-

ers to make rules
and make changes in
content of schedule

State reserves power

of appointment to
PRIs

Delimitati on of con-
stituencies the re-
sponsibility of gov-
ernment, not S EC

State manages PRIs

when delay in elec-
tions

State reserves power

to dismiss Sarpanch

State reserves power

to cancel resoluti on
or decision of
Panchayats

State reserves power

to dissolve
Panchayats

State reserves power

to i nspect records /
works

SFC report manda-

tory

Source: (Bank, 2000)

All the states in India dispatches its duly assigned duties
and responsibilities of central government through Chief
Minister at state level, District Planning Co mmittees and
District Rural Development at district level, Zilla
Parishads at district level, At Sub-district level it is
Mandal, Taluka and Janpad Parishads, and At Village
level: Gram Panchayats andGram Sabhas.
DECENTRALIZATION AND POVERTY RED UC-
TION
In context to poverty reduction through decentralizat ion,
Indian government is giving myriad amount of resources
and benefits to empower poor and vulnerable groups in
society. Despite of great variation among culture, it can
be typically enumerated the roles of government towards
poor especially in rural areas; Provision for public goods
like education and healthcare, Provision for d ivisible

The Author Blue Ocean Research Journals

www.borjournals.com Open Access Journals Blue Ocean Research Journals 330
 Journal of Business Management & Social Sciences Research (JBM&SSR) ISSN No: 2319-5614
Volume 5, No.11, November 2016

goods such as irrigation and agricultural, enforcement of
law that are regulating economic inputs such as labor,
land and capital, Finally protection of rights of individu-
als, organizat ion, association and entitlement.
Though decentralization concept on poverty elimination
sounds enchanting, there is lot more problematic situa-
tion for imp lementing required system wh ich ensures
public resources delivered effectively and efficiently. In
addition misallocation or corruption are play ing a domi-
nant role indeed in India. Decentralization also possesses
problems associated with coordinating with central gov-
ernment of India (Sen, 1996). Hereby poor accountabil-
ity and bad governance can directly hit the interest of the
poor and marginal groups resigning in the society. To
illustrate with an practical examp le
a) Rent seeking behavior on the part of the police,
government officials, etc. can deprive the poor of re-
sources they would ideally receive were the corrup-
tion not taking place;
b) Absenteeism, corruption and other forms of poor
performance means that the government is spending
social welfare resources which yield no benefits;
c) Widespread perception of corruption promotes feel-
ings of distrust towards government, thereby un-
dermining the potential for collaboration between
the state and civil society organizat ions;
d) Finally, a culture of corruption emerges within the
public sector; encouraging officials further rent
seeking behavior and poor accountability (Manor J. ,
2001).
Decentralizat ion when seen in lights of political, ad min-
istrative and fiscal spheres individually, the effect is less
than threshold limit, i.e. they doesnt support in poverty
elimination. On cu mulating above three factors and its
association with poverty reduction, it indicates fairly
acceptable value according to study conducted by
(Grote, 2000).

POVERTY ES TIMATES IN INDIA

Table 2 - Number & Percentage of Population below poverty line by states 2011-12
(Tendulkar Methodology)
Rural Urban Total

No. of No. of No. of

Persons %age of Persons %age of Per- Persons
S.No. States %age of Persons (lakhs) Persons (lakhs) sons (lakhs)
1 Andhra Pradesh 11.0 61.8 5.8 17.0 9.2 78.8
2 Arunachal Pradesh 38.9 4.3 20.3 0.7 34.7 4.9
3 Assam 33.9 92.1 20.5 9.2 32.0 101.3
4 Bihar 34.1 320.4 31.2 37.8 33.7 358.2
5 Chhattisgarh 44.6 88.9 24.8 15.2 39.9 104.1
6 Delhi 12.9 0.5 9.8 16.5 9.9 17.0
7 Goa 6.8 0.4 4.1 0.4 5.1 0.8
8 Gujarat 21.5 75.4 10.1 26.9 16.6 102.2
9 Haryana 11.6 19.4 10.3 9.4 11.2 28.8
10 Himachal Pradesh 8.5 5.3 4.3 0.3 8.1 5.6
11 Jammu & Kashmir 11.5 10.7 7.2 2.5 10.4 13.3
12 Jharkhand 40.8 104.1 24.8 20.2 37.0 124.3
13 Karnataka 24.5 92.8 15.3 37.0 20.9 129.8
14 Kerala 9.1 15.5 5.0 8.5 7.1 24.0
15 Madhya Pradesh 35.7 191.0 21.0 43.1 31.7 234.1
16 Maharashtra 24.2 150.6 9.1 47.4 17.4 197.9
17 Manipur 38.8 7.5 32.6 2.8 36.9 10.2
18 Meghalaya 12.5 3.0 9.3 0.6 11.9 3.6

The Author Blue Ocean Research Journals

www.borjournals.com Open Access Journals Blue Ocean Research Journals 331
 Journal of Business Management & Social Sciences Research (JBM&SSR) ISSN No: 2319-5614
Volume 5, No.11, November 2016

19 Mizoram 35.4 1.9 6.4 0.4 20.4 2.3

20 Nagaland 19.9 2.8 16.5 1.0 18.9 3.8
21 Odisha 35.7 126.1 17.3 12.4 32.6 138.5
22 Punjab 7.7 13.4 9.2 9.8 8.3 23.2
23 Rajasthan 16.1 84.2 10.7 18.7 14.7 102.9
24 Sikkim 9.9 0.5 3.7 0.1 8.2 0.5
25 Tamil Nadu 15.8 59.2 6.5 23.4 11.3 82.6
26 Tripura 16.5 4.5 7.4 0.8 14.1 5.2
27 Uttarakhand 11.6 8.3 10.5 3.4 11.3 11.6
28 Uttar Pradesh 30.4 479.4 26.1 118.8 29.4 598.2
29 West Bengal 22.5 141.1 14.7 43.8 20.0 185.0
30 Puducherry 17.1 0.7 6.3 0.6 9.7 1.2
31 Andaman & Nicobar 1.6 0.0 0.0 0.0 1.0 0.0
32 Chandigarh 1.6 0.0 22.3 2.3 21.8 2.4
33 Dadra & Nagar Haveli 62.6 1.2 15.4 0.3 39.3 1.4
34 Daman & Diu 0.0 0.0 12.6 0.3 9.9 0.3
35 Lakshadweep 0.0 0.0 3.4 0.0 2.8 0.0
All India 25.7 2166.6 13.7 531.3 21.9 2697.8
Source: (GoI, 2013)

Table 3 - Percentage and Number of Poor Estimated by Tendulkar method, usi ng Mixed Reference Period (MRP)

Poverty Ratio (% ) Number of Poor (million)

Rural Urban Total Rural Urban Total

1. 1993-94 50.1 31.8 45.3 328.6 74.5 403.7

2. 2004-05 41.8 25.7 37.2 326.3 80.8 407.1

3. 2011-12 25.7 13.7 21.9 216.5 52.8 269.3

Annual Average Decline: 1993-94 to 2004-05
(percentage points per annum) 0.8 0.6 0.7

Annual Average Decline: 2004-05 to 2011-12

(percentage points per annum) 2.3 1.7 2.2
Source: (GoI, 2013)

Decentralization Effect On Poverty Reduc-
tion In India With Respect To Other Coun-
tries
Hu man Development Index (HDI) movement can be
considered as the resultant effect of decentralizat ion for
most of the studies been conducted. The HDI result re-
flect the collective value of life expectancy, Education
standard and stand of living of Individual therein the
system, whose relationship with respect to Political,
Admin istrative and Fiscal decentralizat ion is depicted
highly significant in study conducted by (Sacchidananda
Mukherjee, 2014) whose relationship is depicted in Fig-
ure2.

The Author Blue Ocean Research Journals

www.borjournals.com Open Access Journals Blue Ocean Research Journals 332
 Journal of Business Management & Social Sciences Research (JBM&SSR) ISSN No: 2319-5614
Volume 5, No.11, November 2016

Figure 2 HDI Relationship with Decentralization

Source: (Sacchidananda Mukherjee, 2014)

Table 4: State-wise Human Development Index (HDI) Scores and Ranks: 1983 to 2011-12
(Rural & Urban Combined)
State 1983 1988 1993 2000 2004-05 2009-10 2011-12 2011-12 Growth
Obse rve d Expe cte d Pattern
Andhra Pradesh 0.29 0.19 0.22 0.29 0.3 0.29 0.31 0.3 0.05

Arunachal Pradesh 0.12 0.07 0.11 0.17 0.23 0.18 0.12 0.22 -0.43

Assam 0.24 0.12 0.15 0.14 0.23 0.18 0.14 0.18 -0.24

Bihar 0.07 0.02 0.06 0.07 0.05 0.05 0.16 0.06 1.85

Chhattisgarh* 0.13 0.08 0.07 0.16 0.14 0.11 0.18 0.13 0.34

Goa 0.77 0.54 0.7 0.7 0.78 0.8 0.8 0.79 0.02

Gujrat 0.5 0.30 0.36 0.39 0.43 0.46 0.48 0.43 0.11

Haryana 0.56 0.42 0.4 0.49 0.54 0.52 0.49 0.51 -0.04

Himachal Pradesh 0.62 0.46 0.43 0.55 0.61 0.66 0.65 0.62 0.05

Jammu & Kashmir 0.44 0.29 0.32 0.41 0.49 0.44 0.48 0.46 0.04

Jharkhand* 0.07 0.02 0.06 0.08 0.15 0.16 0.22 0.16 0.42

Karnataka 0.42 0.34 0.33 0.38 0.44 0.46 0.42 0.44 -0.04

Kerala 0.82 0.72 0.81 0.82 1 0.96 0.91 0.98 -0.07

Madhya Pradesh 0.13 0.08 0.07 0.15 0.18 0.17 0.19 0.18 0.02

Maharashtra 0.5 0.41 0.45 0.51 0.58 0.6 0.63 0.6 0.05

Manipur 0.31 0.21 0.26 0.27 0.26 0.22 0.2 0.23 -0.15

Meghalaya 0.22 0.12 0.23 0.26 0.34 0.26 0.25 0.31 -0.21

Mizoram 0.55 0.45 0.61 0.58 0.53 0.45 0.41 0.51 -0.2

Nagaland 0.27 0.48 0.44 0.47 0.4 0.26 0.26 0.37 -0.3

Odisha 0.19 0.14 0.16 0.18 0.17 0.25 0.26 0.21 0.22

The Author Blue Ocean Research Journals

www.borjournals.com Open Access Journals Blue Ocean Research Journals 333
 Journal of Business Management & Social Sciences Research (JBM&SSR) ISSN No: 2319-5614
Volume 5, No.11, November 2016

Punjab 0.69 0.52 0.56 0.58 0.64 0.58 0.54 0.59 -0.08

Rajasthan 0.18 0.08 0.16 0.27 0.28 0.24 0.32 0.28 0.14

Sikkim 0.21 0.16 0.22 0.24 0.3 0.38 0.32 0.35 -0.08

Tamil Nadu 0.36 0.35 0.39 0.46 0.59 0.62 0.63 0.63 0

Tripura 0.26 0.21 0.28 0.29 0.29 0.42 0.35 0.37 -0.06

Uttar Pradesh 0.1 0.06 0.07 0.14 0.17 0.17 0.12 0.18 -0.31

Uttarakhand* 0.1 0.06 0.07 0.16 0.25 0.38 0.43 0.33 0.28

West Bengal 0.32 0.32 0.35 0.37 0.46 0.41 0.48 0.44 0.09

Source: (Sacchidananda Mukherjee, 2014)

Table 4 HDI Country wise report

Human De velop- Life expe ctancy Expe cte d Mean years of Gross national income GNI per
ment Index (HDI) at birth years of schooling (GNI) per capita capita
schooling rank
minus
HDI
rank

HDI Rank Country Value (Years) (Years) (Years) (2011 PPP-$)

126 Namibia 0.628 64.8 11.3 6.2 9,418 -21

128 Guatemala 0.627 71.8 10.7 5.6 6,929 -11

129 Tajikistan 0.624 69.4 11.2 10.4 2,517 27

130 India 0.609 68.0 11.7 5.4 5,497 -4

131 Honduras 0.606 73.1 11.1 5.5 3,938 7

132 Bhutan 0.605 69.5 12.6 3.0 7,176 -17

133 Timor-Leste 0.595 68.2 11.7 4.4 5,363 -6

Source: (UNITE D NATIONS DEVELOPME NT PR OGRAMME, 2016)

Conclusion grams in effective manner, external factors such as; ge-

On an outset, the result indicates that the decentralization
has marginal effect on poverty reduction in various Indi-
an states. The study clearly reported 11 states among the
considered 28 states have shown less observed HDI than
expected. With respect to countries level India ran ked
130th in HDI i.e. India have occupied the mid value
among the countries, it means the country is performing
averagely with respect to every countries. Decentraliza-
tion though made to imp lement central government pro-
ography, program size, population density, cultural and
political set-up, availability of natural resources, inter-
regional solidarity and Institutional managerial capaci-
ties are influencing the program to be imp lemented sig-
nificantly. Apart external factors, internal factors such as
corruption, misappropriation of public resources by local
bodies, more than required emp loyees and employers as
public agent and admin, week coordination between state
and central government, tall political and administrative

The Author Blue Ocean Research Journals

www.borjournals.com Open Access Journals Blue Ocean Research Journals 334
 Journal of Business Management & Social Sciences Research (JBM&SSR)
Volume 5, No.11, November 2016
structure and weak fiscal policies towards education, 8.
health and agriculture are found to be majo r issues.
Hence the possibility of attaining effective poverty re-
9.
duction can be accomplished by effective governance at
central and local level and easily reachable - better poli-
cies, subsidies and concession towards poor individuals. 10.
REFERENCES
1. Bank, W. (2000). World Develop ment Report
2000/1: Attacking Poverty. Oxford: Oxford
University Press .
2. Besley, T. (1997). Po lit ical Economy of A llev iating 11.
Poverty: Theory and Institutions. The World Bank,
Washington DC .
3. Blair, H. (2000). Participation and Accountability at
the Periphery: Democrat ic Local Governance in Six 12.
Countries. World Development , 28(1): 2139.
4. Go I. (2013). Press Note on Poverty Estimates 2011-
12. Delh i: Nat ional Planning Co mmission. 13.
5. Grote, J. v. (2000). Does Decentralization Serve the
Poor? . IMF-conference on fiscal decentralization .
6. Jha, S. N. (1999). Decentralisation and Local 14.
Politics: Read ings in Indian Government and
Politics . London: Sage , pp. 1344.
7. Manor, J. (2001). Madhya Pradesh Experiments
with Direct Democracy. Economic and Political
Weekly .
The Author Blue Ocean Research Journals
www.borjournals.com Open Access Journals
ISSN No: 2319-5614
Manor, R. C. (1998). Democracy and
Decentralisation in South Asia and West Africa.
Cambridge: Cambridge University Press , 50-62.
Mukarji, N. (1999). Decentralisation and Local
Politics: Read ings in Indian Government and
Politics . London: Sage , pp. 7082. .
R. Luckham, A. M. (2000). Democrat ic Institutions
and Politics in Contexts of Inequality, Poverty, and
Conflict: A Conceptual Framework. IDS Working
Paper 104. Brighton: Institute of Development
Studies .
Sacchidananda Mukherjee, D. C. (2014). Three
Decades of Hu man Develop ment across Indian
States:Inclusive Growth or Perpetual Disparity? .
National Institute of Public Finance and Policy .
Sen, J. D. (1996). India: Economic Develop ment
and Social Opportunity. Delhi: Oxford University
Press .
UNITED NATIONS DEVELOPM ENT
PROGRAMM E. (2016). hdr.undp.org. Retrieved
fro m http://hdr.undp.org/en/composite/HDI
World-Ban k. (2000). Overview o f Rural
Decentralization in India. Volume I. Unpublished
report. Mumbai: World Bank.
Blue Ocean Research Journals 335