Decentralized Governance Framework

Decentralization is the transfer of authority and power from the central government to state & local level governments. Instead of political and economic power being concentrated at the national level, power is dispersed to lower level sub-national entities. India is a federal country (with central, state & concurrent list subjects), but the central government has considerable power over state governments. The most typical being three tiers of centre, state and local governments. Grassroots participatory democratic practices are essential to the success of decentralization. In India local bodies are the primary units of decentralization.1

POLITICAL DECENTRALISATION

The two main aspects of political decentralization in India are:

(i) local accountability via village level elected institutions, and (ii) representation for women and other disadvantaged groups. 2

States modified their Acts consistently with the requirements of the 73d Amendment, and most of them have carried out local elections, albeit with delays relative to the constitutional provisions. The Acts, mandated by the amendment have provided uniformity in terms of three-tier local governments at the district, block and village levels—Zilla Parishads at the district level (ZP), Panchayat Samities at the block level (PS), and Gram Panchayat at the village level (GP). Participation in the local election process is high.3

Decentralisation : The National and Global Context

International experience bears out the close link between reform and Decentralisation. Apart from the theoretical logic of a reduced role of government creating opportunities both for private enterprise and for community action, in many countries actual reform programme has been built upon increasing institutional space for Decentralisation. Reform programmes in developing countries/ transition economies as diverse in range as Poland, Chile, Argentina and South Africa and China, the autonomy to local units in decisions on incentives for investment and capital market access, has given a strong foundation to reforms. In the case of China, the Town & Village Enterprises (TVEs) were given a wide range of powers in matters relating to resource mobilisation, user fees, and recruitment of experts, apart from implementation responsibilities that they already had. Clearly, economic decentralisation has been the key to success of reform programmes in such

1 – Dr. L. R. Yadav, Decentralization and Participatory Democracy in India available at

http://www.skoch.org/12/Full_paper_skoch.pdf

2 Rohini Pande, Overview of Decentralization in India available at

http://policydialogue.org/files/events/Pande_Decentralization_in_India.pdf

3 OVERVIEW OF RURAL DECENTRALIZATION available at

http://www1.worldbank.org/publicsector/civilservice/june2004seminar/RuralDecent.pdf

contexts. The issue of sequencing and forms of Decentralisation, therefore, assumes much significance. In the above-mentioned countries, only South Africa has undertaken the most comprehensive devolution of powers to the third tier. In China, the reforms were not related to political freedom. Indeed, that is proving to be a hindrance as China integrates more into the global economy through institutions such as the World Trade Organisation (WTO). Political Decentralisation provides a more durable ‘rational-legal’ framework that makes Decentralisation an integral part of the political and civic discourse. India is the world leader in creating space for political decentralisation. Now the concomitant arenas of fiscal devolution and economic decentralisation require greater attention by policy researchers.

(Decentralisation in India Challenges & Opportunities available at http://www.in.undp.org/content/dam/india/docs/decentralisation_india_challenges_opportunities.pdf )

Fiscal Decentralisation

Financial responsibility is a core component of decentralisation. Decentralisation initiatives that focus exclusively on electoral and administrative processes without considering the fiscal dimensions will not be sustainable. For local governments and private organisations to carry out decentralisation effectively, they need adequate revenues as well as the authority to make decisions on expenditures. 4Lack of adequate funding for lower level units was the single most important factor that undermined many of the decentralization attempts in 1970‘s and 80‘s. The four pillars of fiscal decentralisation are:

(i) The assignment of expenditure responsibilities to different government levels (ii) The assignment of tax and revenue sources to different government levels(iii) Intergovernmental fiscal transfers (iv) Sub-national borrowing

4 Durga Prasad Chhetri, Democratic Decentralisation and Social Inclusion in India: Exploring

the Linkages available at

http://iosrjournals.org/iosr-jhss/papers/Vol11-issue1/K01116472.pdf?id=6273