Local Government: The Missing Stakeholder In Development
Written by Mr Sunil Kumar, IAS (Retd.)
Beyond The Blueprint is the Blog Series by Pune International Centre (PIC) under Centre for Cooperative Federalism and Multilevel Governance. It explores cities beyond policy, using data, field insights and analysis, bringing governance closer to people.
This month’s blog covers the theme of Responsible Governance. This blog argues that despite the 73rd and 74th Constitutional Amendments, local governments in India remain mere implementers of centrally and state-sponsored schemes rather than autonomous decision-makers. It highlights the issues of lack of consultation, choice, financial stake, and accountability. The author calls for mandatory consultation, scheme-selection rights, financial responsibility, and fixed revenue shares to make local governments true stakeholders in development.
Development in popular parlance has largely come to be associated with the implementation of central and centrally-sponsored schemes and state schemes in rural and urban areas of the states. Even after the coming into effect of the 73rd and 74th Constitution Amendment Acts (CAA), there seems to be little or no recognition that development schemes ought to and/or could be initiated by the local governments based on the well-established subsidiarity principle. Consequently, the pace of transfer of funds, functions and functionaries to local governments continues to be tardy in most states. Local governments are largely seen just as ‘implementing agencies’ of the ‘development’ schemes sponsored by the union and state governments, and not as autonomous democratically elected decision-making bodies.
Over the years, various development schemes have been designed and formulated by the Union government, although they cover subjects which are largely in the state list. Some of the major schemes that come to mind are the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Jal Jeevan Mission (JJM), Swachh Bharat Mission (SBM) for rural & urban areas, Midday Meal Scheme (MDM), Pradhan Mantri Awas Yojana (PMAY) for rural & urban areas, PM POSHAN and National Health Mission (NHM).
The union government uses the provision of Article 282 of the Constitution, which permits it to grant funds for any public purpose, to fund various schemes of the Ministry of Rural Development, Housing and Urban Affairs, Panchayati Raj, Agriculture, Women & Child Development, Social Justice, among others, which largely relate to subjects contained in the State list.
No voice
All the development schemes, whether of the union or state government, are executed in the rural and urban areas, which fall under the domain of rural or urban local governments. However, a perusal of the guidelines of various schemes of union and most state governments shows that the local governments have little or no say in the formulation of schemes. The stakeholder public consultation by various Ministries of the Union government is generally confined to officials of the concerned department in the states and rarely with representatives of local governments. Even in the formulation of state schemes, consultation with local governments is a rarity rather than the rule in almost all states, barring Kerala, which is the only state where local governments are recognised as an important stakeholder and consulted in the formulation of schemes post-1993.
No choice
Likewise, the local governments in almost all states (except Kerala) have no choice in the selection of schemes for implementation in their local areas. Since schemes are conceptualised, formulated and launched by the union and state governments, quite often there is no ‘demand’ for that scheme in some Gram Panchayats and/or Nagar Panchayats. Yet the scheme is thrust on them. The local governments (except in Kerala) have no right to refuse to implement any scheme of the union or state government.
No stake
Consequently, neither the elected representatives nor the local government functionaries have any stake in the success or failure of centrally-sponsored or state schemes in their local areas. Half-hearted understanding, little knowledge of the finer points of the schemes and a poor communication strategy ensure that citizens and intended beneficiaries of the scheme get half-baked information through intermediaries, who crop up almost instantaneously, and receive less than full benefits.
Unfunded mandates
In another twist, local governments and their functionaries are assigned tasks to be carried out by the sponsoring departments, but they receive little or no compensation for performing agency functions from the union or state governments. The administrative costs for implementation of the scheme are neatly divided by the bureaucracy in the union and state government, and nothing reaches the local government. ‘Unfunded mandates’ is another sure way of ensuring poor implementation of the scheme launched with great fanfare for improving the living conditions of citizens.
An examination of existing centrally-sponsored schemes (CSS) reveals that the guidelines of MGNREGA and JJM have carved out an important role for the Gram Panchayats. However, in practice, it is the Block Development Officer (BDO) and the officers of the Public Health & Engineering Department (PHED) who call the shots, and the Sarpanch / Pradhans are reduced to carrying out the bidding of the departmental officials. In several schemes like JJM and SBM, the responsibility of operation & maintenance (O&M) has been unilaterally thrust on the local governments without taking into account their capacity to raise their own sources of revenue or collect user fees. Consequently, in several states, the funds for payment of electricity dues and water charges are centrally deducted by the state governments from the funds recommended for devolution to local governments by the State Finance Commission (SFC). In most other CSS, the role of local government is restricted to providing land, selecting beneficiaries and the like, where they have little or no discretion. Even the number of beneficiaries in the GP is decided by the department.
Since local governments are now constitutionally recognised as the third tier of government and all development schemes are implemented in the urban and rural local areas, it is time to recognise their constitutional status and, based on the subsidiarity principle, accord them their rightful place in the formulation of public policy and implementation of development schemes.
Mandatory consultation
The first step in this direction would be to make consultation with representative bodies of local governments, such as All India Mayors’ Council and representative bodies of Panchayats, Chairmen of Nagar Palika & Nagar Panchayats, etc., mandatory before formulation of any scheme by the union or state government. Ideally, citizen bodies should also be consulted, and the public policy formulation process should be made more inclusive. But a beginning can be made by involving the representatives of local governments in the scheme formulation process.
Right to Local Governments to choose schemes
If the constitutional schema of viewing local governments as democratic institutions of self-government is to materialise, it is important to give them the right to select schemes that they would like to implement in their local area. All such decisions should mandatorily be approved by the Gram Sabha in the Gram Panchayat and the Council in the urban local government. This would take care of the ‘demand’ aspect, which is missing at present.
Tie-up between Local Governments & Academic Institutions
In order to ensure that the decisions of local governments regarding scheme selection are rational and logical, it may be necessary to prescribe that the schemes selected must conform to their Development/Master Plan, which sets the short, intermediate and long-term goals. Academic institutions should tie up with local governments and help them make their development/master plans and oversee their implementation as envisaged under the Unnat Bharat Abhiyan.
Make local governments share a part of the financial burden.
So far, except in Kerala, the financial burden of all CSSs is being shared between the union and the state Governments. In most schemes, the share of the union and state governments is in the 60:40 ratio for general states and 90:10 for north-eastern & Himalayan states. The contribution of local governments, if any, is restricted to providing land, identifying the beneficiaries and collecting their share (if prescribed) under the scheme guidelines and taking care of O&M expenditure.
Since local governments, as the third tier of government, receive devolution grants from both the Central Finance Commission and the State Finance Commission and all schemes are executed in their local area, it appears logical that local governments too bear a part of the financial burden along with the union & state government.
If this decision is taken ‘in principle’, then the details would need to be worked out as has been done by Kerala, which transfers between 30 to 40 per cent of the State Plan budget to the local governments, besides giving them the right to levy local taxes and fees. Kerala has also ensured the optimal size of Gram Panchayats and resisted the temptation to increase or decrease the size and number of GPs based on political considerations. It is also one state where the State Delimitation Commission works objectively and effectively.
Once the local governments become a part of the public policy formulation process through mandatory consultation on the part of the union and state government, get the power to choose which scheme to take up for implementation in their local area or not depending on their priority (as laid down in the Development/Master Plan) and begin to mandatorily bear a part of the financial burden of such schemes, they will begin to take ownership of schemes. They would then need to justify the success or failure of such schemes to their elected representatives and citizens at large, as should ideally happen in a democratic set-up.
It is time to take a fresh look at the design deficiencies in existing schemes of union and state governments and address them. For instance, if the responsibility of enforcing the ‘right to work’ guaranteed by MGNREGA were to be of the local government (GP) and not the state/union government, then citizens would have been best placed to ensure enforcement of their legal right and the whole design of the scheme would have been dramatically different. In the present arrangement, there is no guarantee that if more funds are provided, the legal right to get 100 days of work per annum would be realised in the absence of appropriate accountability mechanisms.
For making local governments a stakeholder in the development process, a whole range of follow-up decisions would need to be taken by the state and local governments relating to the transfer of funds, functions and functionaries and putting in place proper and effective accountability and auditing systems. It is time that local governments begin to get a fixed share in GST from both the CGST and SGST, and a consolidated fund of local government is created, which would enable seamless flow of funds from the union and state government. Tied grants under CFC or SFC devolution are self-defeating. The existing service delivery mechanism (totally dependent on government departments) has failed to deliver. Time for change is NOW.
(Sunil Kumar, IAS (Retd.) is a member of Pune International Centre and a former Secretary, Ministry of Panchayati Raj. Views expressed are personal.)
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