ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Towards Streamlining Panchayat Finance in India

Local governments have become the third tier of governance in Indian federal polity. For decentralisation to be successful, fiscal systems that make governments accountable to their citizens are needed. The absence of consistent data and reporting has made evaluating decentralisation difficult. In this paper, we utilise data from a well-designed sample of gram panchayats in Kerala to document fiscal management systems, extent of decentralisation of revenues, and local governments’ response to raising revenues using local capacity. Our findings suggest that the pressure to spend on welfare and development activities has outstripped development of revenue. However, there is some evidence that local governments have untapped revenue potential in their property tax. Importantly, we also find that state and federal government support vis-à-vis intergovernmental grants is not crowding out revenue mobilisation.

Bank and Poverty Reduction

A close reading of the World Bank's World Development Report 2015 shows that it works on the assumption that human beings generally think automatically, socially, and with mental models, and that future development policy, poverty alleviation, and even policy design need to be modified taking this into account. Poverty is a "cognitive tax" suffered because people are incapable of taking advantage of the opportunities that are open to them. The assumption that development experts improving the behaviour of the poor will reduce poverty, however, fails to confront the growing problem of unsustainable inequalities.

Implications for Local Governments

The subject of local governments has not been comprehensively treated by the Fourteenth Finance Commission. The implications of the new inter se distribution formula of the commission's award for local governments have not been thought through and important conditionalities have been changed or watered down.

Deepening Democracy and Local Governance

Kerala's decentralised experience has demonstrated that democracy is more than just balloting. But deepening democracy is a continuous quest for justice and freedom. While participatory democracy has powerful theoretical arguments, its empirical basis continues to be weak. This article explores how far local governance in Kerala has deepened democratic practice and argues that the local governance system in the state needs to be reformed and redefined.

The Third Tier and the Fourteenth Finance Commission

As a multilayered federal system, India needs a comprehensive and coordinated intergovernmental transfer system that includes the third tier as a dynamic component. This is particularly important because of the multiplicity of channels and the bewildering typology of transfer arrangements that exist today. This article points out that the Fourteenth Finance Commission's real challenge is to persuade state governments to carry on with the task of democratic decentralisation, while spelling out some issues it may consider to improve public fi nance and local democracy.

Free the Church

The editorial “Need for an Ecclesiastical Insurrection” (EPW, 6 April 2013) is contextual and timely. A professional journal devoted to the pursuit of secularism, social justice and scientific analysis has rightly raised the question, “Isn’t there a dire need for an ecclesiastical insurrection in...

Understanding Human Development

LETTERS Issn 0012-9976 Ever since the first issue in 1966, EPW has been India’s premier journal for comment on current affairs and research in the social sciences. It succeeded Economic Weekly (1949-1965), which was launched and shepherded by Sachin Chaudhuri, who was also the founder-editor of EPW...

Value of Democracy

This letter is to register my distress regarding the inference drawn by the two researchers in their paper “Democracy and Health: Evidence from Indian States” (EPW, 1 October 2011). After presenting infant mortality rate data on Indian states and drawing inference about India’s health status, they...

The 13th Finance Commission and the Third Tier

Evaluating the recommendations of the Thirteenth Finance Commission with reference to panchayati raj institutions and urban local bodies and their implications for genuine fiscal federalism in India, this paper finds data related to local governments across states and over time to be wanting in many respects. Yet, as broad aggregates, they help throw some light on the magnitudes and trends in expenditure and own source revenue of the third tier from 2002-03 to 2007-08. It concludes that the commission's sins aside, it has in some ways departed significantly from the past and made suggestions that could strengthen democratic decentralisation if they are fully implemented.

Have the State Finance Commissions Fulfilled Their Constitutional Mandates?

The State Finance Commission, although a technical and quasijudicial constitutional entity like the Union Finance Commission, has to help local governments plan for economic development and deliver social justice and public services at the local level. This article evaluates the history of the performance of SFCs in general and shows that they have missed a great opportunity to contribute to the process of building a more inclusive, participatory and environmentfriendly fi scal federalism via promoting decentralised governance in the country. It argues that the blame is to be collectively shared and shouldered by the union, state and local governments.

Limits of a 'Devolution Index'

The National Council of Applied Economic Research and the Ministry of Panchayati Raj have prepared an index to measure and assess how far the states have progressed in "empowering" panchayati raj institutions. The devolution index measures the functions, finance and functionaries of the PRIs as also accountability in the institutions, and accordingly ranks states. This article critically discusses the experiment to measure and compare states in the empowerment of PRIs.

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