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have to plan for “economic development Limits of a ‘Devolution Index’ and social justice” and implement them. The magnitude of the devolution package envisaged is indeed substantial as well as M A Oommen crucial. As regards the scope of devolution
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.
M A Oommen (maoommen@asianetindia.com) is at the Institute of Social Sciences, New Delhi.
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Since 2005-06, the MoPR has been operating what it calls the Panchayat Empowerment and Accountability Incentive Scheme (PEAIS) under which states are assessed for their performance in empowering the PRIs and the accountability of the PRIs in the discharge of their functions. Any incentive mechanism to empower PRIs is to be seen as a step towards better local demo cracy and development in India. Two questions are crucial here: (1) What do you mean by empowerment of PRIs? and
(2) How do you measure it? Em powerment in the context of decentralisation is to be seen as empowerment of the people through empowering the PRIs (Oommen 2004, 2008). The DI and the criteria used to prepare it and the ranking of states based on that therefore assume significance.
The basic objective of the 73rd/74th constitutional amendments is to create “institutions of self-governments” at the sub-state level by empowering the local governments through appropriate devolution of powers and responsibilities in regard to the mandated functions, with adequate finance and functionaries. Unlike their counterparts elsewhere in the world, the local governments in India, inter alia,
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in the context of the PRIs, the report of a 2001 task force observes:
Devolution in the context of the panchayats means that when the authority in respect of a specific activity is transferred from the state to the local governments, the latter should have the prerogative of taking decisions in respect of planning and implementation of such activity. In fact, functions, funds and functionaries are complementary to one another in the process of devolution of responsibilities and powers upon the panchayats (GoI 2001: 5).
The task force stressed that functions, finance and functionaries are complementary and that they have to be transferred simultaneously so that the transfer of political power from the higher level to the local governments can be real. Moreover, there is a great emphasis on planning and implementation of plans for economic d evelopment and social justice. No DI, whoever constructs it, can be oblivious of these fundamentals.
The NCAER/MoPR Index
It is significant that the MoPR/NCAER have constructed a DI with reference to the 3Fs, viz, Functions, Finances and Functionaries, along with accountability. In all there are 34 indicators of which five relate to functions, 15 relate to finances and 14 to functionaries. Accountability is subsumed under “finance”, and probably under functionaries (see Table 1, Items 16, 17, 18, 26, 27 and 28). Broadly speaking, accountability of a public institution means being answerable to the public for their actions or inactions. Traditionally, panchayats have been subjected to audit and inspection by special institutions such as the local fund audit and examiner of local accounts under the accountant general (AG) of each
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state. This type of upward accountability has to continue. However, it is important to underscore the role of the gram sabha which demands a downward accountability to the citizens. A social audit, ombudsman, citizens’ charter, right to information, and so on are also ways to ensure accountability of the PRIs in India. The DI has failed to take account of issues of downward accountability.
Functional Devolution
Table 1 (p 19) spells out the measurement criteria used in the DI prepared by NCAER/ MoPR to rank states. Under functions, five criteria are taken into account, of which three (Items 3, 4 and 5) are yes or no questions and have very little operational relevance as a meaningful measure of functional devolution. A positive answer to the question (Item No 3) “whether District Planning Committee (DPC) is involved in the preparation of the District Plan” has no meaning. For example, look at the case of Madhya Pradesh, where a state minister presides over the DPC. Here the state government replaces the PRI structure. Instead of giving a negative score, the MoPR/ NCAER indicator seems to celebrate this. Also see what the Third State Finance Commission (SFC) of Tamil Nadu says: “The District Planning Committee which should have been the focal centre for dovetailing the District Plan is in doldrums” (Third TNSFC 2006: 11). Item No 4, “Are GPs (gram panchayats) implementing the major flagship programmes?” is a question that does not in any way measure functional auto nomy. Flagship programmes are at best agency functions. Again, Item No 5 “Are GPs fully empowered to prepare plans for expenditure?” assumes significance only if it is supplemented by probing questions such as, do you consult the gram sabha? What mechanisms are used to concretise the “felt needs” of the gram sabha? What consultative device is used to ensure technical support and projectisation? The questions are far too many to be mentioned here. These are not hypothetical questions. Kerala is one state that has created a multi-stage process of decentralised p lanning and showed that it is possible to plan for “economic development and social justice” through a process of widening the avenues of people’s participation.
Any meaningful measure of functional autonomy will have to take into account the institutional decentralisation or the transfer of institutions that legitimately belong to the appropriate level of the three tiers. For example, in Kerala, critical institutions of public services like hospitals, schools, veterinary institutions, Krishi Bhavans, etc, have been transferred to PRIs as part of decentralised governance. Here it is also important to note that, where there is a strong district rural development agency (DRDA), functional autonomy of PRIs is s everely compromised. West Bengal and Kerala have merged DRDA with district panchayat. It is interesting and surely i nstructive to quote from a publication of MoPR (2006) on Tamil Nadu, the third best in the choice of the ministry:
The DRDAs are separate and powerful institutions, chaired by the district collector. The district collector directs the implementation
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July 18, 2009 vol xliv no 29
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of all area development programmes in his capacity as the chairman of DRDA. Though the chairman of the district panchayat is the vice chairman of the DRDA, the chairman is invited only for governing body meeting to read out the annual report and plays no great role in the day to day functions of the DRDA (MoPR 2006: 775).
Is MoPR oblivious of these realities when they announced the performance ranking? The most surprising part of the exercise is that Kerala’s functional autonomy scores are the same as that of Tamil Nadu, West Bengal, Karnataka and Sikkim.
Financial Devolution
The table shows that 15 criteria have been used to measure financial devolution. So long as you word your criteria vaguely, you arrive at scores of doubtful value. Madhya Pradesh has the highest scores, and Kerala is not only the lowest among the four, but occupies only the 11th position among the 21 states examined. Anyone with some familiarity with the Indian fiscal decentralisation reality would find difficulty in endorsing this. It may be noted that the per capita devolution to local governments in Kerala increased from Rs 210 in 1996-97 to Rs 910 in 2007-08, the year that is apparently considered for the rating and the total devolution in 2007-08 as percentage of state’s own revenue was 20.37%, which does not include the salaries of the various officials transferred to the PRIs.
Out of the 15 financial indicators, I comment only on a few which are seriously flawed. Item 6 “authorisation of PRIs to collect taxes, duties, tolls, etc” is too general to carry any meaning because even in pre-amendment regimes, states have been lavish in such authorisations. Who collects and appropriates property tax, profession tax, entertainment tax, etc, is probably a better way to ask the question. Item 7, “PRIs own revenue as percentage of PRIs expenditure” can result in wrong numbers. If PRI expenditure is less (some states insists on a surplus budget), the own revenue remaining the same, the percentage will be high. A widely accepted and valid measure of financial devolution is the percentage of local governments’ (LGs) own source revenue (OSR) to total own revenue of the state plus LG’s OSR. An equally important one with reference to revenue effort is per capita tax and per capita OSR. Reckoned in terms of these two variables, Kerala is easily above all other states as far as PRIs are concerned. The total OSR of the gram panchayats (GP) of Kerala for 2007-08, the year considered by the MoPR is Rs 302.23 crore and this as a percentage of the state’s own revenue and GPs’ OSR is around 2% as against 0.5% for West Bengal.1 The per capita tax revenue of the GPs of Kerala for 2007-08 works out to Rs 70 and that of OSR Rs 119 as against a per capita OSR of Rs 7.6 for West Bengal (estimate by World Bank for 2005). The situation of MP, and Tamil Nadu could not be any better if past is any guide (See Oommen 2006 and second SFC reports of these states).
Item 9 (percentage of funds devolved to PRIs that are untied (plan)). Item 10 (percen tage of funds devolved to PRIs that are untied (non-plan)) and Item 13 (Are GP fully empowered to sanction?) are allied questions and must be unambiguously worded. The critical measure is the magnitude of funds a gram panchayat at the c utting edge level obtains and manages. In Kerala 70% of the plan funds for PRIs goes to the GPs. But when a state government makes schematic transfers to the district panchayats (DPs), you get a distorted picture. For example, when West Bengal gives schematic transfers up to the order of 16% of the states own revenue as recom mended by the first and second SFCs or when Tamil Nadu makes discretionary plan transfers, are they honestly promoting institutions of self-governments at the grassroots level? Financial autonomy is only in name and can be highly perverse as in the case of Tamil Nadu. In the words of the MoPR on Tamil Nadu, “there has been no great improvement in the untied funds that reach panchayats…These funds were meant to be untied, but in reality were almost all tied to cement roads and street lights” (MoPR 2006: Vol II 778). Again, in Tamil Nadu any estimate beyond Rs 2 lakh and for a panchayat union above Rs 10 lakh has to get the sanction of the district collector.2 On the other hand, in Kerala once the DPC approves a plan or project administrative sanction is automatic. Needless to say, the MoPR under no circumstance can be a p arty to promoting the collector raj. It should be the champion of panchayati raj.
Table 1: Devolution Index Used in 2008-09 to Rank States
Functions
1 De facto transfer of 29 functions listed in 11th Schedule.
2 Detailed activity mapping conducted for these 29 functions.
3 Whether DPC is involved in the preparation of district plan?
4 Are GP implementing the major flagship programmes? 5 Are GP fully empowered to prepare plans for expenditure?
Finances
6 Authorisation of PRIs to collect taxes, duties, tolls, etc. 7 PRIs own revenue as percentageof PRIs expenditure. 8 Timely action on latest SFC’s major recommendations. 9 Percentage of funds devolved to PRIs that are
untied (Plan).
10 Percentage of funds devolved to PRIs that are untied (non-Plan).
11 Promptness with which 12th Finance Commission funds transferred to PRIs.
12 Allocation of funds to PRIs based on apportionment formula.
13 Are GP fully empowered to sanction expenditure? 14 Whether there is a separate budget line for PRIs in the state budget for 2007-08?
15 Devolution of finances corresponding to functions 16 Percentage of PRIs whose accounts are audited (GP) 17 Percentage of PRIs whose accounts are audited (BP) 18 Percentage of PRIs whose accounts are audited (DP) 19 Specify the registers in which the accounts of GP
are updated.
20 Do any funds directly go to the GP with respect to the functions?
Functionaries
21 Expert institutions and entities to support PRIs for the preparation of their annual plans specified.
22 Expert institutions and entities to support capacity- building/training of elected officials of PRIs specified.
23 Amount of money provided for the capacitybuilding/training of elected officials of PRIs.
24 Amount of money provided for the capacity
– building/training of appointed officials of PRIs. 25 Annual report for last fiscal year released.
26 Functionary-wise accountability to PRIs: GP.
27 Functionary-wise accountability to PRIs: intermediate panchayats (IP).
28 Functionary-wise accountability to PRIs: DP.
29 Average days of training of functionaries: elected officials: GP
30 Average days of training of functionaries: appointed officials: GP
31 Of functionaries: elected officials: IP
32 Average days of training of functionaries: appointed officials: IP
33 Of functionaries: elected officials: DP
34 Average days of training of functionaries: appointed officials: DP
Item 12 “Allocation of funds, based on apportionment formula” is an unassailable parameter. But where do you place a state like Tamil Nadu where discretionary plan transfers to sub-state level governments increased from Rs 594.7 crore in 2000-01 to Rs 1,317.5 crore in 2004-05,
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a lthough slightly decreased it was of the order of Rs 1,005.26 crore in 2006-07 (BE) (Third SFC report). The permissive ceiling for discretionary transfers r ecommended by the second SFC of Tamil Nadu was 20% (which is wrong in p rinciple) and it was seldom adhered to. Actually the discretionary transfers are but schemes under various heads. When you make schematic transfers you negate autonomy.
Item 14 is a question: whether there is a separate budget line for PRIs in the state budget for 2007-08? A positive answer does not mean much if the line department appropriates a lion’s share with a negligible proportion to gram panchayats. Again, where do you put a state like Kerala which in 2007-08 (the year considered by the MoPR) the entire transfers to local bodies are allocated under separate heads of accounts for each LG level and for each local body by name and are given as Appendix IV in the state budget.3
Item 15 again is posed as a question: “devolution of finance corresponds to functions?”. This question is valuable p rovided the NCAER experts have drawn up a foolproof or even the second best mechanism to link activity maps corresponding to each tier with the budgetary heads and allocation of funds with reference to those.
Items 16, 17 and 18 refer to the percentage of panchayats audited corresponding to each one of the three tiers. They do not measure financial devolution but are included presumably as a measure of accountability. But what about social audit or other means of downward accountability? Items 19 and 20 are too silly when you do such a serious exercise as the ranking of states. If you give equal weight to good, bad and indifferent items, you can come up with a meaningless ranking. At any rate, the MoPR must put the working sheets, if it has one, on the basis of which they arrived at their decisions. One would also like to know the sources of data and the means used if any to standardise them. This is but an elementary transparency guarantee.
Devolution of Functionaries
None of the 14 items given under “functionaries” measure administrative autonomy. There is absolutely no reference to redeployment of functionaries or even how many departments have done this. Out of the 14 items, 10 are related to training and capacity-building. While they are important, by no stretch of imagination do they measure the progress in the devolution of functionaries to the PRIs. Four items are included probably to gauge accountability: three (26, 27 and 28) of them refer to “functionary-wise accountability to PRIs” (no one knows what it means) of the three tiers. The last six items refer to average number of days trained. What is ostensibly to be measured is the administrative autonomy and not the number of days trained (a military regime will score high on most of the items). How many administrative officials, technical staff, engineers, doctors are deployed to PRIs is the crucial question. Who writes their confidential reports? Can the PRIs take disciplinary actions? Surely the MoPR does not
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want to preside over a PRI regime which is 2 Before 20 December 2007, the limit to village Oommen, M A (2004): India: Fiscal Decentralisation to panchayat for administrative sanction was only
Rural Governments, Rural Development Division
a meek appendage of the rural develop- Rs 1 lakh and for the intermediate tier (panchayat (Washington: World Bank).
union) Rs 3 lakh.
ment department. – (2006): “Fiscal Decentralisation to Sub State Lev
3 Appendix IV is part of the Kerala State Budget
The DI raises several issues. The academic since 1997-98. el Government of India”, Economic & Political Weekly, 11 March.
community which has faith in participatory
– (2008): “Introduction” in Oommen (ed.), Fiscal
democracy cannot afford to treat them light-References
Decentralisation to Local Government in India ly. The MoPR, if it means business, cannot be GoI (2001): Report of the Task Force on Decentralisa-(UK: Cambridge Scholars Publishing). indifferent to its foundational calling. tion of Powers and Functions upon Panchayati Raj TNSFC (2006): Report of the Third State Finance Com-
Insti tutions, Krishi Bhavan (New Delhi: Govern-mission of Tamil Nadu (Chennai: Government of ment of India). Tamil Nadu).
Notes
MoPR (2006): A Mid-Term Review and Appraisal, World Bank (2007): West Bengal: Fiscal Decentra1 West Bengal data is for 2005 and is based on Vols I, II and IV, Ministry of Panchayati Raj (New lisation to Rural Governments, World Bank World Bank (2007). Delhi: Government of India). (unpublished).
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