Power

Civil service reforms that strengthen district administrations must go hand in hand with empowerment of panchayats

Participatory Democracy and Local Bodies

N C Saxena

Creation of panchayats and urban bodies in 1993 through a Constitutional amendment had initially raised hopes about their role in improving service delivery to the people, as decentralisation was expected to achieve higher economic efficiency, better accountability, larger resource mobilisation, lower cost of service provision, and higher satisfaction of local preferences. But studies show that although some village level panchayat leaders have done commendable work, elected local bodies on the whole have not benefited the people to the extent of funds provided by government. Their record in empowering the excluded is very disappointing. These studies have revealed following features about their functioning.

>>Gram Sabha meetings were regularly held only in a few places, and in most cases, participation in gram sabha meetings was low. Often such meetings were only on paper.

>>There was little knowledge in the villages of the amounts of funds received by the panchayats and the heads under which expenditure had been incurred.

>>The criterion for the selection or rejection of beneficiaries was not clear to the poor. In many cases, it was obvious that lists were manipulated by the village chief and/or officials, and that only those who had the ability to pay bribes were selected as beneficiaries.

>>Elected village sarpanches have spent huge amounts, often up to several lakhs in elections. While in office, their main aim is to recover their investment, and make more money for future elections.

>>Heterogeneous and unequal village societies often throw up leaders who have little concern for the poor.

>>Factional fights at the local levels divert the energies of the elected officials from working for public welfare to consolidating the power of their group.

>>The quality of delivery of benefits to the poor was low and leakages ranged from 20 to 70 per cent. Most elected officials had the propensity to make money, and almost in all cases, panchayat sarpanch/beneficiaries paid 'commissions' to officials. In effect, there were only a small proportion of cases – perhaps 25-30 per cent – where the delivery of programmes had improved after decentralisation.

>>Panchayats at all levels are mostly busy implementing construction oriented schemes, which promote contractor-wage labour relationship. These do not require participation of the poor as equals, on the other hand these foster dependency of the poor on sarpanch and block staff. In such a situation panchayat activities get reduced to collusion between sarpanch and block engineers. Panchayats are not active in education, health, SHGs, watershed, nutrition, pastures and forestry programs, which require people to come together as equals and work through consensus.

>>At least 50 per cent of NREGA funds are spent through the village panchayat. But even under NREGA there is no social control by the people. Most often, block officials and pradhan/sarpanch select the project and participation of the poor, especially women, in design or implementation is missing. Clearly, the panchayati raj system has not been able to enhance participation and empowerment.

Why are panchayats not delivering?

Some reasons for their lacklustre performance are discussed below.

Lack of adequate devolution: So far the progress on fiscal and functional decentralisation has been disappointing. The primary function of Panchayats in all the three tiers is "the preparation of plans for economic development and social justice" (Art 243 G). Excepting Kerala, no other State has taken any positive step to devolve funds, functions and functionaries to the PRIs to enable the Panchayats to discharge this constitutionally mandated function properly. Further, it is imperative that the PRIs have resources to match the responsibilities placed on them. While State Finance Commissions have submitted their recommendations, very few States have implemented these or taken the necessary steps to ensure fiscal viability of the PRIs.

Too much control by bureaucracy: Under the State laws, wide powers of suspension and dismissal have been vested in the State bureaucracy. This straightaway places PRIs in a position of disadvantage vis-a-vis even middle rung functionaries of the State Governments. It also takes away the essential characteristic of PRIs as elected representative bodies. In some States, even Gram Panchayats have been placed in a position of subordination vis-a-vis Intermediate Panchayats and so on. However, these provisions have in-built limitations because they directly affect the concept of democratic decentralisation on the one hand and the autonomy of the PRIs on the other.

Instances have been reported where Gram Panchayat Sarpanches have to spend extraordinary amount of time visiting Block Offices. There are also instances of harassment by Block officials. Systems which require Gram Panchayat Pradhan/Sarpanch to approach Block office for funds and/or technical approval need to be drastically changed. Village bodies should be able to spend funds on their own without having to take technical approval from government officials. These interactions with the Block staff distort the role of a Sarpanch as elected representatives of a Gram Sabha and induct them into the bad old ways of officialdom, besides encouraging corruption. Another factor limiting initiative is the tied nature of funds disbursed to these institutions. They generally prescribe activities and target groups for the scheme as a whole. This has two implications. The activities stated under a certain scheme are not always appropriate for all parts of the district. This results in unsuitable activities being promoted or an under-spend of the funds. Secondly, tied funds are inflexible, giving little scope for tailoring to local needs and conditions.

Overwhelming dependency on government funding: A review of money received and own source funds shows the overwhelming dependency of Panchayats on government funding. How these funds are used is not properly audited. These funds are a soft option and discourage efforts to generate local revenue. When Panchayats do not raise resources and instead receive funds from outside, people are less likely to request a social audit if they are not asked to pay taxes.

Reluctance to use fiscal powers: At the village level, an important power devolved to GP is the right to levy tax on property, business, markets, fairs and for the service provided, like street lighting or public toilets, among other. Only a small number of village people are aware of this fiscal power, as it is in disuse. Very few panchayats use their fiscal power to levy new taxes. The argument pushed by the Panchayat heads is that it is difficult to levy tax on your own constituency, especially when you live in the community.

Status of Gram Sabha: Empowering Gram Sabhas could have been a powerful weapon towards transparency, and involvement of the poor and marginalised people. However, most of the State Acts have not spelt the powers of Gram Sabhas nor have any procedures been laid down for the functioning of these bodies.

Suggested reforms

Rural decentralisation and PRIs are a profound change in the rural institutional scene. They may ultimately offer a better option for development and poverty alleviation. However, it was a mistake to think that PRIs will emerge as caring institutions in an environment of rent-seeking politics and unresponsive and inefficient bureaucracy. If district level civil servants and politicians are indifferent to public welfare, it is unlikely that village and block level politicians will be any different.

Thus there are big risks in premature promotion of PRIs. Past attempts at decentralisation failed in India, in part because of resistance of the vested interests of the bureaucracy and state level politicians. These vested interests remain. Steep deterioration in political morality as well as in governance has further distorted the scene. If not carefully designed, sequenced and implemented, decentralisation can increase the fiscal burden on the states and lead to a break-down in service delivery , in particular to the poor. Effective panchayats/user groups would also require effective district and block level administration. Hence accountability and performance from local bureaucracy should go simultaneously along with building local PRI capabilities, otherwise elected PRI leaders would not change their perception of the state being an 'open treasury'. Thus political and civil service reforms must go hand in hand with empowerment of panchayats. Below are the reforms specific to panchayats and decentralisation.

Change financing system: It is necessary to reconsider the current funding system. Rather than receiving a share in taxes and Central grants the panchayats should have the right to levy and collect taxes on their own in order to reduce their dependence on state and central governments. For instance, Tamil Nadu collects land tax through government machinery and then transfers 85% to the panchayats. It will be more cost effective if the entire burden of collection is shifted to the village panchayats, and they in turn transfer 15% of the collected taxes to government. Today the PRIs hesitate to levy and collect taxes, as they prefer the soft option of receiving grants from GOI. This must be discouraged and the local bodies be encouraged to raise local resources for development and then receive matching grants from the Centre/States. The more dependent a PRI is on the mass of its citizens for financial resources, the more likely it is to use scarce material resources to promote human development and reduce poverty. External funds with no commitment to raise internal funds make PRIs irresponsible and corrupt.

Untied grants: In addition, panchayats would need a share in state and central revenues. States need to increase the share of transfers to PRIs from state governments as untied grants, by (i) consolidating state schemes with broad rural development objectives into untied grants, as Kerala has done; (ii) making these grants a share of state revenues, (iii) explicitly defining through state legislation a formula to allocate grants to jurisdictions and PRI levels; and (iv) transfer collection of village taxes, such as land revenue, irrigation tax to PRIs.

The formula of transfer should no doubt give weightage to population and poverty, but also to performance and efficiency, so that there is incentive to them for increasing the sources of own revenues of PRIs through own and assigned taxes and increasing their capacity to collect. State grants should be given to them only when the PRIs are able to collect a minimum percentage of the taxes assigned to them. Flow of funds from the State should also be dependent on good work or mobilisation done by them. For instance these can be linked to the efforts made by panchayats in population and disease control, cleanliness, school attendance of females and negatively with hunger deaths, crime, and civil and revenue suits.

Therefore, the additional allocations recommended by the Union Finance Commission to States should be contingent upon the States fully implementing the suggestions given above.

Link devolution with performance: A "Devolution Index" may be prepared for all States, and at least 1/3rd allocation of centrally sponsored schemes in the Panchayat functional domain or block grant (when introduced) may be allocated to States on the basis of this index. It is emphasised that the Devolution Index will be prepared by the States themselves on the basis of self-assessment but will be available for evaluation and assessment by academic bodies.

Rank panchayats: Using a well designed methodology, it is possible to measure the performance of panchayats, and to what extent they are inclusive and participative.

Audit of panchayats: Large expenditures are now being incurred by PRIs. Their accounts are to be audited by Local Fund Audit, but there are several problems. First, there are huge arrears, and in some cases accounts have not been audited for more than ten years. Secondly, the quality of their reports is very poor, therefore the utility of such audits is doubtful, the impact it makes on improving systems is at best marginal, perhaps negative. Thirdly, there are complaints of corruption, and the general impression is that audit reports can be bought. Lastly, elected officials are not held accountable for any lapses noticed in their reports, only officials are, which breeds irresponsible behaviour on the part of non-officials.

The quality of work should be monitored by a team of journalists, civil society members, panchayat leaders from the neighbouring districts (who have already done excellent work), and stakeholders. Based on these reports, panchayats should be graded, and future funds should be linked with their grade. Strengthening financial management and audit procedures will also strengthen accountability of the local bodies, their standing committees and its representatives to the people as well as to government.

Gender empowerment: The empowerment of women through reservations in panchayats is a necessary first step but needs to be reinforced by other measures such as :

• the provision of Women Component Plans in PRI budgets;

• linkages with Self-Help Groups;

• adequate training and capacity building;

• encouragement to political parties to put up women candidates;

• the opportunity to women to serve a full term when they are elected to posts in the PR system;

• Mahila Sabhas (or equivalent) to facilitate women's concerns and priorities being raised in meetings of Gram Sabhas and Ward Sabhas;

• separate quorum for women's participation in Gram Sabhas and sub-Gram Sabha forums.

Increase the use of IT: Several transactions can be carried out using online applications. This has been sufficiently demonstrated in various pilot projects. For instance, land records can be put on the web, and then disseminated through the private kiosks.

Linking MLAs with block panchayats: There is a nebulous domain of executive powers into which MPs, MLAs, and the PRIs all foray. By giving a role to MLAs in the panchayat system, one will make them strong supporters of delegation of functions and funds. To hold that a MLA is wily, corrupt, and irresponsible, while the indirectly elected Adhyaksha or Taluk President is honest, and committed to public welfare is neither good theory, nor is empirically valid.

Lastly, effective panchayats will also require effective district and block level administration. Hence efforts towards better accountability and performance from local bureaucracy should go simultaneously along with building local PRI capabilities, otherwise the elected PRI leaders will not change their perception of the state being an 'open treasury'. Thus, civil service reforms that strengthen administration must go hand in hand with empowerment of panchayats. Professional and responsive public administration will be an asset for both, the social sector as well as for enabling panchayats to play the important role that is mandated for them.

N C Saxena is Distinguished Fellow, Skoch Development Foundation