A Study on Decentralization in Selected States: A Report for UNDP, India

Buddhadeb Ghosh Debraj Bhattacharya Madhulika Mitra

Institute of Social Sciences

Eastern Regional Office
CF-149, Sector-I Salt Lake City, Kolkata 700064 Tele/fax: (91) 033- 23592684,Telephone: 033- 23340233

August 2012

Table of Contents
Page No Chapter I Introduction Chapter II Core Issues of Devolution. Chapter III Case Studies of Nine States. Assam..... Bihar Jharkhand.. Orissa......... Madhya Pradesh..................... Rajasthan..................................................... Maharashtra... Chapter IV State of Devolution 2 3 10 11 16 22 27 33 40 48 53

Chapter

Recommendations.

61

CHAPTER I

Introduction
This study has been sponsored by UNDP. It seeks to examine the status of devolution to the panchayati raj institutions (PRI) in nine states, namely Assam, Bihar, Jharkhand, Orissa, Madhya Pradesh, Chattisgarh, Uttar Pradesh, Rajasthan and Maharashtra. Such a study requires field work to capture the reality that often does not reveal itself in written documents. However, there was no time for doing such field work, as we were asked to prepare the report within a month. Initially, we thought of making visits to at least 2 or 3 states. We could not find time even for this. We then tried to elicit some information through questionnaire. This also failed to elicit fruitful information within the short time. This report has accordingly been based entirely on desk research and the data used here are obtained from secondary sources. The bulk of this report consists of studies on nine states. These are clubbed together in Chapter III. Any study that seeks to make evaluation or even make statements on the status of devolution must be based on a conceptual framework. The conceptual framework used in this study may be discerned from the discussions made in the second chapter on various issues surrounding the concept of decentralisation and devolution. While evaluation of the status of devolution in individual states has been made in each case study, an overall scenario of the nine states is given in Section I of Chapter IV. In Section II of the same chapter we have tried to identify the challenges that the project of decentralisation has been facing in this country. In a sense, this chapter contains the main lessons drawn from this study. Based on all these, we have ventured to make a few recommendations for the future (2013 - 2017) programme of UNDP in the last chapter. .

CHAPTER II
3

Core Issues of Devolution

Understanding devolution Devolution is an organising principle for empowering the governments at a more local level. In its extreme form, it becomes indistinguishable from the principle of subsidiarity, which postulates that a central authority should have a subsidiary function, performing only those tasks which cannot be performed at a more local level. As it happens in the practical world, centralised states seeking administrative reform through decentralisation find it difficult to apply the principle of subsidiarity. Generally they resort to less radical form of devolution. In its most conservative state, devolution may take the form of de-concentration, under which certain administrative and financial decisions are allowed to be taken by the lower level offices of a central government. This is decentralisation within bureaucracy and does not change the character of democratic functioning of the state or alter the power-relations between the levels of government and in that sense cannot claim to be recognised as one form of devolution. The purpose of devolution is to deepen democracy through dispersal of powers from the centre to the lower levels of government, so that the institutions of government which exist very close to people acquire more power and resources, but remain accountable to their electors. This is possible through what is sometimes referred to as democratic decentralisation. Democratic decentralisation refers to the system where the locus of decision-making in some areas of governance is transferred from the higher level to the lower level representative governments, which may exist or are created at the local level to carry out governance functions at that level. Two forms of dispersal of powers: There are two major forms of transferring functions, resources and authority from higher level to the lower level government, namely delegation and devolution. Sometimes, the managerial responsibilities for accomplishing certain tasks, along with funds earmarked for the same, are transferred to the local governments. This type of decentralisation is known as delegation under which the major responsibility of discharging a function rests with the government delegating it to the government at the lower level. Accordingly, the latter remains responsible primarily to the higher level government and secondarily to the citizens. Since dispersal of powers through the form of delegation does not make the local bodies fully responsible for the outcome and since it cannot guarantee primary accountability of these bodies to their electors, delegation remains a very weak form of decentralisation of governance and consequently fail to create much impact. Under devolution mode of decentralisation, on the other hand, certain functions or subfunctions or activities together with full decision making powers and resources necessary for the discharge of the transferred functions or sub-functions are transferred to the lower level governments, such as local government. Besides, under such dispensation, the upper-level government is not directly responsible for the discharge of devolved functions/subfunctions/activities. The primary accountability of the lower-level government for discharging the devolved responsibilities is to the citizens.

Autonomy of local government: The hall mark of decentralisation under devolution mode is autonomy of lower level government. If dispersal powers and resources do not expand the sphere of autonomy of the
4

local government, then doubts have to be raised about the nature of dispersal of powers that has taken place. In simple terms, autonomy may be understood as freedom of action. How much freedom should a lower level government like local government enjoy? In a federal system there are governments at multiple levels and each government cannot obviously be fully autonomous. At the same time, each government should enjoy a separate existence and independence from the control of other governments. In other words, each government must exist not as an appendage of another government, but as autonomous entity in the sense of being able to exercise its own will in the conduct of its affairs free from direction of another government (Adeyemo 2005: 79). Of course, it may be argued, autonomy should neither be construed as absolute autonomy, nor should it be interpreted as the licence to avoid any transactions or interactions with the state or central government. For, in a federal system there has to have inter-dependence between different levels of government. The autonomy of local government has to be understood in this inter-governmental context. What it really means is that there must be a definition of boundaries or arena of operation of each level of government.

Constitutional status of panchayats: Article 243(d) defines panchayat as institution of self-government. Article 243G expresses the intention that while framing laws on panchayats the state legislatures should endow these institutions with such power and authority as may be necessary to enable them to function as institutions of self-government. Thus panchayats are governments at their own levels and they must be allowed to function as government. This means that they should have an autonomous jurisdiction of their own. It will be a sphere of independent action and the state government is not expected to exercise any control over this sphere except giving general guidance and support. Autonomy may be an elusive concept. If there are governments at multiple levels, then government at each level will enjoy only partial autonomy. How much autonomous jurisdiction can be carved out for panchayats is a matter of judgment. But it cannot be too small to make the concept of self-governing institution at the local level meaningless. In some cases panchyats may also act as agencies of the state government, but this sphere cannot be allowed to overshadow or diminish the distinctive character of panchayat as the governments at their own levels. Granting autonomous jurisdiction to panchayats implies that the constitution intends devolution type of decentralization of governmental power as opposed to other forms of dispersal of powers, namely, administrative deconcentration or delegation. This will necessitate withdrawal of certain activities or functions from the state government and transferring them to the local bodies. Such conceptualization of panchayats marks a break from the way how the local government institutions used to be treated in the past as bodies subservient to the provincial or state governments. It holds the promise of transforming the system of local governance. Need for a change in state-local relation The structure of the existing local administration in the country is characterized by the field establishments of the various line departments and the offices under the direct control of the District Collector or District Magistrate up to the level of Block or in some cases even below that level. This pattern was developed during the British days and has undergone little change since independence. There is evidence to suggest that this structure, which controls all the regulatory, developmental and residual functions of the state government at the local level, is failing to meet the expectations of common people. Even though panchayats have been introduced, the structure of bureaucratic district administration remains intact with the structures of the local government institutions being superimposed upon it. The view that the panchayati raj institutions are no more than agencies of the state government has prevailed in
5

the country for a very long time. Hence they have very little autonomy. They usually play a subservient role as instruments and agencies of the state government. No substantive reform of local governance is possible without creating an autonomous space for the institutions of local government. It must start with the premise that the panchayati raj institutions, being governments at their own levels, are an integral part of the countrys governance system and, therefore, they must replace the existing structure of the bureaucratic local administration in respect of the functions or activities devolved to them. In other words, there is a strong case for altering the present state-local relations. Panchayati raj bodies must be allowed to play their role in local governance independently in respect of the devolved functions and the state governments bureaucracy must not interfere in this. This would obviously mean change in the pattern of inter-governmental powers - state government losing some functions and the local governments gaining the same. While there may be necessity for the retention of some establishments of the state government including that of the Collector and District Magistrate at the local level, their functions and responsibilities should be confined to areas which are outside the jurisdictions of the local bodies. In respect of devolved functions, the local government institutions should have autonomy and must be free of bureaucratic control. Present Pattern of Devolution: Most states have shown the lack of political will to decentralize. The post-amendment panchayats are functioning, like before, within the framework of what may be called permissive functional domain. That is to say, no exclusive functional area is carved out for the panchayats by withdrawing certain specific activities being performed in different sectors by the state government and transferring them to these bodies. The functional domain of the state government remains in tact. Panchayats are merely permitted to work, as it were, in certain parts of this domain. For all the so-called developmental functions assigned to the different tiers of panchayat, there are specific line departments of state government or parastatal bodies like DRDA. They handle these functions. They have access to necessary resources as also staff for the discharge of the functions. Mere statutory or executive authority to undertake functions which are being performed by the state government is no guarantee that those would, indeed, be taken up by the PRIs, unless they have adequate funds and personnel to discharge them. These resources are not made available to them. Hence the impressive lists of various functions, including in some cases all the 11th schedule functions, that every panchayat Act religiously provides remains sterile. Nobody takes them seriously. What the 73rd constitution amendment intended is exclusive functional domain backed up by resources for the panchayats, requiring dispersal of powers in devolution mode. That has not happened in most of the states. Basic principles of devolution The Second Administrative Reform Commission in its Sixth report on Local Governance observes that the constitutional design of democratic decentralization has not yet been put into practice. Starting from the premise that a Panchayat is the local government and has legitimate right to enjoy financial and functional autonomy, the Commission enunciates the following principles for carrying out devolution exercises. (i) There should be exclusive functional jurisdiction or an independent sphere of action for each level of the Panchayat. The State Government should not exercise any control over this sphere, except giving general guidance. If any activity within this sphere is presently performed by any line department of the State Government, then that department should cease to perform the activity after devolution. (ii) There may be spheres of activity where the State Government and the Panchayats would work as equal partners.
6

(iii)

There may also be a sphere where Panchayat Institutions would act as agencies for implementing Union or State Government schemes/programmes. (The difference between the partnership mode and agency mode of functioning is that the scope of independence in discharging responsibility is more in the former case compared to the other).

Among the above three spheres, the first two should predominate. The agency functions as in (iii) should not be allowed to overshadow the other two spheres of the action, where the local government institutions will have autonomy. (iv) Panchayat at each level is an institution of local government. Hence there cannot be a hierarchical relationship between a higher level Panchayat and its lower level counterpart. (Pp 146-7) Method of devolution Subject to the above principles, rational method for devolution should be devised. Several questions are involved here. Firstly, one has to determine what are the broad sectors that have high relevance for the local areas and prima facie require decentralisation for improving service delivery? In making choice of the broad sectors, the 11th schedule may be a guide to start with, but it should be cautioned that one need not restrict ones choices within the 11th schedule subject matters only. After making broad choice of sectors to be decentralised it is necessary to break down the sectors. A sector denotes certain services, which produce outcomes in terms of human wellbeing, such as health sector, education sector, surface communication sector etc. Generally departments of the government are organised around certain sectors, even though there may be overlapping. A sector may be broken down into components, each of which is called a service. For example, immunisation is one of the services of the health sector, soil conservation may be regarded as one of the services of the agriculture sector. Services are made up of activities. For example, for providing the service of teaching, it is necessary to recruit teachers, deploy them to schools, train them, oversee their performance etc. Unbundling of services or identifying activities involved in providing each service within a sector/department is the first important task of devolution of function. In India this is also referred to as activity mapping. Unbundling of activities is the building block of devolution, but for actual devolution, one needs to follow certain principles. Borrowing ideas principally from the fiscal decentralization literature, some attempts have been made in India to develop a methodology of distribution of activities to different levels of panchayats1. We need not go into the details of the methods developed so far. They are not perfect yet and need to be revised further. It is not our intention to plead for a particular method. The purpose of bringing the issue of method of dispersal of powers in the discourse on devolution is to highlight the point that the actions taken so far by the state governments on activity mapping have mostly been based on intuitions emerging out of the centuries-old experiences of centralized administration of the country, and not on rational principles of distribution of powers between different levels of government. The result has been extremely unsatisfactory and we shall analyse this aspect in the subsequent discussions. Norms of Devolution The Administrative Reform Committee has noted that certain norms and principles should guide the course of democratic decentralization in devolution mode. It seems useful to draw attention to the following principles, among others2.
First, there should be a clear link in citizens minds between their votes and the consequences in terms of the public good it promotes. This is necessary,
1 2

See in this connection See Sixth Report of the Second Administrative Reform Committee, 2007, Pp 13-17.

because accountability to the citizens is the only route to keep a democratic government on the right track. Second, decentralisation tends to promote fiscal responsibility, provided there is a clear link between resource generation and outcomes in the form of better services. People will be encouraged to raise more resources only when there is a greater link between the taxes and user fees levied and the services that are delivered. This is possible when the local government is perceived to be fully responsible for services a condition that does not exist in India. This also calls for treating functional and fiscal decentralisation together just like looking at two sides of the same coin. Third, since all local government subjects by definition are also State subjects, there should be clear delineation of roles of the State and the local government, in respect of each of the subjects/functions, otherwise needless confusion and undue interference by the State will be the inevitable consequences. This is corollary to the first principle. The citizens who elect these governments must know who is responsible for what.

Devolution, to be real and meaningful, demands that local governments should be effectively empowered to frame regulations, take decisions and enforce their will within their legitimate sphere of action. Such empowerment should be clearly and unambiguously defined by the Constitution and State legislatures. fiscal devolution to the local governments must meet two standards: the local government must be able to effectively fulfill its obligation; there must be sufficient room for flexibility through untied resources, to establish priorities, devise new schemes and allocate funds.

Limitations of the 11th schedule: In the discourse on devolution in India, the 11th schedule has unnecessarily played an important role, even though this is nothing more than an indicative list. This schedule gives a list of subjects/activities intended to be transferred to the local bodies and covers a broad spectrum of development activities ranging from activities in the social and economic sectors (education, health, women and child development, social security, farm and non-farm economic activities etc) to the development of infrastructure and institutions necessary for social and economic development. This schedule has not been a helpful guide in determining the functions or activities to be devolved. Firstly, the thrust of the schedule is almost entirely on development and creates the wrong impression that the panchayats should not be entrusted with the regulatory functions of government. Secondly, an impression has been created in many quarters that the 29 items listed in the 11th schedule are sacrosanct and belong to the legitimate area of the panchayats. Many state Acts on PRIs religiously lay down all the 29 items of the schedule as the functional domain of panchayats. All the activity maps prepared by various state governments have tried to devolve functions from each of the items listed in the schedule and, in trying to do so, faced quite often absurd situations. These are senseless actions and naturally failed to contribute towards genuine decentralisation. In reality, the schedule does not have any legal force. One is entitled to ignore it altogether. At best, it is an indicative list and even as an indicative list, it is far from perfect. Some of the subjects mentioned in the list are not worthy candidates for decentralisation. The individual items of the list sometimes denote a subject and sometimes an activity. When the list denotes a subject, the totality of some subjects cannot be
8

devolved as discussed earlier and when it denotes an activity (for example, poverty alleviation programme) it tends to give a wrong impression that the agency functions and the devolved functions belong to the same category. The scope of the provisions of Article 243G is quite wide and the 11th schedule is definitely not the boundary limiting the range of options available to the state legislatures for adoption of any scheme of devolution of functions and responsibilities to the local councils. The 11th schedule may be one of the options, but there are other options also that need to be creatively explored. Core functions A consensus has not grown about the essential functions that need to be devolved to panchayats. At one extreme, some activity maps and even some panchayat legislations put almost all the developmental functions of the state government in the basket of the PRIs. This is absurd. Which functions or activities of the state government will be devolved to the panchayats will of course be determined by the respective state legislatures/governments. Hence the profile of decentralization will vary from state to state and the panchayats will have varying patterns of functional jurisdiction. But there should be certain core activities which should be common for the panchayat systems of all the states. The 11th Union Finance Commission (EFC) had identified a set of 5 subjects out of 29 subjects of the 11th schedule as the core functions of PRIs. Unfortunately this suggestion of the EFC was not further explored. After experiencing many unpractical activity maps prepared by various state governments, it seems necessary that the idea of determining core functions of panchayats receives serious attention. There are certain development subjects where substantial involvement of panchayats is not only possible, but essential from the point of view of ensuring efficient service delivery and peoples participation. Most important subjects where the logic of decentralization is very strong are elementary education, adult and non-formal education, primary health care, drinking water, sanitation, women and child development, civic services, roads and rural infrastructure. All of them, except civic services, are mentioned in the 11th schedule. Besides the above subjects, there are some poverty alleviation programmes of the central government where panchayats roles are well recognized. The most ambitious centrally sponsored scheme (CSS) of poverty alleviation, namely, NREGS assigns crucial role to the PRIs. There is another important programme of poverty alleviation. This is public distribution system (PDS), where involvement of panchayats is necessary. Thus certain identifiable activities within the following broad functions should constitute the core functional area of the panchayat system of all the states. Elementary education, adult and non-formal education. Primary health care, drinking water and sanitation. Women and child development. Roads, culverts, bridges. Rural infrastructure Poverty alleviation programmes, including PDS Civic amenities and environmental improvement. The activities to be devolved under all these subjects should be the exclusive responsibility of the panchayats. The line departments of the state government should not interfere in them except giving guidance and support. In this sphere of core activities, panchayats will function independently or as partners of central or state governments, but with sufficient autonomy in taking decisions. There are various institutions at the village and Block levels for delivery of services in many of the sectors mentioned above. These are presently being managed by the line departments
9

centrally. If the PRIs have to play key roles in these sectors at the grassroots level, then the management of these establishments should be handed over to them. The institutions in the education and health sectors that need to be handed over to the gram panchayats or Block panchayats, as the case may be, are as follows. Devolution of activities in these sectors will not be complete unless these institutions come under the control of PRIs. Primary schools, community based child education centres Literacy centres Public libraries Sub Centres for primary health care Primary/Block health centres Anganwadi centres.

10

CHAPTER III Case Studies of Nine States

ASSAM BIHAR JHARKHAND ORISSA MADHYA PRADESH RAJASHTHAN MAHARASHTRA

Assam
Background and Milestones in Policy Assam in pre-colonial times has a long history of traditional community organisations such as the mel and the khel systems. The Ahom empire which ruled Assam from 1228 AD to 1826 AD had a form of panchayat system which solved local disputes. The coming of the East India
11

Company to Assam disrupted this system and established direct rule in the rural areas. This led to several revolts but the British were able to establish their supremacy. Although the Ripon Resolution of 1882 gave priority to local self-government, in Assam every effort was made to scuttle the attempts at decentralisation till 1915. The Local Self Government Act of 1915 established the village Panchayats on a legal basis. In 1926 another Act was passed which gave the power of water supply, medical relief and sanitation to the panchayats. Both these legislations were however unsuccessful in establishing a vibrant village panchayat system as they lacked resources and functionaries. After independence, in 1948, a new Panchayat Act was passed. All adult members of a panchayat area were eligible to vote. Another Act passed in 1959 established the three tier system. In 1964 an amendment to the Act gave the intermediate panchayats the responsibility for preparation and implementation of block plans. In 1973 the previous Act was repealed and a new legislation was enacted. The existing three-tier body was changed in favour of a two-tier system with Gaon Panchayats at the base and Mahakuma Parishad at the sub-divisional level. Provision was made for reservation of SC/ST and women in the panchayats. The Mahakuma Parishad was given powers to plan and implement its own schemes and build up a permanent cadre of panchayat employees. This Act was repealed by the Act of 1986 which was enforced from 1990 onwards. This new Act increased the powers of the bureaucracy and the state government. Following the 73rd amendment to the Indian constitution, a new Act was enacted in conformity with the provisions of the seventy third amendment of the constitution. In addition to establishing the three tier system and the provisions for the reservations of the scheduled tribes, scheduled castes and women the Act also introduced the Gaon Sabha and the State Finance Commission. Status of Devolution Activity Mapping

In a Gazette notification dated 25th June 2007 the activity Mapping for the state was notified. Out of 29 subjects, 26 subjects were assigned to the Zila Panchayats, 27 to the Anchalik (Intermediate) Panchayats and 28 to the Gram Panchayats. Activity mapping has been completed in case of 23 subjects. The Activity Mapping Exercise has clearly delineated the devolution of funds, functions and functionaries. The assignment of subjects mentioned in the 11th schedule to the PRIs is as follows: Items in the 11th Schedule 1 2 3 4 5 6 7 8 Agriculture Land Improvement Conservation Minor irrigation Animal Husbandry Fisheries Social Forestry Minor Forest produce Small Scale Industries and GP Yes Soil Yes Yes Yes Yes Yes Yes Yes
12

AP Yes Yes Yes Yes Yes Yes Yes Yes

ZP Yes Yes Yes Yes Yes Yes Yes Yes

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Khadi and Village Industries Drinking Water Rural Housing Drinking Water Fuel And Fodder Roads and Culverts Rural Electrification Non-conventional Energy Poverty Alleviation Education secondary primary

Yes Yes Yes Yes Yes Yes Yes Yes Yes and No and No No No No No No Yes No No No

Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Yes Yes Yes Yes Yes No No Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes

Technical Training Vocational Education

Adult and Non-formal Education Libraries Cultural activities Health and Sanitation Family Welfare Women and Child Development Social Welfare SC&ST Welfare Public Distribution System Maintenance assets of

Community No

Implementation

The State of Panchayati Raj Report of IRMA (2008-09) has noted that the formal devolution of powers to the PRIs however has not been matched by implementation in the field. The concerned departments were not consulted while preparing the activity mapping and therefore the gazette notification more or less remains an executive order only. Functions

13

The Status of Panchayati Report by IRMA (2010) has said that usually selection of beneficiaries, choice of programmes/activities is routed through the PRIs. In case of Centrally Sponsored Schemes, where clear-cut guidelines are given, the PRIs are involved. Functionaries As per the above mentioned report by IRMA, relevant functionaries are yet to be transferred to the PRIs in accordance with the devolution of subjects envisaged in the activity mapping, an observation that has been corroborated by the Fourth SFC report. As per the budget of 2009-10, salary part of employees working with Panchayats is to be routed through the Panchayats, but it has not been implemented as yet. State Government has also not issued specific Government Orders to transfer functionaries. Some attempts have been made in the following six departments Education, Soil Conservation, Handloom, Power, Agriculture and Veterinary. But execution of supervisory and monitoring power remains a challenge for Panchayat representatives. A separate Panchayat Administrative and Technical Service has not been created in the State of Assam. Funds The Assam Panchayat Act, 1994, under sections 25, 57 and 95, has prescribed the taxation powers of the GPs, APs and ZPs. Apart from house tax allocated to the GPs, all other levies that the PRIs are empowered to collect tolls, fees, user charges, fines etc as non-tax revenue. However there was enormous delay in framing the Assam Panchayat (Financial) Rules which came into effect only in 2002. To make matters worse, the framing of relevant bye-laws laying down the rates of taxes, manner of collection etc are still pending. The preliminary report of the Fourth Assam State Finance Commission (2011-2012) has said that as of now tax collection by the PRIs is minimal and they derive their bulk of internal revenue from non-tax sources like haats, ferries and fisheries located in their jurisdiction. A summary of PRI revenue is presented below: Internal Revenue of PRIs (in Rs Lakhs) PRIs ZP Tax Non-Tax 8.19 246.71 9.58 288.65 11.50 346.38 9.48 285.60 2008-2009 2009-2010 2010-2011 2011-2012

AP Tax Non-Tax GP Tax Non-Tax Total Tax Non-Tax 99.63 1390.17 124.98 1703.25 165.80 2180.27 116.47 1609.29 79.22 516.88 100.61 656.44 135.82 886.19 91.71 598.35 12.22 626.58 14.79 758.16 18.48 947.70 15.28 725.34

Source: Preliminary Report of Fourth Assam State Finance Commission, p.10 14

The Fourth SFC report has also given a summary of revenue receipt and expenditure: Summary of Revenue and Expenditure of PRIs (in Rs Lakhs) Particulars 2008-09 2009-10 2010-11 2011-12 Projection A I a) b) II Revenue Receipt Own Revenue Tax Revenue Non Tax Revenue 99.63 1390.17 124.98 1703.25 6762.00 8590.23 165.80 2180.27 11935.68 14281.75 116.47 1609.29 1725.76

Transfer from State under SFC 4860.00 award Total - A 6349.80

B i) ii) iii) iv)

Non- Plan Revenue Expenditure Salary Remuneration Sitting Allowances Administrative Expenditure Total - B 4893.58 1341.97 157.70 224.48 6617.73 for 6617.73 9512.26 922.03 15715.40 1433.65 6754.44 1341.97 157.70 1258.15 9512.26 8058.25 1341.97 157.70 6157.48 15715.40 8864.07 1341.97 315.41 9277.00 19798.45 12028.00 31826.45 30100.69

Fresh Expenditure Physical Infrastructure Total Rev Exp (B+C)

Excess of Expenditure over 267.93 Revenue A (B+C)

Source: Preliminary Report of Fourth Assam State Finance Commission, p.17 It can be seen therefore that there is huge gap between revenue receipts and revenue expenditure, which is increasing over the years, and therefore the PRIs are heavily dependent on the State to meet their recurring expenditure. They have therefore no untied funds at their disposal for financing any development project of their choice. As per the recommendations of the Third Finance Commission the PRIs received Rs 48.60 crores in 2008-09 from the State government followed by Rs 67.62 crores in 2009-10 and Rs 119.36 crores in 2010-11.These amounts were spent mainly for meeting the salary burden of panchayat employees. Regarding devolution of funds the Fourth Finance Commission has recommended that 14 per cent of all State taxes and duties, other than Entry tax, Entertainment tax and Electricity Duty, shall form a divisible pool for distribution between PRIs and ULBs during 2011-12. The Commission has also proposed an incentive fund at the rate of 5 per cent of the Divisible Pool to encourage the PRIs/ULBs to improve their performance. This fund shall be kept at the disposal of the State Government to be disbursed to the PRIs/ULBs based on the criteria (a) improvement of own resources, and (b) proper budgeting and accounting of all expenditure defrayed.
15

Ranking as per Devolution Index of MoPR According to the Devolution Index of MoPR for the year 2010-2011, the rank of Assam is fourth among the North Eastern States. The overall score of the state is 31.08. The score for Function is 29.20, the score for Finance is 33.51 and the state has got 0.00 for Functionaries. The overall score, if ranked among major states, would have been 15th, below that of Uttar Pradesh (31.22) and above Puducherry (30.03). As noted earlier, in terms of the fiscal indicators also, Assam comes in poor light. Its per capita own tax revenue was Rs 0.62 in 2009-10 and Rs 0.82 in 2010-11 against an allIndia average of Rs 18 as of 2007-08. The states per capita own source revenue (tax plus non-tax revenue) was Rs 9.05 and Rs 11.61 in 2009-10 and 2010-11 respectively against all-India average of Rs 37 as of 2007-08. (See Oommen 2010 for All-India figures).

Bihar
Background and Milestones in Policy The earliest village republics of India can be traced back to areas which are now in the state of Bihar. The colonial intervention significantly altered the village communities in India and therefore Bihar as well and created a new form of local governance system following the Mayo Resolution of 1870. In 1885 the Bengal Local Self Government Act created district boards and local boards at the district and sub-divisional levels. In 1922 The Bihar and Orissa Village Administration Act created fully elected union boards and also a few elected panchayats. After independence the Bihar Panchayat Raj Act of 1947 was enacted. By 1957 a total of 7670 Panchayats were in place in the state. The Bihar Panchayat Samiti and Zilla Panchayat Act of 1961 created the Block and Zilla Panchayats. By 1970 all three 16

tiers were operational in the state. Following the Ashok Mehta Committee report in 1978 elections were held to the panchayats. However this election was marred by violence and nearly 10 per cent of the Mukhiyas (GP Presidents) were elected unopposed due to threat to rival candidates. From here onwards panchayati raj in Bihar took a downturn as elections were not held till 2001. In the meanwhile however, after 1993 a new Panchayat Act was enacted. In 2006, the new Government led by Shri Nitish Kumar replaced the 1993 Act by a new Panchayat Act of 2006. As per the Bihar Panchayat Act 2006, twenty departments have on paper devolved functions to PRIs. Present Status of Devolution The report of the Fourth Finance Commission of Bihar (2010) has discussed the latest status of devolution in the state. We summarise below the main arguments related to Finances, Functions and Functionaries. Finances The Third Finance Commission (2004) recommended that an amount not exceeding 3 per cent of the States total tax revenue shall be devolved to the PRIs and the ULBs together. The share of each PRI or ULB will be limited to the resources raised by the respective ULBs or the Zilla Parishads (including the PS and GPs within the ZP) as a matching contribution. The fourth SFC (2010) has noted that a disproportionately large share has gone to the ULBs. It also noted that the devolved amount of Rs 59 crore was less than the 3 per cent suggested by the Third Finance Commission. The report has also noted that the OSR of the PRIs is negligible. It says, Gram Panchayats and the Panchayat Samitis have not augmented their own sources of revenue so far, because the state government have not yet notified maximum rates of taxes, tolls and fees, etc. to be imposed by them. Broadly speaking, the PRIs failed to raise their own resources and mostly thrive on Central/State Government grants (p.35). Thus revenue assignment one of the hall marks of local governments autonomy works out almost to zero for Bihars panchayats. What is more, the situation is not improving. As of 2002-03, per capita own tax revenue of PRIs of Bihar was zero and it remains so even in 2007-08. They were collecting per capita non-tax revenue of Rs . In 2002-03 and Rs 4 in 2007-08. (Source of 2002-03 figures is Bihar 4th SFC report and for the latter Oommen 2010). Functions 20 Departments have transferred 79 functions to the GP, 60 functions to the PS and 61 functions to the ZP. While the numbers are impressive, the SFC report also says that such transfers are more in the form of delegation rather than devolution and no substantial responsibility and resource was given to these institutions (p.26). The Departments which have transferred functions are: Agriculture, Revenue and Land Development, Water Resources (Minor irrigation), Animal Husbandry and Fishery, Forest and Environment, Industry, Public Health Engineering, Rural Development, Rural Engineering, Energy, Primary Education, Adult Education, Literacy, Cultural Activities, Medical, Family Welfare, Social Welfare, Welfare of the Handicapped, Public Distribution System and Relief and Rehabilitation. The SFC report has also given a list of functions of various departments that have been transferred to the PRIs. We reproduce below the transferred activities mentioned in the SFC report: 1. Agriculture Department: Planning and formulation of schemes, crop cutting experiments, agricultural fairs and exhibitions, subsidies, agriculture extension, Farms and Nurseries, soil conservation, to get reports from all departmental officers on work done in meetings and power to require attendance of officers and employees of corresponding levels. 2. Revenue & Land Reforms Department: To recommend settlement of government or community lands, maintenance of traditional irrigation facilities, grazing lands, house sites to homeless, approach passage lands, maintenance of community assets, assist in survey of lands, supply of copies of land records to villagers, collection of land revenue under certain conditions and furnish absentee statement of Halka Karmachari. 17

3. Minor Irrigation Department: Formulation of new schemes, estimates, and Technical report under guidance Of ZP; supervision, site selection and grant of CL to Executive Engineers; surface irrigation schemes of M.I. to be under control of P.S; beneficiary groups to function under control of P.S. Grant of CL to Block level engineers; state TWs and LI schemes to be transferred to G.P; beneficiary groups to function under control of G.P; power to exercise control, inspection and supervision over individual M.I. beneficiary schemes; renovation of defunct schemes with government funding; control over panchayat level staff of M.I. 4. Animal Husbandry and Fisheries: Z.P. to make selection of beneficiaries in several schemes of the department. Control over department staff in the matter of grant of C.L. P.S. also empowered to make selection of beneficiaries in some schemes. They have been given control over block level staff in the matter of grant of C.L. The G.P. has also been empowered to select beneficiaries in several schemes of the department. It has additional responsibility of development of grazing grounds, control of epidemic and contagious diseases, disposal of dead animals and maintenance of assets. 5. Environment and Forest Department: The PRIs are empowered to execute all works of social and farm forestry previously done departmentally. Afforestation after identification of non forest lands, establishing nurseries, protection of saplings have also been assigned to them. They will make plans for plantation keeping in mind future requirement of fuel fodder and timber. Monitoring of transport permits for forest related materials. Additionally the PRIs have been given responsibility to generate awareness towards environment, eco-development and extension activities. 6. Industries Department: Z.P. to monitor establishing of new small scale industries and send recommendation for district level action plan. Recommendation of beneficiaries of KVIC be made after consultation with Panchayats. DIC will obtain recommendation of G.P.s for beneficiaries of PMGRY. Handloom and handicraft schemes will be executed on the recommendation of Gram Panchayats. Panchayat Samiti Pramukh and Z.P. Adhyaksha will have power to supervise and inspect centres for handloom/ power loom, mulberry/ silk training, extension and production. Gram Panchayats will also have power to supervise Weavers' cooperatives who will get financial assistance or loan on their recommendation only. Z.P. will recommend candidates for enterprise development by Institute for Development of Entrepreneurship. Growth centres will be selected on recommendation of Z.P. Some control was also given to PRIs on the leave and attendance of departmental employees. 7. Public Health Engineering Department: The Z.P. has been empowered to make selection of panchayats for sinking of hand pumps in primary and middle schools. In piped water supply schemes the Z.P. will decide the priority in which the various ongoing schemes will be taken up. It will exercise supervision over Prakalp and other departmental employees involved in rural water supply schemes. The P.S. has been given power to monitor sinking of new and maintenance of existing hand pumps and to supervise other water supply schemes. Gram Panchayats had been given power to undertake schemes for ordinary and special repair of hand pumps. However later on the department vide its letter no.983 dated 4/8/09 informed that the department had withdrawn the powers of special repair, sinking of new tube wells and re-sinking of new tube wells in place of closed hand pumps. They will decide sites for sinking new hand pumps to replace the old or failed hand pumps and continue to undertake ordinary repairs with the funds provided by the government. The department is expected to place funds at the disposal of the Gram Panchayats. The Gram Panchayat is also expected to make selection of BPL beneficiaries under the Total Sanitation Scheme. 8. Rural Development Department: Powers and functions were delegated by this department in 2001. The schemes running at that time were: 1) Jawahar Gram Samriddhi Yojana- In these schemes Panchayats were empowered to execute schemes upto Rs. 50,000 with approval of Gram Sabha only. 2) Swarn Jayanti Gram Swarojgar Yojana- In this scheme the self help groups were to be selected on recommendation of Gram Sabha from among the BPL families. 18

3) Indira Awas Yojana- In this scheme the Panchayats were empowered to select the beneficiaries through the Gram Sabha. Panchayats were entrusted the task of ensuring transparency in execution of Indira Awas scheme. 4) Sunishchit Rojgar Yojana:- This scheme was to be executed through the Zila Parishad, Panchayat Samitis according to the guidelines issued for the purpose. These agencies were given responsibilities of various levels in the interest of fair execution. 5) Pradhan Mantri Gramodaya Yojana:- The delegation in case of these schemes were same as in case of IAY. 8. Department of Rural Works: The Panchayat Samiti was entrusted with the sending of Annual Work Plan for rural roads to Z.P. The Z.P. will make a district road annual plan after compiling block level reports. This is to be placed before the State level standing committee. Gram panchayats are empowered to undertake maintenance of rural roads and drains, their upgradation or new construction. Panchayat Samiti is empowered to construct and maintain public roads, drains, culverts and other means of communication. Zilla Parishads are to decide the priority of roads, bridges and culverts in the district for maintenance and upgradation purposes. It can undertake new construction with its own funds or request the government to provide the same. Zilla Parishad is responsible for maintenance of Z.P. roads with the help of funds provided and earmarked for this purpose. The Z.P. will decide the priority of roads to be taken up for maintenance by the Rural Engineering Organisation (REO) from the funds provided by the government to it. The Z.P. has been given some powers to supervise and control the attendance of engineers of the REO in their district. 10. Energy Department: Zilla Parishad to make selection of those Panchayats Samitis and Gram panchayats where the schemes for development of nonconventional sources of energy will be implemented. Panchayat Samitis will send recommendation regarding sites for solar panel in their area. G.P.s will make selection of beneficiaries for schemes to popularise the non conventional sources of energy. G.P.s and P.S.s were entrusted the task of monitoring and supervising the rural electrification schemes. Z.P. was to prepare schemes for rural electrification projects and settle the priority of villages chosen for this purpose. The PRIs are to assist in installation of meters, collection of bills and to stop illegal tapping of power. 11. Education Department: The PRIs were given a major role in policy aspects of education programmes and to supervise teaching. The Z.P. was given power to distribute teacher units sanctioned by government between Gram Panchayats. The Panchayats were given responsibility to select site for opening of new schools and to redistribute the units allocated by the Z.P. to individual schools. Panchayat Samitis were empowered to recommend upgradation of primary schools to middle schools. Z.P. is to allocate funds received from government or its own sources for repair of school buildings between blocks. Panchayat Samitis were to allocate the amounts for repair to each school and Gram Panchayat was to get the work executed under its own supervision through the School Education Committee. The Z.P. was empowered to allot the contingent expenditure amounts for schools and the P.S. and G.P. were given responsibility to ensure its proper utilisation through the school education committee. PRIs were given power to supervise and evaluate the implementation of mid-day meal scheme. In 2001 the Gram Panchayats were given power to appoint para teachers. Later on in 2006 the appointment of primary teachers has been entrusted to Panchayats by Rules. Similar Rules were framed for secondary teachers and power was given to Zilla Parishads. Z.P., P.S. and G.P. were given various degrees of effective control over the District, Block level Education officers and teachers. The Zilla Parishads and Panchayat Samitis were given power to transfer teachers within their district and block respectively subject to the rules to be framed by the government in this regard. 12. Adult Education Department: In the area of Adult education the PRIs were generally given the responsibility to promote the objectives of the scheme by motivating people. In the field of secondary education the panchayat Samitis were empowered to recommend sites for opening of new high schools which was to be considered and finalised by Z.P.s. The PRIs were entrusted responsibility of enrichment and maintenance of district, block and village level libraries. 13. Department of Youth, Art and Culture: Each level of PRIs was given responsibility to select sites for and develop playgrounds of upto two acres area, promote women and traditional sports and to organise sports events. Preservation of cultural heritage and structures of archaeological interest was also the general responsibility of the PRIs. 14. Health Department: The P.S. and G.P. were given responsibility to ensure proper distribution of medicines. The Civil Surgeon is to inform them about the quantity of medicines being supplied to 19

hospitals/ health centres. Panchayat Samitis were given special role in promoting family welfare, immunisation, disinfection, sanitary and medical care arrangements at melas and places of mass congregation and identifying patients in special campaigns against certain diseases and to bring them to health centres. The Z.P. was assigned the general role of supervising these activities. Some administrative control was also conferred on the medical officers of their area in the matter of their leave of absence. Salaries of medical officers and staff of block level health centres were to be paid on the absentee statement of the Pramukh. Limited powers were also given to the P.S. and Z.P. to recommend disciplinary action against the medical officers. 15. Welfare Department: Z.P. was given power to supervise all scholarship schemes, hostels of all residential schools, site selection for construction of hostels and to identify cases of atrocities on SC/ ST and to assist them in getting legal aid. Panchayat Samitis were given power to sanction, renew and disburse the scholarship to children of persons engaged in unclean occupations and musahars. Funds were to be allotted through districts to blocks by the government. Duties of similar nature were assigned to Panchayat Samitis in the matter of untouchability and atrocities on members of those castes. The Gram Panchayats were given power to sanction, renew and disburse scholarships to children described above in case of P.S. studying in lower classes of the primary/ middle schools. The powers given to them in respect of untouchability and atrocities are also of the same nature within their respective area. Some administrative control was given to Z.P. and P.S. in respect of district and block level officers to control their leave and absence from headquarters. In case of dereliction of duty by these officials the PRI was given power to recommend disciplinary action. In the special component plan the Panchayat Samitis were given a special role. They were to recommend action on 8-10 selected activities for selection of schemes, their implementation, monitoring and evaluation. The Gram Panchayats were given responsibility to recommend individual and self help groups eligible for assistance under centrally sponsored schemes. 16. Social Welfare Department: The Z.P. has been given power to exercise supervision over scholarships for physically challenged. The P.S. has been given power to make selection of beneficiaries, renewal and disbursement of scholarship for the physically challenged students of higher school classes, whereas the G.P.s have power for lower school classes. Anganwadi, Child Development Project godown bhawans are to be constructed under their supervision. The P.S. and G.P. are entrusted with responsibility of site selection for these buildings. The GPs have been given power to make selection of Anganwadi Sewikas and Sahayikas in accordance with the guidelines to be set by the government. The Z.P. has been given power to supervise this selection. Panchayat Samitis and Gram Panchayats have been given power to exercise close supervision and control over the distribution of nutritional materials, medical care etc. The G.P.s are directly involved in formation of committee of beneficiaries and purchase committees. The Z.P. has been given power to supervise these activities. The PRIs have been given administrative control to the extent of ensuring attendance of various functionaries of the department and the Anganwadi staff. 17. Department of Labour Employment and Training: Gram Panchayats are given the responsibility to maintain register of migrant and unorganised labourers. It is also supposed to maintain list of liberated bonded labourers and to recommend schemes for their rehabilitation which will be sanctioned by the Z.P. G.P.s were further empowered to select new beneficiaries and eliminate expired cases under the social security programmes like maternity benefit, family benefit and old age pension. Their recommendations are to be considered by Z.P. It was also provided that the payments to beneficiaries will be made in presence of Mukhiya or Member of gram panchayat. The Panchayats were also to exercise vigil over payment of minimum wages. 18. Department of Food & Consumer Protection: The PRIs were entrusted with power to supervise and monitor the distribution of essential commodities through PDS shops, preparation of ration cards, participation in distribution cum vigilance committees at various levels and send recommendations to SDO/ Collector as required. The PRIs are to cooperate and ensure that procurement at minimum support prices is done for which they have been given supervisory and monitoring functions. Gram Sabha is to make selection of new beneficiaries under the Annapoorna scheme and beneficiaries under the Antyodaya Anna Yojana. The P.S. and Z.P. will exercise general supervision. Some administrative powers in the matters of absence from headquarters and leave of departmental officials have been conferred on the PRIs. 19. Relief and Rehabilitation Department: The Adhyaksha has power to sanction upto Rs. 1,00,000 in one year for relief purpose in times of natural calamities under section 69(1)(e) of the Act. 20

Similarly Pramukh has power to sanction Rs. 25,000 in one year under section 42(e). Gram Panchayats are to prepare the list of beneficiaries for distribution of relief. The relief materials will be sent to Anchal Adhikari but their distribution shall take place in the supervision of member of Panchayat. The government will keep some food grains available at an identified shop of PDS in every panchayat. It will be responsibility of the Mukhiya to see that no one dies of starvation in his area. The panchayat will make recommendation regarding engaging of boats for relief purposes. In addition to these departments the Government of Bihar has decided to transfer 5 other functions to the PRIs: i) Settlement of Panchayat level estates ii) Registration of Births, Deaths and Marriages iii) Issue of Caste Certificates iv) Repair and Maintenance of hand pumps v) Rural Hygiene and availability of drinking water

An assessment of activity mapping In effect this detailed exercise on activity mapping has been an exercise in futility. As 4th SFC reports, the transfer of functionaries to PRIs was not done Devolution of funds by the State Government was not effective as the departments concerned continued to receive budgetary allocations in respect of transferred functions. Thus, the proposal to transfer functions, functionaries and funds to PRIs, as indicated in the activity map, still remains largely on paper. Apart from this, the way the activity map has been drafted is far from satisfactory. Let us look at the following instances. In agriculture, panchayats are asked to do a lot of things, but without any guarantee for funding and staff. Some controlling power over the existing staff of the department is proposed to be given, but it is not substantive. In minor irrigation, it is not made clear whether the existing schemes of the department would be handed over entirely to the panchayats. If not, what will be the division of responsibility between the department and the panchayats? This is not made clear. In some sectors, responsibility given is only for beneficiary selection. In some other cases only agency functions have been given. These do not count as devolution. In Health department, there is no mention about the transfer of the management of sub centres, PHCs, etc to the PRIs. Only some administrative control (eg granting casual leave) over health staff including medical officers has been given to the panchayats. Without the former, the latter does not carry any sense. Same thing has been done in respect of Anganwadi centres, where management control remains with the department, but panchayats have been given some administrative powers over some staff. This type of decentralisation creates only confusion. The sector that urgently calls for decentralization is water supply. Here panchayats have been given minor powers of repair of hand pumps. For piped water supply scheme, they can at best fix the priorities of the schemes to be taken up by the department. More powers should have been given in this sector. Similarly, PRIs should have been given more powers in implementing poverty alleviation schemes, as in other states. Substantial powers have been given to all the tiers in the sector roads, culverts and bridges. But funds are not assured. More importantly, the role of Rural Engineering Organisation vis--vis PRIs in the matter of district and sub district level roads has not been clearly defined. It is very surprising that in Bihar, substantive powers have been given to the PRIs in primary and secondary education, including appointment of primary teacher. But it is reported that this has not led to the decentralization of the elementary education sector.
Ranking as per Devolution Index of Ministry of Panchayati Raj According to the Devolution Index developed by the Ministry of Panchayati Raj in 2010-11, Bihars score was 25.65 which placed it 17 th among 19 major states. The score for Function was 54.78, for Finance the score was 20.56 and for Functionaries the score was 3.33 (Ministry of Panchayati raj, Memo No.N-39011/52/2009-PEAIS/Pol.II). While the score for functions is reasonably good as a result of the formal devolution, the fact that there has been very little achievement in terms of 21

devolution of finances and functionaries has resulted in the low rank of the state as per the Devolution Index.

Jharkhand

Background and Milestones in Policy Jharkhand is among the newest states of India. It came into existence on 15 November 2000 by carving out the southern districts of Bihar. The state has a large tribal population (26.3 per cent as per 2001 census) with 32 Scheduled Tribes. Santhal, Oraon, Munda, and Ho are the major tribal groups, constituting about 80 per cent of the tribal population of the state. Traditionally the tribal communities since ancient times had their own community based systems which emphasised on democratic participation. The resources that came within a tribal village were common property. The head of the village came from the founder family and was responsible for the administrative and judicial side of village governance as well as the
22

social welfare of the villages. Four types of traditional panchayat system evolved among the tribals of the state: (a) Munda - Manki system (Ho):In this system three levels of organizations were present first at the lineage level, second at the village level and third at the inter-village level. The head of the village level were known as Mundas while the heads of the inter-village level was known as Mankis. The posts were hereditary. (b) Parha system (Oraon): There were two types of heads in a Oraon village. The secular head was known as Mahto who responsible for administrative and social issues. The other was the religious head known as the Pahan. The villagers elected the Mahto every three years. The inter-village organisation was known as Parha and the head of that organisation was known as Parha-Raja. (c) Munda Manki system (Mundari): There were two types of inter-village organisations known as Parha and Patti representing political and social organisations respectively. A patti is a group of villages usually ten to twelve. The head of a patti is known as Manki. The Parha, on the other hand, is the head of the clan. Parha has jurisdiction over every member of the clan irrespective of their location while the patti has a territorial jurisdiction. Thus every individual has two leaders the parha or the clan head and the patti or the territorial head. (d) Manjhi Paragnaiti system: This system is prevalent among the Santhal tribe. The Manjhi is the head of the village. Earlier this post was elected but now it has become hereditary. The inter-village panchayat is known as Pargana Panchayat headed by a Parganait. Every tribal village had some form of a Gram Sabha. The traditional functions of the tribal village Panchayat were the following: Community Development and Village welfare Control over and management of land, forest and water for the good of the community Organising community festivals and other celebrations to preserve cultural traditions Preparing and providing herbal medicine to the people of the village Resolving disputes Sending unsettled disputes to the inter-village panchayats for resolution.

The traditional system of the tribal communities was disrupted by the coming of the East India Companys rule and later the Crowns rule. The East India Company introduced the permanent settlement in 1793 which created a new set of intermediaries between the village population and the state. Seventy five years after the permanent settlement, Lord Mayo introduced an Act which created district boards and local boards at the district and sub-divisional levels,
23

respectively. Bihar and Orissa Village Administration Act of 1922 created fully elected union boards to decide petty civil and criminal cases. By 1924-25, a large variety of rural bodies came into existence in Bihar, including the Jharkhand region, such as the district boards, local boards, union committees and elected panchayats.

After independence the Bihar Panchayat Raj Act of 1947 replaced union committees with village panchayats. The gram panchayats and gram katcheris started functioning from 1948. The Bihar Panchayat Samiti and Zila Parishad Act was enacted in 1961 for organising block and district level panchayats, by 1970 a three-tier panchayat system was in place in Bihar including the Jharkhand region. While the new panchayat system came into force all over the state, it also generated conflicts between the new system and the traditional tribal systems. The traditional tribal panchayats found it difficult to integrate with the new panchayat system. There were several protests by the tribals against the new system. After the 73rd amendment a new Bihar Panchayat Raj Act came into force in 1993. But elections could not be held in Bihar for many years as the Bihar High Court declared the reservation provisions of the Act as unconstitutional. Thus elections were not held in the Jharkhand regions of Bihar as well. Following the formation of the new Jharkhand state in November 2000 the Jharkhand Panchayat Raj Act was passed in March 2001 in conformity with the 73rd amendment and also the PESA Act of 1996. However no election could be held as several writ petitions were filed in the High Court challenging the provisions of the Panchayat Act on the following grounds: (a) Whether hundred per cent reservation of seats for chairpersons at all levels of the panchayats in the scheduled areas exclusively for the scheduled tribes was a violation of the Fundamental Right to Equality (article 14 of the Constitution)? (b) Whether it is mandatory on the part of the state to reserve certain seats and offices of the chairpersons of the panchayats at all levels exclusively for women? The elections were put on hold by court order following these legal challenges. After a protracted legal battle a Supreme Court judgment in January 2010 declared the provisions of the Jharkhand Panchayat Raj Act 20001 constitutionally valid and directed the State Election Commission to conduct elections as early as possible. As per the judgment of the Supreme Court, necessary amendments were carried out by way of an ordinance notified on 15-04-10. The legislative changes made in Jharkhand Panchayati Raj Act included 50 per cent reservation for women in place of 33 per cent originally provided, the State Election Commission was suitably empowered to oversee conduct of polls, and the post of Deputy-Chairpersons in the three tier system was de-reserved. Thus after 22 years, panchayat elections were held in Jharkhand in November and December 2010. The elections were enthusiastically received and 53,207 representatives were elected out of which 30,748 were women.

24

Status of Devolution

There has been no effective devolution in Jharkhand beyond the statutes of the Panchayat Raj Act, 2001. The Finance Commission has been set up but is yet to submit its report. Recently the Chief Secretary has issued a letter to 6 Departments to ascertain the functions that may be devolved to the Panchayats. Briefly the status is as follows:

Activity Mapping Activity Mapping is yet to be done.

Functions The Jharkhand Panchayat Raj Act 2001 has formally devolved a large number of functions to the PRIs in keeping with the Eleventh Schedule of the Constitution. Chapter VII of the JPRA has given a long list of functions. In addition to general functions like preparation of annual plans and budgets, the following sectors are included in the list o functions agriculture, land development, minor irrigation, animal husbandry, fisheries, social forestry, minor orest produce, khadi and cottage industries, rural housing, drinking water, roads and bridges, rural electrification, non-conventional energy, poverty alleviation, primary education, adult and nonformal education, technical training, libraries, sports, markets and fairs, Hygiene and sanitation, welfare of weaker sections, health and family welfare, social welfare and social security, creation and preservation of community assets, supervision of public distribution system, management of child development programme, cooperatives, savings, formation of Self-HelpGroups, birth and death registration. The panchayats are also given some functions in the Scheduled areas.

Funds Chapter VIII of JPRA has created provisions of a Gram Panchayat Fund, A Panchayat Samiti Fund and a Zila Parishad Fund. The Gram Panchayat Fund shall consist of: (a) Contributions and grants made by the central or state government, if any; (b) contributions and grants made by the Zila Parishad, Panchayat Samiti or any local Authority, if any; (c) Loans sanctioned by the central or state government, if any; (d) All amounts realised by it by way of taxes, and fees-items; (e) All receipts connected with any of the schools, hospitals, dispensaries, buildings, institutions or works kept under control and management of the Gram Panchayat or made by it or vested in it; (f) Entire income accruing from any trust or endowment and all the amounts received by way of donation and contribution in favour of the Gram Panchayat; (g) Fines and monetary penalties imposed and realised, as specified under the provisions of this Act;
25

(h) Other amounts to be received by the Gram Panchayat and on its behalf. The Panchayat Samiti fund shall consist of: (a) Contributions and grants made by the central or State Government, if any, wherein is included even such contribution of the land revenue realised in the State as the Government determines; (b) Contributions and grants made by the Zila Parishad or any other local Authority, if any ; (c) Loans sanctioned by the central or State Government or loans taken by a Panchayat Samiti against surety of its own assets, if any ; (d) All amounts realised by it by way of toll, cess and fees items; (e) All receipts connected with any of the schools, hospitals, dispensaries, buildings, institutions or under constructions vested in the Panchayat Samiti or constructed by it or under its control and management; (f) Entire income accruing from any trust or endowment and all the amounts received by way of donation and contribution, in favour of the Panchayat Samiti ; (g) Fines and monetary penalties, imposed and realised, as specified under the provisions of this Act or under the bye-laws made there under; (h) All other amounts received by the Panchayat Samiti or on its behalf. The Zila Parishad fund shall consist of: (a) Contributions and grants made by the central or State Government, if any, wherein is included even such portions of the land - revenue realised in the State as the Government determines; (b) Contributions and, grants made by the Zila Parishad (Sic) or any other local Authority, if any ; (c) Loans sanctioned by the central or State Government or loans taken by the Zila Parishad against surety of its own assets, if any; (d) All amounts realized by it in toll, cess and fee items; (e) All receipts connected with schools, hospitals, dispensaries, buildings, institutions or under construction works whatsoever vested in the Zila Parishad or constructed by it or coming under its control and management; (f) Entire income accruing from any trust or endowment and all the amount received by way of donation and contribution in favour of the Zila Parishad; (g) Fines and penalties imposed and realised under the provisions of this Act, as specified; (h) All other sums of money received by the Zila Parishad or from its other sources. Chapter X of JPRA has listed the circumstances under which the PRIs can impose taxation, tolls and fees. However such taxes, tolls and fees are subject to the approval of the state government.

At present the Panchayats have been devolved an untied fund of Rs 10 lakh. Out of this 5 lakhs have been devolved from 13th FC. The rest has been devolved from departments of drinking water, public works and women and child development. However all major schemes are implemented through the Block.

Functionaries
26

Chapter VI of the Jharkhand Panchayat Act has specified the powers of the Pradhan and UpaPradhan of the GP, the Pramukh and the Upa-Pramukh of the PS, the Adhyakshya and UpaAdhyaksha of the ZP. However no devolution of functionaries is known to have taken place.

Ranking as per MoPR Devolution Index

Jharkhand has been placed last among 19 major states in the Devolution Index of Ministry of Panchayati Raj in 2011. It has received a total score of 11.70. The score for Function is 12.00, the score for Finance is 2.00 and the score for Functionaries is 16.67.

27

Orissa
Introduction Immediately after independence, Orissa enacted legislation in 1948 called Orissa Grama Panchayat Act. In 1955 Anchal Sasan Act was passed to establish panchayat at Tehasil level. Following the report of the Balawantrai Mehta Committee, Orissa went for a threetier Panchayat system for which a legislation for zilla parishad had to be enacted in 1959, which was later amended as Orissa Panchayat Samiti and Zilla Parishad Act in 1961. Later a new Act for Grama Panchayat was passed in 1964. After 73rd Constitution amendment the above mentioned two Acts were suitably amended. Devolution of Functions At the outset, one may look into the scheme of functional assignment to different tiers of panchayat as provided in the state legislations on panchayat. It will be seen from the following discussion that the scheme of devolution as laid down in these Acts do not follow the spirit of the constitution. Statutory provisions: Gram Panchayat : There is no mention of the planning in the functions of GP though this power is given to all the panchayats by the Constitution. In case of transfer of functions, the control of state and central government is there as mentioned in the section 46 of the Orissa Grama Panchayat Act. Therefore, functional jurisdiction of GP is subject to restrictions that may be imposed by the state government departments or other authorities from time to time and from case to case. The Constitution envisages GP as an institution for contributing towards the attainment of economic and social development of people and social justice which is much bigger role than provisioning of civic amenities but the provision of assignment of functions along with restrictions imposed by section 46 leaves the GP with nothing except provisioning of civic amenities. Panchayat Samiti : In assigning functions to the PS also, absolute control of state government is noticed. Under Section 20 (1) (a) of the Orissa Panchayat Samiti Act, a PS will, subject to the control of the state government, plan, execute and supervise development programmes, schemes and works in the block relating to community development. The Act also gives extraordinary power to the Collector in which he can direct the BDO to spend or pay money out of fund for any execution of work. The Act and Rules makes the SDO superior to the PS Chairperson in some cases. The BDO and the SDO along with other government officials are also vested with substantial financial power which has made the Chairperson a mere figurehead. Zilla Parishad : The Orissa Zilla Parishad Act 1991 determines the functions of ZP in such a way that it is difficult for ZP to work as an institution of self - government. Clauses (ii) and (iia) of subsection 3 of Section 3 are very much confusing. If these two clauses are read
28

together, one can come to the conclusion that ZP may prepare a plan but it cannot execute the schemes under it, unless the government by order asks it to do so. The central government asked the state government to merge DRDA with the ZP to which the state government did not agree. It agreed to associate the DRDA with ZP more closely so that the former can function as technical support agencies of the latter.

Executive orders: Whatever may be the statutory scheme, the government issued executive orders for devolving functions to the PRIs. Following the cabinet decision in 1999, 19 subjects were decided to be devolved to the PRIs, but ultimately orders were issued devolving functions of only six departments along with funds and functionaries to the ZP. These included the following: 1. Women and Child Welfare Department ICDS, Indira Mahila Yojana and Mid Day Meal 2. Food Supplies and Consumer Welfare Department recommendation for appointment of retailer 3. School and Mass Education Department District Inspector of schools and District Mass Education Officer declared as Additional Executive Officer of ZP 4. Rural Development Department rural connectivity and sanitation programmes, maintenance of community based hand pumps were given to ZP 5. Panchayati Raj Department - SGRY programme 6. Agriculture Department - management of soil and social conservation demonstration centres, watershed development programmes, fish and rice integrated farming In an order issued in July 2003, the government of Orissa devolved 21 subjects out of 29 listed in the Eleventh Schedule of the constitution. These functions come under 11 departments namely, 1. Agriculture 2. Food Supplies and Consumer Welfare 3. Health and Family Welfare 4. Women and Child Development 5. Water Resources 6. School and Mass Education 7. Fisheries and Animal Resources Development 8. Co operation 9. Panchayati Raj 10. Rural Development 11. SC and ST Development In 2005, activity maps for 22 subjects were issued. Apart from the fact that the activity map remained non-operational, as will be seen later, the drafting of the activity map itself was unsatisfactory. We may illustrate this by looking at the activity map of one department, namely Women and Child Development.
Activity map of Women and Child Development Department The activities of the department to be devolved are grouped under four sections, namely (i) Socioeconomic development of women, (ii) ICDS projects, (iii) Welfare of the disabled and (iv) Adoption of children. Let us look at the activity maps of the first two sections. In the first, one notices use of the verbs promote, mobilise, support, propagate generate awareness and identify in 29

abundance (See table below). The list confers little to PRIs in terms of functions that require to be discharged by an institution of government. The functions given to them are more apt for NGOs, rather than the institutions of local government. Some concrete activities given are inconsequential, such as disbursement of NOAP, OAP etc. Regulatory work of ensuring payment of minimum wages to women agricultural labourers is devolved without corresponding statutory power to take action against those who violate the legal provision.

ZP Promote equal opportunity for women Mobilise social support against social evils Promote opportunity for women.

PS Propagate equal opportunity for women Mobilise social support against social evils Identify income generating activities for women

GP Generate awareness Promote self-help groups of women Supervision of Anganwadi centre

In ICDS project PRIs are asked to supervise or monitor something or somebodys work. Given the fact that the control over staff of or managerial powers relating to ICDS remain with the government, what purpose is served to give these powers to the PRIs? Thus in the very important project of ICDS, PRIs have nothing to do except assisting the officials in various matters, in enlisting peoples participation in the project run by government officials ZP Supervise, support and guide ICDS projects Monitor functioning of the ICDS project in ICDS project Promote peoples participation PS Supervise ICDS projects GP Assist in selection of beneficiaries and assist in selection of sites for anganwadi centres Ensure community participation

Assist officers in procurement and supply of nutrition materials and other medical supplies to ICDS centres Provide infrastructural facilities and other logistic support to facilitate implementation of the project and to construct anganwadi centres Assist in selection of anganwadi workers

Assist in selection of anganwadi centres

Selection of Anganwadi workers

The standing committees of the panchayats are also not very much functional. According to the Panchayat Rules, there should be seven standing committees at every tier of panchayat, but most of the members are aware about five standing committees (IRMA, 2008). Devolution of Functionaries According to an order issued by the state government in 2003, the district and block level officers and village level functionaries of 11 departments have been made accountable to ZP,
30

PS and GP respectively for implementation of schemes/subjects transferred to panchayats. However, the accountability of these officials to the panchayats seems to be limited. The administrative control is limited to sanctioning the casual leaves of the officials by the head of the panchayat. For programme implementation, the officials are required to attend the meetings of PRIs at respective level. They can place their plans and schemes for discussions and approval in the meetings. The panchayat heads can ask for information and reports from time to time but in case of any discrepancy, they can at most draw the attention of the higher departmental authorities. In reality, these officials continue to work as employees of the respective line departments. Their service conditions are determined by the concerned departments. The departments recruit them, not panchayats. Panchayats also do not have any role in determining the number of posts required in different categories. Such decisions are taken by the concerned departments. It seems that even the limited involvement of the line department officials with the panchayats could not get institutionalized. The 3rd SFC of Orissa, which submitted its report in 2010, observes that plans and programmes of different Departments are not placed before the Zilla Parishad and Panchayat Samiti for discussion and approval. In many cases, District Level / Block Level Officers do not obtain permission before availing of casual leave. Headmasters of Primary Schools/Sevashrams do not obtain approval of Sarapanches before proceeding on casual leave (P 95). The Commission also notes that different departments, some of whose works have been devolved to the PRIs, had issued orders that go against the spirit of decentralisation. For example, the School and Mass education department has constituted committees at district and panchayat samiti levels for taking decisions on transfer of teachers and non-teaching staff. The district Committee is headed by Collector, while the chairman of ZP remains an ordinary member. Similarly the committee at PS level is headed by MLA, not the chairman of PS. Similarly the district Planning and Coordination committee is headed by a Minister, not the chairperson of ZP (Ibid P 97). Arrangements made to provide technical and administrative staff to all the tiers of panchayats are as follows. Gram Panchayat : Every GP has a Secretary who is the principal officer of the GP. Government has also provided an Executive officer to every GP by way of deployment of Village Level Worker and Village Agriculture Worker. The panchayat has no inherent power derived from the statute for determining the requirement of different categories of staff, recruitment of staff, determining their service condition, and exercising discipline and control over them. Panchaayt Samiti BDO is the executive officer of PS. Some staff like Extension Officer, Village Level Worker, ministerial staff, Computer Operator etc. under its control. Zilla Parishad : The District Collector is the Chief Executive Officer of the Zilla Parishad while the Project Director, District Rural Development Agency functions as the Executive Officer (EO). One Additional Project Director of the technical background has been authorized to work as EO of the ZP for operational purpose. Other district level officers continue to function as additional EO. In addition, the ZP has been provided with one Executive Engineer and several administrative staff. In the whole state, total 218 non technical staff have been deployed from EIC, Water Resource Department to 30 ZPs. Fiscal Devolution Like the scheme specific functional decentralization, PRIs in Orissa only receive fund for the implementation of specific schemes for the respective departments. There is no district sector / panchayat window in the state budget. (IRMA, 2008).
31

The Panchayat Acts also do not ensure fiscal autonomy of the panchayats. Power to levy property tax which is the most common source of resource generation by the local governments - has not been given to any level of panchayat. They are also not empowered to levy other taxes like professional tax, entertainment tax or surcharge on the transfer of property. GPs have the power to levy fees and rates but in most cases related to the service they provide like conservancy tax, drainage tax etc. but not any toll for use of its roads and bridge. PS and ZP have no power to levy any tax, fees and rates. A portion of the revenue collected by the state government from certain sources like minor forest produce, kendu leaf, cess on land revenue are assigned to PRIs. But the amount received is very meagre. Thus, these institutions lack power to raise adequate resources (ISS, 2005). According to the information provided by the 3rd SFC, till 2007-08 the ZP and PS did not generate any revenue. Only GPs generated some revenue, but the amount was very meager. As of 2002-03, GPs own source revenue was Rs 2.91 per capita. After five years in 2007-08, it rose to only Rs 3.33. Thus the PRIs of Orissa are fully grant-dependent. After the visit of then Union Minister of Panchayati Raj in 2005, Government of Orissa is reported to have agreed to undertake relevant reforms to the taxation provisions. Till now, no such initiative has been visible. Fund Transfer to PRIs Before the recommendations of 1st SFC came into force in 1998 99, transfer of fund to PRIs was made on ad-hoc basis as per the requirement and the level of requirement was quite low. There was no uniformity in the year wise transfers made in favour of PRIs. An annual average amount of Rs. 5653.1 lakh was transferred to PRIs from the year 1993 94 to 1997 98. Out of this, Rs. 5383.90 lakh were grants and Rs. 269.20 lakh were assignment of taxes. The 1st SFc recommended transfer of Rs. 136.75 crore per annum to PRIs including assignment of taxes, devolution of tax revenue and grants in aid (PRIs & Acievements under 11th Finance Commission Award). The Second SFC in its report submitted in 2004 recommended transfer of 10 percent of total state revenue amounting to Rs. 383. 3 crore per annum to the panchayats. It included Rs. 211.83 crore as the transfer of 10 percent of tax revenue and Rs. 171.47 crore as grant in aid. The Commission also made some more recommendations relating to matters like appointment of trained accountant on contract basis, audit of accounts by Examiner of Local Accounts, PRIs involvement in certain welfare activities etc. The state government accepted only the following. The Rural Local Bodies would receive Rs. 156.63 crore in 2005-06 and Rs. 250.90 crore in 2009-10 at an average of Rs. 201.00 crore per annum. This amount would include the receipts that the Rural Local Bodies were getting from the state government under different heads. The existing system of sharing profit from Kendu Leaf Trade would flow to the Rural Local Bodies @ Rs. 10.00 crore per annum. (IRMA, 2008) The 11th UFC awarded the state of Orissa Rs. 69.12 crore per annum under the following heads: Rs. 62.42 crore for maintenance of civic services Rs. 2.23 crore for maintenance of accounts Rs. 4.47 crore for creation of data base The total amount came to about Rs. 346 crore for the five years period. The Commission recommended the PRIs to raise 25% of the amount as matching grant. Considering the poor financial condition of the PRIs, the state government had decided to provide the amount as State Matching Contribution. (PRIs & Acievements under 11th Finance Commission Award) The 12th Union Finance Commission allocated a sum of Rs. 803 crore as grant - in - aid for the PRIs in Orissa for the period 2005 2010 for the following purposes: Rs. 370 crore for water supply and sanitation maintenance and repair
32

 Rs. 250 crore for basic sanitation coverage Rs. 83 crore for creation of database and maintenance of accounts (ISS, 2012) The 3rd SFCs award covers the five-year period from 2010-11 to 2014-15. The Commission recommended that 15 per cent of the average own gross tax revenue of the state government for the years 2005-06 to 2007-08 calculated at Rs 896.17 crores per annum (Rs 4480.85 crores for 5 years) might be devolved to the local bodies in the ratio of 75:25 between PRIs and urban local bodies. The Commission also recommended that the expenses to be made on this account by the state government might be met from the award to be made by the 13th UFC for the local bodies of the state. When the 13th UFC award came it was noted that the amount falls short of Rs 241.99 crores per year or Rs 1209.95 for five years. The state government agreed to give this additional amount from its own resources, thus fixing transfer of block grant at a level fixed by SFC. However, CFC grant is subsumed within it and cannot be considered as additionality. Over and above this block grant, the state government would continue grants-inaid towards payment of salaries, honoraria, sitting fee etc of PRI staff and representatives. The net per capita transfer of block grants under the above arrangement comes to about Rs 215 per annum. According to 13th CFC estimates, per capita expenditure of PRIs as of 2007-08 was to the tune of Rs 576, against an All-India average of Rs 779. Clearly Orissas PRIs are working at a low level of operations and even within that control of PRIs over untied resources in the total expenditure amounts to around 37% or probably much less. In all probability, more than two-thirds of total expenditure of PRIs are made from tied funds, indicating little autonomous space for these bodies. Implementation Even in implementation of schemes, the GPs do not get any free hand. They act basically as the agents of the government. The GP can sanction expenditure up to Rs. 50,000 only. Only in case of implementation of schemes financed from GP income, the control is less. GP can take any activity with no financial limit (IRMA, 2008). Devolution index Since 2008 09, evaluation of states under PEAIS has been based on a two stage assessment and the same was followed in 2010 2011. The first stage, called the framework criteria, is based on the following fundamental constitutional requirements: Establishment of State Election Commission. Holding of elections to the PRIs. Setting up State Finance Commission. Constitution of the District Planning Committees (DPCs). States fulfilling each of the 4 fundamental requirements become qualified for evaluation in terms of various indicators of the Devolution Index (DI). The state of Orissa has fulfilled all the 4 requirements. The state Election commission has been constituted after the 73rd CA came into force in the state. Elections to the PRIs are held on regular interval. After the amendment, the first election was held in 1997, the second was held in 2002,the third in 2007 and the fourth election was held in February 2012. The State Finance Commissions have also been set up. Till now 3 SFCs have been constituted. The 3rd SFC was constituted in 2008. After the third general election to the PR bodies in 2007 and urban bodies in 2008, the DPCs in all the districts have been constituted.
33

According to the cumulative DI value the rank of Orissa was 15 in 2010 2011 while it was 17 in terms of the incremental performance.

Madhya Pradesh

Introduction After independence, the state of Madhya Pradesh (MP) came into being in 1956 as a result of reorganization of state in the country broadly on linguistic basis. Again in 2000, Chattisgarh was created as a separate state partitioning 16 southern districts of the erstwhile MP. Presently, the state comprises 50 districts grouped into 10 divisions. In terms of population, MP is the sixth largest state in India and in terms of area, it is the second biggest state in the country. Panchayats before 1956 In the pre independence period, panchayat was in existence in Central Provinces and Madhya Bharat regions. In Central Provinces, the panchayats were set up with the enactment of the Central Provinces Village Act 1920 and brought into force in 1922. Under this Act, a village panchayat could be established for one village or a group of adjacent villages. Later Central Provinces and Berar Panchayat Act was enacted in 1946 which provided for the establishment of village panchayat in each village with a population of one thousand and more. In Madhya Bharat, a number of erstwhile princely states had panchayat system in the pre independence period. Madhya Bharat Panchayat Act was enacted in 1949, consisting of village, Kendra and mondal panchayats. Panchayats between 1957 and 1993 After the formation of Madhya Pradesh (MP) as a separate state in 1956, a panchayat act was enacted 1962 but the earlier GPs continued to function till 1965 when the village panchayats were constituted under the new act. At the higher level, there were janpad sabhas in Mahakoshal region and Kendra and mondal panchayats in Madhya Bharat region but the state did not constitute district panchayats till 1984. During this period, three panchayat acts were in operation, namely, the Madhya Pradesh Panchayat Act 1962, Panchayat Act 1981 and Panchayati Raj Act, 1990. The 1962 Act was based on a study undertaken by the Rural Local Self Government Committee, constituted in 1957. A more simplified and shorter Act having 126 sections against 393 of the earlier one was enacted in 1981 which was replaced by a new Act in 1990. Four elections were held during this period; the elections of 1965, 1970 and 1978 were held under the 1962 Act while the elections of 1983 84 were held under the 1981 Act. Panchayat Structure All the panchayat acts of MP have had the provisions for a three tier panchayat structure. A gram panchayat or village panchayat had 10 wards for a population of 1000 in one or group of villages and up to 20 wards for a larger population. There was a janpad panchayat at the block level and a district panchayat at the district level. Following the suggestions made by the Balwantray Mehta study team, the state government made the block panchayat the main agency and the district panchayat an advisory and supervisory body.
34

Panchayats in Tribal Areas The Central Province and Berar Panchayat Act 1946 after the amendment of 1950, had provision for setting up of tribal and pargana panchayats in the tribal dominated areas. The act of 1962 also had this power. Using this power, the state had set up such panchayats in Bastar district and Jashpur sub division of Raigarh district. Later in 1972, this system was reversed and the normal provisions were made applicable. The state even did not make any special provision for the panchayat structure in Schedule V areas in post 73rd amendment legislation of 1993. Finally, the Act was amended in 1997 by which the 73rd Constitutional Amendment was extended to these areas with some modifications. Reservations Earlier, the state legislation had the provision for womens representation in panchayat through cooption /nomination. The 1962 Act provided for cooption of two women as members of GP and Janpad panchayat and one woman in district panchayat. The 1981 Act continued the same provision. An amendment was made in 1988 to reserve 20 percent seats for women in the GP and janpad panchayats. In addition, 10 percent posts of heads of panchaayts at all the three tiers were reserved for women. With sizable population of SC and ST and the largest concentration of Schedule V areas in the state, MP has always been proactive in giving reservations to SCs/STs. All the acts of 1962, 1981 and 1990 provided for reservation of seats for SC/STs. Post 73rd Amendment Development After the 73rd Amendment came into force in 1993, the Madhya Pradesh Panchayat Raj Adhiniyam 1993 was passed by the state legislature in the same year and came into effect in January 1994. The new act was basically a reproduction of the earlier one except for the inclusion of reservations of women and OBCs, provision for gram sabha and control of ZPs over the DRDAs and of janpad panchayat over the blocks. Till 1999, eight amendments of the Act were made and between 2000 and 2010, the Act was further amended. In the year 2000, major change took place in the structure of PRIs in the state. Even the name of the Act was changed to Madhya Pradesh Panchayati Raj Avem Gram Swaraj Adhiniyam and came into force in January 2001. Further in 2004 and 2007, the Act was amended. The major development, taking place since 1993 are the following: Gram Sabha The Act includes provisions for the gram sabha (GS) and its powers and functions. The GPs were to organize for four quarterly meetings of GS on four fixed dates which were changed to fixed weeks in the 1997 amendment. Numerous instructions were also issued for GS meetings but till 2000, these were not very much functional. In the amendment done in 2000, GS was created for each village of the GP with eight standing committees. Each GS was to have a fund called Gram Kosh. In 2004, the number of committee was reduced to two as many committees did not function well. Provision of Recall The provision of recall of the sarpanch or a panch of a GP was introduced in the eighth amendment in 1997. For this, at least one third members of gram sabha have to give notice if at least half of the tenure is over. In case of sarpanch, this is in addition to the provision of no confidence motion which could be tabled at least one year after the election and six months before expiry. No confidence motion can also be brought for the janpad panchayat president or the zilla panchayat president/vice president. Later, in another amendment, the wait period for bringing it has been changed to two and half year. State Election Commission

35

The state government constituted the State Election Commission in February 1994. The constitution of the three tier panchayats was notified in March and the first election was held in May June of that year.

State Finance Commission The First state Finance Commission was constituted in June 1994. The Commission gave its final report in June 1996. The Second SFC was constituted in June 1999 while the third SFC gave its recommendations in October 2008. District Planning Committee The Madhya Pradesh Zilla Yojna Samiti Adhiniyam, the law for constituting District Planning Committee (DPC) was enacted in May 1995. The law provides for DPC consisting of 15 members in eight districts, 20 members in 29 districts and 25 members in eight districts. The districts were grouped on the basis of their size and population. A minister nominated by the state government is the chairperson and the collector of the district is the secretary of the DPC. Extension of Panchayats to Fifth Schedule Areas After the Parliament passed the PESA Act in 1996, the sixth amendment to the state act included necessary changes to conform to this act. As mentioned before, the 1997 amendment made special provisions for panchayats in Scheduled Areas. Table : Basic information about Panchayats in Madhya Pradesh Level Name Institution Zilla Parishads Janpad Panchayats Gram Panchayats of No. of No. of SC institutions representati ve 48 313 23051 23401 885 7008 388829 396722 136 (15.4) 1078 (15.1) 59889 (15.4) 61103 (15.4) ST OBC Women

District Block Village Total

222 (25.1) 1972 (27.5) 100744 (28.5) 102938 (25.9)

195 (21.9) 1326 (19.3)

304 (34.4) 2393 (34.1)

70603 134368 (18.1) (34.6) 72124 137065 (18.2) (34.5)

Source: IRMA, 2008 Some innovative experiments in decentralisation During the first phase of post-73rd amendment period, Madhya Pradesh blazed the trails by introducing new ideas of panchayati raj. The first major idea that attracted attention was the launching of gram swaraj programme under which every village was to have a gram sabha and the gram sabhas were conceived not only as deliberative bodies, but also executive bodies with many functions of gram panchayat being transferred to them. For enabling gram sabhas to perform executive functions, eight standing committees were constituted. The second important initiative was to introduce the idea of district government. For this purpose the District Planning Committees (DPC) were made powerful bodies. The body was headed by a minister, not by the chairperson of Zilla Parishad. Apart from the planning function, many powers and functions, together with funds of development programmes of the state were transferred to this body. In another move, the provision of recall of elected Panchs and Sarpanchs of gram panchayats was introduced.
36

None of these trail blazing policies worked. In the gram swaraj scheme, most of the 8 committees did not meet. Only one committee, namely gram vikash committee was found to be somewhat active. The objective of gram swaraj was dispersal of powers from gram panchayat and sarpanch to the people directly through the gram sabha and its committees. However, gradually powers got concentrated at the hands of three persons, namely Sarpanch, Secretary and Treasurer, the latter being a newly created position in every gram sabha. The treasurer was supposed to have been selected by the villagers through consensus, not election. The arrangement did not work. The institution of treasurer was abolished and in 2005, law was amended to reduce the number of gram sabha committees from eight to two. Even these two committees (Gram Vikash Committee and Nirman Committee), it is reported, are not functioning properly. In the case of changes made to the DPC, the result became very depressing for the panchayat system. Poweers got concentrated at the hands of the DPC to the corresponding loss of power and weakening of the PRIs. Within DPC again, the minister and collector became important, making the institution highly bureaucratic. This experiment of district government did not work and the system was abolished in the middle of the last decade. However, powers and functions of different departments, which were transferred to the DPCs, did not go to any tier of panchayats. These have gone back to the respective line departments. Devolution of functions: Immediately after the new Panchayat Act incorporating the constitutional provisions was passed in 1993, the state government of Madhya Pradesh held the elections and expressed the intention of making panchayats real centres of power. The Act did not contain any radical provisions on devolution of powers and functions. But the state government issued executive orders from time to time devolving powers and functions to the PRIs. The first executive order was issued in 1994 and it contained a long list indicating transfer of programmes/ schemes/305 functions for gram panchayats, 99 for janpad panchayats and 102 for zilla panchayats (Buch 2000 P 174). The functions included certain on-going programmes or activities and panchayats involvement was, in most cases, in the nature of supervision, control, promotion, cooperation, inspection etc. This means that the full responsibility for a function or a part of it or for a scheme or a programme was not given to the panchayats. This was retained by the respective line departments and panchayats were required to provide support in the forms of cooperation or promotion or supervision etc. This was not obviously any desirable form of devolution. The ineffectiveness of the order in assigning concrete functions to the panchayats became clear in the manner in which the issue of control over staff associated with the implementation of transferred subjects was addressed. The order introduced the concept of functional control of panchayats over the staff associated with the transferred schemes or programmes. It was clarified that such staff would remain as government staff under the control of their departmental heads. Panchayats were given some minor administrative powers over them. In 1996, the government thought that the 1994 order needed to be supplemented by further orders enhancing the powers of the panchayats. Accordingly another order was issued in that year under which full responsibility of programmes of 17 departments was transferred to the panchayats. But this order also followed the pattern of the previous order. Thus school management and rural health centres were transferred to panchayats. But the schools remained as government schools and the teachers remained as government teachers under the disciplinary control of their departmental superiors. The Department of Women and Child Welfare assigned to the Panchayats the task of supervision of the ICDS programmes and inspection of various centres for women and children. The Department of Health delegated the work of health and sub-health centres to the Janpad Panchayat on the condition that the JP can only inspect these institutions from time to time, and can issue instructions for their improvement, if necessary. In the case of rural development, panchayats were given minor responsibilities of beneficiary selection, selection of works or monitoring progress of work.

37

Evaluating the decentralization initiatives of Madhya Pradesh during the period 1995-2001, Behar and Kumar (2002) observe that the process has not generated the desired changes of devolving enough financial, administrative and political powers, roles and functions to the Panchayat institutions on the basis of which Panchayats can function as viable and effective institutions of self-governance. Frequently the functions devolved to the Panchayat institutions are limited to supervision and inspection of projects, identification of beneficiaries, and giving administrative approval. The responsibility of implementation of projects has been entrusted to the Panchayats by few departments, and this, too, is primarily confined to maintenance of projects A close examination of power and authority actually transferred to Panchayats shows that the steps taken so far are inadequate and superficial, and has done little to truly empower the Panchayats (P 17 - 18). In terms of devolution of powers and functions and resources to the panchayats, the period 199498 was most productive. The period 2000-05 was characterized by innovative experiments like gram swaraj and District Government. After the decline of these experiments, as noted earlier, no further initiative appears to have been taken for empowerment of PRIs. A recent survey (Buch and Jain 2010) draws a discouraging scenario of decentralization in Madhya Pradesh. Its major findings on devolution, among other things, are as follows. General findings of the study were, among other things, as follows. There was resistance to decentralisation due to historical background and organizational culture. Panchayati Raj was characterized by incomplete devolution, lack of clarity and subsequent withdrawal of powers and responsibilities once given to the panchayats. Panchayats are not involved in tackling major nation-wide problems, such as malnutrition. Often some kinds of decentralization measures are used as a smokescreen to continue the centralized governance systems. Thus the Presidents of Zilla Panchayats complain that even though they receive budgets from more than half-a-dozen departments for execution of development programmes, real powers are with the departmental officers. They also pointed out that they have the powers of supervision over some field-level staff of ICDS, Health, school education etc, but when complaints about their work are made, administrative powers to take action are exercised by the departmental officers. There is no explicit agenda of governance and despite exhortation for decentralization, as articulated from time to time, the tendency of the countrys entire governance system is towards centralization. The study referred to above examined the role of PRIs in delivering certain essential basic services. Its findings were as follows. School education: The budget is with the department. Decisions on opening of new schools and on choosing their locations are taken by a Committee headed by the collector. ZP has no role in it. The annual plan of Sarba Siksha Abhiyan (SSA) is prepared by the Project officer, SSA. School education programme funds do not come to PRIs. The education committees of ZP and JPs have only monitoring function. Public health: In public health, main programmes are conducted through NRHM, which is managed by the District Health Committee headed by the collector. The state budget for salary, medicine etc is controlled by the department and there is no role for PRIs in it. Even though there has been some kind decentralization in public health service delivery system, decision-making powers have not gone to the PRIs but to the committees at the district and Block levels. ICDS programme: Previously, the gram panchayat had a role in appointment of anganwadi workers. Now the government officers have full powers of making appointments. For the nutrition programmes, funds are with the department and the agency for supplying inputs is determined by a committee constituted by the government.
38

Drinking water supply: Previously, the GPs were involved in managing hand pump repairs through departmental mechanics. But this function has been taken back and given to the departmental officers. Public distribution system: PRIs have no role in PDS. It is managed by the civil supply department. There is a separate vigilance committee for keeping watch on and for supervision over the PDS. In sum it may be stated that responsibility of delivery of services in the essential sectors highly relevant for human development rests with the concerned line departments. Panchayats have practically no role in decision making, implementation or delivery. They function at best as development agencies supporting the higher level government who may utilize their service if and when felt necessary (Buch and Jain, 2010, P 6). Fiscal Devolution According to an estimate made by the second SFC of Madhya Pradesh, Fiscal decentralization in Madhya Pradesh had remained poor at a time when the state was claiming to have transferred lots of functions and responsibilities to the PRIs. The following indicators for the period between 1994- 95 and 1997-98 prove this (Second Madhya Pradesh SFC report, chapter V, table 3).
(i) Expenditure-decentralisation ratio which measures the percentage of local spending to total state government spending increased from 8.12 in 94-95 to 17.95 in 97-98. (ii) Revenue decentralisation ratio which measures the percentage of local government tax revenue to state government tax revenue declined from 4.39 in 1994-95 to 2.16 in 9798. (iii) The fiscal autonomy ratio which measures the percentage of locally raised revenue, both tax and non-tax, to total expenditure of local bodies declined from 26.7 in 1994-95 to 7.48 in 1997-98. The above figures represent combined figures of rural and urban local bodies. If the urban local bodies are taken out, the revenue decentralisation ratio and fiscal autonomy ratio would have looked more depressing. Yet, the above figures point towards a peculiar feature of Indian decentralisation. It may be noticed that expenditure decentralisation ratio had more than doubled in the four year period of !994-95 to 1997-98 (from 8.12 to 17.95), indicating that the state government had been transferring more and more functions to local bodies along with funds to a large extent. But this has not kept pace with fiscal decentralisation resulting in lowering of revenue decentralisation and fiscal autonomy ratio. Figures for laterv years are not readily available. We calculated fiscal autonomy ratio for PRIs from Oommen ( 2010, table 2), which stands at 1.12 as of 2007-08, which means that the same trend of dissociation between functional and fiscal decentralisation is continuing. Concluding remarks While concluding it would be apt to quote what the second SFC of MP had stated in their report submitted in the year 2003. There seems to be lack of clarity about the tasks entrusted to different tiers of the PRI system There has to be a clear-cut demarcation between the functions along with functionaries and finances of different tiers of PRI. In the absence of any obligatory functions of JPs and ZPs, both are functioning as agents of the state and central governments in performing certain functions. The planning function assigned to PRIs under the Constitution is not being performed in the manner in which envisaged in the Constitution In the light of experience gained so far, it would be appropriate to evolve three lists of subjects, one entirely for the state, second for PRIs (local list) and the third a concurrent list for the state and the PRIs. The local list may be categorized as the Zilla
39

panchayat list, the Janapad list and GP list, keeping in view their capacity to undertake particular functions The question of restructuring finances of PRIs can be addressed only when this exercise is done. The devolution of functionaries with functions implies the closing down of line departments of the State Govt. and transfer of staff to the PRIs. In the absence of such an effective devolution of functionaries, the present dyarchy operating at the ground level is detrimental to good governance and effective self-government. (Chapter VII, Section 2)

References Buch Nirmala, 2000, Chapter on Madhya Pradesh in George Mathew ed. Status of Panchayats in the states and Union Territories of India, Institute of Social Sciences and Concept Publishing House, New Delhi Buch Nirmala and Uday Jain, 2010, Decentralisation through Panchayati Raj: Impact in Good Governance in Madhya Pradesh, Mahila Chetna Manch, Bhopal. IRMA, SoPR 2008 and 2010 Report of the Second State Finance Commission

Rajasthan
40

A. Background of Decentralisation and Local Governance

Introduction Rajasthan has a long history of panchayats. Record shows that panchayats existed in the state even during 750 A. D. 1000 A. D. though at that time, panchayats were constituted for specific period. In the pre independence period, some of the princely states of Rajasthan enacted Legislation on panchayats. Even in 1928, Bikaner had its own Gram Panchayat Act (Government of Rajasthan, 2008). Post Independence Period The first step towards organization of panchayats in the state took place in 1948 with the promulgation of Panchayati Raj Ordinance. But the PR system was established on a sound basis through the Rajasthan Gram Panchayat Act, 1953 and the Rajasthan Panchayat Samiti and Zilla Parishad Act, 1959. Rajasthan is the first state to introduce panchayati raj in accordance with the recommendations of the Balwantray Mehta Study Team. The scheme of democratic decentralization was inaugurated by Shri Jawaharlal Nehru on October 2, 1959 at Nagaur. It pioneered the adoption of a three tier PR system with gram panchayats (GP), panchayat samitis (PS) and zilla parishads (ZP) functioning as parts of an interlocked institutional structure. ZP mainly functioned as an advisory body while PS had the functional powers and executive authority. There were provisions for co- option of two women and two members of SC/ ST at each level if members of these categories were not represented in the institutions through election or ex- officio membership. The GPs had jurisdiction over a village or group of villages. In 1953, the state had 3929 GPs. The number increased to 7396 at the end of 1960s and slightly decreased to 7353 in 1990. The specific functions of a GP as mentioned in 1953 Act were, (1) sanitation and health, (2) public works, (3) education and culture, 4) self defence, (5) welfare of people, (6) agriculture and preservation of forest, (7) breeding and protection of cattle, and (8) village agencies. The 1959 Act also authorised GPs to act as the executing agencies for PS schemes. The main sources of GP income were grants, taxes, financial assistance from PS and government and non tax revenues. In the 1953 Act, Gram Sabha did not find any statutory status but the 1959 amendment provided for a meeting of all adult residents of gram panchayat which subsequently became an instrument for identifying the poorest of the poor for the Antodaya Scheme evolved in Rajasthan in 1977 78. The PSs in Rajasthan consisted of, apart from the elected members, sarpanches of all the GPs under it as ex- officio members, all MLAs as ex officio associate members. There were also provisions for co- opted members. The chairperson and Vice Chairperson of the PS were to be elected indirectly. The Block Development Officer was the chief executive officer of the PS. The functions of the PS as per the 1959 Act were related to communication, cooperation, cottage industries, relief, forests, work among backward classes and rural housing. PSs were authorized to levy taxes on rent of agricultural land and on trades, surcharge on stamp duty, fees on fairs and festivals etc. Apart from the elected members, the ZPs had the provision for having ex officio members (chairpersons of PSs), ex officio associate members (MLAs and MPs and president of district level central co- operative bank) and co - opted members from women,
41

SCs and STs. The collector was the ex officio but non voting members. He was designated separately as District Development Officer (DDO) for the district and had a controlling power over the PR bodies of the district. The Deputy DDO was made the secretary of the ZP and he assisted the Collector in development work. The ZPs were entirely an advisory body with no executive authority. The 1959 Act fixed a three year term for PR bodies which was increased to five years in 1969 and again reduced to three years in 1982. In Rajasthan, elections to three-tier panchayats were conducted in 1960 61, 1964 65, 1978, 1981 82 and 1988 and prior to 1959 Act, elections to GPs were held in 1954 and 1957. During the formulation of third and fourth five year plans, the government of Rajasthan made serious attempts to involve PR bodies in planning from below but it did not succeed. In the subsequent district planning endeavours, PR bodies were not much involved. Even the district planning was attempted to be kept techno administrative in nature and the PR bodies were treated as implementing agencies. The GPs were considered convenient agents for carrying out small food for work or other famine works. The only exception was that PSs continued to be involved in primary education. In the 1980s, middle school education was transferred to them though ZPs were given some responsibilities. Post 73rd Amendment Period The Rajasthan Panchayati Raj Act was passed in 1994 in conformity with the 73rd Constitutional Amendment. Apart from incorporating the mandatory provisions of 73rd amendment, the Act provides for few other things like procedure of gram sabha, reservation for OBCs etc. For conducting fair election, the Rajasthan Panchayati Raj (Election) Rules were framed in 1994 and after two years the Rajasthan Panchayati Raj Rules were set up for smooth functioning of PRIs. In 1999, the Rajasthan PESA Act was enacted. Gram Sabha The 1994 Act provides for a gram sabha at the GP level. At least two meetings of gram sabha are to be held in a year with a quorum of one tenth of all adult members. The PSs are entrusted to monitor the gram sabha meetings. Though the gram sabhas are empowered to discuss the activities of panchayats and development programmes to be taken, the panchayats are not bound to follow the decisions of gram sabha. District Planning Committee The Rajasthan Panchayati Raj Act 1994 has provided for setting up of district planning committees with the chairpersonship of the zilla parishad chairpersons called zilla pramukhs. The main functions of the DPC are to consolidate the annual plans of the PSs and urban local bodies and to forward the draft district plan to the state government. Section 121 of the Rajasthan Panchayati Raj Act 1994 and Rules 350 to 352 of the Rajasthan Panchayati Raj Rules 1996 deal with the constitution and functions of DPCs. To strengthen the DPCs, the State Planning Board has been revived with the Chief Minister as the Chairperson. Eminent experts from the various fields have been inducted as the members of the Board. State Election Commission After the 73rd Constitutional Amendment, a separate State Election Commission has been set up to conduct time bound elections every five years, for PRIs and ULBs. So far, four PRI elections have been conducted in 1995, 2000, 2005 and 2010. GP sarpanch and the members of GP, PS and ZP are directly elected while the PS and ZP chairpersons are
42

indirectly elected by the members of PS and ZP respectively. The state government has taken a controversial policy of two child norm as the qualification of the panchayat members. Direct elections have not only increased the number of elected representatives but have also changed the nature of organic linkages between the three tiers of PR bodies that existed prior to the 73rd amendment. It has also given a wider democratic base and legitimacy to the system. State Finance Commission The Government of Rajasthan had established the First State Finance Commission (SFC) in April 1994 which submitted report in 1995 for the period 1995 2000. The Second SFC was set up in May 1999 and it gave its report in August 2001. The third SFC was set up in September 2005. It submitted report on February 2006. Panchayats in Fifth Schedule Areas The provisions of 1994 Act were also extended to the scheduled areas but with the passing of PESA Act, 1996, there was a need to bring the said act in conformity with the PESA Act. The state has amended its existing laws through the Rajasthan PR (Modification of Provisions in their Application to Scheduled Areas) Ordinance 1999. The powers of panchayats and specially the gram sabhas also increased after the amendment. Some changes have taken place in the recent years. The Chief Minister, in his budget speech for the year 2011 12, has announced state governments commitment to comply with all legislations related to PESA and also to formulate detailed rules for effective implementation of PESA Act. There are five ZPs and 23 PSs under the PESA region and it has been specially mentioned by the Chief Minister to transfer the sale-income from minor forest produce to the panchayats of PESA region. Table 1 Basic Statistics of PRIs in Rajasthan, 2010 Name of No. of No. of SC Institution institutions representati ve Zilla Parishads Janpad Panchayats Gram Panchayats 33 248 9177 9458 1013 5273 1,12,229 118515 179 929 17957 19065

Level

ST

OBC

Women

District Block Village Total

163 827 13467 14457

158 790 23568 24516

522 2741 57237 60500

Source: ISS, New Delhi

Part B Assessment of Status of Devolution

Introduction
43

Articles 243 G and I of the Constitution deal with the substantive issues of power, authority and responsibilities of the panchayats and also their sources of finance. The very concept of self governance or decentralization of power acquires meaning when PR bodies exercise power in a democratic way. The conformity Act of Rajasthan came into effect on April 23, 1994 and underwent amendments in 1999, 2000, 2004. How much devolutions to the PRIs has taken place in the state in terms of functions, functionaries and fund will be discussed in the following sections: 1. Devolution of Functions By the Act of 1994, all the 29 subjects listed in the 11th schedule of the Constitution have been devolved to panchayats, but an analysis in 2008 mentioned that out of 29 subjects, certain powers and responsibilities in respect of 22 subjects have been devolved to ZPs, in 25 subjects to PSs and in 27 subjects to GPs through the Act. The subjects in which no activities have been devolved to PRIs are the following: a. Gram Panchayat SSI and food processing, Technical Training and Vocational Education b. Panchayat Samiti Minor Forest Produce, Public Distribution System, SSI and Food Processing, Rural Electrification c. Zilla Parishad Minor Forest Produce (MFP), Technical Training and Vocational Education, SSI and food processing, Fuel and Fodder, Non conventional Energy Sources, Libraries, Maintenance of Community Assets. Earlier, MFP was not devolved to any level of panchayats but after the enactment of PESA Act, 1996 an amendment was made in 1999 providing for the devolution of the matter of MFP in Scheduled areas to GPs and gram sabhas. According to the amendment, income from sale of tendu leaves, after deducting administrative expenses shall be transferred to respective panchayats through the concerned ZPs (ISS, 2012). Activity mapping for the transfer of functions have been completed (IRMA, 2008). As per the government order dated 19. 06. 2003, issued by the Chief Secretary based on a report of Cabinet Sub committee, functions of 18 departments with functionaries and funds of 16 departments were transferred to the PRI. (Government of Rajasthan, 2007). Of them, primary education was completely devolved to the panchayats. Some other subjects or different activities under the same subject were transferred to different tiers of PRI. For example, construction of Hat was transferred to GP while watershed development programme was transferred to ZP. Fisheries and irrigation tanks were allotted to GP, PS and ZP on the basis of their size. DRDA was merged with ZP after the issuance of order (Government of Rajasthan, 2007). However, the 3rd SFC (2008) found that the above facts, even though presented by the state government, were incorrect. The report shows that the budget head provisions of different departments for each tier of PRIs were so small that the state government could not involve the PRIs in the basic activities of the 18 mentioned departments. In recent times (2009), initiative towards the devolution of powers to PRIs has been taken to celebrate the Golden Jubilee Celebration of Panchayati Raj in the state. An order dated 2nd October, 2010 spoke about the complete devolution of five departments, namely, elementary Education, Medical and Health, Agriculture, Social Justice and Empowerment and Women and Child Development in the first phase. Standing Committees : Six standing committees at each tier of panchayats have been constituted but they were virtually dysfunctional. For effective functioning of the
44

committees, the state government by an order dated 14th March 2011 has fixed dates/days for convening meetings of standing committees on a regular basis. The state government has issued another order for functioning of village secretariats at the GP level and fixed dates for grievance redressal meetings. Involvement of PRIs in Planning: It has already been observed that governments effort to involve PRI in planning from below during 3rd and 4th Five Year Plans did not succeed. After the formation of DPCs, the state has adopted a three step process for preparing annual and five year plans of the district. Despite such efforts, the main responsibility of planning still lies with the district level officers. This is mainly because of absence of detailed rules of functioning of DPCs (IRMA, 2008). 2. Devolution of Functionaries Along with functions, the government order of 2003 also mentions about the transfer and control of functionaries to panchayats. Both general category and technical category staff have been devolved to panchayats. The disciplinary authority of these staff is PRI which is empowered to impose minor penalties of three types written warning, recovery of pecuniary loss and stoppage of two annual increments. In most cases, panchayat heads do not exercise their powers. Either they are not aware of their power, or they do not want to take disciplinary actions on functionaries (IRMA, 2008). The state governments effort for devolution of powers to panchayats did not sustain for long. In 2003, the power to transfer teachers devolved upon panchayats was withdrawn and given back to the Education Department. In the next year, devolution of three more departments, namely, Food and Supplies, PWD and PHHD was withdrawn. In the meantime, the state government appointed a cabinet sub committee to review devolution of functions and Activity Mapping was redrafted according to the recommendation of this committee. The committee submitted its report in 2005 but it has not been brought to public (IRMA, 2008). Rajasthan has been facing the shortage of secretary at GP level for a long time. The First SFC also recommended for at least one Secretary for each GP but this has not been implemented properly in practice by the state government. After the 2nd SFCs recommendation on similar lines, all the GPs of the state have received a Secretary but in some cases, the staff posted, do not know anything about the functioning of GP. As a result, in many places the working of GP has been suffering very much. (Rajasthan 3rd SFC, 2008). In recent years, some initiatives have been taken for equipping GPs with adequate staff. The state government issued an order to expedite filling up all vacancies of functionaries under the transferred departments and creation of additional posts of Panchayat Development Officers and other technical staff at the GP level. To meet the local need, creation of ministerial staff, extension staff, computer staff etc. is also mandated at the ZP and block levels. Earlier, the supervisory authority of the devolved staff was the concerned line departments (IRMA, 2008). By an order issued on 2nd October, 2010, day to day supervisory control of staff along with their transfer within districts or blocks as well as imposition of minor penalties, annual performance appraisal etc. have been vested in the PRIs whereas the other powers such as appointments, service conditions, promotions, inter district transfer, major penalties etc. would remain under the ambit of the line departments. The state government has also directed the line departments not to undertake implementation of the transferred activities at the departmental level and also not to issue any direction or order to the transferred functionaries directly.
45

3. Devolution of Finance One of the reasons of poor functioning of PRIs in Rajasthan is the lack of fund. Most of the panchayats in Rajasthan suffer from resource crunch and are completely dependent on the state assistance. Like other states, in Rajasthan also the three main sources of income of PRIs are (i) own income from taxes, (ii) non tax revenue and (iii) transfer from higher sources. PRIs also perform the agency functions for implementing different rural development programmes for which they receive funds from central and state governments. In 2003 2004, the total amount of own income of PRIs in Rajasthan was only Rs. 15.85 crore which increased to Rs. 17.07 crore in the next year (IRMA, 2008). The 3 rd SFC report shows that between 1999 2000 and 2004 2005, the share of own income to total income of both ZPs and PSs ranged from less than one percent to 2 percent. Out of 9177 GPs in the state, the Commission could collect information of only 1198 GPs. On the basis of this, the commission calculated that share of own income to the total income of GPs was not even 0.1 %. The transfer of fund is the main source of income of PRIs. The transfer to ZP and PS is done through treasuries while to the GP level, fund is transferred through banks For creation of panchayat window, the budget head of Panchayati Raj Department has been coupled with sub head of ZP and PS. In Rajasthan with the consent of Finance Department, fund is being transferred in PD/bank account of the concerned panchayats. The provision of panchayat window has not been properly utilized and a large amount of fund is still going to the line departments (IRMA, 2008). SFC and UFC Fund The 1st SFC recommended devolution of 2.18 % of total state taxes to local bodies in a ratio of 3.4 : 1 to the PRIs and ULBs. The annual average devolution to the PRIs was Rs. 61.12 crore only which was very insignificant to PRIs to perform their functions (ISS, 2000). The 2nd SFc recommended transfer of 2.25 % of the total state tax , 15 % of the entertainment tax and 1 % of the net royalty to the PRIs and ULBs on the ratio of 76.6: 23.4 based on the proportion of rural urban population according to Census 2001. Out of 2.25 %, 2,20 % should be devolved for providing basic amenities whereas 0.05 % as incentive money for raising resources from untapped sources. The 3rd SFC reported that transfers to PRIs had been made according to the recommendations of the last AFC. The 3rd SFC recommended increase of the local bodys share of state tax to 3.50 %, apart from 100 % entertainment tax for ULBs and one percent share in royalty receipts from mineral for GPs. The overall amount to be made available to PRIs was to be of the order of Rs. 1674.04 crore. The commission recommended transfer of the amount totally as untied grant. The recommendation has been accepted by the state government, but it has put some conditions, which to some extent dilutes the concept of untied fund. (IRMA, 2008). The 4th SFC has been constituted by the state government in April 2011. A provision of Rs. 411.60 crore for 2010 2011 and Rs. 450 crore for 2011 2012 was earmarked by the state government to be released to PRIs, upon the recommendations of 4th SFC.

Table 2 Financial Devolution to PRIs in Rajasthan Commission Amount (Rs. in crore) st 1 SFC 306.6 2nd SFC 594.61 3rd SFC 1674.04 EFC 490.95
46

TFC
Source: Report of 3rd SFC, Rajasthan

1230.00

The EFC had recommended a grant of Rs. 490.95 crore for PRIs and the entire amount was released by the state government. These funds were utilized for maintenance of rural infrastructure. Rs. 1884.20 lakh was provided for maintenance of accounts of PRIs and Rs. 754.08 lakh were kept for creation of data base. The TFC had recommended Rs. 1230 to be transferred to PRIs for strengthening drinking water and sanitation facilities in rural areas as well as creation of database and maintenance of accounts. An annual provision of Rs. 246 crore was kept under it. The amount of fund transferred against this provision during the first three years of TFC period is shown in Table 3. The 13th FCs recommendations on sharing of central divisible pool by the local bodies also would yield for Rajasthans PRIs a sum of Rs. 3938.7 crore in five years. Table 3 Fund Transferred to PRI against TFC Provision Year Provision Amount (RS. in Transferred Amount (Rs. in crore) crore) 2005 06 246 246 2006 07 246 223 2007 08 246 123
Source: ISS, 2012

Recent Initiatives It has already been mentioned that Rajasthan Government took some initiatives towards the devolution of powers to PRIs in 2009. In the budget speech of the Chief Minister for 20112012, fiscal devolution in favour of PRIs was further noticed. Since that year, the fund flow of five departments, where devolutions of functions and functionaries was completed, is shown under the budget of PRIs to enable them to discharge the transferred functions. For PESA region, announcement has also been made to transfer the income from the sale of minor forest produce to Panchayats. The state has also announced incentive based award grant for encouraging the PRIs to mobilize resources from own sources. Surcharges on stamp duties will also be transferred to the PRIs and ULBs and for that Rajasthan Stamp Act will be amended (ISS, 2012). 4. Framework Since 2008 09, evaluation of states under PEAIS has been based on a two stage assessment and the same was followed in 2010 2011. The first stage, called the framework criteria, is based on the following fundamental constitutional requirements: 1. Establishment of State Election Commission. 2. Holding of elections to the PRIs. 3. Setting up State Finance Commission. 4. Constitution of the District Planning Committees (DPCs). States fulfilling each of the 4 fundamental requirementbecome qualified for evaluation in terms of various indicators of the Devolution Index (DI). The State of Rajasthan has fulfilled all the 4 requirements. 1. The State Election commission has been constituted after the 73rd CA came into force in the state. 2. Elections to the PRIs are held on regular interval. After the amendment, the first election was held in 1994, the second was held in 2000, the third in 2005 and the fourth election was held in January - February 2010.
47

3. The State Finance Commissions have also been set up. Till now 4 SFCs have been constituted. The 4th SFC was constituted in April 2011. 4. DPCs in all the districts have been constituted with Chairperson of ZP as the Chairman and made operational. In three districts, namely, Karauli, Tonk and Jhunujhunu, DPCs are more regular in conducting meetings for discussions on district plan and untied fund. According to the cumulative DI value, the rank of Rajasthan in terms of devolution index was 5 in 2010 2011, while it was first ranking state in terms of the incremental performance

Part C Conclusion
Although Rajasthan is the first state to introduce Panchayati Raj in the country in 1959, not much development took place during the pre 73rd amendment period. During the post amendment period, legislative supports have been provided in compliance with the constitutional provisions but devolution to the PRIs did not take place properly to make the panchayts as local self governments. The state has also faced resistance from various quarters against devolution. The officials are not ready to adjust to the new system underv which they have to report to the elected representative. The deeply entrenched caste system of the state is also to some extent responsible for such situation. In recent years, some significant initiatives have been taken by the state government in the direction of devolution of powers to the PRIs. As a result, the state has also performed well in 2010 2011 in terms of development Index, prepared by the Ministry of Panchayati Raj, Government of India. It is expected to perform better for effective devolution in coming times.

Maharashtra
Background and Milestones in Policy Like many other parts of India, the area now under the state of Maharashtra, had some form of traditional panchayats prior to the arrival of the British. The establishment of British rule and improvement of communications disrupted this traditional set up but new efforts were made under Crowns rule to establish a local self-government system. The first such attempt was the Bombay Local Fund Act of 1869. Under this Act local fund committees were formed but were not democratic in nature as the officials were nominated. After the Ripon Resolution of 1882, a Local Board Act was passed in 1884, which created district and Taluka local boards. The Bombay Village Panchayat Act of 48

1920 for the first time created the statutory village panchayats as wholly elected bodies although voting rights at this stage was restricted to adult male members only. In 1923 an amendment to the Local Board Act created the provision for direct election of the members of the district local boards. The Government of India Act of 1935 gave significant amount of powers to the provincial legislatures. Following this the Bombay Act XXIII was passed in 1938. Nominated members were replaced by elected members, seats were reserved for Scheduled Castes and non-Muslim minorities and the Taluka local boards were abolished. After independence and re-organisation of the states in 1956 the Bombay Village Panchayats Act was passed in 1958.This Act defined the duties, responsibilities and powers of the village panchayats. After the state of Maharashtra was formed in May 1960, Government of Maharashtra set up a Committee directly under the Chairmanship of the then Chief Minister, Shri V.P. Naik for strengthening of the panchayats. Based on the recommendations of the committee the state enacted the Maharashtra Zilla Parishads and Panchayat Samitis Act in 1961. This Act created the Panchayat Samitis and Zilla Parishads of the state. After the 73rd amendment, the Acts of 1958 and 1961 was revised through the Act No. XXI of 1994. As per the provision of the 73rd amendment, the Act reserved seats for women, scheduled tribes and scheduled castes. The State Election Commission and the State Finance Commission were also formed. The Maharashtra District Planning Committee (Constitutions and Functions) Act of 1998 created the District Planning Committees. After the Indian Parliament passed the Provisions of the Panchayats (Extension to the Scheduled Areas) Act 1996, Maharashtra also passed the Maharashtra Zilla Parishads and Panchayat Samitis (Extension to the Scheduled Areas and Amendments) Act, 1997 to bring the state law in conformity with the Constitutional provisions. In 2003 the GP Act was modified to create provisions for six gram sabhas in a year. In 2005 the Gram Sabhas were given powers to conduct social audit of the GPs.

Status of Devolution Activity Mapping The Bombay Village Panchayats Act, 1958 devolved 79 items under the heads of Agriculture, Animal Husbandry, Social Welfare, Education, Medical and Public Health, Building and Communication, Irrigation, Industries and Cottage Industries, Cooperation, Self Defense, Village Defense and General Administration. Land improvement and land consolidation was also assigned to the Village Panchayats under the Act of 1958. Opening of fair price shops was assigned to village panchayats under General Administration. Preparation of plans for the development of the village and drawing up of programmes for increasing the output of agriculture and non-agricultural produce in the village was assigned to Village Panchayats under General Administration in accordance with the Act of 1958. Zilla Parishad and Panchayat Samiti were assigned different subjects of activities under section 100 of Maharashtra Zilla Parishads and Panchayat Samities Act 1961. 129 subjects were assigned to Zilla Parishads whereas Panchayat Samities were made responsible for 75 subjects. Since Activity Mapping was carried out in Maharashtra under the Bombay Village Panchayat act of 1958 and the Maharashtra Zilla Parishad and Panchayat Samiti Act of 1961, no separate activity mapping was carried out post 73rd amendment of the Constitution of India. Functions: Schedule I of the Maharashtra Zilla Parishad and Panchayat Samiti Act enlists the functions which stand transferred to ZPs. Similarly, Schedule II provides for functions to be
49

performed by the Panchayat Samiti. Likewise, there is a separate schedule in GP Act enumerating the functions to be performed by GPs. These are legally known as Transferred Functions. The State Government is duty bound to transfer all the funds and functionaries for the activities mentioned in these schedules. However, there is a overriding provision in both the statutes under which a function once transferred to ZP or GP can revert back to the State, if deemed expedient by the Government. But, whenever functions once transferred are to be reverted back, it is necessary to seek the permission of the State Legislature. For transferring additional functions and including them in the schedules under ZP and GP, there is no need for the approval of the State Legislature. Apart from the transferred functions vested in ZPs and GPs there is also a provision under both the statutes that the schemes and programmes which are exclusively with the state Government can also be entrusted to ZPs and GPs on Agency Basis for which the requisite funds are transferred to ZPs / GPs by the State Government and the government staff required for the implementation is sent on deputation to ZPs. Similarly, there is a provision in GP and ZP Act that any function transferred to ZP can be further transferred by ZP to GP to be implemented on Agency Basis. The list of functions mentioned in schedules appended to GP and ZP Acts cover most of the subjects mentioned in the 11 th Schedule of the Constitution. However, it needs to be mentioned that some of functions under particular subject are permitted to be implemented by both, ZPs and State Government departments, which creates lot of duplication and confusion. For example according to schedule of the transferred subjects, all the inter-village connecting roads, Other District Roads and Main District Roads stands transferred to ZP and the funds required for construction and maintenance are required to be provided to ZPs by the State. However, by exercising powers vested in State Government to revert any transferred subject back to the State Government, the Government recently passed an order entrusting Main District Roads to the State Public Works Department. This conflict is creating certain administrative difficulties and political turmoil in some districts. The echo of this conflict is also heard in the District Planning Councils which were constituted in the State in 2008. The DPC, as per law, is an elected body which provides for representation of the urban local bodies and PRIs in proportion to the urban and rural population of the district. The rural representatives of the DPCs are elected by and from amongst the elected members of the ZP / PS whereas the urban representatives are elected by the member of urban local bodies in the district. This is in compliance of the Constitutional provisions regarding the constitution of the DPC. However, the chairperson of the DPC is the Guardian Minister of the District appointed by the State Government and all MLAs and MPs from the district are invitees in DPCs. It has been noticed that the arrangement practically vests decision making in invitees and guardian minister than the elected representatives of the urban and rural local bodies. There is certain overlap in functions entrusted to ZPs, PSs and GPs. Most of the developmental works within the GP area like internal roads, drainage etc. have been entrusted to GPs. However, the ZP and PS members desire to have say in the activities exclusively within the domain of GPs. Functionaries: All the powers of recruitment, appointment, transfer, disciplinary action, including removal from services of Grade C and Grade D employees working in 33 Zilla Parishads are exclusively vested in Zilla Parishads. These employees are the employees of Zilla Parishads recruited under two District Services, viz. District General Services and District Technical Services. There are as many as 57 different cadres ranging from Engineering, Health, Education, Social Justice, Minor Irrigation, Water Supply, Sanitation, General Administration, Agriculture, Animal Husbandry, Dairy, Women and Child Welfare etc. under which these employees are recruited. In addition to this, there are around 300 thousand
50

honorary and part time employees engaged by the ZPs viz. Anganwadi Sevikas, Anganwadi Assistants, Village Health Workers etc. The total annual salary bill of all these employees is around INR 85 billion, which is fully reimbursed by the State Government to Zilla Parishads as a grant. However, complete autonomy is given to the ZPs to engage their staff as stated above. Only the cadre strength of employees is approved by the State Government and further process is solely within the domain of ZPs. There are around 9500 Grade A and B officers drawn from the administrative departments of the State Government, who are sent on deputation as Head of the Department and to occupy other senior positions in the respective ZPs fourteen departments. The Chief Executive Officer of Zilla Parishad is an officer appointed from Indian Administrative Service (IAS) who is responsible for execution of the decisions taken by the elected representatives who function through the Subject Committees, Standing Committee and the General Body. The president of Zilla Parishad is conferred a status of Deputy Minister who is elected from the elected councilors of ZP. There is also a quota allocated for Grade C employees of ZPs who get promoted to Grade A and B cadres of the respective 14 administrative departments of the State. Similarly, there is a provision in Gram Panchayat Act that the 10 per cent of the employees engaged by the GPs to get absorbed in C and D cadres of ZPs if they otherwise qualify. However, the Secretary of a GP is posted from the cadre maintained by ZPs. There is now a strong demand by the Zilla Panchayats (ZP) to allow them to recruit even Grade A and B cadre officers also, on the lines of Urban Local Bodies where all the officers and employees are employed by the ULBs excepting the Municipal Commissioner / Municipal Chief Officer who is sent on deputation by the State Government. Similarly, there is a demand by the GPs that the Secretary of the Panchayat should also be allowed to be recruited and engaged by them instead of s/he being sent on deputation by the ZPs. However, the Government has not considered this demand as yet because it is still felt necessary to maintain an impartial administrative interface to check consequences of a highly politicized PRIs which many times tend to breed partisan atmosphere and succumb to populism. The Gram Panchayats also have powers to recruit their own staff excepting the Secretary who is sent on deputation by ZP and whose emoluments are paid to ZP by the State Government. There are 27920 Gram Panchayats in the State as on date which have engaged around 100 thousand employees. The GPs have to pay their salaries from their own resources. However, recently the State Government has introduced a scheme under which 50 per cent of the basic salary is reimbursed to GPs to strengthen their administrative set up. There is a provision in the ZP Act under which the General Body of ZP may summon any officer of the State Government stationed in District including Collector for discussions on vital district issue and to give advice. Similarly all the Government, semi-Government & PRI functionaries working within the GP areas including Talathi (Revenue Officer), Forests Guard, Teacher, Health Worker have to invariably attend Gram Sabhas and also participate in meetings of the GPs whenever so required. If any one of them fails to attend, the GP may report it to the controlling officer of the concerned Government Servant who is duty bound to take action against such employee if he is unable to explain his absence. Action can also be taken against the controlling officer by his next superior officer if he fails to act on complaint in time. However, there is a strong demand by GPs that the functions which are presently performed at village level by the Government servants of various state departments should also be transferred to GPs though the functions are not enumerated in the list of 29 subjects under the 11th Schedule of the Constitution of India. Funds: (a) Own Source Revenue:
51

Various taxes mandated to be levied by GPs are property tax, betterment charges on the land benefited from the schemes implemented by the Gram Panchayats, pilgrim taxes, tax on fairs, festivals, shopkeepers and hoteliers, general sanitary cess, lighting tax, general water charges, fees on grazing of cattle, registration fees etc. Zilla Parishad can levy cess on land which may vary upto Rs.7 for each rupee of land revenue levied by the Government, ZP also levy 1 per cent stamp duty on all the transactions taking place in the area of ZP, irrigation cess upto 20 paise on each rupee of water rate levied by the State Govt. The Zilla Parishad also levy cess on minor minerals. The total own income through taxation and cess by ZPs is around INR 6 billion per annum whereas levy of taxes and user charges by GPs in the State is in the range of INR 14 billion. The per capita tax levied by ZP and GP together in the rural area is in the range of INR 205 which is a highest levy in rural areas by PRIs in India. Zilla Parishads, PSs, & GPs are empowered to prepare and implement their own schemes and programmes for the subjects allocated to them. However, ZP /PS has to seek the approval of their General Body where as GPs have to get the approval of Gram Sabha before incurring expenditure on the schemes. (b) Government Financial Support: The State support to ZPs and GPs is mostly by way of tied grants for recurring and nonrecurring cost of the programmes and schemes transferred to PRIs. The programmes cover range of activities from creation of physical infrastructure, health, education, nutrition, water supply, sanitation, social welfare, maintenance of assets, construction of office building, residential quarters etc. Also to encourage PRIs to mobilize resources by way of levy of taxes, cess and user charges, equalization grants in proportion to the recovery of these charges is given by the State Government. The State Government also allocates a fixed percentage of the taxes presently imposed by the State but which were levied in the past of the PRIs. e.g. vehicle tax and employment tax. These taxes are levied and collected by the State but a proportionate share is allocated every year to ZPs and GPs. Untied Grants: In the recent past, the PRIs are given untied grants for development of programmes under various schemes of the Government of India and also by the State Government. Under the award of 13th Finance Commission, Maharashtra State will be receiving around IR 55 billion over a period of five years. Government of India for the first time has not spelt out the specific activities for which the amount should be spent and it is left to the PRIs to decide development programmes of their local needs. Similarly the money received under Backward Region Grant Funds (BRGF), (twelve districts in Maharashtra are covered under this programme), the GPs are supposed to spend untied grants for various schemes and programmes conceived by them with community participation through Gram Sabhas.

Development Grants for local initiatives: (i) The State Government has also declared development programmes for providing untied grants to performing GPs. Under Eco-Balanced Village Development Campaign, the State Government provides financial support to those GPs who comply certain conditions like, plantation and nurturing of trees equal to the population of the village, eradication of open defection practice, recovery of taxes to the extent of 80 per cent, a complete ban on use of plastic, switching over to non conservative energy sources, solid waste and liquid waste management etc. The money is given every year ranging from IR200 thousand to 1.5 million to all GPs complying with the conditions, depending upon the population of a GP and it may utilize the funds received for development activities chosen by the Gram Sabha.

52

(ii) Similarly, under Yashwant Gram Samruddhi Yojana, villages which are ready to share at least 15 per cent capital cost from their own resources for development works chosen by them, are provided 85 per cent grant by the State Government. If State budget allocation for the year fall short of the demand by the GPs, the percentage of capital cost sharing by the GPs is enhanced beyond 15 per cent and the villages who contribute maximum own share towards capital cost are awarded the State share. Around INR 2 billion are allocated every year under State budget for this programme.

Ranking as per the Devolution Index of MoPR

In the Devolution Index of MoPR for the year 2011, Maharashtra has been ranked in the fifth spot. The score for Functions is 64.67, for Finance it is 49.97 and for Functionaries it is 52.83. The overall score is 53.58.

CHAPTER IV

The State of Devolution

I An Overview of Devolution in Nine States
We are conducting the present study after nearly two decades of the enactment of the 73 rd constitutional amendment. Yet the case studies on the state of devolution and on the status of panchayats as autonomous local governments in nine selected states as presented in the preceding chapter fail to provide an encouraging scenario of decentralisation of the governance
53

system. Clearly the hope that the constitution amendments generated now turns out to be an illusion. All the states under study have fulfilled the mandatory requirements of the Constitution. Except Jharkhand, all the states have also fulfilled the framework criteria, namely, constitution of SEC, holding of election, setting up SFC and DPCs, thus creating appropriate environment for strengthening local governments. After a long delay of about 10 tears, Jharkhand held the elections only in 2010. It has not yet constituted DPCs. The SFC has been constituted, but it has not yet given report. The other 8 states have done everything required of them constitutionally, but they tend to drag their feet when the question of empowering the PRIs through devolution is required to be considered. The states of Rajasthan, Maharashtra and Madhya Pradesh have at some points of time shown great enthusiasm for decentralisation through the empowered panchayat system at the local level, but it could not be sustained and decentralisation measures could not be institutionalised. The existing pattern of devolution as revealed from the case studies may be summarised as follows. General pattern of devolution: The fountain head of devolution of functions is of course the state-specific statutes on Panchayats. If one goes by the statute, one will be struck by the generous manner in which functions have been devolved to all the tiers of panchayats. In some cases they include all the 29 functions of the 11th schedule. A detailed study of the Panchayat Acts of 16 major states, including 6 of our study states, namely Assam, Bihar, Jharkhand, Orissa, Madhya Pradesh and Rajasthan, show that on an average all the states devolved 78% of the 29 11 th schedule functions to the gram panchayat alone (IRMA, 2010, P 268). If one leaves certain functions unsuitable for gram panchayat, such as rural electrification, technical and vocational training or small scale industry, devolution to gram panchayat shoots up to more than 85% of the 11th schedule functions. Devolution to the Intermediate and district Panchayats also have been similarly generous. But a little look at this pattern of devolution will show that this is in reality an illusion. Permissive functional domain: Most states have shown the lack of political will to decentralize. The post-amendment panchayats are functioning, like before, within the framework of what may be called permissive functional domain. That is to say, no exclusive functional area is carved out for the panchayats by withdrawing certain specific activities being performed in different sectors by the state government and transferring them to these bodies. The functional domain of the state government remains in tact. Panchayats are merely permitted to work, as it were, in certain parts of this domain. For all the so-called developmental functions assigned to the different tiers of panchayat, there are specific line departments of state government or parastatal bodies like DRDA. They handle these functions. They have access to necessary resources as also staff for the discharge of the functions. Mere statutory or executive authority to undertake functions which are being performed by the state government is no guarantee that those would, indeed, be taken up by the PRIs, unless they have adequate funds and personnel to discharge them. These resources are not made available to them. Hence the impressive lists of various functions, including in some cases all the 11th schedule functions, that every panchayat Act religiously provides remains sterile. Nobody takes them seriously. What the 73rd constitution amendment intended is exclusive functional domain backed up by resources for the panchayats. That has not happened. Agency Functions

54

In some states, such as Madhya Pradesh, Rajasthan and Maharashtra, panchayats are comparatively more active than those in other states. But they remain active because of the responsibilities given to them to implement schemes or projects sponsored by the central government and in some cases by the state government. Being active with the agency functions does not automatically lead to the expansion of the autonomous space of the panchayats. Treating Panchayats principally as the implementing agencies of the higher level government is an old practice. In fact the first generation panchayats, which emerged after acceptance of the report of Balawantray Mehta Committee by the government, were utilised for better implementation of community development programme of the government of India. This practice still continues. Unstable Medium of Devolution Mention has been made about the ineffectiveness of devolution through statutes. Apart from the fact that all the functions of panchayats are in concurrent list and functional devolution is not matched by fiscal empowerment, the Panchayat Acts suffer from other infirmities, indicating hesitance about creating autonomous space for these institutions. The states Panchayat Acts mention large number of functions to be discharged by various tiers of panchayats. But It is very difficult to notice transfer of precise responsibilities to the specific tiers of panchayats in respect of discharge of any function that is supposed to be discharged by the panchayats3. Functions are expressed in a very wide and open-ended manner and fail to pin point the specific area of responsibility of a specific tier of panchayat in respect of delivery of any service. What is more disturbing is that provisions giving sweeping powers exist along with the provisions imposing severe conditions on the same. Most provisions of the Panchayat Acts of different states giving powers to the panchayats are limited by the conditions imposed by other provisions of the Acts. There are two ways to do this. First, a clause is inserted stipulating that that the powers given in respect of some functions are subject to such conditions or restrictions as may be prescribed by rules or as may be laid down in the executive orders of the government. This is the route through which apparently looking decentralisation in devolution mode turns out to be nothing more than delegation of functions. The second route to make statutory provisions on devolution illusory is to make a provision in the Panchayat Act that enables the State Government to add or withdraw the functions and duties entrusted to the Panchayats in some other provisions of the Act. The present trend in all the states is to assign functions to the PRI not through the statute, but by rules or executive orders. Hence it is easy for the state governments to give powers and responsibilities to the panchayats and at the same to withdraw them. The task of assigning functions to the panchayats was given to the state legislatures, but the same seems to have been usurped by the state governments. The constitution did not guarantee assignment of a set of exclusive functions for the panchayats. (The 11th schedule is only an indicative list). Hence, the kind of role they would be expected to play in the system of governance depends on the policies of the regime that controls the government of a state. In other words, like before the issue of empowerment of panchayats still remains at the mercy of the regimes that control the state governments at a particular point of time. Thus the whole issue of devolution to panchayats stand on a slippery ground. There is need for imposing constitutional fiat both on the state governments and state legislatures. That is the major reason that prompted two high-powered commissions, namely NCRWC (National Commission to Review the Working of the Constitution) and ARC (Administrative Reform Commission) to recommend amendment of Article 243 G of the Constitution.
3

There are, however, few exceptions. For example, in Orissa, powers given to the panchayat samiti in respect of education are quite specific. Whether the samiti can exercise these powers in reality is, of course, another matter.

55

Activity Mapping In 2004, at the instance of the newly created ministry of Panchayati Raj (MoPR), several round tables of state panchayat ministers were held. In one of these round tables, recommendations were made to devolve real powers to the panchayats. The MoPR signed Memorandum of understanding with several state governments in order to ensure, among other things that steps would be taken by them to devolve powers to panchayats in real terms map, for which specific activities to be discharged by different levels of panchayats were required to be mapped out. Thus the phrase activity mapping entered into the discourse on decentralisation in India to denote what in the international literature is known as expenditure assignment or functional assignment. The idea of activity mapping, because the 11th schedule which is the reference point for all devolution exercises in this country is not a workable list. For, each individual item in that list is one or more development subject or subjects, such as agriculture, including agricultural extension, education, including primary and secondary schools, roads. These subjects are so broad in scope that in some of them the government at all the levels central, state and local will have some responsibility and in some others the state and the local governments will have to be involved. Take the example of roads. There are national highways, the state highways, the district roads, village roads connecting GPs within a Block and other village roads connecting villages within a GP. Obviously, it is necessary to specify which of these roads will be responsibility of the PRIs and within them which types of roads would be the responsibility of which tiers. Decentralisation means sharing of activities between governments at different levels, in this case between the state and the local governments and within the latter, between GP, PS and ZP. Thus devolution means transfer of individual activities of a subject and in most cases not the subject in its totality. Hence, detailed mapping of activities involved within a subject has to be the first step of preparation of a devolution scheme. Several states in the country took up the elaborate exercises on activity mapping during the period 2004 to 2007. In our study states also, at least four states, namely, Assam, Bihar, Orissa and Rajasthan have completed this exercise. In Madhya Pradesh elaborate exercises on functional assignments to PRIs and to gram sabha were made during the period 1994 to 2001. Even then, the state is reported to have done another exercise on activity mapping in recent times. An assessment of activity maps prepared by various states, including some of the states under the present study indicates that the whole exercise had failed to fulfil the objective for which it was undertaken. They suffer from various flaws of serious nature, which are as follows. In most cases, the activity mapping exercise had been treated as a departmental task of the panchayat department and the line departments involvement in it was absent. Accordingly, the notification on activity mapping was being considered as one that has a value for the panchayat department only, as if the concerned line department had no obligation to abide by it. But the order cannot be made operative unless the line departments transferred the staff and the funds earmarked for the transferred activities. In many states it was found that even though notification on activity mapping had issued, the matching orders of the concerned line departments had not issued and necessary actions for the transfer of staff and funds did not take place. Hence, the main notification containing activity maps remained nothing more than a paper exercise. All activity maps earmarked several activities relating to elementary education and primary health care. But it is strange none thought of transferring the management responsibilities of the institutions like Health Sub Centre, PHC, Anganwadi centre, Primary schools etc. These are the essential centres for delivering both public health and educational services. If these centres are kept outside, it is difficult to understand how the panchayats would deliver the services.
56

Activity maps do not seem to be a serious exercise of decentralization for improving delivery of essential services at the local level. In most cases, the activities to be devolved have been identified from the on-going schemes or certain specific activities of the line departments associated with such schemes, leaving little scope for the PRIs to make innovations based on local needs. The assumption made in many cases of activity mapping is that the PRIs are concerned only with the execution of plan schemes or utilization of plan funds. A major reason for decentralization is improvement of the quality of the services provided by the state. From that view, activities funded from the nonplan budget become more important. It is wrong to get obsessed with plan funds or plan schemes in considering allocation of responsibilities to the PRIs. The non-plan activities are seldom considered in conducting exercise on activity mapping. In some cases the responsibility of executing some schemes fully or some activities within such schemes are proposed to be transferred to the LGIs. This is not devolution, but delegation. Mention has been made in chapter 2 (Core issues of Devolution) that activity mapping or decisions on functional assignment to the PRIs have suffered because of the belief that 11th schedule is sacrosanct and all items in it should be devolved and all the tiers of panchayats should get involved in all kinds of activities. This sometimes leads to absurd situations where activities mentioned for certain tier do not carry much sense. This may be another reason as to why the activity maps and in many cases panchayat Acts also use vague and useless expressions for assigning functions or activities. Examples of expressions used in abundance in activity maps (and also in the statutes) of various states are: promote, mobilise, support, propagate generate awareness, etc. PRIs are also required to supervise or monitor or provide assistance to work being managed by the line departments. Clearly, the intention is not to decentralise functions, but to create a smokescreen of PRIs involvement in the works of the department. Methodology of functional assignment or activity mapping In no states evidence was found that activity mapping or assignment of functions to the PRIs has been made on the basis of certain rational principles. As mentioned in an earlier chapter, there is need for adopting a methodology based on sound principles in preparing activity maps. Fiscal Devolution To what extent the autonomous space of PRIs has expanded through devolution may be quantitatively judged from the data relating to fiscal decentralization. Estimates made by Oommen (2010) from the financial data on local government collected by the Thirteenth Union Finance Commission (ThFC) would throw some light on this. Firstly, it is to be noted that the share of PRIs in total public sector expenditure shows a growth of 2.5% in 2002-03 to 3.7% in 2007-08. Even though the figure is not high (in developed countries it ranges from 20 to 30%), yet the growth might indicate growing importance of PRIs in local governance. But this conclusion cannot be drawn when two other aspects are considered. First it is noted that central transfers to the PRIs have grown very much over the years, because these institutions have been receiving regularly both the central finance commission grants as well as funds for discharging agency functions, such as implementation of the centrally sponsored schemes like MGNREGS, BRGF etc. In fact the latter constitutes the lions share of the central transfers to PRIs. The overall dependence of PRIs on central transfers for expenditure is showing an upward trend from 19.5% in 2002-03 to 31.1% in 2007-08. For some of our study states, it is extremely high, for example, as of 2007-08 the dependence of Assam was to the extent of 87% of PRI expenditure, that of Bihar 90.7%, Madhya Pradesh 65% and Orissa was dependent to the extent of 71.6%. Since the bulk of central transfer is tied
57

fund for discharging agency functions, namely implementation of centrally sponsored schemes, it does not expand autonomous space of the PRIs. The shrinkage of autonomous space of panchayats is also revealed from another set of indicators. This is poor level of own source revenue (OSR) and also its declining trend. OSR of PRIs constituted only 0.4% of the total public sector OSR in 2002-03. It further declined to 0.3% in 2007-08. Thus on the one hand PRIs share in total public sector expenditure is increasing, while the ratio of their OSR and total public sector OSR is increasing. This only shows increasing dependency of PRIs on funding from the higher level governments, which is indicative of their fragile autonomous space. Some of the states covered under the present study, present a very dismal scenario of local resource mobilization. In 2002-03, PRIs of at least 4 states, namely Assam, Bihar, Orissa and Rajasthan did not collect any tax. In 2007-08, the tax revenue of the PRIs of these states remains zero. Per capita tax collected by the PRIs of Uttar Pradesh and Madhya Pradesh remains Re 1 Re 3 respectively in 2007-08. In contrast to these states, PRIs of Maharashtra collect Rs 80 per capita as tax. In 2007-08, per capita total own source revenue (OSR) of PRIs varied between Rs 3 and Rs 7 in the states of Assam, Bihar, Orissa, Rajasthan and UP. Per capita of OSR collected by Maharashtras panchayats stood at Rs 114 in 2007-08. These data give enough indications of the utter lack of fiscal devolution in the panchayats of most states. Decentralised Planning Information on the status of decentralized planning is scanty. The outputs of decentralized planning process are panchayat level and municipal level area plans and district plan prepared by DPC. Plans would include 5-year plans including vision statements and annual plans. What is happening with regard to panchayat level and municipal level area plans is difficult to tell, as data are not readily available. Some data are available with regard to the functioning of the DPCs and preparation of district plans. According to a survey done in 2009 on the subject (PRIA 2009), the DPCs of Bihar and Chattisgarh were not functioning. The data on the meetings of DPCs of Madhya Pradesh were not available. However this state has issued guidelines on how to prepare panchayat level plans and district plans. The plans in Rajasthan are prepared sector-wise and area-wise by the DPCs. Proposals are invited from heads of various departments and the funds are then disbursed accordingly. 17 sectors have been identified for preparation of district plan. Panchayat and ULB plans were integrated into Block level plans and then forwarded to Chief Planning Officers who consolidated them into the district plans. These were then approved formally by the DPCs. The participatory element was missing in these plans. It is also not clear as to whether the plans could initiate the process of convergence. The system of having State Ministers as Chairpersons of DPCs severely hampers the participative nature of the planning process in the DPC. This is a common experience in all the states where minister heads the DPC. Such states are Chattisgarh, Madhya Pradesh, Orissa and Maharashtra. In Rajasthan, the role of DPCs appears to be focused on disbursement of untied funds and implementation of plan schemes. It seems DPCs in Rajasthan are more like District Disbursement and Implementation Committees rather than Planning committees. DPCs have not been able to integrate the plans of rural and urban areas. Coordinated planning is not taking place and any joint project planning has not necessarily resulted in integrated project implementation. Inter-sector coordination was also felt to be a problem. The planning process of schemes like NREGA, SSA, NRHM and JNNURUM, wherever undertaken, is often independent of annual planning at Panchayat or Municipal levels.
58

II

Challenges of decentralisation
Centralising forces More than 50 years have passed after the first generation panchayats of independent India came into existence, following the Balawantray Mehta Committee report. Even after the passing of the 73rd constitutional amendments, nearly two decades have passed. Yet we are trying to explore the challenges that the project of decentralisation face in this country. If decentralisation reform is facing challenges, then there must be some centralising forces which are standing in the way. It has been felt that there are two major centralising forces that have often put obstacles to many reform measures. The first obstacle is about our mindset. There is a feeling among the ruling elites and also among the common people about the immutability of the colonial structure of local administration which is more than two centuries old. There is evidence to suggest that this
structure is failing to be responsive and sympathetic to people. It is also not efficient. Yet whenever any attempt has been made to introduce panchayati raj, the structure of bureaucratic district administration has been allowed to remain intact, with the structures of the local government institutions being superimposed upon it. The legacy of the collector-led district administration is

found to be too strong to allow even partial replacement of the system by panchayati raj. The second centralizing force comes from our centralized planning regime, under which not only policies and strategies of socio-economic development of people are formulated centrally, but also most of the important development schemes or projects are designed and financed centrally. In such a situation, the value of panchayats lies more in their usefulness in the management of the centrally designed development programmes, not in their potential in enriching local democracy or in their capacity in assessing properly the priorities of needs of the local people and allocating resources in terms of such priorities for delivering public services. No wonder, at the policy making level the interest about panchayats has remained confined to only their agency functions, not in the matter of their autonomous functional area. Apart from the above, the decentralization reform measures had to encounter certain specific problems, which appear to be as follows. Problems of devolution In a federal framework, the roles and responsibilities of governments at different tiers are clearly defined through legislation. Following this principle, the 7th schedule of the constitution defines the functional domain of the union government and the state governments. The rules that should prevail in respect of subjects over which both have jurisdiction (that is, concurrent jurisdiction) are also clearly laid down. Unfortunately the 7th schedule does not have a list for local governments. On the other hand the subject of local government itself finds place in list II of 7th schedule, signifying that the state government would decide on matters relating to local government, subject to the conditions laid down in Parts IX and IXA of the constitution. Hence whatever functions have to be devolved to the local governments must come from those subjects over which the state governments have full jurisdiction. Devolution should mean redesigning of the respective roles of the state government and the local governments in respect of the full or parts of the listed state subjects. It also means clear-cut delineation of functions of the state and the local and then of each of the different tiers of panchayats.
59

In this country there are various problems associated with devolution. Devolution means shrinkage of the functional domain of the state government and expansion of the domain of local government. This will have the effect of increasing the degree of autonomy of the lower level government in relation to the higher level government with respect to the devolved functions. In other words, empowerment of the lower level government through devolution cannot take place unless there is corresponding loss of power of the higher level government, thus altering the inter-governmental balance of powers. This makes decision-making on devolution difficult and explains at least partially as to why the political will for driving decentralization reform is rarely seen. Secondly, many of the subjects listed in the state list (List II) are such that the state government cannot transfer the responsibility for executing all the activities of those subjects to the local government. For example school education is an apt candidate for devolution. But some activities within it, such as determining curriculum, setting standards of leaning, writing and publishing text books etc, might be considered to be ones that require uniformity and hence cannot be decentralised. Determining which subjects or parts of individual subjects or certain activities within a full subject or part of subject are tasks that cannot be addressed objectively properly without developing appropriate criteria. In the absence of such criteria, subjective considerations tend to play bigger role in devolution exercises. Thirdly, somehow an idea has developed that the panchayats are basically development agencies. Their role as government at the local area gets submerged under the development only tag attached to the panchayats. This mind set has impacted upon the Indian practice of devolution in two ways. The regulatory functions of government are hardly considered as worthy subjects of devolution to the PRIs and in transferring activities to them entire attention falls on the activities of so called planned schemes to the neglect of non-plan activities. The service delivery on regular day-to- day basis depends more on the efficiency of the discharge of non-plan activities. These activities are not given importance in devolution exercises. The latter remain concerned only with the distribution of activities of the plan schemes. Fourthly, in India, bureaucracy has acquired enormous power mainly due to centralisation of governance functions and constitutional guarantees provided to the government servants to protect their own service interests. With transfer of functions from the state to the local, it is necessary to place the government servants associated with the devolved functions under the full administrative control of the local governments. This has not been possible so far. At the same time, alternative ways to staffing of the local government institutions have not yet taken shape. Many of the state government decisions concerning devolution look illusory because of the compromises made by the state governments on the face of stiff opposition of the government servants to work under the administrative control of the local governments. Lastly, it is necessary to highlight a rather neglected aspect of the problem of decentralisation. This relates to the discourse on decentralisation in which the idea of panchayat as an institution of local government with an autonomous space of its own fails to take root. There are a few advocates drawn from the social activists, political activists, former bureaucrats and academics who are trying to carry forward the idea. But their voice has remained feeble. More strident has been the voice of a diverse array of social thinkers whom Pranab Bardhan describes as anarcho-communitarians. They are against the centralised state and energetically support assignment of control to local self-governing communities. They would not like to see the characteristics of local government in the panchayat, because in that case the latter would become part of the state, which is unacceptable to them. Their perception about community governance is somewhat anarchist and cannot gel with the perception of panchayat as local government within the framework of multi-level federalism. Sometimes government policies also have been influenced by these ideas (for example, gram swaraj experiment of Madhya Pradesh). It is believed that the idea of panchayat as a local government within a multi-level federal system has to be brought in forcefully in the discourse on decentralisation.
60

CHAPTER V

Recommendations for UNDP programme 2013 2017

The focus of this paper is on decentralisation, which was one of the major intervention areas of the UNDPs previous country programme ending in 2012 and also forms part of the proposed future programme covering the period 2013 2017. In decentralisation, UNDPs major programmes have been (i) strengthening decentralised planning process at the district level and (ii) capacity development for local governance.

The Indian Constitution, through its 73rd and 74th amendments of 1992, has introduced local government at the third stratum of Indias federal system and also at the same time ushered in a regime of multi-level planning process in which district and sub-district level area planning system would be an integral component. As this study has shown, the decentralisation reforms both in respect of the local governance system and local level planning process could not make even a modest headway in most of the 9 focused states of UNDP. In that background it would be appropriate for UNDP to design and implement programmes that would strengthen the process of decentralisation reforms. It is believed that such reforms would pave the way for the emergence of a local government system that would apply the good governance principles and work towards achieving sustainable human development.

In this paper, we have tried to provide an assessment of the state of decentralisation in individual states and have also tried to identify the major challenges facing decentralisation reform in this country. Normative dimensions of certain core issues of devolution have also been discussed in order to provide a direction for future intervention programmes that might aim at removing present deficiencies. There is no doubt that decentralisation reform can only be done by the government, mostly the individual state
61

governments and in some respect the union government also. What can UNDP do? How can it help strengthen the process of decentralisation reform? UNDPs role as a partner of government in development has always been that of a catalyst of ideas and solutions to countrys challenges. It is this role that the UNDP has to play in a more creative way with the objective of making firm incremental change, not radical change. (For, as all of us know, governance reform is a slow process.) The instruments of intervention should be the same, namely creating and adding knowledge base, advocacy, technical assistance, action research with small financial assistance and capacity building. However, fields of their application may vary. Subject to these observations, a broad outline of future programme may be as under.

The future programmes of UNDP on decentralisation may be divided into four broad groups. They Are: Building knowledge base and sharing knowledge and information Advocacy Support to decentralised planning Capacity development

Some indicative activities under each of the above may be as follows. Building knowledge base and sharing knowledge Suggested activities

Sponsoring studies: There are several focus areas. Some of them are as under: a. Local governance and service delivery b. Local government resource mobilisation c. Methodology of functional assignment to the local government institutions d. Poverty reduction and local government e. Institutional integration for convergence in local area
f. National and international experiences of good practices in functional

assignment, fiscal decentralization including local resource generation. g. Panchayati Raj status Reports for each state on the basis of common parameters for measuring progress.

Knowledge sharing activities: Due importance may be given to the knowledge sharing activities. Solution Exchange has been a commendable initiative and this must continue. Apart from this, initiative may be taken to create two national resource centres one on (i) decentralised governance issues and the other on (ii) decentralised planning. It is understood that work has started to build up the second centre. But nothing seems to have come up as yet. The practitioners, activists, academics and general public find it extremely difficult to obtain authentic information on the above issues. Hence UNDP may take necessary steps to set up these centres. These resource centres may procure and generate various documents on local governance, local planning etc. Examples are:
62

research reports, case studies of good practices, articles, monographs, seminar proceedings etc, Acts, rules, guidelines etc.

Dissemination of information: Knowledge and information base to be built by the Resource Centres should be made accessible to general public through imaginative use of (i) print media (publication of research reports and case studies, seminar proceedings, news letters etc), (ii) audio-visual media (CDs, video etc) and (c) web-site.

Advocacy There are not many champions of decentralisation in this country. Some civil society institutions make efforts from time to time to take the issues concerning decentralisation and local democracy to the public sphere. They are not yet strong groups. There are panchayat Raj Associations in various states. There is also a national organisation for local government. UNDP may consider supporting all these civil society groups to create strong fora from where advocacy for the various decentralisation issues may be made. Besides, UNDP may also support initiatives of the civil society institutions in organising meetings, conferences and seminars. Support to decentralised Planning During the present project period, UNDP has been supporting two programmes on local planning: one, support to the district planning process in selected districts the other being support to micro planning under Rural Decentralisation Project. Even though these programmes have broken new grounds, much more needs to be done to ensure that the local planning processes add value to the on-going development activities in the districts. While commenting upon the outcome of the above activities, Consultants report on the evaluation of UNDPs Democratic Governance programme observes as follows: district plans tend to comprise a collection of proposed annual spending statements by each of the departments responsible for the last-mile delivery of these schemes, particularly since the devolution of funds and functions is still not complete in most states. Added to this, District Planning Committees are weak and unable to push a more integrated model of planning. (Satyanand: 27, italics added). It is also reported that the Rural Decentralisation Project was not successful in getting village and Block plans become an organic part of the district plan (Ibid: 28). The above observations are quite serious in nature and accordingly should be given due consideration. Both the programmes are very important for strengthening decentralisation and should be continued in the next phase. But considering the fact that the outcome of the ongoing programmes could not meet the expectations, it is necessary to rethink about both these programmes and design them in a different way for implementation in the next phase. While redesigning the programmes, the following suggestions may be considered.

Before providing technical advice to the DPCs and district planning officers, it is necessary to develop, in consultation with the stakeholders, a workable, but effective, model of district plan that can integrate plans of PRIs, urban local bodies and those of various line departments for the purpose of achieving the development vision of the district. Similar models have to be developed for planning at the levels of all the tiers of panchayats and urban local bodies. Models also have to be developed for integration of panchayat and the line department plans at the Block level.
63

In order to get full benefits of convergence it is not enough to have integrated plans. Strategies have to be worked out and institutional arrangements have to be made for ensuring (i) incorporation of the annual plan in the annual budgets of the respective local bodies/line department units, and (ii) joint monitoring of plan implementation at the GP, Block and district levels. The Planning departments (and the Planning Boards) of the states should be involved along with others in developing models/methodologies of district and sub-district level planning, so that they own the same and take initiative to institutionalise them. Data support has to be given for preparation of local plans and monitoring of plan implementation. UNDP might consider working with the states statistics departments in developing district level and block level data banks.

Capacity Development UNDPs work on capacity development in local governance is well recognised and should continue in the next phase. We did not have the opportunity to look into the capacity development programmes conducted so far and, hence, would not like to make any comment on them. We would, however, like to point out that the training designs on integrated district and sub district level training are still in infancy. Accordingly we shall suggest that high priority should be given to the capacity building of different stake holders in decentralised planning, budgeting and monitoring of plan implementation. There is need for building expertise on these subjects for which nodal institutions may be identified and given support. The capacity of district level trainers has to be developed. Good training manuals and training materials will have to be prepared through the nodal institutions.

64