‘Pan­chay­ats will be there in fu­ture’

Business Standard - - DEMOCRACY AT WORK -

States such as Ker­ala, Kar­nataka and Tamil Nadu are among the top five for trans­fer­ring func­tions, in­sti­tu­tions and fi­nances to PRIs. Lately, the de­tails re­lated to the weigh­tage given to 2011 pop­u­la­tion in the 15th Fi­nance Com­mis­sion (FC) has re­ceived a back­lash from the south­ern states. Do you think their reservations are rel­e­vant? What ef­fect can it have on ru­ral and ur­ban lo­cal gov­er­nance and the process of de­cen­tral­i­sa­tion?

The back­lash cer­tainly has plenty of sub­stance. They are protest­ing be­cause the 15th FC will take into ac­count their 2011 pop­u­la­tions when sug­gest­ing for­mu­lae for hor­i­zon­tal and ver­ti­cal trans­fers [of cen­tral funds] to states.

Th­ese states say they are be­ing pun­ished for more ef­fec­tive pop­u­la­tion con­trol ever since the fam­ily plan­ning pro­gramme was an­nounced in 1971. That is bound to have a bear­ing on the ac­tual pro­por­tion of al­lo­ca­tions th­ese states re­ceive from the cen­tral govern­ment’s rev­enues di­vis­i­ble pool, both for their own use and to sup­ple­ment lo­cal gov­ern­ments’ fi­nances.

The 14th FC was of the view that the use of dated pop­u­la­tion data is un­fair and con­cluded that a weight to the 2011 pop­u­la­tion would cap­ture the de­mo­graphic changes since 1971, both in terms of mi­gra­tion and age struc­ture.

How­ever, this is not di­rectly rel­e­vant to the is­sue of whether south In­dian states are do­ing bet­ter than north­ern ones in the de­vo­lu­tion of pow­ers and re­spon­si­bil­i­ties to lo­cal gov­ern­ments. Ar­guably, even if they were not, the use of 2011 pop­u­la­tion data will harm them.

While there are vari­a­tions across states, the eco­nomic sur­vey 2017-18 noted that ur­ban lo­cal gov­ern­ments in In­dia gen­er­ated 44 per cent (in 2015-16) of their to­tal rev­enue from their own re­sources com­pared to pan­chay­ats which over­whelm­ingly (about 95 per cent in 2014-15) de­pend on de­vo­lu­tion of funds from the Cen­tre. What are the chal­lenges and so­lu­tions for re­solv­ing the chal­lenges to co­op­er­a­tive fiscal fed­er­al­ism? While the ur­ban lo­cal gov­ern­ments earn a higher pro­por­tion of their rev­enues on their own as com­pared to pan­chay­ats, both ru­ral and ur­ban lo­cal gov­ern­ments are sig­nif­i­cantly un­der­funded to per­form the tasks that are de­volved to them un­der the law.

This does not mean that there is no scope to raise more rev­enues at the pan­chayat and mu­nic­i­pal­ity lev­els. In this re­gard, it is true that the pan­chay­ats have gen­er­ally failed to utilise the rev­enue han­dles that have been given to them by the state gov­ern­ments un­der the law. While some states, such as the south­ern states and Ma­ha­rash­tra, have had a gen­er­ally bet­ter track record, and Chat­tis­garh and West Ben­gal have been able to un­der­take ef­fec­tive re­forms in this re­gard, there is tremen­dous scope for pan­chay­ats to in­crease their own rev­enues.

Un­for­tu­nately, it is quite of­ten the lack of ca­pac­ity of states that has come in the way of pan­chay­ats rais­ing their own rev­enues. Tax

T R Raghu­nan­dan, an ex­pert on de­cen­tral­i­sa­tion and a for­mer joint sec­re­tary in the Min­istry of Pan­chay­ati Raj, speaks to Shree­hari Paliath in an email in­ter­view on the out­comes of the 73rd Amend­ment to the Con­sti­tu­tion, which for­malised the de­cen­tral­i­sa­tion of gov­er­nance through pan­chayat raj in­sti­tu­tions (PRI) across the coun­try. Edited ex­cerpts:

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