Why has Decentralisation become Unfashionable?

Decentralisation has gotten the short end of the rope because of political battles over federalism and what they mean for Union and state governments.

Last week was the twenty-fifth anniversary of the landmark constitutional amendments that laid out the roadmap for democratic decentralisation in India. The 73rd and 74th amendments were passed with much fanfare in 1993, and while there are large variations in the level of progress states have achieved, the Government of India’s official line has been consistent in supporting a decentralised governance framework.

Decentralised planning forms the bedrock of this process. This is a multi-layered exercise where local governments (gram panchayats) formulate plans that are aggregated, and integrated into block-level and district-level prioritisation and planning exercises. They are not meant to be wish-lists, but are supposed to follow an iterative process where costed activity plans are rationalised and reconciled with district and state-level budget envelopes, and finally form a significant chunk of the state budgets.

There are numerous weaknesses in how the planning and budgeting processes play out in practice. For instance, at the district-level and below, Union and state government schemes are supposed to converge and translate into integrated development plans. At the same time, Centrally Sponsored Schemes (CSS), with their specific fund-flow mechanisms and implementation and reporting guidelines, continue to make up the majority of funds that flow into districts for specific schemes such as health, education, rural development, etc.

This is just another disabling factor for district-level bureaucrats, who already have to function within the constraints of scheme-wise budget envelopes dictated by state governments. While these budget envelopes are typically pegged to previous year allocations (with minor adjustments made for inflation), it is not uncommon for planning officers to be faced with drastic cuts or steep hikes without neither a suitable explanation, nor clarity regarding how the scale of implementation ought to be adjusted to match the allocations.

However imperfect, this intended cycle of decentralised planning, with the involvement of village councils (gram sabhas) was the cause of great excitement and significant scrutiny. A quarter of a century later – in 2018 – the public discourse on decentralisation and grassroots planning seems rather muted. There are several reasons for this.

For one, apart from political voice at the grassroots, and the emergence of strong local leaders, questions regarding whether there have been lasting improvements in service delivery as a result of decentralisation have not been answered conclusively. An admittedly mixed record of devolving funds and the quality of personnel have affected the quality of implementation on the ground.

Local governments and district administrations have often been used by the Union to bypass state governments. One example is the preponderance of Centrally Sponsored Schemes that distort district and state-level planning and accountability mechanisms. As Chief Ministers, Narendra Modi, Nitish Kumar and Jayalalitha had been trenchant critics of the central schemes in limiting the autonomy of state governments. Decentralisation too depends largely on a settled federal architecture, where local governments are aligned with the planning and budgeting processes of their respective state governments. Promoting decentralisation therefore requires an equal emphasis on Union-state relationships, and the functioning of district and local government bodies.

This is where the public discourse seems to have taken a decisive turn. In 2014-15, with the implementation of the recommendations of the Fourteenth Finance Commission, transfers to state governments increased three-fold, mainly through restructuring central schemes and by reformulating the share of states in taxes collected by the centre. This has been accompanied by announcements that indicate a desire to move towards performance-linked models of development funding. While the benefits in state governments owning their development agendas may be evident, what has transpired is an intensification of the Union-state conflict over budget allocations. The recent debates over the terms of reference of the Fifteenth Finance Commission are only the latest of these political battles. Political bargaining and mudslinging over special packages for states, or regions within states have become a regular feature of our federal system.

As a result, the nuts and bolts of planning processes within states, and down to the villages have suffered. For instance, planning functions of within states – whether through the planning department, or a dedicated State Planning Board – have languished, as they continue to be ineffective in supporting district and local governments to plan better.

The reality is that in the midst of the political battles over federalism and what it means for the Union and the state governments, decentralisation has got the short shrift. This is not something that a scheme can fix – and certainly not a gap that the Union can hope to plug by leapfrogging state governments. And that is one of the primary reasons one is pessimistic about the outcomes of the newly announced Rashtriya Gram Swaraj Abhiyan, or the ongoing Aspirational Districts Programme.