The Panchayati Raj institution (PRI) is celebrating the 25th anniversary of its inception this year. The institution was formalized through the 73rd amendment to the constitution in 1992 with the purpose of decentralising governance to the local level. The 73rd and 74th constitutional amendments heralded decentralised governance and allowed India to move towards a truly representative democracy from just the ‘largest’ democracy. This momentous event was a watershed in India’s polity, and brought about a paradigm shift in fiscal federalism and governance. The constitutional amendments envisaged a package of devolution and autonomy to different levels of government and brought forth a participatory form of governance.

The essence of participatory democracy has been captured well in the local governance system through a framework ensuring quinquennial elections as in the states and the centre, representation of marginalised communities and women, establishment of state finance commissions (SFCs) and establishment of district planning committees, among other things.

Limitations to devolution: tackling the 3Fs

The purpose of the constitutional amendment was the devolution of functions, functionaries, and finances – the 3Fs. To ensure that the PRIs got enough financial independence and didn’t have to rely completely on transfers, it became mandatory for states to constitute SFCs to review the financial position within the state. The constitution of SFCs addresses the issue of financial autonomy of the PRIs, but the functional autonomy of these institutions remains a challenge.

According to Article 243(G) of the constitution, the states have been mandated to devolve adequate powers and responsibilities to the PRIs. The XIth Schedule lists 29 subjects which have been assigned to the PRIs so that they are able to prepare plans for economic development and social justice according to the same. The state is responsible for clearly delineating the ambit of each tier of local government and thereby ensuring functional autonomy and transparency. The clear identification of what each tier of panchayat is responsible for is absolutely essential for ensuring efficient and transparent governance.

In 2005-06, the Panchayat Empowerment and Accountability Incentive Scheme (PEAIS) was introduced to improve the devolution process within the states. This centrally sponsored scheme had the objective of incentivising states to empower the panchayats through the devolution of the 3Fs, and to incentivise the panchayats to put in place an accountability system. Under this scheme, the ministry of panchayati raj, through an external body, has been ranking the performance of the states/UTs annually. According to the Devolution Index of 2015-16 (see Devolution Report 2015-16, MoPR and TISS), Kerala has been the best performer in terms of devolution of functions and functionaries in practice, while Haryana has devolved the funds best.

According to a study conducted by the Tata Institute for Social Sciences (TISS), “Devolution theory clearly indicates that ‘effective transfer of functions based on the principle of subsidiarity’, ‘unambiguous control of the Panchayat over the functionaries discharging the functions’, ‘financial authorization of the Panchayat commensurate to the functional responsibility’ and the ‘ability of the Panchayat to function as cutting edge partners with the line department as autonomous agencies in decision making’ are critical to effectiveness in devolution.” This has still not been achieved in most states except for Karnataka, Kerala, Tamil Nadu, Maharashtra and Gujarat.

The impediment that arises in reality is that while the law mandates the role of panchayats, it is ambiguous in differentiating the roles and thus allows for coexistence of both centralised and decentralised actions in service delivery and/or programme execution. The issue of ambiguity in the division of functions and funds has allowed concentration of powers with the states and thereby restraining the elective representatives who are more aware and sensitive to the ground level issues to take control. This has the potential to threaten the ethos of the democratic federation that India is and brings forth the urgency to tackle this issue.

Mapping the functions

One plausible way to address this challenge is for states to adopt the concept of ‘activity mapping’, wherein each state clearly delineates the responsibilities and roles for the different tiers of the government in respect to the 29 subjects listed in the XIth Schedule. The subjects are divided and assigned to the different tiers on the basis of accountability to the public and the public finances.

The sixth report of the Second Administrative Reforms Commission had recommended that there should be a clear-cut demarcation of functions of each tier of the government. Karnataka has been the first state to bring about activity mapping in functioning. It undertook activity mapping and the devolution of funds and functionaries simultaneously for each level of panchayat. This positioned the zilla and taluk panchayat as the planners, facilitators, and owners of the executive machinery. Consequently, gram panchayats became responsible for the provision of local services while gram sabhas instrumented accountability at the lowest levels.  

Karnataka’s experience lays forth an example for other states to adopt as well as learn from their challenges to ensure seamless functioning of the government. A significant challenge that Karnataka seeks to manage is the commensurate devolution of funds and functionaries. The process of activity mapping needs to be complemented by ensuring the devolution of other two Fs.

Trigger the change

The ministry of panchayati raj has provided guidelines that the states can refer to while adopting this mechanism. The ‘activity matrix’ provided suggests the subjects and the activities that each tier of the government can be given responsibility for. The trigger for moving forward has been made available to the states.

The case for determining the current status of activity mapping and thereby devolution of the 3Fs is critical. Consequently, the need to achieve success in the same is pertinent to ensure effective democracy at the grassroots level. This will allow for efficient planning and execution of schemes, and more importantly, bring forth convergence in the multitude schemes and programmes that are being implemented by both the centre and the states. Therefore, activity mapping is an imperative and crucial step towards ensuring devolution as well as better outcomes for welfare schemes and socio-economic development.

Gaur is joint secretary at NITI Aayog and Tara is a Young Professional at NITI Aayog.

(The article appears in the July 31, 2018 issue)