Prof. Dinesh MehtaCEPT University, Ahmedabad, INDIA

The ContextDecentralization and devolution of

governmental functions to the local level has been accepted by most governments

Empowering local governments is seen as a means for rapid economic growth

Increasing social divide, poverty and environmental deterioration can be minimised when governments are closer to people

The Aberdeen Agenda: Commonwealth Principles on Good Practice for Local Democracy and Good Governance

Constitutional and legal recognition

Ability to elect representatives

Partnership between spheres

Appropriate legal powers

Participation

TransparencySubject to scrutinyInclusivenessAdequate resourcesEquitable service

deliveryCommitment to

capacity development

Open accountability

Source : Joint Annual Review of Decentralisation 2004, Government of Uganda; Modified from Jütting et. Al.4

DECENTRALISATION

Poverty Reduction / Better Lives

POLITICAL MOTIVATION

POWER SHARINGINCREASED STABILITY

MORE POPULAR

PARTICIPATION

LESSVULNERABILITY

VOICE

ECONOMIC MOTIVATION

EFFICIENCY GAINS

EFFECTIVENESSBETTER TARGETING

IMPROVED / INCREASED ACCESS to SERVICES

Rationale for Empowering Local Governments

Decentralisation and inter governmental relationsThe term "decentralization" embraces a variety of

concepts- Political, administrative, fiscal and market decentralization

Political decentralisation – democratic decentralisation.

Administrative decentralisation-three major forms of administrative decentralization -- deconcentration, delegation, and devolution

Fiscal Decentralisation is a core component of decentralization

Market Decentralisation –private sector participation, deregulation_

Aberdeen Agenda

India Pakistan Sri Lanka Bangladesh Maldives

Constitutional and legal recognition

y Y Y Y y

The ability to elect local representatives

Not currently Not currently

Partnerships between spheres of Government

There is open dialogue. No organised local government voice

There are informal local government associations in four provinces, which are currently playing a lobbying role.

Provincial Chief Ministers hold regular meetings. There is a local government association although its role in formal intergovernmental relations is limited.

There is dialogue between the Upazila, district, divisional level administration and national departments.

The presidents of each atoll, island and city council maintain dialogue.

Aberdeen Agenda

India Pakistan Sri Lanka Bangladesh Maldives

Defined legislative framework

Each state has its own local government legislation

The local government ordinance 2001. The Baluchistan government Act in 2010.

Provincial councils act 1987; Urban councils ordinance 1939; Municipal councils ordinance 1947; Pradeshiya Sabhas Act No. 15 1988

The Hill district local government Parishad Act 1989; The Zila Parishad Act 2000; The local government (pourashava) Ordinance 2008; The local government (union parishad) ordinance 2008; The local government (upazila parishad) ordinance 2008; The local government City Corporation ordinance 2008

The main legislation regulating local government is the Decentralisation Act 2010 and the Local Council Election Act 2010.

India: 73rd and 74th constitutional amendmentsGranted constitutional status to the third tier of

local government – political, functional, fiscal decentralisationElected local governments; reservation for women

(one-third, now 50% in some states), reservation for minorities,Gram sabha, ward committes (area sabha),

Transfer of functions - List of 29 items in Eleventh Schedule (Rural) and 18 items under 12th Schedule (urban)

Creation of District Planning Committee and Metropolitan Planning Committee

State Finance Commissions

Financing: Typical Problems• Funding: local government funding is often:– Quite inadequate (unfunded mandate)– Overly rigid (tied), so defeating the very local

discretion that justifies decentralizing– Inequitably allocated between LGs– Delayed or unreliable– Overly controlled by higher level (eg under

single treasury)– Associated with overly rigid financial

regulations (eg on procurement)– Without incentives for good performance

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Finance CommissionCentral Finance Commission – Article 280, of

the Constitution of India provides for establishment of a Finance CommissionDistribution of total income from taxes of the

Government (the Central and State Government) between the Union and the States as per there respective contribution towards of the taxes.

Factors based on which the government should allocate the grant-in-aid of the revenues to the States of India out of consolidated fund of India.

State Finance CommissionThe principles which should govern

The distribution between the State and the Panchayats (Municipalities)of the net proceeds of the taxes, duties, tolls and fees leviable by the State;

The determination of the taxes, duties, tolls and fees which may be assigned as, or appropriated by, the Panchayats (municipalities);

The grants-in-aid to the Panchayats (municipalities) from the Consolidated Fund of the State;

The measures needed to improve the financial position of the Panchayats (municipalities);

Any other matter referred to the Finance Commission by the Governor in the interests of sound finance of the Panchayats (municipalities).

Inter-governmental relation

Source: Dr. Louis A. Picard, University of Pittsburgh

Autonomy of Local governments

tendency of central government to proceed with caution in devolving responsibilities to local governmentsIndia – in theory huge devolution (11th

schedule 29 functions; 12th schedule 18 functions) in practice very few functions are devolved

Roles and responsibilities among different spheres of governments

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LOCAL Government

State and National

Governments

Utility/ Local Government Associations

INTERNAL ACCOUNTABILIT

Y

DOWNWARD ACCOUNTABILIT

Y

Citizens and Consumers

Performance benchmarking, Self-regulation

Grievance redressal, report cards

Public dissemination

Reform-linked funding,

Regulatory compliance

Internal accountability

for performance results

Accountability for

regular operations

UPWARD ACCOUNTABILIT

Y

2. Structures of Accountability

Deconstructing local “capacity” problemsTendency to state that Local Governments have no

capacity

There are indeed “inherent” problems of capacity but they are exaggerated

Many capacity constraints are externally imposed:Inadequate FinancingUnclear roles, functions and expectationsUnclear procedures and poor guidanceWeak institutional arrangements for

accountability and coordination among different levels

Weak monitoring & ineffective incentives/sanctions for performance

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strengthening inter-governmental relations