Local Governance in India

• The editorial discusses the financial constraints faced by Panchayats in India.
• Highlights issues stemming from weak devolution, reliance on central schemes, and poor fund utilization.

Historical Context

• Democratic Decentralisation Evolution:
  • Transitioned from colonial administration to constitutional self-governance.
  • 73rd and 74th Constitutional Amendments (1992): Established legal recognition for Panchayati Raj Institutions (PRIs) and Urban Local Bodies (ULBs).

Key Issues Hindering Decentralisation

1. Fiscal Dependence:
   • Panchayats rely on state and central transfers, limiting financial independence.
   • Own-source revenue accounts for only 5-10% of Panchayat expenditure.
   • Urban corporations receive just 0.6% of GDP in revenue despite contributing 60% to GDP.
2. Political and Bureaucratic Centralisation:
   • Local bodies function mainly as implementing agencies for central schemes.
   • Local governance lacks true authority due to state control over subjects.
3. Reliance on Centrally Sponsored Schemes:
   • Funds tied to central schemes reduce local flexibility in addressing needs.
   • Example: PMAY-G saw only 41% of funds utilized due to various implementation issues.
4. Weak Accountability and Transparency:
   • Poor financial accountability and limited public participation hinder effective governance.
   • Tax revenue is only 1.1% of total, with non-tax at 3.3%.
5. Delayed Institutional Framework:
   • State Finance Commissions (SFCs) often delayed or ignored.
   • Only 9 states have constituted their 6th SFC as required.
6. Limited Representation of Marginalized Groups:
   • Token representation for women, SCs, and STs often results in proxy governance.
7. Human Resource Challenges:
   • Acute shortage of trained personnel in local bodies.
   • Critical planning and financial management roles are often state-controlled.
8. Digital Infrastructure Deficits:
   • Inadequate digital tools hinder transparency and citizen engagement.
   • Over 25,000 villages lack internet connectivity.

Recommendations for Revamping Decentralisation

1. Strengthening Fiscal Autonomy:
   • Establish a predictable fiscal devolution mechanism.
   • Enhance local tax collection and broaden revenue bases.
2. Empowering Local Governments:
   • Grant administrative autonomy for personnel recruitment and budget control.
3. Reforming Urban Governance:
   • Implement a Mayor-in-Council system for improved accountability.
4. True Devolution of Powers:
   • Conduct mandatory activity mapping for clear governance responsibilities.
5. Enhancing Local Revenue Generation:
   • Allow local bodies greater borrowing powers and encourage municipal bonds.
6. Bridging Urban-Rural Governance Divide:
   • Develop flexible classifications for peri-urban areas to ensure proper governance.
7. Capacity Building and Training:
   • Establish Local Governance Training Institutes for ongoing education of representatives.
8. Implementing Participatory Governance:
   • Mandate public consultations and social audits to boost accountability.

Way Forward

• True democratic decentralisation requires a focus on fiscal strength, functional autonomy, and fair representation.
• Empowering local bodies through financial independence and inclusive governance is essential for effective service delivery.

Mains Answer Writing Practice Question

Critically assess the effectiveness of the 73rd and 74th Constitutional Amendments in achieving true democratic decentralization in India. Discuss the key challenges and suggest measures to enhance the effectiveness of local self-governance. (200 words)