Decentralized Governance Framework

Decentralization is the transfer of authority and power from the central

government to state & local level governments. Instead of political and economic
power being concentrated at the national level, power is dispersed to lower level
sub-national entities. India is a federal country (with central, state & concurrent
list subjects), but the central government has considerable power over state
governments. The most typical being three tiers of centre, state and local
governments. Grassroots participatory democratic practices are essential to the
success of decentralization. In India local bodies are the primary units of
decentralization.1
POLITICAL DECENTRALISATION
The two main aspects of political decentralization in India are:
(i)
(ii)

local accountability via village level elected institutions, and

representation for women and other disadvantaged groups. 2

States modified their Acts consistently with the requirements of the 73d
Amendment, and most of them have carried out local elections, albeit with
delays relative to the constitutional provisions. The Acts, mandated by the
amendment have provided uniformity in terms of three-tier local governments at
the district, block and village levelsZilla Parishads at the district level (ZP),
Panchayat Samities at the block level (PS), and Gram Panchayat at the village
level (GP). Participation in the local election process is high. 3

Decentralisation : The National and Global Context

International experience bears out the close link between reform and
Decentralisation. Apart from the theoretical logic of a reduced role of
government creating opportunities both for private enterprise and for community
action, in many countries actual reform programme has been built upon
increasing institutional space for Decentralisation. Reform programmes in
developing countries/ transition economies as diverse in range as Poland, Chile,
Argentina and South Africa and China, the autonomy to local units in decisions on
1 Dr. L. R. Yadav, Decentralization and Participatory Democracy in India available at

http://www.skoch.org/12/Full_paper_skoch.pdf
2 Rohini Pande, Overview of Decentralization in India available at

http://policydialogue.org/files/events/Pande_Decentralization_in_India.pdf
3 OVERVIEW OF RURAL DECENTRALIZATION available at

http://www1.worldbank.org/publicsector/civilservice/june2004seminar/RuralDecent.pdf

incentives for investment and capital market access, has given a strong
foundation to reforms. In the case of China, the Town & Village Enterprises (TVEs)
were given a wide range of powers in matters relating to resource mobilisation,
user fees, and recruitment of experts, apart from implementation responsibilities
that they already had. Clearly, economic decentralisation has been the key to
success of reform programmes in such contexts. The issue of sequencing and
forms of Decentralisation, therefore, assumes much significance. In the abovementioned countries, only South Africa has undertaken the most comprehensive
devolution of powers to the third tier. In China, the reforms were not related to
political freedom. Indeed, that is proving to be a hindrance as China integrates
more into the global economy through institutions such as the World Trade
Organisation (WTO). Political Decentralisation provides a more durable rationallegal framework that makes Decentralisation an integral part of the political and
civic discourse. India is the world leader in creating space for political
decentralisation. Now the concomitant arenas of fiscal devolution and economic
decentralisation require greater attention by policy researchers.
(Decentralisation in India Challenges & Opportunities available at
http://www.in.undp.org/content/dam/india/docs/decentralisation_india_challenges
_opportunities.pdf )

Fiscal Decentralisation
Financial responsibility is a core component of decentralisation. Decentralisation
initiatives that focus exclusively on electoral and administrative processes
without considering the fiscal dimensions will not be sustainable. For local
governments and private organisations to carry out decentralisation effectively,
they need adequate revenues as well as the authority to make decisions on
expenditures. 4Lack of adequate funding for lower level units was the single most
important factor that undermined many of the decentralization attempts in
1970s and 80s. The four pillars of fiscal decentralisation are:
(i)
(ii)
(iii)
(iv)

The assignment of expenditure responsibilities to different government

levels
The assignment of tax and revenue sources to different government levels
Intergovernmental fiscal transfers
Sub-national borrowing

4 Durga Prasad Chhetri, Democratic Decentralisation and Social Inclusion in India:

Exploring the Linkages available at http://iosrjournals.org/iosr-jhss/papers/Vol11issue1/K01116472.pdf?id=6273