Mani Shankar Aiyar, Former Union Minister and Senior Congress Leader

While outlay has increased by a factor of 15—and we see in the latest budget that it has increased even further—the fact remains that where India stood 134th in the UN (United Nations) human development index 1994, the last such report shows us at exactly in the same position. None of this is going to be improved by economic and tax reforms until governance reforms at the grass roots are hitched to the wagon of faster economic growth.

The fact is that accelerated growth leads inevitably to accreted disparities. And the only way in which we can compensate is by ensuring, through the empowerment of local communities, that they actually get access to their entitlement.

What needs to be done is to bring into the political resolve of the government, two administrative orders issued by UPA I (the previous United Progressive Alliance government). The first was in October 2004, saying that within three months all Centrally sponsored schemes should have their guidelines amended to provide for the centrality of the panchayat in planning and implementation, as provided for in Part 9 of the Constitution. The second was a directive from the Planning Commission in August 2006 that no state plan would be acceptable unless it was based on participative grass-roots planning.

How will the budget impact sectors? Where should you invest? Find out on’s Budget 2010 microsite

So long as we continue to ignore these directives and think in terms of inclusive growth without inclusive governance, we are not going to solve the essential problems besetting delivery processes. And without addressing the problems of inclusive governance at the grass-roots level, we are never going to achieve inclusive growth.

In actual implementation, even with respect to the backward region grant fund, the gap between intention and practice is so wide that we need to address it in terms of the constitutional provisions for local governance.

What we need to do is to combine the political perceptions of Rajiv Gandhi with the economic expertise of (Prime Minister) Manmohan Singh. Until both these are done, I am afraid that for 77% of our population—which the Arjun Sengupta committee pointed out is living on less than Rs20 a day—reform is not going to mean much.

I am delighted that the finance minister flagged the problem but I am sad that although the solution was found by Rajiv Gandhi 20 years ago and has been incorporated in our constitution, the actual implementation on the ground is as tardy as it is proving to be.

But until the link is made, I am afraid the future is very bleak for most of our people.

The one ray of hope is that Vijay Kelkar, through the 13th Finance Commission, has earmarked 2.5% of the divisible revenues of the nation for local self government. That in itself is going to constitute a huge increase over present levels that will be at the disposal of local self government units for non-Plan purposes. But as the step has been taken for non-Plan purposes, if the Planning Commission follows up in a similar manner then I think the era of Panchayati Raj will eventually dawn and we will see a smile coming on the face of Mahatma Gandhi. So now that Kelkar has shown the way, all that Planning Commission deputy chairman Montek Singh Ahluwalia has to do is follow.

As told to Ruhi Tewari

Respond to this column at