India’s centripetal structure is impeding governance

The pandemic does not have an equal impact. Globally, urban areas have been worse hit than rural ones. Older age groups, especially those with co-morbidities, suffer more severe illness and higher fatalities than any other age group. The impact varies even within cities. For example, there are large differences in the number of cases and fatality rates between New York’s five boroughs. In India, even within a municipal block, richer neighborhoods are likely less affected than poorer areas, especially slums. Shutting down everything burdens areas and groups not yet affected by covid, while not doing so makes it difficult to contain the virus. There is no simple, uniform government response. Ideally, covid needs to be tackled in a highly decentralized way—at the city, village and block level.

One of India’s biggest mistakes is not creating sufficient local government capacity. This is a fundamental error of India’s founders, as the Constitution only provided for Union and state level governments and the creation of local governments was left to the states. In 1992, Parliament corrected this deficiency by passing the 73rd and 74th Constitutional amendments, creating panchayati raj institutions (PRIs) and urban local bodies (ULBs). Local governance has four constitutional aspects—form, functionaries, function and finances. India has done a great job with the former two, but not the latter. Consequently, local governance is constitutionally recognized, but not empowered.

The Constitution details the form and functionaries of local governments. There are three tiers of PRIs—village/gram level, district level, and an intermediate level between the two. Similar tiering was adopted for ULBs—municipal corporations for large urban areas, municipal council for smaller urban areas, and nagar panchayats for areas transitioning from rural to urban. Through elections conducted by the state election commissions, there are over 3 million elected local government representatives across 250,000 PRIs and ULBs. Due to the reservation of one-third of the total seats in local bodies for women, India has 1.4 million women in elected positions. Seats and sarpanch/pradhan positions are also reserved for Scheduled Caste/Scheduled Tribe (SC/ST) candidates, making this the only level of government where SC/ST candidates have a genuine voice in governance (unlike parliamentary candidates from reserved constituencies, who are completely dominated by party whips). In enabling participatory democracy, PRIs—and to a lesser extent ULBs—are a success. But these elected representatives don’t have functions and finances to deliver governance.

The first failure is that the 73rd and 74th amendments did not mandate the transfer of governance functions—like the provision of education, health, sanitation and water—to them. Instead, the amendments listed the functions that ‘could’ be transferred and left it to the state legislature to actually devolve functions. There has been very little devolution of authority and functions in the last 27 years.

Making matters worse, state executive authorities have proliferated to carry out these functions. A common example of this is the existence of dysfunctional state-level water boards, performing tasks that should be left to elected representatives of local governments who best understand local water problems and can be disciplined through the democratic process.

The second failure of the 73rd and 74th Amendments is the lack of finances for PRIs and ULBs. Local governments can either raise their own revenue through local taxes or receive intergovernmental transfers; the constitutional amendment recognized both but did not mandate either. The amendments left it to state legislatures—a choice that most states have not exercised. Historically, PRIs have received more funding through Central and state schemes, especially targeting agricultural needs, women and rural welfare. ULBs, meanwhile, have fallen through the cracks.

Municipal revenue accounts for a small share of gross domestic product (GDP) in India, hovering around 1% of GDP from 2007-08 to 2017-18. This proportion was 4.5% for Poland, 6.0% for South Africa, 7.4% for Brazil, 13.9% for the United Kingdom and 14.2% for Norway in 2010. More than half of India’s municipal revenue comes from intergovernmental transfers, which brings uncertainty and lack of control over budgets. Consequently, ULBs usually don’t even spend their entire budget.

PRIs and ULBs are powerless without the devolution of functions and finances. They have been waiting for over two decades now to develop from merely constitutional and democratic institutions into governance institutions. A well-funded local government with clearly delineated functions is best positioned to fight a pandemic like covid. In its absence, India needs to rely on state and Union government measures, which tend to be of the one-size-fits-all sort, like a countrywide lockdown, instead of block-level curfews and similar targeted measures. An important lesson for the future is that states must devolve more functions and finances to local governments and build capacity before the next crisis hits Indians.

Shruti Rajagopalan is a senior research fellow with the Mercatus Center at George Mason University, US.