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Balveer Singh Gothwal

Bikram Singh Jantwal

Dev Raj

Dharm Pal Yadav

E. Sonia

Himanshu Behl

PANCHAYATS ANDECONOMIC

DEVELOPMENT

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Issues to be covered

Decentralization as a strategy for inclusive

development of the country

How policy and institutional reforms canbe designed and implemented to makethe panchayats effective catalysts in thedevelopmental process in rural areas

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Scope1. Introduction

2. Decentralization

3. International Examples & PEAIS

4. Relationship between Decentralizaion and Economic Development

5. Success Stories: Case Study

6. Shortcomings and Reform Issues

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Mahatma Gandhi

Independence must begin at the bottom.

Thus, every village will be a republic orPanchayat having full powers.

Rabindranath TagoreOur aims must be restore to the villagesthe power to meet their own requirement.

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Economic Development

Economic Development is a wider term thanEconomic growth

Economic Growth- Sustained increase in acountry's output of goods and service (GDP)

Economic Development- Progressive changes inthe socio-economic structure of a country.(Technology intensive, high industrialization,high standard of living)

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Decentralization

Meaning

First Generation Theories vsSecond Generation Theories

Arguments against decentralization

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PRESENT STATUS OFPANCHAYATSPRESENT STATUS OFPANCHAYATS

2,34,676 Village Panchayats,20,73,715 elected representatives.(40 % women,16% SC and 11% ST)

6097Intermediate Panchayats

,1,10,070

electedrepresentatives. (43 % women,22 % SC,13 % ST)

37 District Panchayats,11,825 elected representatives. (41 %women,18 % SC,11 % ST)

At the Village Panchayat level, each elected representativesconstituency comprises of a out340 people, (70 families)making India the largest and most intensely democraticcountry in the world.

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Decentralization

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Phases of Decentralization (Through

Panchayati Raj) in India

Phase 1: From 1959-1992

Phase 2:From :1992 onward

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Phase 1

DIFFERENT STAES ASSINGNED DEVLOPEMENTFUNCTIONS TO DIFFERENT PRI

RURAL ILLETRECY

LACK OF FUND

POVERTY

INEXPERIENCED REPRESNTATIVE

GOVT. INTERFERANCE

LACK OF CONTINUITY IN WORKING OF PRI

LACK OF INTERST OF RURAL PEOPLE

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Decentralization: Political Reasoning

Government closer to people. Makes peopleparticipate in decision making and reflectstheir needs and preferences.

Accountable governance through voterinformation, participation and monitoring.

Increase capabilities of vulnerablesections

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Decentralization: Economic Reasoning

Efficiency gains from public service delivery:

Wastages and leakages minimized

Wider choice and better matching of publicservice with preference of people

Resulting efficient allocation of resourcesincreases welfare

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FROM : 1992 onwards (REFORMOF PANCHAYTI RAJ 73rd

AMENDMENT ACT 1992)

Phase II

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Salient Feat res of the 73rd

Constit tion mendment ct

Panchayats will be instit tions of self-government.

Basic Units of Democratic System - Gram Sabhas(villages) comprising all the ad lt members registered as

voters.

Three-tier system of panchayats at village, intermediatebloc /tal /mandal and district levels. Smaller stateswith pop lation below 2 million only two tiers

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Salient Feat res of the 73rd

Constit tion mendment ctcont

Seats reserved for Sched led Castes (SCs) and

Sched led Tribes (STs) and women.

Independent Election Commission in each state fors perintendence, direction and control of the

electoral rolls.

In each State a Finance Commission to determine theprinciples on the basis of which adeq ate financialreso rces wo ld be ens red for panchayats.

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Structure of financial administration

1. Own Income

(a) Tax revenues and(b) Non-tax Revenues

2. Grants from the State Government.

3. Grants from the Central Government

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International Examples & Panchayat Empowerment and

Accountability Incentive Scheme

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Some International Examples

Oates (1972) was not clear whether decentralisation is acause or a result of economic growth.

Martinez-Vazquez and MacNab (2002)-fail to find astatistically significant and robust relationship between fiscaldecentralisation and economic growth for developingcountries.

Faguet (2004)- .decentralisation significantly changednational public investment patterns. Investment changedunambiguously in education, water and sanitation, watermanagement, agriculture, and urban development after 1994reform.

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Faguet (2005) showed that decentralisation led tofivefold increase in municipal investmentswithout increasing the running costs.

In Brazil, Baiocchi (2007) :1988 constitution devolvedgreater political and fiscal autonomy to the localgovernments and the share of tax revenues of localgovernments increased from 11 to 13 per cent between

1987 and 1991. Public services showed a substantialincrease since the late 1980s and the disparity in services

between regions substantially decreased.

Conti

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Hofman and Kaiser ( 2007): The big bangdecentralisation in Indonesia initiated after thefall of the Suharto regime in 1988 devolvedresponsibility for delivering health, education,

infrastructure and environmental services to localgovernments.

Based on their survey, they found that there weresignificant improvements in local service deliveryand satisfactory ratings for local civil services.

Conti

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Panchayat Empowerment andcco ntability Incentive Scheme

(PE IS)

Implemented since 2005-06

Objectives:

Incentivizing states to empower panchayats throughdevolution of Funds, Functions and Functionaries

Incentivizing PRIs for Accountability System

Performance of states measured through DI

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Evaluation Frame work

First Stage (Framework Criteria)

State Election Commission

Elections of PRIs

State Finance Commission District Planning Committees (DPCs)

Second Stage (3Fs)

Funds

Functions Functionaries

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OverOver

allallRan

Ran

State/UTsState/UTs Devol tionDevol tion

IndexIndex

OverOverallallRan

Ran

State/State/UtsUts Devol tionDevol tionIndexIndex

11 KeralaKerala 70.0170.01 1515 P d cherryP d cherry 30.0330.03

22 Karanta

aKaranta

a 62.3962.39 1616 Uttra

handUttra

hand 28.2128.21

33 West BengalWest Bengal 59.5659.56 1717 BiharBihar 25.6525.65

44 RajasthanRajasthan 53.8953.89 1818 GoaGoa 20.2320.23

55 MaharshtraMaharshtra 53.5853.58 1919 Jhar

handJhar

hand 11.7011.70

66 TamilTamil nadnad 53.4553.45 NorthNorth East StatesEast States

77 Madhya PradeshMadhya Pradesh 52.7452.74 11 Si

imSi

im 60.2260.22

88 G jaratG jarat 47.7847.78 22 Trip raTrip ra 45.6045.60

99 Andhra PradeshAndhra Pradesh 47.6947.69 33 Manip rManip r 13.3113.31

1010 ChhattishChhattish GarhGarh 47.6647.6644 AssamAssam 39.3139.31

1111 HaryanaHaryana 44.4944.49 55 Ar nachal PradeshAr nachal Pradesh 19.7019.70

1212 HimachalHimachal PradashPradash 40.8340.83 NationalNationalAverage: 42.38Average: 42.38

1313 OrissaOrissa 40.0340.03

1414 Uttar PradeshUttar Pradesh 31.2231.22

Performance of States and UTs (as per Devolution Index 2010-11)

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Prize

1

2

3

4

State

KeralaKarnataka

Sikkim

WestBengal

Amount(Rs in

Crores)

3.0

2.0

1.0

1.0

INCENTIVE AWARDS FOR CUMULATIVEACHIEVMENT

(Based on Devolution Index)

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RELATIONSHIP BETWEEN

DECENTRALIZATION ANDECONOMIC DEVELOPMENT

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STATE WISE RANKING ACCORDING TO PER CAPITA INCOME &GROWTH

Rank State/UT(Rupee) % Growth

1999-2000 2005-2006

1 Gujarat 18864 34157 81.1

2 Uttarakhand 13672 24585 79.8

3 Sikkim 14890 26412 77.44 Haryana 21966 38832 76.8

5 Tripura 14119 24706 75.0

6 Chhattish garh 11761 20151 71.3

7 Andhra Pr 15507 26211 69.0

8 Arunachal Pr. 14107 23788 68.6

9 Goa 42296 70112 65.8

10 Karnataka 16758 27291 62.9

11 Himachal Pr. 20806 33805 62.5

12 Meghalaya 14611 23420 60.313 West Bengal 15826 25223 59.4

14 Kerala 19294 30668 59.0

15 Maharashtra 23340 37081 58.9

16 Tamil Nadu 19378 29958 54.6

17 Manipur 13260 20326 53.3

18 Assam 12269 18598 51.6

19 Jharkhand 12747 19066 49.6

20 A & N islands 23728 34853 46.9

21 Punjab 25611 36759 43.522 Uttar Pradesh 9405 13262 41.0

23 Bihar 5766 7875 36.6

24 Rajasthan 13477 17863 32.5

25 Madhya Pr 12384 15647 26.3

All India 15839 25956 63.9

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0

10000

20000

30000

40000

50000

60000

70000

80000

State-wise per capita income (Rupee) 1999-2000(Rupee) 2005-2006

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RanRankk

StateState Literacy rateLiteracy rate RankRank StateState Literacy rateLiteracy rate

11 KeralaKerala 93.9193.91 1515 Haryana 76.64

22 MizoramMizoram 91..5891..58 1616 KarnatkaKarnatka 75.6075.60

33 TripuraTripura 87.7587.75 1717 MeghalayaMeghalaya 75.4875.48

44 GoaGoa 87.4087.40 1818 OrissaOrissa 73.4573.45

55 Himachal PradeshHimachal Pradesh 83.7883.78 1919 AssamAssam 73.1873.18

66 MaharshtraMaharshtra 82.9182.91 2020 ChhattishChhattish GarhGarh 71.0471.04

77 SikkimSikkim 82.2082.20 2121 Madhya PradeshMadhya Pradesh 70.6370.63

88 Tamil NaduTamil Nadu 80.3380.33 2222 Uttar PradeshUttar Pradesh 69.7269.72

99 NagalandNagaland 80.1180.11 2323 J&KJ&K 68.7468.74

1010 ManipurManipur 79.8579.85 2424 Andhra PradeshAndhra Pradesh 67.6667.66

1111 Uttrakhand 79.63 2525 JharkhandJharkhand 67.6367.63

1212 Gujarat 79.37 2626 RajasthanRajasthan 67.0667.06

1313 West Bengal 77.08 2727 Arunachal PradeshArunachal Pradesh 66.9566.95

1414 Punjab 76.68 2828 BiharBihar 63.8263.82

Ranking by literacy rate in 2011

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S.NS.N

oo..

State/State/UtsUts GrowthGrowth S.NoS.No

..

State/State/UtsUts GrowthGrowth

11 Andhra PradeshAndhra Pradesh 0.750.75 1111 MaharshtraMaharshtra 1.541.54

22 AssamAssam 2.762.76 1212 OrissaOrissa 1.501.50

33 BiharBihar 1.511.51 1313 P njabP njab 2.222.22

44 G jratG jrat 2.082.08 1414 RajasathanRajasathan 1.661.66

55 HaryanaHaryana 3.073.07 1616 Tamil NadTamil Nad --0.740.74

66 Himachal PradeshHimachal Pradesh 1.081.08 1717 UttarUttar PradeshPradesh 1.941.94

77 Jamm andJamm and

KashmirKashmir

1.681.68 1818 West BengalWest Bengal 1.651.65

88 Karnata aKarnata a 1.561.56

99 KeralaKerala 1.341. 34 A ll IndiaAll India 1.671.67

1010 Madhya PradeshMadhya Pradesh 1.161.16

Growth rate of Rural Employment (1993-94 to 2004-2005)

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RELATIONSHIP BETWEEN DECENTRALIZATION AND

ECONOMIC DEVELOPMENT

RANK PER CAPITAINCOMEGROWTH

RURALPOPULATIONBPL

GROSSSTATEDOMESTICAVERAGEGROWTH

LITERACYRATE

RURALEMPLOYMENTGROWTH

DEVOLUTIONINDEXRANKING

1 GUJARAT J&K ARUNACHALPRADESH

KERALA HARYANA KERALA

2 UTTARAKHAND DAMAN &DIUAND GOA

UTTARAKHAND MIJORAM ASSAM KARNATAKA

3 SIKKIM PUNJAB MADHYA PRADESH

TRIPURA PUNJAB SIKKIM

4 HARYANA HIMACHAL

PRADESH

GOA GOA GUJARAT WEST BENGAL

5 TRIPURA ANDHRA PRADESH

ORISSA HIMACHALPRADESH

UTTARPRADESH

RAJASTHAN

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Decentralization and inclusive development

No clear causal linkage betweendecentralization and economic growth:

Neither the theoretical studies nor empiricalanalyses show clear evidence thatdecentralisation leads to development.

Effectiveness of decentralization as adevelopment catalyst is context anddesign specific

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Success Stories

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Case: Peoples Planning Process in Kerala

The most important innovation in a decentraliseddevelopment strategy is the Peoples PlanningCampaign (Janakeeya Aasoothranam) of Kerala.

33 per cent of the states plan budget is devolved forspending on development projects formulated bythe PRIs.

Based on peoples preferences articulated by thegram sabhas , village panchayats formulate theirplans, which are coordinated at block level andapproved at the district level

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Case: The Green Kerala Express Social Reality Show

The Kerala state government has employed a novelmethod to activate competition among the panchayats

and showcasing the best performing panchayats througha social reality show called, The Green Kerala Express.

The competition first invited all Local Governments in

the state to provide a short video showcasing theirsustainable development projects . More than 200 localgovernments responded with the stories of localdevelopment, covering different developmental aspects.

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The jury visited the 15 LGs

shortlisted for the second round alongwith the video team and evaluated theirperformance on the ground. Based on a

final jury interaction onscreen, the bestthree panchayats were selected withaudience participation in the selection.

Elappully (Palakkad district): First Prize.

Akathethara (Palakkad district): Second Prize.

Adatt (Thrissur district) : Third Prize

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Over two years(2008-2010), the milk production increased from 2,400 litres a day to12000 litres, increasing incomes by Rs. 7.5 crore in 2009-10. Paddy farmers adoptdairying as a second livelihood option.

The panchayat provided direct support to women to set up more than 600 diary units.It also provided support services, such as fodder cultivation on 50 acres of land andsetting up a model veterinary hospital.

To ensure that NREGA activities did not create a shortage of farm labour, the NREGAprogramme was put on hold during paddy cultivation season.

Elapully Panchayat: First prize winner

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Case: Revenue Mobilisation

P ne and Satara districts in Maharashtra present an interestingexample of how it is it is possible to significantly enhance thereven e from property taxes by introd cing a simple area based taxsystem at the panchayat level.

Looking at the successful transition and improvement inrevenue productivity, the Maharashtra state amended the rulesunder the Panchayat Act to enable the gram panchayats toadopt the area based system.

Substantial increase in revenue from property tax by almostthreefold from Rs. 147.56 crore in 1999-2000 to Rs. 425.93 crorein 2003-04.

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Case: Efficient Provision of Water

Supply in Karnataka

In G tta aad Panchayat,construction of the system wastaken up under the Rajiv Gandhi Rural Water and sanitationScheme

System has a bore-well as the source of water, which is to a50,000 litre capacity overhead tank. There are nearly 100individual household connections and the total cost of thesystem was about Rs.7 lakh .

According to the guidelines, the village community had tocontribute in advance 10 per cent of the capital cost. The

panchayat raised the required amount of Rs.70000 from thevillagers

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SELF-SUSTAINING WATER SUPPLY

SYSTEMSThey initially collected a onetime flat rate charge of Rs.1000 for each household connection. Thereafter, asfollows:-

For pto the first 10,000 litres Rs. 50 flat rate

For the next 10,000 litres Rs. 50+Rs.10 per additionalkilolitre

For the next 10,000 litres Rs. 150+Rs.20 per additionalkilolitre

Experience reflects the foresight of the leaders to make the watersupply system economically viable, their sagacity, and the

willingness of the people to pay for a service.

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Shortcomings andReform Issues

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The examples of successful experiences of panchayats provide anumber of lessons.

Under favourable conditions, and if the system is designedproperly, panchayats can be effective catalysts in development.

Putting together a compendium of successful experiences , can

inspire other panchayats to embark on developmental initiatives.

Horizontal learning through effective dissemination ofsuccessful experiences and creation of systems to share theexperiences can be a great source of inspiration.

Summary of the Experiences

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Some Glaring Shortcomings

Top down approach of planning- Centrally sponsored schemes

Tax system heavily skewed in favour of the Centre. Less scope of revenue

generation in PRIs

Lack of awareness and information among the elected representatives ofpanchayats.

Panchayats dont have any right over natural resources

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Delivery ofservices is better in case ofeven distribution ofassets and land reforms. This ensureseven distribution ofpower and prevents elite capture ofpublic services. Eg. West Bengal

Human development and harnessing the pool of educated manpower. The analysis of the performance ofpanchayats in different states and regions in India shows that panchayats have been relatively more successfulin contributing to development in places where the literacy rate and education standards were higher

Reservation of seats for women in the panchayats : Studies show that gender of village presidentsignificantly alters expenditure composition.

Catalysing Panchayats for Development: Reform Issues

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Strong, visionary and committed leadership :feature of successful panchayats

Proper information system: Precondition forgrass root planning

There should be direct linkage between taxpayments and benefits received.

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Creating institutions and systems toshare experiences: Inter-panchayatcooperation and coordination.

Empowerment of the panchayats in

appointment- Significantimprovement in education (Bihar).

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Thank You

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