Prof. Dinesh Mehta CEPT University, Ahmedabad, INDIA

The Context Decentralization and devolution of governmental functions to the local level has been accepted by most governments Empowering local governments is seen as a means for rapid economic growth Increasing social divide, poverty and environmental deterioration can be minimised when governments are closer to people

The Aberdeen Agenda: Commonwealth Principles on Good Practice for Local Democracy and Good Governance Constitutional and legal recognition Ability to elect representatives Partnership between spheres Appropriate legal powers Participation Transparency Subject to scrutiny Inclusiveness Adequate resources Equitable service delivery Commitment to capacity development Open accountability

Source : Joint Annual Review of Decentralisation 2004, Government of Uganda; Modified from Jütting et. Al. 4 DECENTRALISATION Poverty Reduction / Better Lives POLITICAL MOTIVATION POWER SHARING INCREASED STABILITY MORE POPULAR PARTICIPATION LESS VULNERABILITY VOICE ECONOMIC MOTIVATION EFFICIENCY GAINS EFFECTIVENESS BETTER TARGETING IMPROVED / INCREASED ACCESS to SERVICES Rationale for Empowering Local Governments

Decentralisation and inter governmental relations The term "decentralization" embraces a variety of concepts- Political, administrative, fiscal and market decentralization Political decentralisation – democratic decentralisation. Administrative decentralisation-three major forms of administrative decentralization -- deconcentration, delegation, and devolution Fiscal Decentralisation is a core component of decentralization Market Decentralisation –private sector participation, deregulation_

Aberdeen Agenda IndiaPakistanSri LankaBangladeshMaldives Constitutional and legal recognition yYYYy The ability to elect local representatives Not currently Partnerships between spheres of Government There is open dialogue. No organised local government voice There are informal local government associations in four provinces, which are currently playing a lobbying role. Provincial Chief Ministers hold regular meetings. There is a local government association although its role in formal intergovernmen tal relations is limited. There is dialogue between the Upazila, district, divisional level administration and national departments. The presidents of each atoll, island and city council maintain dialogue.

Aberdeen Agenda IndiaPakistanSri LankaBangladeshMaldives Defined legislative framework Each state has its own local governme nt legislation The local government ordinance The Baluchistan government Act in Provincial councils act 1987; Urban councils ordinance 1939; Municipal councils ordinance 1947; Pradeshiya Sabhas Act No The Hill district local government Parishad Act 1989; The Zila Parishad Act 2000; The local government (pourashava) Ordinance 2008; The local government (union parishad) ordinance 2008; The local government (upazila parishad) ordinance 2008; The local government City Corporation ordinance 2008 The main legislation regulating local government is the Decentralisation Act 2010 and the Local Council Election Act 2010.

India: 73 rd and 74 th constitutional amendments Granted constitutional status to the third tier of local government – political, functional, fiscal decentralisation Elected local governments; reservation for women (one-third, now 50% in some states), reservation for minorities,Gram sabha, ward committes (area sabha), Transfer of functions - List of 29 items in Eleventh Schedule (Rural) and 18 items under 12th Schedule (urban) Creation of District Planning Committee and Metropolitan Planning Committee State Finance Commissions

Inter-Governmental structure

Financing: Typical Problems Funding: local government funding is often: – Quite inadequate (unfunded mandate) – Overly rigid (tied), so defeating the very local discretion that justifies decentralizing – Inequitably allocated between LGs – Delayed or unreliable – Overly controlled by higher level (eg under single treasury) – Associated with overly rigid financial regulations (eg on procurement) – Without incentives for good performance

11 Finance Commission Central Finance Commission – Article 280, of the Constitution of India provides for establishment of a Finance Commission Distribution of total income from taxes of the Government (the Central and State Government) between the Union and the States as per there respective contribution towards of the taxes. Factors based on which the government should allocate the grant-in-aid of the revenues to the States of India out of consolidated fund of India.

State Finance Commission The principles which should govern The distribution between the State and the Panchayats (Municipalities)of the net proceeds of the taxes, duties, tolls and fees leviable by the State; The determination of the taxes, duties, tolls and fees which may be assigned as, or appropriated by, the Panchayats (municipalities); The grants-in-aid to the Panchayats (municipalities) from the Consolidated Fund of the State; The measures needed to improve the financial position of the Panchayats (municipalities); Any other matter referred to the Finance Commission by the Governor in the interests of sound finance of the Panchayats (municipalities).

Inter-governmental relation Source: Dr. Louis A. Picard, University of Pittsburgh

Autonomy of Local governments tendency of central government to proceed with caution in devolving responsibilities to local governments India – in theory huge devolution (11 th schedule 29 functions; 12 th schedule 18 functions) in practice very few functions are devolved Roles and responsibilities among different spheres of governments 15

LOCAL Government State and National Governments Utility/ Local Government Associations INTERNAL ACCOUNTABILITY DOWNWARD ACCOUNTABILITY Citizens and Consumers Performance benchmarking, Self- regulation Grievance redressal, report cards Public dissemination Reform-linked funding, Regulatory compliance Internal accountability for performance results Accountability for regular operations UPWARD ACCOUNTABILITY 2. Structures of Accountability

Deconstructing local “capacity” problems Tendency to state that Local Governments have no capacity There are indeed “inherent” problems of capacity but they are exaggerated Many capacity constraints are externally imposed: Inadequate Financing Unclear roles, functions and expectations Unclear procedures and poor guidance Weak institutional arrangements for accountability and coordination among different levels Weak monitoring & ineffective incentives/sanctions for performance

18 Structures foraccountabilityFiscalDecentralisationHuman Resourcesmanagement Strong local governments Enable Community participation Legal Framework:assignment offunctions strengthening inter-governmental relations