Panchayati Raj Institutions: Issues and Challenges

[op-ed snap] Evaluating the panchayati raj institutions at 25

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Mains Paper 2: Governance | Important aspects of governance, transparency and accountability, e-governance- applications, models, successes, limitations, and potential

From UPSC perspective, the following things are important:

Prelims level: 73th Amendment(read the attached story)

Mains level: A brief examination and introspection on panchayati raj system.


News

Context

  1. Last week marked the 25th anniversary of the 73th Amendment, a good time for some examination and introspection on panchayati raj
  2. Panchayati raj institutions(PRIs) are simultaneously a remarkable success and a staggering failure

25 years of panchayati raj institutions: A success or a failure?

  1. If the goal was to create another layer of government and political representation at the grass-roots level, then there is no parallel to the PRIs
  2. And if the goal was to provide better governance, then PRIs are a failure and not equipped to succeed anytime in the foreseeable future

Greater representation for women

  1. There are about 250,000 PRIs and urban local bodies, and over three million elected local government representatives
  2. The 73rd and 74th Amendments required that no less than one-third of the total seats in local bodies should be reserved for women
  3. At 1.4 million, India has the most women in elected positions. Seats and sarpanch/pradhan positions were also reserved for SC/ST candidates
  4. While India has always had reservations for elected representatives from disadvantaged groups like SC/STs, this is the only level of government with reservation for women

On all other margins except representation, PRIs are either a failure or a series of missed opportunities
The first failure: Very little devolution of authority

  1. The transfer of various governance functions—like the provision of education, health, sanitation, and water was not mandated
  2. Instead the amendment listed the functions that could be transferred, and left it to the state legislature to actually devolve functions
  3. There has been very little devolution of authority and functions in the last 25 years
  4. PRIs cannot govern unless they are given the authority to actually perform functions related to governance

The second failure: The lack of finances for PRIs

  1. Local governments can either raise their own revenue through local taxes or receive intergovernmental transfers
  2. The 73th Amendment recognized both forms of public finance, but did not mandate either
  3. The power to tax, even for subjects falling within the purview of PRIs, has to be specifically authorized by the state legislature
  4. The 73rd Amendment let this be a choice open to the state legislatures—a choice that most states have not exercised
  5. The constitutional amendment created provisions for State Finance Commissions to recommend the revenue share between state and local governments
  6. However, these are merely recommendations and the state governments are not bound by them
  7. As a result, PRIs are so starved for funds that they are often unable to meet even payroll obligations
  8. They are reluctant to take on projects that require any meaningful financial outlay, and are often unable to solve even the most basic local governance needs

What should be done?

  1. The only long-term solution is to foster genuine fiscal federalism
  2. where PRIs raise a large portion of their own revenue and face hard budget constraints, i.e. fiscal autonomy accompanied by fiscal responsibility
  3. Without the functions and finances, PRIs will only be an expensive failure
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