Local Self Governance & Development

MDV-111
Local Self Governance

and Development
Indira Gandhi National Open University
School of Extension and Development Studies
Block
1
DEMOCRATIC DECENTRALIZATION
UNIT 1
Decentralisation: An Overview 5
UNIT 2
Local Self Government and Panchayati Raj Institutions 22
UNIT 3
Local Self Government and Urban Local Bodies 44
UNIT 4
PESA and its Implementation 66
ORIGINAL PROGRAMME DESIGN COMMITTEE
Prof. Amita Shah Prof. P. Radhakrishan
Gujarat Institute of Development Research Madras Institute of Development Studies, Chennai
Ahmedabad
Prof. Ramashray Roy (Rtd)
Prof. S. K. Bhati Centre for Study of Developing Societies
Jamia Millia Islamia University, New Delhi New Delhi
Prof. J. S. Gandhi (Rtd)
Jawaharlal Nehru University, New Delhi Prof. R. P. Singh ( Rtd)
Ex-Vice-Chancellor, MPUAT, Udaipur
Prof. Gopal Krishnan (Rtd)
Punjab University, Chandigarh Prof. K. Vijayaraghavan
Prof. S. Janakrajan (Rtd) Indian Agriculture Research Institute, New Delhi
Madras Institute of Development Studies Chennai. Dr. Nilima Shrivastava, IGONU, New Delhi
Prof. Kumar B. Das
Prof. B. K. Pattanaik, IGNOU, New Delhi
Utkal University, Bhubaneswar
Prof. Nadeem Mohsin ( Rtd) Dr. Nehal A. Farooquee, IGNOU, New Delhi
A.N.Sinha Institute of Social Sciences, Patna Dr. P. V. K. Sasidhar, IGNOU, New Delhi
REVISED PROGRAMME DESIGN COMMITTEE

Late Prof. T S Papola(Rtd) Dr, S, Rubina Naqvi
Institute of Studies in Industrial Development Hindu College, University of Delhi, Delhi
New Delhi Prof. Nadeem Mohsin ( Rtd)
Prof. S. Janakrajan (Rtd) A.N.Sinha Institute of Social Sciences, Patna
Madras Institute of Development Studies Chennai. Prof. Rajesh, Delhi University, New Delhi
Prof. S. K. Bhati Prof. B. K. Pattanaik, IGNOU, New Delhi
Jamia Millia Islamia University, New Delhi
Prof. Nehal A. Farooquee, IGNOU, New Delhi
Prof. Preet Rustagi
Institute of Human Development, New Delhi Prof. P. V. K. Sasidhar, IGNOU, New Delhi
Prof. Gopal Iyer (Rtd) Dr. Pradeep Kumar, IGNOU, New Delhi
Punjab University, Chandigarh Dr. Grace Don Nemching, IGNOU, New Delhi
Dr. S Srinivasa Rao Dr. Nisha Varghese, IGNOU, New Delhi
Jawaharlal Nehru University, New Delhi
COURSE PREPARATION TEAM
Units Writers: Editors:
Prof. G. Palanithurai Prof. P. P. Balan
Gandhigram Rural Institute (Unit 1 ) Centre For Research in Industrial Development
(Content Editor)
Prof. Nehal A Farooquee
IGNOU, New Delhi (Unit 2) Mr. Praveer Shukla (Language Editor)
Dr. V. Dhar Prof. B.K. Pattanaik, IGNOU
NIUA, New Delhi (Unit 3)
Prof. Nehal A Farooquee, IGNOU
Dr. S.K. Singh
Prof. P. V. K. Sasidhar, IGNOU
NIRD, Hyderabad (Unit 4)
Programme Coordinators: Prof. P.V.K. Sasidhar, Prof. B.K. Pattanaik, Prof. Nehal A. Farooquee
Course Coordinator : Prof. Nehal A. Farooquee
PRODUCTION TEAM
Mr. S. Burman Mr. K.N. Mohanan Mr. Babu Lal Rewadia
Dy. Registrar (Publication) Asst. Registrar (Publication) Section Officer (Publication)
MPDD, IGNOU, New Delhi MPDD, IGNOU, New Delhi MPDD, IGNOU, New Delhi
March, 2019
 Indira Gandhi National Open University, 2019
ISBN: 978-93-88980-30-2
All rights reserved. No part of this work may be reproduced in any form, by mimeograph or any other
means, without permission in writing from the Indira Gandhi National Open University.
Further information on the Indira Gandhi National Open University courses may be obtained from
the University's office at Maidan Garhi, New Delhi.
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Cover Design by Dr. Lakshaman Prasad, SOPVA, IGNOU
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MDV-111 LOCAL SELF GOVERNANCE
AND DEVELOPMENT
Dear Lerner,
The theme of the course MDV-111 is ‘Local Self Governance and Development’.
As you all are aware that all developing nations are struggling hard and putting
their sincere efforts to achieve the goals of development. The World Development
Indicators published by the UNDP provides data and information on the
achievements of nations on various areas of development. The developing nations
are facing many daunting problems and they are confronting many issues with
regard to development, such as education, health, per capita income, gender etc.
It is now well realized that Local Self Governance alone can help a graet deal in
achieving the goals of development. Therefore it is pertinent to study about various
parameters and components of local self governance and development. It will
also enable you to share your perspectives on development in various forums.
The main aim of this course is to make you all aware about the importance and
role of local self governance in achieving the goals of development. This course
is divided into following four blocks.
Block 1, Democratic Decentralization, deals with the basics of democratic

decentralization, the various levels of local self government and Panchayati Raj
Institutions in India, how local governance helps the marginalized sections
particularly the tribal groups.
Block 2, Extension Teaching Methods and Audio Visual Aids, discusses the
meaning of teaching and learning in the context of extension and development
in the first part. In the second and third parts, this block discusses the meaning,
functions, classification, and description of extension teaching methods, and
audio-visual aids, along with their selection for various teaching occasions.
Block 3 ‘Communication in Extension and Development’ with three units

deals with an overview of communication, communication channels, important
theories and models of communication.
Block 4 ‘ICT for Development’ with two units appraises you about the interface
between ICT and development of various sectors and how the ICTs are useful
for rural and urban development.
Block 5 ‘Diffusion of Innovations for Development’ with two units gives an

overview of diffusion of innovations and innovation processes for development.
Block 6 ‘Innovation, Innovativeness and Adopter Categories’ with four units

presents various attributes of innovation, the concept of innovativeness, adopter
categories, opinion leaders, diffusion networks and consequences of innovations.
Democratic Decentralization
BLOCK 1 DEMOCRATIC
DECENTRALIZATION
At present enormous amount of literature has been prepared on decentralization

by the scholars all over the world. Institutions like World Bank, UNDP, European
Commission and a number of others. They are not only studying the on going
process of decentralization but also supporting the process of decentralization
with funding heavily. The newly created literature on decentralization has brought
different set of experiences both of positives and negatives and yet to conclude
the overall experience of decentralization in the world. The primary aim of
decentralization is to engage the people in democracy and development, and
achieving economic development and social justice through a participatory
process is an imperative in the new institutional set-up. The Local Bodies are
now strengthened through a process of devolving adequate powers, functions,
functionaries and funds build the skill, capacity and capability of the elected
leaders and officials and create a support structure for the Local Body leaders.
Unit 1, Decentralization: An Overview, focuses on building our understanding

on the meaning and concepts of people’s participation in the local self governance
in development. This unit will give you knowledge about the context, the reasons,
the promises and expected risks involved in decentralization. Further it will make
you aware about the difference between the new wave of decentralization with
the old one.
Unit 2, Local Self Government and Panchayati Raj Institutions, describes

the role and importance of Panchayati Raj Institutions and local self governance
in India. After the 73rd Amendment to the Indian Constitution, Panchayate Raj
System has come to occupy a pivotal place in the Indian democratic system.
With this land mark amendment, the local governments have become the third-
tier in federal system after the union and the states. After reading this unit you
will be able to explain the concept of local self government in India
Unit 3, Local Governance and Marginalized Sections, unit discusses the

meaning, concept and the need for inclusion of the marginalized sections into
local governance institutions. The representatives are drawn from different socio-
economic segments of Indian Society. The elected representatives are with
different conditions, skills, capabilities, perspectives and capacities.
Unit 4, PESA and its Implementation, unit discusses about those local bodies
which is designed to provide self-rule for tribals. The Act, 1996 (Act No.40 of
1996), popularly known as PESA. This unit provides details about the PESA, its
status and operational aspects including gaps and measures for strengthening the
system.
4
Decentralisation: An Overview
UNIT 1 DECENTRALISATION: AN
OVERVIEW
Structure
1.1 Introduction
1.2 Decentralisation – Meaning and Concept
1.3 Types of Decentralization
1.4 Merits of Decentralisation
1.5 Limitations of Decentralisation
1.6 New Wave of Decentralisation
1.7 Let Us Sum Up
1.8 References and Suggested Readings
1.9 Check Your Progress-Possible Answers
1.1 INTRODUCTION
Decentralisation has gained currency and prominence in governance discourse
since 1990. Contextually a new venture which alters the institutional landscape
of governance at grassroots. Majority of the countries and almost 80% of the
third countries involved in decentralisation either by compulsion of external
pressures or by their own choice. It is being done by the countries with varying
levels of commitment and success. A new set of institutional structure has been
created at the grassroots very near to citizens. The new institutional mechanism
was created by different ways from Constitutionalization to mere passing of
executive order. It is mandated to deliver public goods and services effectively
to the level of the expectations of the people. At present enormous amount of
literature has been prepared on decentralisation by the scholars all over the world.
Institutions like World Bank, UNDP, European Commission and a number of
others apart from universities have involved in studying the new phenomenon in
the World in a comparative perspective. They are not only studying the on going
process of decentralisation but also supporting the process of decentralisation
with funding heavily. The newly created literature on decentralisation has brought
different set of experiences both of positives and negatives and yet to conclude
the overall experience of decentralisation in the world. Methodologically also it
is incorrect to make quick judgment on the institutions within a short span of
time since their inception. Hence the mixed experiences of decentralisation are
viewed with difference from varied perspectives.
This unit will give you knowledge about the context, the reasons, the promises
and expected risks involved in decentralisation. Further it will make you aware
about the difference between the new wave of decentralisation with the old one.
It will provide you the scenario of decentralisation in the world very broadly.
After studying this unit you should be able to understand
• Explain the meaning of Decentralization
• the diverse meaning of the concept ‘decentralisation’ and its dimensions
5
Democratic Decentralization • the promises and hopes with which it is promoted and pushed
• the risks involved in decentralisation
• the difference between the new wave of decentralisation and the old one
1.2 DECENTRALISATION: MEANING AND

CONCEPT
Decentralisation has been defined differently by the scholars and institutions.
There is no unanimity in definitions. Basically, notions and explanations on
decentralisation originate from the basic discipline Public Administration. Some
of the definitions and explanations look similar but in reality they are different.
So proper understanding is necessary otherwise you will be getting lost in the
jungle of expressions and explanations. There are some push factors working in
decentralisation. Hence some of the definitions offered by the institutions which
are pushing decentralisation have to be understood. World Bank has defined the
concept decentralization in following ways. “decentralisation is the transfer of
authority and responsibility for public functions from the central government to
intermediate and local governments or quasi – independent government
organizations and / or the private sector”. It is a complex multifaceted concept.
There are different types of decentralisation which should be distinguished from
one another, because they have different characteristics, policy implications and
conditions for success. Types of decentralisation include political, administrative,
fiscal and market decentralisation. But the core element remains intact.
Subsequently the UNDP has also defined it. Decentralisation according to UNDP
refers to a restructuring of authority so that there is a system of co-responsibility
between institutions of governance at the central, regional and local levels
according to the principle of subsidiarity. Based on this principle, functions (or
tasks) are transferred to the lowest institutional or social level that is capable (or
potentially capable) of completing them. Decentralisation relates to the role of
and the relationship between central and sub-national institutions, whether they
are public, private or civic.
1.3 TYPES OF DECENTRALIZATION

Decentralization is a process of transferring responsibilities to sub-national levels.
There are six types of decentralisation in practice. First, decentralisation by default.
When government institutions become so ineffective that they fail almost entirely
to make the influence of central authorities penetrate down to lower level arenas
and people at the grassroots become negative about government institutions. As
government fails, the civil society step into development domain and make
development projects. So it is not considered as decentralisation. Second, handing
over of tasks and responsibilities previously performed and looked after by the
government agencies to private agencies in the event of the failures of government
agencies. Hence, this is also not considered as decentralisation. Third, delegation
of certain responsibilities of development projects to parasital agencies. It also
happens rarely and hence it need not be considered. It is a school of thought
which argues that decentralisation happens outside the purview of public
6
institutions cannot be considered as decentralisation. There is yet another school Decentralisation: An Overview
of thought which broadly includes all types of decentralisation. But there are
other three types of decentralisation which are to be defined as the activities of
the institutions which are well within the domain of pubic institutions. And these
definitions will reflect a model of democracy, accountability and legitimacy largely
promised on western liberal tradition. But in practice in many of the developing
countries you find variations in terms of definitions. Broadly accepted categories
of decentralization are explained here.
1.3.1 Democratic Decentralisation

First we will take up democratic decentralisation. It is otherwise called political
decentralisation. It refers to the transfer of political power and authority to sub-
national levels of government. Elected bodies are in position from the village
council to state level bodies. Devolution is also considered as a form of political
or democratic decentralisation. It is being widely recognized that political
decentralisation is the true mode of decentralizing government by bringing
benefits like participation of people in local affairs and accountability of office
holders. Democratic decentralization inculcates democratic values at the
grassroots to the common citizen. The figure-1.1 explains the bases of political
or democratic decentralisation.
Creating Bodies for

governance by law at
the grassroots level
Adopting public Devolution of Autonomy to

institutions to powers to Local programme
decentralized Government and to spend
context
Organization of
Downward
Accountability
Fig.1.1: Democratic Decentralisation
1.3.2 Administrative Decentralisation

Second, administrative decentralisation which refers to the transfer of decision
making authority, resources and responsibilities for the delivery of services and
functions from the central government to other decentralized levels of
governments. It has got three variants and each having different characteristics:
(i) de-concentration (ii) delegation and (iii) divestment. You need to have clear
understanding of the above three concepts of Administrative Decentralisation.
The key elements of administrative decentralisation are given in the following
figure-1.2.
7
Existence of lower levels
of government agencies
and field offices
Delivery of public Transferring decision – Execution on

services and functions making authority behalf of central
at lower levels resources government
Accountability between
local government and
central government
Fig.1.2: Administrative Decentralization
De-concentration is a process in public administration in which a field office or

official or a central government department wants some degree of delegated
authority to make decisions or to modify regulations to deliver services effectively
and efficiently. The main objectives of de-concentration are: (i) to improve
administrative efficiency, (ii) to enhance service delivery and (iii) to ensure
adequate central government representation and supervision at provincial and
local levels. De-concentration happens when the local entities act as agent of
central government and it remains accountable to higher levels in the hierarchy.
Delegation is a mere extensive form of administrative decentralisation. It
redistributes authority and responsibility to local units of government or agencies
that are not always necessarily branches of local offices of delegating authority.
Divestment takes place when planning and administrative responsibility or other

public functions are transferred from government to voluntary, private or non
governmental institutions. It is more contracting out the services and
administrative functions partially to units of private agencies.
1.3.3 Fiscal Decentralization
Allocation of
responsibilities among
levels of government
Central government Resources for Local Allocation of various

control governments taxes among levels of
government
Fiscal transfer system

among different levels of
government
Fig.1.3: Fiscal Decentralisation

8
Third, fiscal decentralisation refers to resource allocation to sub-national levels Decentralisation: An Overview
of government including the delegation of funds within Sector Ministries to the
de-concentrated levels. Fiscal Decentralisation transfers two rights to local
governments: a, funds (to deliver decentralized functions) and b, revenue
generating power and authority (to decide on expenditure). The essential
characteristics of fiscal decentralisation are captured in the following figure-1.3:
There are five major forms of fiscal decentralisation:

i) Cost recovery of public services through user charges
ii) Co-financing through which users participate in providing services and
infrastructure through monetary or labour contributions
iii) Expansion of local revenue through prosperity or sales taxes and indirect
charges
iv) Inter-governmental transfers that shift general revenues from taxes collected
by the central government to local government
v) Authorization of local government borrowing and the mobilization of either
national or local government resources through loan guarantees
Now that you have read about the meaning and concept of decentralization along
with the types of decentralization. Now try to answer the following question in
the Check your progress 1.
Check Your Progress 1
Note: a) Write your answer in about 50 words
b) Check your answer with possible answers given at the end of the unit
1) Analyse the need for democratic decentralization of power.
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2) Enumerate the types of Decentralization.
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1.4 MERITS OF DECENTRALISATION
Decentralisation is being attempted with different motives hopes and promises.
It has got rich potentials. Some of the merits of decentralization are as follows:
• to deepen democracy
• to enlarge opportunities for citizens to participate in decision making process
• to draw and use local knowledge for development
• to use informal local mechanisms for the management of resources
• to promote effective partnership between state and society
• to give greater sense of ownership to the stakeholders on the development
projects for their sustainability
• to enhance associational activities at the lower level
• to facilitate cooperation between government and lower level associations
and NGOs
• to enhance the accountability of the officials and the elected representatives
and political institutions
• to enhance the responsiveness of government
• to enhance the transparency of government
• to ease the frustration of people with political ambition to enable them to
play officials roles
• to equip people with skill of negotiation and bargaining
• to improve the collective action potential
• to promote planning, evaluation and monitoring from below
• to undermine authoritarian enclave
• to build the capacity of the people
• to rediscover the local dimension of development
• to recognize the potentials of the local governments
• to improve the efficiency of service delivery
• to adhere to the global demand of democratization
• to convert the noise of the poor into voice of the poor
• to promote equity
• to alleviate poverty
• to empower women.
i) Deepening of Democracy
Democracy and its practices have to percolate in to the larger society as a
culture. It goes beyond national parliament and state legislatures. At every
dwelling unit, there will be an unit meant for governance. There will be a
process of mutual discussion and deliberation and based on the above,
consensus decision will be taken. It is a way of living, respecting each other
and treating all equally. From the grassroots to national parliament all
10
institutions involve in practicing democracy in taking decision collectively Decentralisation: An Overview
through a process of dialogue. Thus decentralisation is a process by which
democracy is being widened and deepened.
ii) Ensuring People’s Participation

Hitherto beneficiaries and petitioners are made as proud citizens and
stakeholders to participate in the decision making process and by which
they feel that they decide their destiny on the issues affecting their life.
Depending on the opportunity, skill and capacity of the stakeholders,
participation will take place in the decision making process. Each and every
social segment will get an opportunity to be in the decision making bodies
when the powers are decentralized.
iii) Using Local Skills and Knowledge

Through decentralization development becomes local and left in the hands
of local people. Considering this the knowledge and skill of the local people
will be harnessed through community participation. To make use of the
local skills and knowledge for the market, skill up gradation will take place.
To produce marketable goods and articles by making use of the skills and
knowledge of the people, appropriate technologies are also utilized. Thus
local skills and knowledge will be used by adopting newer technologies to
global market. Local skills and knowledge will be used by adopting newer
technologies to global market also.
iv) Using Informal Local Mechanism

Communities have developed practices and procedures over a period of
time to manage resources in the absence of formal institutions which are
being used in the process of development and governance at grassroots. To
settle many of the problems in resource management at grassroots, the
informal local mechanism can be used. While they are being used equity is
also achieved in terms of utilization of resources by the communities. Local
mechanism evolved, refined and used over a period of time is much more
useful and rational manner for adoption even to-day for managing the local
resources. Local informal mechanism has got required vibrancy and utility.
v) Promoting Partnership between State and Society

by involving the people in the development activities and service delivery
activities not only as participants but also as contributors and partners in the
process of implementation of schemes and programmes of the governments.
The partnership is established between the society and the state. User groups
and stakeholders take responsibility of managing services and government
departments mainly act as catalyst. The user groups take full charge of the
programmes schemes and service delivery. As a result, people come to the
front and government departments remains in the backdrop.
vi) Ownership of Development

Since citizens are made as development participants to participate in the
development projects, people have adequate information and understanding
about the projects and thereby they take responsibility for the project to
deliver the goods. Having got the sense about the whole benefits, they
11
Democratic Decentralization establish their grip over the project activities and develop a sense of
ownership. The beneficiaries are not in a mood or perception of being in the
receiving end and feel that they are the owners and guardians of the
programmes. Thus the success rate of the schemes and programmes is very
high. Greater sense of ownership is built on development schemes and
programmes by people or stakeholders for whom the schemes and
programmes are actually meant.
vii) Enhancing Associational Activities

Having brought the people closer to the formal institutions at grassroots,
people become conscious of what institutions have to deliver and thereby
they organize themselves to claim their entitlements and services not as
charity but as entitlements and rights. People will organize themselves in to
different kind of associations. At the grassroots women, youth, marginalized
and others form groups to claim their entitlements. Through the above
associations, they resort to settle all the problems. Decentralisation will
enable people to form and organize associations. Thus people are mobilized
for development activities continuously.
viii) Alliance Building for Development

In order to ensure efficient delivery of services, the local institutions will
make partnership with the organizations and associations functioning at the
grassroots. The Local Body institutions will collaboration and contact with
other civil society organizations with the purpose of efficient delivery of
services.
ix) Enhancing Accountability

Since people are provided with opportunity for participation at grassroots
for decision making, people can question and make observation about the
functioning of the institutions and representatives and thereby accountability
is ensured and enhanced. The accountability system mostly is built up
internally and upward and not downward. However, through decentralisation
accountability is built up downward and towards the people. The existing
accountability arrangement is being looked at from the perspective of output.
But decentralisation brings a new perspective that it is to be looked at from
the perspective of outcome. By turning the process of accountability from
internal to external, transparency is ensured.
x) Responsiveness of Government
Regular conduct of meetings of the governing institutions are convened at
the grassroots level, people are participating in the institutions not as an on
looker but as an assertive stakeholders with necessary information regarding
the functioning of the institutions. This makes the government responsiveness
towards demands of the people.The practice of entitlement claim by the
people made the governing institutions responsive and responsible.
xi) Enhancing Transparency

Hitherto maintained secrecy of the governing institutions has been opened
through the participation of the people in all the activities at the local level
for development and thereby development activities and functioning of the
12
institutions are made transparent. Having established grip over the Decentralisation: An Overview
institutions, people make the institutions transparent in all their activities.
xii) Easing Frustrations

The heavy competition for public offices at the National and Regional levels
made many aspired individuals for public space frustrated as official positions
available in the institutions are limited. But this new institutional mechanism
at grassroots provides opportunity for such frustrated individuals to perform
functions in the public office and thereby frustrations of the people are eased.
In the same way people who are all frustrated over the performance of the
government institutions will be given responsibilities for the same task and
thereby the frustrations are eased.
xiii) Increasing Negotiating and Bargaining Skills

People of different social segments with different kinds of disabilities and
disadvantages will participate in the decision making process and thereby
they learn the art of negotiation and bargain through their continued practice
of taking part in deliberation. At the local level marginalized groups will
bargain and negotiate with the dominant groups, elected representatives will
negotiate with officials, representatives of higher level governing institutions
like provincial legislatures and national parliament will negotiate with the
local governments. By continuing this practice of engagement, negotiating
skill of the people at lower segments will be increased.
xiv) Increased Collective Action Potential

Benefits are being distributed not based on external drive but on the efficiency
of the participation of the people in the decision making process. In order to
get the benefits collective identities are formed and based on the identity
arguments are projected and institutions are compelled to make decisions.
In such a way collective action potential is enhanced. Water used groups
and self help groups are a few best examples.
xv) Planning from Below

So far, planning exercise had been done at the central level which resulted
in large scale demands of the people unmet. In the six decade governance,
the centralized planning has achieved tremendous results in macro economics
of the countries and yet the rural realities have not been changed drastically
towards achieving development as expected. In the centralized planning
diversity is not accommodated. The development outcome is being captured
by only a few groups in the society. In order to provide basic facilities, to
make use of the facilities to growth and to bring economic activities, planning
exercise has to be done at the micro level. This exercise had been thought of
many times. Whether planning institutions could be created at the bottom
either at the block level or at the district level. Now this concept gained
currency and planning exercise has to be initiated at different levels starting
from the lowest unit. By doing so, the needs and aspirations of the people
will be met through this planning from below.
xvi) Undermining the Authoritarian Enclave

By giving opportunity at the ground to all the social groups, questions raised
13
Democratic Decentralization against the ruling elites and the bureaucracy and thereby authoritarian enclose
is undermined. In a society like India authorities tendency is always active
as the social structure is such that hierarchy is established because of the
caste system. A feudal culture is maintained because of its being agriculture
based. Since colonial administration continue to dominate, a culture of ruling
and dominating has been perpetuated. The new dispensation of
decentralisation of powers has opened the gates for access to power and
make the people to break the authoritarian enclave.
xvii)Building the Capacity of People

It is an imperative in decentralisation of power that people should take more
responsibilities and discharge the same effectively and efficiently to deliver
the services to the people. To perform the new responsibilities, capacities of
the people have to be increased. Till date, people have developed an attitude
that the government would provide everything and people have to receive
the same. Now the role has been reversed. People have to manage their
affairs on their own. People are involved in the affairs of governance and
thereby their capacity will be enhanced. Therefore the new system envisages
a new task of building the capacity of the leaders and the people. In a market
driven economy for every act people require skill and efficiency. People
with skills are to be updated and upgraded to match the requirement of the
market. Against this background capacity building assumes significance.
xviii) Local Dimension of Development

Development has dimensions and of which local dimension was missed for
decades together. Now it has been realized that local dimension has to play
a role in achieving larger macro development goals. In the absence of local
development, we have witnessed the imbalance among the regions, blocks
and districts. Now because of the initiatives from below, the imbalances
will be settled through micro planning for local economic development.
Economic development is being the focus of local development. To achieve
economic development all initiatives have to be taken from infrastructural
development to skill up gradation.
xix) Recognizing the Potentials of Local Government

Though steps had been taken to activate local governments in 1950’s, it
could not succeed and ultimately failed. Instead of realizing the potentials,
the threats were being focused. As a result it failed. Now looking at potentials
are being looked. The law of subsidiary brings the arrangement that at every
level the unit of governance is capable of delivering the services provided
the opportunities are given to the units. Law of subsidiary argues that things
that are to be done at the lowest level should be allowed to be done things
that could not be done at that level to be shifted to the next higher level. In
that way activities have to be carried out from the lowest unit to highest unit
of governance.
xx) Improving Efficiency in Service Delivery

Service delivery is a critical issue for many governments. Public institutions
have lost their credibility and efficiency and as a result governments have
started privatizing such services to increase efficiency and to satisfy the
14 needs of the people. Local body serves as a powerful instrument in delivering
quality service at affordable cost to the requirements of the citizens. Further Decentralisation: An Overview
these responsibilities are with them, through peoples participation efficiency
is achieved.
xxi) Responding to Democratization

Decentralisation process responds to the growing demand for
democratization. Decentralisation not only democratizes the political
institutions but also the society. Many of the societies freed from the colonial
yoke have adopted representative form of governance with the intension of
democratizing the society. But even political institutions are not
democratized. Hence the society is affected with inequality, authoritarian
practices. Decentralisation deepens the democracy by democratizing the
institutions both in political and social realms.
xxii)Noise to Voice
In democracy, many of the public grievances are expressed through popular
and public demonstrations. But decentralisation creates structures at all levels
up to the grassroots and thereby the noise of the people is converted into
voice as their demands are placed before the institutions for decision making.
Even the lowest unit of governance at the grassroots, there is an institutional
structure to listen to the voice of the citizens. Thus channels have been
opened through decentralisation to channelise the grievance of the people.
xxiii)Equity Promotion
Equity is the casuality in centralized governance and administration. While
distributing resources and benefits, in the absence of claim by the
stakeholders as entitlements, equity is not maintained. But now the
decentralisation process enables the stakeholders to claim their entitlements,
as rights, as a result equity is achieved.
xxiv)Poverty Reduction
Macro strategies and approaches have not reduced poverty beyond certain
levels. Hence micro and local approach had been tried. Since it has got the
potentials, poverty can be reduced further with the active participation of
the poverty striken and the community.
xxv)Empowering Women and other Marginalized

Since decentralisation has enabled all segments to participate in the process
of governance and development, it accommodates women and other
marginalized in the whole process and thereby the women and other
marginalized are empowered. Further, women and other marginalized are
given exclusive reservation of seats. After 73rd constitutional amendment,
they are coming in large number to Local Bodies and thereby they form a
critical mass and they perform critical functions also. Hence, in the whole
process women and other marginalized are oriented in governance, political
and development process.
What we have seen from the above are the potentials of decentralisation.
These potentials are derived from the experience of many countries while
decentralizing powers. It does not mean all potentials will be realized in all
the societies while decentralizing the powers. Realization of potentials 15
Democratic Decentralization depends on many factors and of which how the whole process of
decentralisation takes place is crucial and important.
1.5 LIMITATIONS OF DECENTRALISATION

Though there are promises and hopes, there are cynicisms and threats in
decentralisation. These threats and cynicisms are also on the basis of experience
gained in the societies. They are
• To democratize lower levels of the political institutions as a substitute for
democratization of the apex
• To draw the elites and dominant figures at the lower level into officials
positions of power. So that the central government can cultivate them as
allies
• To give away the tasks which the central government finds either costly or
inconvenient
• To mobilize local resources through tax increases, the blame for which will
be borne by people at lower levels
• To make use of local resources which the ruling party can exploit for partisan
advantage
• To strengthen the federal government by giving power to the local bodies
without strengthening the state governments
• To please the donor agencies who favour decentralisation
• To build the party at the grassroots
• To decentralize the state inefficiency and corruption at grassroots
• To increase the cost of governance
• To create more conflict at grassroots
i) Substitute Creation
It is perceived that decentralisation is nothing but substitute creation at the
grassroots as political institutions at apex failed to live up to the expected
standard. Instead of reorienting the delivery mechanism, the federal
government creates institutional mechanism with an investment of huge
cost.
ii) Enabling Elites to Capture Power

By decentralisation, central government enables the elites at the grassroots
to capture power and work as its allies. People who are not able to be
accommodated in the apex bodies find opportunity at the grassroots and
thereby they serve the ruling elites at the apex as allies.
iii) Shifting the tasks

Central government shifts its tasks and responsibilities which it finds costly
and difficult to carryout at the grassroots. By doing so, it shifts the blame.
Now it escapes from the balance of the people when services are not delivered
properly.
16
iv) Mobilise Resources at the cost of Local Bodies Decentralisation: An Overview
Local resources are being mobilized through taxes without taking the balance
as the duties have been assigned to the grassroots institutions. There are
enough potentials at the grassroots to mobilize resources but is not being
utilized. But now through decentralisation of powers, these responsibilities
have been given to local bodies and thereby the governments at the apex
escape from the blame of the public.
v) Local Resources can be used for Partisan Advantage

Ruling party at apex can make use of the local institutions for its own
advantages. Election is being fought on poverty line; necessarily
responsibilities with political affiliation come to local bodies. The ruling
party at the apex can make use of their opportunity to expand the party.
vi) Strengthening the Central Government

It is believed that the decentralization process weaken the strength of the
central government and the state government. It is being perceived by many
state governments as a poly to weaken the state governments.
vii) Pleasing the Donor Agencies

Donor agencies have affirmed their faith in decentralisation. Many of the
countries which are depending heavily on the funding of the donor agencies
for development adhere to the directives of the donor agencies. As a result
it becomes a pleasing mechanism to acquire funding.
viii) Party Building at the Grassroots

Ruling political parties are using this decentralisation as a strategy to build
the party at the grassroots. This sometimes promotes social conflicts at the
grassroots.
ix) Decentralisation of Corruption

Inefficient state has decentralized the inefficiency to the grassroots institution.
In the same way the centralized corrupt practices will be decentralized while
decentralisation is on.
x) Increasing Cost of Governance

By creating institutionalized structures at the grassroots for governance and
administration cost of governance will be increased.
xi) Poor Capacity of the Leaders and Officials

Officials and leaders at the grassroots do not have the needed capacity to
handle the powers and responsibilities thrust on them. Without systematic
capacity builing most of them are working as a puppet in the hands of the
functionaries of the government.
xii) Conflict at Grassroots

There are many sources of power at the grassroots and they compete with
each other and clash with each other to handle power at the grassroots
legitimately as powers are decentralized constitutionally and other means.
17
Democratic Decentralization Any new venture has its own merits and demerits. Looking at merits one
has to handle it. As industrialization, modernization and globalisation,
decentralisation has also got some demerits. Humanity by its ability has to
make use of the opportunities and to avoid threats.
Now that you have read about the merits, threats and limitations of
decentralization. Now try to answer the following question in the Check your
progress 2.
1) Give few merits of decentralization
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2) Give few limitations of decentralization
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1.6 NEW WAVE OF DECENTRALISATION

Decentralisation is not a new to the world. It was introduced in 1950’s with
different set of objectives. It was practiced and experimented in many post colonial
societies more particularly Afro Asian Countries and also in Scandinavian
countries of the Europe. But those attempts failed to live up to the expectations.
In many of the authoritarian countries this decentralisation helped to strengthen
the authoritarian regime at the higher level government by tightening the
grassroots societies. The new initiative of decentralisation now is different from
the earlier attempts qualitatively. At the core decentralisation moved from the
basic argument that it is a public sector phenomenon.
This decentralisation is part of democratization, and it devolves powers resources

and functionaries to the elected local governments as a distinct set of state actors
with an own identity, legitimacy and added value in the process of development.
This new wave of decentralisation is linked to the emergence of a new paradigm
18
of local economic development. It aims to activate the local economy through Decentralisation: An Overview
the process of evolving regional plan. Further this new wave of decentralisation
is embedded with the broader reforms of the state.
The wave of decentralization is gradually spreading from country to country. Its

fruits have been encashed in many of the European Countries those have
effectively implemented decentralization of functions, funds and functionaries
to the local bodies. However, the success of decentralization depends on the
acceptability and attitude of the executives and legislatives.
New wave of Decentralisation
Decentralisation and Accountability and Regional Planning

and Local Economic Broader State
Devolution Responsiveness
Development Reform
Fig.1.4
1.7 LET US SUM UP

In this unit, we have discussed about the meaning and concept of decentralization.
We have also discussed the merits and limitations involved in the process of
decentralization. We also emphasized on the new wave of decentralization.
1.8 FURTHER SUGGESTED READINGS/

REFERENCES
European Commission, 2007, Supporting Decentralisation and Local
Governance in Third Countries, European Commission, Brussels.
Manor, James 1999, The Political Economy of Democratic Decentralisation,

World Bank, Washington, D.C.
Palanithurai, G. 2008. Restructuring Local Governance in Globalisation, The

ICFAI Journal of Governance and Public Policy Vol. 3 No.1 March, 2008 23 –
34.
Shah, Anwar (ed.), 2006, Local Governance in Industrialized Countries, World

Bank, Washington D.C.
1.9 CHECK YOUR PROGRESS-POSSIBLE

ANSWERS
1) Analyse the need for democratic decentralization of power.
Ans.Democratic decentralisation is otherwise called political decentralisation.
It refers to the transfer of political power and authority to sub-national levels of
19
Democratic Decentralization government. Elected bodies are in position from the village council to state level
bodies. Devolution is also considered as a form of political or democratic
decentralisation. It is being widely recognized that political decentralisation is
the true mode of decentralizing government by bringing benefits like participation
of people in local affairs and accountability of office holders. Democratic
decentralization inculcates democratic values at the grassroots to the common
citizen.
2) Enumerate the types of Decentralization.

Ans. The broad categories of decentralization are:
(i) Democratic Decentralisation
(ii) Administrative Decentralisation
(iii) Fiscal Decentralisation
1) Give few merits of decentralization
Ans. Some of the merits of decentralization are as follows:
• to deepen democracy
• to enlarge opportunities for citizens to participate in decision
making process
• to draw and use local knowledge for development
• to use informal local mechanisms for the management of resources
• to promote effective partnership between state and society
• to give greater sense of ownership to the stakeholders on the
development projects for their sustainability
• to enhance associational activities at the lower level
• to facilitate cooperation between government and lower level
associations and NGOs
• to enhance the accountability of the officials and the elected
representatives and political institutions
• to enhance the responsiveness of government
• to enhance the transparency of government
• to ease the frustration of people with political ambition to enable
them to play officials roles
• to equip people with skill of negotiation and bargaining
• to improve the collective action potential
• to promote planning, evaluation and monitoring from below
• to undermine authoritarian enclave
• to build the capacity of the people
• to rediscover the local dimension of development
• to recognize the potentials of the local governments
20 • to improve the efficiency of service delivery

• to adhere to the global demand of democratization Decentralisation: An Overview
• to convert the noise of the poor into voice of the poor

• to promote equity
• to alleviate poverty
• to empower women.
2) What are the threats associated with decentralization?
Ans. The threats associated with decentralization are:
• To democratize lower levels of the political institutions as a
substitute for democratization of the apex
• To draw the elites and dominant figures at the lower level into
officials positions of power. So that the central government can
cultivate them as allies
• To give away the tasks which the central government finds either
costly or inconvenient
• To mobilize local resources through tax increases, the blame for
which will be borne by people at lower levels
• To make use of local resources which the ruling party can exploit
for partisan advantage
• To strengthen the federal government by giving power to the local
bodies without strengthening the state governments
• To please the donor agencies who favour decentralisation
• To build the party at the grassroots
• To decentralize the state inefficiency and corruption at grassroots
• To increase the cost of governance
• To create more conflict at grassroots
21
UNIT 2 LOCAL SELF GOVERNMENT AND
PANCHAYATI RAJ INSTITUTIONS
Structures
2.1 Introduction
2.2 Historical Background
2.3 Panchayati Raj System after Independence
2.4 Panchayati Raj System after 73rd Constitutional Amendment
2.5 Constitution and Functions of Panchayati Raj Institutions
2.6 Issues and Challenges of the PRIs
2.7 Let Us Sum Up
2.9 Check Your Progress – Possible Answers
2.1 INTRODUCTION
Local Self Government has been major instrument for the extension of the
democratic process at the grass root level and to involve the local communities
in decision making in matters concerning their basic civic and other needs. Right
from the beginning in 19th century, the local-self government institutions
(panchayats and municipalities) in rural and urban areas have remained the main
instruments of democratic decentralization in India. The panchayat in rural India
and municipalities in urban India are defined in the constitution as institutions
of local-self government. The popular saying of ‘panch-pardhan’ from the ancient
times connotes that the panchayat had deep roots in the Indian culture. After the
73rd Amendment to the Indian Constitution, Panchayate Raj System has come to
occupy a pivotal place in the Indian democratic system. With this land mark
amendment, the local governments have become the third-tier in federal system
after the union and the states. However even after more than a decade of passing
of the historic constitutional amendments of 1992, the local governments have
not been made effective in many states. Their function varies from state to state
and in many states, devolution of functions, functionaries and funds to the local
government has not taken place as envisaged in Part-IX and IXA of the
Constitution. On the other hand, considerable progress has been made in the
member states of European Union in effective decentralization of powers and
functions to the communities at the local level. In fact, unlike in India there are
no separate local level institutions are regional and area based, covering both-
urban and rural communities.
After reading this unit you will be able to:
• Explain the concept of local self government in India
• Describe the evolution of Panchayati Raj in India
• Discuss the three tier Panchayat Raj Institutions
• Describe the essence of landmark 73rd Constitutional Amendment
22
Local Self Government and
2.2 HISTORICAL BACKGROUND Panchayati Raj Institutions
Panchayats in Ancient Times

The panchayats in India have a long history, before earning a covered place in
the Indian Constitution. The significance of the system had been chronicled during
different periods of Indian history. It is not a flight of fancy, but the truth is that,
ancient Indian history has provided evidence of the existence of village panchayats
comprising five informally elected elderly members to settle dispute in the village.
A reference to an organized system of rural local self-government (panchayat)
has been found in ancient Vedic literature. Rig Veda has mentioned about
‘Gramini’, the village head employed by the king for civil and military purposes;
while Atharva Veda envisaged the institution of ‘sabha’,’samiti’,’sabhapati’ and
‘sabhasad’ primarily performing judicial functions. A mention of village
institutions had been made in the great epics, the Ramyana and the Mahabharat,
where the gramini was responsible for collecting statue dues, keeping village
records, settling disputes and controlling crime. Kautaliya’s Artha Shastra gives
a comprehensive account of the system of village administration prevailing in
ancient India. Besides, evidence of the village panchayats is also discerned in
the Maurya and Chola dynasties and during the golden era of the Gupta period.
Panchayati Raj System during Medieval Period

With the coming of the Muslim rule in India, local institutions received a set-
back, as they did not enjoy the same autonomy and prestige, as under the Hindu
kings. “Mughal government was highly centralized autocracy. The crown was
the motive power of the entire administrative machinery. Where the government
is absolute, the supreme authority concentrated in one man’s hand, the territory
larger, the means of communications between the districts slow and difficult, the
transfer of local officers frequent, no political life or local initiative is left to the
people. The muslim rulers recognised local chiefs and zamindars as the
repositories of local authority, to the exclusion of the people. “The villages and
towns of the Mughal empire enjoyed parochial self-government rather than local
autonomy. A people who do not possess political freedom and powers of self
taxation for national purposes, can not be said to enjoy local autonomy”. The
office of Kotwal was developed as the keystone of the municipal administration
and “his functions in connection with the town in his charge were, at least in
theory, the most comprehensive conceivable being in certain respects even wider
than those of the municipal bodies of the present day”.
While the mughals did not initiate any positive measures of encouragement to
local institutions, wherever such institutions existed, they worked in co-operation
with the official machinery of the rulers and in certain respects became a part of
it. Between the breakdown of the mughal empire and the coming of the British,
there was complete anarchy and military despotism in most parts of the country.
During this period “the ties of social framework were loosened, and in many
places, local institutions had been perverted or sapped, before the British officials
had an opportunity to assess their value.” The medieval period was comparatively
an uneventful period in the history of panchayat system in India. The system
was largely ineffective during Mughal rule, except during Akbar’s reign, it appears
that no other Mughal ruler assigned importance to the panchayats.
23
Democratic Decentralization Panchayati Raj System during British Period
In the same vein, during the initial years of British rule, the autonomy of the
panchayats gradually got diluted with the establishment of local civil of local
civil and criminal courts, revenue and police administration. However the British
rulers were well cognizant of the role played by self governing communities at
the village level. Sir Charles Metcaffe, a Brithish Governor in India during 1852
called panchayat as ‘the little republic’, but with some reservation because a
caste ridden feudal system with power concentrated in the hands of a few landlords
would be inconsistent with the sole mission of decentralization. This is amply
reflected in the East Indian Company Resolution of 1865 which said:
‘The people of this country are perfectly capable of administering their local
affairs. The municipal feeling is deeply mooted in them. The village communities
are the most abiding of Indian institutions. They maintained the framework of
society while successive swarms of invaders swept over the country. The initiative
taken by the Viceroy, Lord Mayo, in 1870 although it was a resolution for
decentralization of power was aimed at improving administrative efficiency. In
1882 Lord Ripon resolved in favour of imparting political education to the people
in general and rural people in particular. The Royal Commission on
Decentralization in 1907 recognized the importance of the panchayats at the
village level, which recommended association of the people with the task of
local administration. A few subsequent initiatives focused on decentralization
during British Rah are Montegue Chelmford Act, 1919; the Simon Commission
report 1925 and Government of India Act, 1935. With these initiatives, by 1925
eight provinces had passed panchayat Acts and by 1926 six Indian princely states
also passed panchayat laws. By 1948, 20 other native states had village panchayat
Acts.
When India was colonised, there occurred a sharp break from the tradition. The
state system, after the advent of the British emerged as a highly centralised set
up. Local institutions during the British period were more a creation of the
government from whom they derived their autonomy rather than a process of
spontaneous growth. No attempts were made to build up the system on indigenous
foundations, although a good deal of indigenous taxation was retained in local
finance. “The chungi of the muslim rulers, the Sikh dharat, the muhtarafa of
Maratha towns have a descendant in today’s octroi. But from the structure and
procedure of earlier local institutions, almost nothing has been incorporated into
modern local government” The form adopted during the British rule was an
admixture of the British and continental patterns. The history of local self-
government in India under the British rule can be conveniently divided into four
phases. “Local finance being a counterpart of local administration and its mainstay,
has of course, been an expression of the purpose implicit in different phases of
local government.” The first phase may be assumed to have ended in 1882, when
Lord Ripon issued his well-known resolution on local self government.
The second phase covers developments from 1882 to 1919, when more powers
were transferred from the centre to the provinces, and the recommendations of
the Decentralisation Commission of 1907, besides discussing other matters,
suggested some changes in local self-government. The third phase extended up
to 1935, during which the Indian Taxation Enquiry Committee (1925) considered
the problems of local taxation, along with central and provincial finances. The
24 Simon Commission of 1930 reversed the process of decentralisation, by
recommending strict control of the state over local bodies. The fourth phase Local Self Government and
Panchayati Raj Institutions
covers developments up to 1947. During this phase, the struggle for independence
was intensified and with the introduction of provincial autonomy in 1937, and
coming into power of congress ministries in many provinces, local bodies,
particularly village panchayats, received a great stimulus and there was
democratisation of local bodies. But “local self-government became a mere
annexe to the national political stadium, where the struggle for independence
was moving towards its climax.”. A rapid survey of local self-government and
finances in India under the British rule, reveals certain “well marked
characteristics”. Independence opened a new chapter in socio-economic reforms,
as embodied in the Directive Principles of State Policy, enunciated in the
Constitution which established a federal system of public administration, provided
universal adult franchise and the objective of welfare state. Article 40 of the
Constitution lays down that the state would take steps to establish autonomous
bodies in the form of village panchayats.
After reading this section, you will have gained an idea about the term, rural
development. Now you should be able to answer the questions given in Check
Your Progress 1.
1) Describe the existence of panchayat during ancient period.
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2) Discuss the contribution of British rule to the panchayati system.
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2.3 PANCHAYATI RAJ SYSTEM AFTER

INDEPENDENCE
After independence, the process of empowering panchayats gathered momentum.
Mahatma Gandhi, the father of the nation, while emphasizing on ‘Gram Swaraj’
(village autonomy) strongly advocated that: ‘Independence must begin at the
25
Democratic Decentralization bottom. Thus every village will be a republic of panchayat having full power.’
The spirit and importance of panchayati raj system found place in Article 40 of
the Directive Principles of State Policy of the Constitution of India, which says:
‘The state shall take steps to organize village panchayats and endow them with
such powers and authority as may e necessary to enable them to function as units
of self-government.’
Pandit Jawaharlal Nehru the first Prime Minister of India, considered panchayats
as an important socio-economic and political institution at the village level. While
inaugurating the panchayati raj in Rajasthan in 1959, he underlined the
importance of people taking responsibilities: ‘To uplift millions of villages is
not an ordinary task, the reason for the slow progress is our dependence on official
machinery. An officer is probably necessary because he is an expert. But this can
be done only if the people take up the responsibility in their own hands. The
people are not merely to be consulted, but effective power has to be entrusted to
them.
The then Rural Development Minister Shri S K Dey, stated: ‘In Panchayati Raj
System, the people of India would govern themselves through their representative
institutions, from the Parliament and thus democracy would travel from Gram
Sabha (village parliament) to Lok Sabha (Lower House of the National
Parliament)’. Former Prime Minister Rajiv Gandhi, while emphasizing on the
significance of panchayats had remarked. “We must put an end to planning from
above. We must put an end to priorities being conceived and decided at ethereal
heights, far from ground realities”. While delineating a few functions of the
local self-government, Pandit Jawaharlal Nehru, advocated: “The panchayati raj
bodies should assume the responsibilities of looking after the needs of everyone
in the village and thus become an insurance against illness, unemployment,
illiteracy and other disabilities”.
The First Five Year Plan also recognized the need for disaggregated planning
through a process of democratic decentralization incorporating the idea of a village
plan and a district development council. The Government of India constituted
several committees at different points of time to strengthen the local self-
government institutions. The first one was the Balwantray Mehta Committee
constituted in 1957. The committee recommended the urgency of democratic
and elected institution at the lowest level and suggested a three-tier system at the
district election commissions. Ashok Mehta Committee (1977) recommended a
two-tier set-up at district and village level. The Sarkaria Commission on Centre-
State relations appointed in 1983 recommended in its report that the objective of
decentralized planning cannot be achieved unless role. Instead of playing their
role, ironically, these institutions have been allowed to stagnate. Elections to
these bodies had not been held regularly and often they remain superseded for a
long period. The Sarkaria Commission recommended that it was that it was
necessary to hold elections regularly and adequate funds devolved to these
institutions. The GVK Rao committee, 1985, emphasized the need for regular
elections to panchayati raj institutions (PRIs). A committee headed by P.K.
Thungon, 1986 recommended that panchayati raj bodies should be constitutionally
recognized, should have provision for timely and regular elections and their term
should be five years. While the L. M. Singhvi Committee of 1987 recommended
that the PRIs should get constitutional safeguards and financial resources should
be devolved to them.
26
Since the beginning of the VI five year plan, a number of special programmes Local Self Government and
for poverty alleviation, employment generation and area development were
launched in the country. At this stage, block level was considered important to
implement rural development programmes through fuller utilization of local
resources. In November 1977, a Working Group under the Chairmanship of Prof.
M.L. Dantwala was appointed by the Government of India, to draw up guidelines
for block level planning. At the same time, in December, 1977, a Committee on
Panchayati Raj, headed by Ashok Mehta was appointed. The Committee
considered inadequacy of resources, mainly responsible for failure of PRIs and,
therefore, recommended, inter alia, measures for strengthening the financial
resources of PRIs. In the light of recommendations of the Committee, gradually
PRIs were set up in almost all the states and were contemplated to be developed
as instruments of development. Whereas in Maharashtra and Gujarat, power
was vested in district panchayats, in Madhya Pradesh and some other states, the
responsibility for development was entrusted to development blocks. Another
committee headed by Prof. C.H. Hanumantha Rao (1984) went into the question
of evolving methodology for district level planning and recommended that
planning process at the district level should be sufficiently decentralised, having
a good deal of autonomy, administrative and technical capability and financial
adequacy.
The above discussion shows that there has been no dearth of ideas and expert
opinion but what is lacking is consistency in thinking and political will to
implement the concept of decentralised planning and development in a multi-
level framework, and create PRIs in that framework which are democratic,
autonomous, financially strong, capable of formulating and implementing plans
for their respective areas and provide decentralised administration to the people.
Elections were not held regularly in a large number of states. Even after three
decades since the Balwant Rai Mehta Committee had recommended 3-tier
Panchayati raj system as a form of rural self-government and as a mechanism for
democratic decentralisation, in most of the states, the position regarding PRIs
remained unsatisfactory, and no tangible action was taken to strengthen the local
self-government system. Financially these bodies were weak and dependent
largely on state governments which did not follow any consistent policies, with
the result that most of the PRIs remained defunct or superseded.
The Constitutional Amendment Act, 1992, marks a water-shed in the history of

local self-government in the country since it gives a constitutional mandate to
the state governments to restructure and revamp rural local bodies in accordance
with constitutional obligations. The Act provides for (i) the creation of three tier
system of PRIs - gram panchayat at the village level, Janapad Panchayat at the
block level and Zila Panchayat at the district level, with sufficient powers and
functions contained in schedule XI of the Act; (ii) the creation of State Election
Commission to ensure free, fair and timely elections after the expiry of every 5
years, and (iii) the creation of State Finance Commission after every 5 years to
recommend devolution of financial resources from the state government to local
bodies and also suggest measures for strengthening their financial position.
Taking into consideration all these recommendation and success of West Bengal,
Karnataka and Andhra Pradesh experiments and the prevailing mood for
decentralization, Prime Minister Rajiv Gandhi introduced the 64th Constitutional
Amendment Bill in 1989, which was passed by the Lok Sabha, but failed to get
27
Democratic Decentralization the concurrences of the Rajya Sabha. Later, a cabinet committee was constituted
to look into the contents of the Panchayati Raj Bill of 1989 afresh and a
comprehensive amendment was introduced in the form of the Constitution 73rd
Amendment Bill in 1992 during the Prime Ministership P V Narasimha Rao,
which was passed by both the Houses of Parliament and came into effect on
April 24, 1993. Shortly after the aforesaid amendment, in his letter of May 5,
1993 to panches and sarpanches, he had mentioned: ‘Democracy and devolution
of powers to panchayats have now become part of the most sacred document of
this nation: the Constitution of India. No one can now snatch democratic practices
from the panchayat. The Constitutional changes will prove to be a major landmark
in the history of development of rural areas of this country”.
Panchayati Raj Institutions in Progressive Indian Status
The local self government institutions in Gujarat first came into being under the
Bombay Panchayat Act 1933. In the 1960s, the gram panchayat was seen as the
focal unit of development through an integrated structure of three-tiers, each
organically linked to the other. The new Panchayati Raj Act, after 73rd
constitutional amendment was passed and adopted on 1993.
The history of panchayati raj system in Karnataka revels that in the old state of
Mysore, three-tier structure of union panchayats, taluka boards and district boards
was established under the Mysore Local board Act, 1902. This was replaced by
the Mysore Village panchayats and Local Boards Act, 1959 and a three tier
structure was introduced on the recommendations of Blawantrai Mehta
Committee. In 1983, on the recommendations of Ashok Mehta Committee, the
Karnataka Act of 1983 was enacted. It demonstrated for the first time the
willingness of stage government to divest substantial powers in favour of sub-
state institutions. The new Panchayati Raj Act after 73rd constitutional Amendment
came into being in 1993.
The history of panchayat in Kerala shows that before the formation of Kerala in
1956, there were panchayats urban local bodies in the three different regions of
the state, namely Travancore, Cochin and Malabar. The Kerala Panchayat Act
1960 provided that government could authorize the panchayats to exercise
functions such as collection of land revenue, maintenance of survey and village
records, collection of village statistics, supervision and control over primary
schools, health centres, public health, child welfare and maternity institutions
and execution of community development works. The Act was amended in 1964,
1967 and 1978, before the conformity Act came into operation in 1994.
History of panchayats in Madhya Pradesh dates back to 1920 when the panchayats
were setup in the central provinces under the Village Panchayat Act1020. After
the formation of Madhya Pradesh in 1956, the new Panchayat Act was enacted
in 1962. The chronology of panchayat legislation in present Madhya Pradesh
include: Madhya Pradesh Panchayat Act, 1962; Panchayat Act, 1981; Panchayati
Raj Act, 1990; and finally Panchayati Raj Act, 1993 with amendments between
1994 and 1999.
Village panchayats in Maharashtra had traditionally functional as the main centres

of administration. The first formal initiative was taken with the enactment of
Bombay Village Panchayat Act in 1920. The panchayat legislation was amended
28 from time to time: Bombay Village Panchayat Act 1933; Bombay Village
panchayat (Amendment) Act1939; Bombay Village Panchayat Act 1958 before Local Self Government and
the formation of Maharastra in 1960. After the formation of Maharashtra state,
Zilla parishads and Panchayati Smitis Act was enacted in 1961. Three important
committees were set up in the state namely as ‘Panchayat Raj Committee’ in
1970; Panchayati Raj Review Committe 1973 (Bongirwar committee) and
panchayati Raj Review Committee of 1984 (Patil Committee). The District
Planning and Development Councils (DPDC) were formed during this period.
The new Panchayati Raj Act came into force in the state on 2nd April 1994.
After reading this section, you will have gained an idea about the term, rural
development. Now you should be able to answer the questions given in Check
Your Progress 2.
1) Describe the first five commission constituted by Government of India for
strengthening of Panchayati Raj Institutions.
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2) Discuss the history and growth of Panchayat in Kerala.
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2.4 PANCHAYATI RAJ SYSTEM AFTER 73RD

AMENDMENT
The 73rd amendment of the Constitution is an epoch making event in the history
of democratic decentralization in India. While introducing the constitutional
amendment bill in Parliament on December 1, 1992, the then Cabinet Minister
of Rural development observed: ‘This casts a duty on the centre as well as the
states to establish and nourish the village panchayats soas to make them effective
self-governing institutions and by introducing this Act, the government was
fulfilling Mahatma Gandhi’s dream of Gram Swaraj.’
29
Democratic Decentralization With 496 panchayats at the district level, known as district panchayats (DP) zilla
parishad (ZP); 5905 at the intermediate level, know as block samitis/intermediate
panchayat (IP); and 230762, at the village level know as gram panchayat (GP),
India today has the world’s largest functioning democracy at the grassroots. These
elected democratic institutions are manned by 3.4 million Scheduled Castes and
0.26 million Scheduled Tribe (Kurukshetra, 2002).
Table 1 Number of PRIs and its Elected Representatives in Progressive

Indian States (2004)
State Gram Intermediate District
Panchayat Panchayat Panchayats
Number Elected Number Elected Number Elected
Of GP Members of IP Member of DP Members
Gujarat 13819 83213 225 2768 25 544
Kanataka 5659 53421 175 2162 27 591
Kerala 991 53421 152 1009 14 202
Madhya 22029 208356 313 4297 45 486
Pradesh
Maharastra 28553 178132 349 2877 33 1423
Punjab 12445 48860 140 5257 17 190
Source: Ministry of Panchayati Raj, Government of India, website
In conformity with the Constitutional amendment, all the states have amended
their state Acts by repealing the then existing ones. Today the PRIs constitute the
potential instruments for effective implementation of India’s rural development
and poverty alleviation programmes. It is true that, if effectively empowered, the
PRIs have the potential to build a progressive India (which veritably lives in its
villages) in harmony with the felt needs and aspirations of the people.
Table 2 Structure of Population and at Different Institutions in a Few States

States Average rural Average number Average number Average number
Population of village of gram panchayat of pachayat
per garm per gram per panchayat samitis per zilla
panchayat* panchayat* samities** parishad**
Gujarat 2294 1.3 73.1 9.6
Karnataka 6152 5.2 4.7 9.0
Kerala 23,785 1.4 - -
Madhya 2010 2.5 41.0 10.2
Pradesh
Maharastra 1952 1.5 82.8 10.3
Punjab 1289 1.0 92.8 9.8
Source:* As per census 2001.
** Panchayati Raj Insitutions in India, Ministry of Rural Development,1991
30
The structure of the PRIs of a few Indian states is given in Table 2. It is interesting Local Self Government and
to note that in Kerala on an average one panchayat caters to the needs of 23,785
rural populations, where as in Punjab one panchayat deals with 1289 rural
population. Each panchayat in Kerala and in Karnataka consists of wards, which
are looked after by ward members of the panchayat. The division of panchayat
into wards thrust responsibilities on the ward members to look after the needs of
their ward population. This results in effective functioning of panchayat in Kerala
and Karnataka.
Key Features of 73rd Constitutional Amendment

The main feature of the 73rd Constitutinal Amendment are: (i) Establishment of
a three-tier structure: village panchayat (gram panchayat); intermediate panchayat
(panchayat samiti) and district panchayat(zilla parishad); (ii) Regular elections
every five years; (iii) Resevation ofseats for the Scheduled Castes and Scheduled
Tribes in proportion to their population; (iv) Not less than one-third reservation
of seats for women at the three different levels of PRIs;(v) Establishment of
State Finance Commissions to recommend measures to improve the finances of
panchayats; (vi) Establishment of State Election Commissions to conduct election
to the PRIs; (vii) Establishment of District Planning Committees to prepare
development plans for the districts; (viii) Preparation of plans of economic
development and social justice and implement 29 subject listed in the 11th
Schedule of the Constitution; (ix) Establishment of grama sabhas (village
assemblies) and their empowerment as a decision making body a the village
level; and (x) Rotation in accordance with the reservation of seats for women
and the Scheduled Castes in the PRIs. The key features as envisaged in the 73 rd
constitutional amendment are given in Table 3.
Table 3 Key features of 73rd Constitutional Amendment
S.No Key Features Provision in the Act

1. Three Tier Structure Article 243-B envisages, Gram Panchayat at
at the District Level Block Level and District panchayat
2. Elections at every Article 243-E tells, Every Panchayat shall
five years continue for five years from the appointed for
its first meeting and no longer.
3. Reservation of seats Article243-D envisages, reservation of seas for
for Scheduled the Scheduled Castes and Scheduled Tribes in
Castes and proportion to their population for membership
Scheduled Tribes of panchayat
4. Reservation of seats Article 243-D (3), provides that not less than
for women one third (including the number of seats reserved
for women belonging to Scheduled Castes and
Scheduled Tribe) of the total number of seats to
be filled up by direct election in every panchayat
shall be allotted by rotation to different
constituencies in panchayat
5. Establishment of Article 243-I provides for constitution of States
State Finance Finance Commission to review financial
Commissions position of the PRIs and to make
recommendations to the Governor and 31
distribution between the state and the PRIs of
the net proceeds of the taxes, duties, tolls and
fees leviable by state
6. establishment of Article 243-K provides for the establishment
State Election of State Election Commission. The
Commission superintendence, direction and control of the
preparation of electoral rolls for and the conduct
of all elections to the panchayats shall be vested
in the State Election Commission
7. Establishment of Article 243ZD provides for the constitution of
District Planning DPCs to consolidate the development plans
Committee (DPCs) prepared by the gram panchayat
8. 29 duties and Article 243(G) made addition of Eleventh
responsibilities Schedule and assigning duties and
responsibilities on 29 subjects.
9. Establishment of Article 243 provides for Gram Sabha to exercise
Gram Sabha such power and perform such function at the
village level as the legislature of a State may by
law provides
With the enactment of 73rd constitutional amendment and formulation of

Panchayati Raj Acts by different state governments the State Election
Commissions have been established, helping the state governments in holding
periodic elections to PRIs. Almost all states have constituted State Finance
Commission; despite the fact that their recommendations are being poorly
implemented by many state government. A large number of women, Scheduled
Caste and Scheduled Tribe have been elected to these bodies and a tradition of
justice and gender equality in political representation has been widely established.
Bihar government has declared 50 per cent reservation of seats for women in
PRIs.
Table 4: Representation of Women,SCs, and STs in PRI and on 1.4.2004

PRIs Scheduled Scheduled Women
Castes Tribes
Gram Panchayat 346002 233765 838227
Intermediate Panchayat 22333 8210 47455
District Panchayat 2201 1322 4923
Total 370536 243297 890605
Source: website of Minitry of Panchayati Raj, Government of India
The feature of the Panchayati Raj Acts of the progressive Indian states are more
or less same with little variation, however their functioning differs because of
level devolution of powers to the PRIs in these states.
Village-level democracy became a real prospect for India in 1992 with the 73rd
amendment to the Constitution, which mandated that resources, responsibility
32
and decision-making be devolved from central government to the lowest unit of Local Self Government and
the governance, the Gram Sabha or the Village Assembly. A three-tier structure
of local self-government was envisaged under this amendment. The nationwide
euphoria that greeted this about-turn in bureaucracy was seen again with the
extension of the 73rd amendment to the Scheduled Areas, through Provisions of
Panchayats Extension to Scheduled Areas Act, 1996 (hereinafter PESA or Central
PESA or the Tribal Self Rule Law as it is variously called). Scheduled Areas are
those, which are under the Fifth Schedule of the Constitution of India where the
tribal populations are predominant. It is also imperative to understand here that
the founding fathers of the Constitution of India had envisaged a special scheme
of administration in the scheduled areas where general laws would not be
applicable unless the Governor deemed it fit to enforce such laws. It was thought
that these areas are inhabited with people who have resided on the basis of their
own customary practices and traditional beliefs and culture and thus general
laws of the land would be inappropriate with their customary laws and ethos.
However, a decade later, there is growing feelings that while the burden of
‘management’ of natural resources, has been devolved; ‘control’ over resources
and land is still in the hands of the state. This paper delves in some detail into the
manner in which the States’ have subverted the mandate of the Central Legislation
through carefully using the wordings in law to make the implementation vague
and ineffective especially in the context of ‘community resources’ in scheduled
areas. The scheduled areas, which are notified by the President of India as the
Tribal dominated areas, exist in nine states of India.
The Coming of PESA (Tribal Self Rule Law)

A brief introduction of how the central law on PESA came into being and the
consequent state mandate would be instructive here. The 73rd amendment to the
Constitution and the subsequent enactment of Provisions of the Panchayats
(Extension to the Scheduled Areas) Act, 1996 (PESA) aimed to operationalise
decentralization in India, through the transfer of power to the Gram Sabha or the
village assembly. The PESA attempted to vest legislative powers in Gram Sabha,
specifically in matters relating to development planning, management of natural
resources and adjudication of disputes in accordance with prevalent traditions
and customs. This significant legislation was expected to have far reaching
consequences in the social, economic and cultural life of tribal people in
Scheduled Areas. All the scheduled states were given one year to amend their
respective Panchayat Acts to conform to the letter and spirit of PESA. Accordingly,
most states have introduced some form of conformity amendments, which reflect
their intent to conform to the spirit of PESA. At a first glance the state conformity
legislations and amendments seem to have generally reflected most of the
provisions of the PESA, although a closer look establishes that almost all powers
have been made subject to rules/ further orders “as may be prescribed by the
State Governments”. The control over prospecting of minor minerals, planning
and management of water bodies, control and management of minor forest
produce, prevention alienation of land are all subject to rules in force or as may
be prescribed by the State. The fact that the enabling rules are not in place even
more than eight years after the adoption of the central law on PESA suggests
reluctance by the State Governments to operationalise the mandate of PESA.
There are four points that need particular emphasis here. First there are critical
omissions of some of the fundamental principles without which the spirit of
PESA can never be realized. Secondly, the state legislations, perhaps by design,
33
Democratic Decentralization twist certain words from the Central PESA that has resulted in powers being
taken away from the Gram Sabha – the collectivity of all village adults where
the need for empowerment is most critical for making local self-governance a
reality in the Country especially in relation to managing common pool resources.
Thirdly, even where it affirmed some provisions of the law in principle, their
applicability was made subject to framing of rules/ orders or “as may be
prescribed.” As stated earlier, such enabling rules are not yet in place in most
cases. Finally, few rules and prescriptions began to surface in early 2000 primarily
through revocable official circulars but which again have been totally inoperative
because of the ambiguity and lack of clarity of these provisions. Thus it is not
surprising that even these are waiting to be taken to the ground. The operative
provisions being not in place, a promising radical law has been reduced largely
to a paper law.
The above is exemplified in numerous ways especially in the context of

community resources. The Panchayats (Institutions of Local Self-Government)
at the appropriate level and/or the Gram Sabha have been endowed specifically
with powers for management of local resources. For instance the Gram Sabha or
Panchayat at appropriate level shall be consulted before making acquisition of
land in scheduled area for development projects as well as before resettlement or
rehabilitation of persons affected by such projects in Scheduled Areas. The use
of the word ‘consultation’ under PESA instead of ‘consent’ significantly waters
down the power vested with the Panchayat. Besides Gram Sabha and Panchayats
have powers to prevent alienation of land in the Scheduled Area and to take
appropriate action to restore any alienated land of Scheduled Tribe5. In this regard
there needs to be a clear understanding of the nature and extent of powers that
needs to be vested with the Gram Sabha and the various tiers of the Panchayats.
The law is vague and ambiguous as will be demonstrated later in state specific
examples. Further the ownership of forest based resources have also been granted
though is a tendency to limit the local area of the Gram Sabha for the purposes of
owning minor forest produce. A central concern of the present paper is to highlight
the conflicts arising out of the powers vested with the Gram Sabhas under PESA
and the provisions contained in the various ‘subject matter’ State laws Under the
PESA, the Gram Sabha or the Panchayats at the appropriate level has been vested
with the mandatory powers to regulate on subjects such as minor forest produce,
alienation of land, management of minor water bodies and control over local
plans and their resources. On all these subjects there exists specific State
legislation, which might impact the operation of the state variants of the PESA.
Again when it comes to amending all the subject matter laws to give effect to
PESA, the States response is varied.
2.5 CONSTITUTION AND FUNCTIONS OF

PANCHAYATI RAJ INSTITUTIONS
Panchayati Raj Institutions comprise of three institutions namely gram panchayats,
panchayat samitis and zilla parishads, the constitution and functions of these
three organizations are given below:
Gram Panchayat
A gram panchayat consists of a sarpanch and five to 13 elected panches depending
upon the population. The member of village panchayats are elected by the same
34
Electoral College, which elects members of the Legislative Assembly of the Local Self Government and
state and the Lok Sabha(the lower house of Parliament). The State Election
Commission prepares the election roll for PRIs elections. Under the 1994 Punjab
Panchayati Raj Act, it is envisaged that a village panchayat will discharge duties
and responsibilities relating to the subject mentioned in the Eleventh Schedule
of the Constitution. Important functions of the gram panchayat include preparation
of annual development plans, its budge; construction, repair and maintenance of
community assts; khadi and village industries; rural housing; rural electrification;
non-conventional sources of energy; poverty alleviation; education; public health
and family welfare; adult and non-formal education ; cultural activities , fairs
and festivals; promoting agriculture, including animal husbandry; dairying and
poultry; fisheries; social and farm forestry; women an child development; social
welfare and public distribution system.
Panchayat Samiti
There is a panchayat samiti in each development block, a compact development
area. Its membership comprises:
15 to 25 directly elected members from territorial constituencies.

Members of the Punjab Legislative Assembly, major portion of whose
constituency falls in the panchayat samitis area shall also be members of the
panchayat samitis.
The Punjab Panchayat Raj Act, 1994 has assigned the panchyat Samitis 26
functions. The important functions are agricultural improvement land
improvement, irrigation and water management and promotion of animal
husbandry and dairying and poultry, fisheries, roads, social services, social
welfare, technical training, poverty alleviation and rural electrification.
Zilla Parishad
Every district has ah zilla parishad, having jurisdiction over the entire district
excluding the areas included in a municipality or a cantonment board. The directly
members of zilla parishads vary from 10 to25. The Additional Deputy
Commissioner (Development) of the district of the district is the ex-officio Chief
Executive Officer of the zilla parishad. The members of the zilla parishad are:
• Directly elected from demarcated constituencies;
• All chairpersons of panchayat samities; and
• Members of Parliament/Member of Legislative Assemblies whose
constituencies fall in the jurisdiction and geographical area of the zilla
parishad
The Panjab Panchayati Raj Act of 1994 assigns functions to the zilla parishads.
The functions include agriculture development, irrigation; ground water resources
and watershed development; horticulture; statistics; rural electrification;
distribution of essential commodities; soil conservation; animal husbandry and
dairying; fisheries; small-scale industries including food processing industries;
rural roads; health and hygiene; rural housing; education; social welfare and
welfare of the weaker sections; poverty alleviation; social reform activities;
weights and measures and promotion of thrift and savings through small saving
campaigns.
35
Democratic Decentralization Constitution and Functions of PRIs in Progressive Indian States
In Gujarat the sarpanches (president) of the village panchayats are elected directly
by adult franchise and up sarpanches (vice-president) are elected by the elected
member of the village panchayats. The same procedure is followed in the
intermediate panchayats and district panchayats. In Karnataka, both the adhakya
(president) and upadhakya (vice-president) are elected indirectly by the elected
members of the gram panchayats. The same procedure is followed in the
Intermediate and district panchayats.
Table 5: Head of the PRIs and Procedure of Election
Panchayati Procedure of Election of Head of PRIs

Raj
Village Panchayat Intermediate District Panchayat
Institutions
Panchayat
(PRIs)
Gujarat Sarpanches are Chairman of Chairman is directly
directly elected by Intermediate elected by the people
the people and up- Panchayat is directly and Vice-Chairman
sarpanch are elected by the people of district Panchayat
indirectly elected by and the Vice- is indirectly
the elected members Chairman is elected
of panchayats members of the
Intermediate
panchyayat
Karnataka Adhakya and Adhakya and Adhakya and

Updhkya are Updhkya are Updhkya are
indirectly elected by indirectly elected by indirectly elected by
the members of the members of the the members of
panchayat. The post Taluka panchayat. ZillaPanchayat
of Adhakya is on
rotation basis, 2.5
and 2.5 year each.
Kerala President and vice- President and President and

President are Vice-president are Vice-President are
indirectly elected by indirectly elected by indirectly elected by
the member of the the members of the the member of the
village panchayat block panchayat district panchayat
Madhya Sarpanch and President and President and

Pradesh Up-Sarpanch are Vice-President are Vice-President are
indirectly elected indirectly elected by indirectly elected by
the members of the the member of the
block panchayat. district panchayat
Maharashtra Sarpanch and President and Presiden and

Up-sarpanch are Vice-President are Vice-President are
indirectly elected indirectly elected by indirectly elected by
the member of the the member of the
block panchatyat zilla panchayat
Punjab Sarpanch is directly Chairman of the Chairman of the

elected by the people panchayat Samiti is Zilla Prishad is
directly elected by the directly elected by
people of the block the people of the
36 distirct.
Election of head of the PRIs through indirect election resembles with the system Local Self Government and
adopted by the legivslative assembly and parliament. The rotation of seats of the
head and vice-head of the PRIs as practised in Karanataka would create
opportunity for others. The power for impeachment of the sarpanch and members
of the village panchayat in Punjab lie with the Directorate of Rural Development
and Panchayats, a bureaucratic machinery, where as the impecahement of the
panchayat personnel in Kerala is done by the ombudsmen and in Gujarat zilla
parishad is empowered to take decision regarding the impeachment of personnel
of panchayat including its president. In all states panchayat secretaries look after
the administrative and financial matters of panchayats. The panchayat secretary
works in close coordination with panchayat. However the work of intermediate
and district panchayat is being carried out at the block headquarters and district
headquarters with the help of block and district staff.
2.6 ISSUES AND CHALLENGES OF THE PRI’S

After more than 25 years of the implementation of the 73rd constitutional
amendments, in many states PRIs are not found to be adequately empowered to
discharge their duties and responsibilities. There are poor devolution of functions,
functionaries and funds in many states. Some of the issues and challenges which
the PRIs are facing are narrated below:
i) One of the important observations is that all the functions of the panchayats
are found to be congregated in the hands of pradhans (heads) in gram
panchayats and members are largely marginalized. Power and functions
hardly delegated to the members of village panchayats. This is against the
ethos of the decentralization. In other words, even if there is some devolution,
there is no de-concentration and powers are congregated in the hands of the
heads of the panchayat. Sighting the case of West Bengal, Ghatak and Ghatak(
2002) remarked that power of village council was totally concentrated in
the hands of pradhan. For all practical purposes the pradhan was an extremely
powerful man- there used to be saying in the rural areas of West Bengal that
‘above there is God and below there is the pradhan’. For the de-concentration
of power, the Panchyati Raj Acts of different state governments have made
provision of various standing committees supposed to be headed by the
panchayat members. However, in most of the states, these standing
committees are seen to be ad hoc arrangement on project to project basis
rather than a permanent institutional structure and most of them are headed
by the panchayat heads rather than by the members of the panchayats. The
state governments having the provision of up-gram sabha per se Himachal
Pradesh has empowered the member panchayat to head the up-gram sabha,
the body equivalent to Gram Sabha which plans and implement the
programme in their won village of the panchayats. Mani Shankar Aiyar,
(2005) remarked that in the absence of such effective devolution of
functionaries with functions, there is a kind of diarchy operating at the ground
level, which is detrimental to good governance. In other words, the PRIs do
not have executive set up, which the central and state democratic institutions
have, it makes the working difficult and more difficult in case of PRIs manned
by illiterate heads and members.
ii) Another anomaly in the functioning of the PRIs is the lack of clear cut
demarcation of functions among the three constituents of the PRIs such as 37
Democratic Decentralization village panchayat, block or intermediate panchayat and the district panchayat.
Even after the more than decade of the 73rd constitutional amendment, many
state governments are yet to formulate an activity mapping for the PRIs in
the state. Thus in some states more powers have been divested with the
village panchayats, while in other states, district panchayats are more
powerful. For example Maharastra, Gujarat and Uttar Pradesh governments
have assigned more functions to district panchayats, while Madhya Pradesh
and Kerala government have assigned more power to village panchayats.
The intermediate panchayats in many states are largely function less and
crying for functions, functionaries and funds.
iii) Panchayats in many states are performing those functions which have direct
relationship with money and grants from the government and hardly consider
other promotive health, education and social development related activities
as their duties and responsibilities. In other words, the post 73rd constitutional
amendment village panchayats are more selfish, mechanical and money-
minded and dependent. In other words, village panchayats in many states
have become dependent bodies rather than local self governments. The use
of money and muscle power in the village panchayat elections and
panchayats’ involvement in the corruption in government implemented
schemes are frequently being in news and a buzz word in local democracy.
iv) Considering the workload and duties and responsibilities thrust on the PRIs,
it is pertinent that they should be given functionaries. Besides, the
functionaries of other line departments devolved to PRIs need to be
transferred to them. The state governments of Karnataka, Kerala, and Madhya
Pradesh have transferred the functionaries and issued instructions to them
to work under the control of panchayats. In Punjab, the grassroots level
functionaries such as ad hoc teachers and health workers are selected through
Zilla panchayats (the district level PRI). In Himachal Pradesh, panchayat
head is a member of the selection committee for the recruitment of panchayat
sahayak( panchayat assistant) and technique sahayak (technical assistant)
functionaries working under the village panchayat. In Kerala, the village
panchayat has a kind of arrangement of panchayat secretariat at the panchayat
level where the village panchayat functionaries and seat and work for the
village panchayat. In many other states, the panchayat ghars (village
secretariats) are least utilized and most of the functionaries operate from
the block headquarters. One estimate says that if the functionaries are transfer
to PRIs, then 49,566 development functionaries will work under PRIs. The
Panchayati Raj Act of Gujarat has made provision of State Panchayat Services
Board and District Panchayat Service Selection Committee for the selection
of functionaries of PRIs at the state and district level.
v) In Kerala, functionaries of village panchayats, although, are state government

employees, yet work under the panchayats and are paid by the panchayats.
In Karnataka, panchayats have appointed some employees by their own are
paid from the untied fund of the panchayats funds. In Punjab the panchayts
are involved in the selection of the anganwadi workers and chawkidars
(village guards) in their respective panchayats. However, Patnaik (2003)
the state level functionaries feel that their role in implementation of
developmental schemes might be reduced considerably due to transfer of
powers and functions to PRIs. In 1999, the Government of Uttar Pradesh
38
transferred some functions like primary education to the Gram Panchayats. Local Self Government and
Primary school teachers were also placed under the administrative control
of the Gram Panchayats. Faced with stiff opposition from the teacher unions
the government soon withdrew the orders regarding the transfer of teachers
to the supervision of Panchayats. Panchayat secretaries, the key functionaries
of the village panchayat in Punjab, Haryana, Uttar Pradesh and some other
states feel that empowerment of elected representatives of village panchayats
means downsizing their power and functions. They always want to remain
as boss of the village panchayat and not to work under them as an employee.
Pai (2004) remarked that in most the key functionaries namely secretaries
and executive officers at all levels of panchayats are state government
employees.” On the contrary, in Kerala, although the panchayat secretaries
are the government employees, they act under the village panchayats. In
Himachal Pradesh, panchayat sahayaks (panchayat assistants) and technique
sahayak (technical assistant) are appointed with the help of village panchayat,
although paid by the government are working under the panchayats. On the
whole most of the state government finding it difficult to transfer their
grassroots functionaries under the village panchayats largely for the following
reasons: (i) the bureaucratic apparatus are skeptic about the efficiency of
panchayats to handle these educated manpower; (ii) the employees are
reluctant to work under panchayats which would adversely affect their
autonomy and they consider that the panchayats are more interested in fault
findings rather than providing supportive supervision to them; (iii) without
the transfer of finance, the transfer of functionaries is a difficult proposition;
and(iv) it is comparatively easier to put newly recruited functionaries under
the village panchayats than the old functionaries selected by the government.
Still village panchyats in most of the states do not have any bureaucratic
structure to support them in their day to day functioning. Mani Shankar
Aiyar, (2002) remarked that in the absence of such effective devolution of
functionaries with functions, there is a kind of diarchy operating at the ground
level, which is detrimental to good governance. In other words, the PRIs do
not have executive set up, which the central and state democratic institutions
have, it makes the working difficult and more difficult in case of PRIs manned
by illiterate heads and members.
vi) A major impediment in the effective functioning of PRIs is the lack of

adequate funds for the implementation of need-based programmes. The
relation between the local functions and local finance are interrelated. They
are concomitant to each other and in fact, one exists for other. Local functions
cannot be performed without finance and without functions the need for
finance does not arise ( Bordoloi, 1972). If local bodies are to play any
significant part in economic and social development, they must clearly have
access to adequate finance (Hicks, 1961).While Maddick (1970) from
decentralization from India remarked that the concentration of functions is
perhaps greatest in the lowest tier of the system where finances and
administrative personnel are invariably in shortest supply.
vii) It is remarked that a large number of functions have been vested in

decentralized bodies without sufficient finances and this has resulted in the
near failure in fulfilling their responsibilities leading to discontinuation of
the system in many states (Hedge, 1994). Besides, those funds, which are
available are mostly tied in nature, leaving little flexibility to the panchayats
39
Democratic Decentralization (Siva Subrahmanyam, 2003).Devolution of funds to PRIs would enable these
bodies to function as effective self-government. Under Article 243-H of the
constitution, state legislative has been empowered to enact laws: (i)To
authorize a panchayat to levy, collect and appropriate certain types of taxes,
duties, tolls and fees; (ii)To assign to a panchayat, certain types of taxes,
duties, tolls levied and collected by the state government; (iii)To provide
for making grants-in-Aid to the panchayats from the consolidated fund of
the state; and (iv)To provide for constitution of such funds for panchayats
and also the withdrawal of such money there from.
viii) The 10 th Finance Commission constituted by government of India

recommended that” the respective State Finance Commission would suggest
mechanisms for sharing financial resources with the local government”.
One of the recommendations of the 11th Finance Commission was that “the
state government should augment the Consolidated Funds to supplement
the resources of the local bodies” and “enhancing the revenues of the local
bodies through property tax, house tax, octrai, entry tax and user charges”.But
ironically internal revenue mobilization (IRM) of the PRIs constituted only
4.17 percent of their total revenue. The house tax the so-called panchayat
tax is being collected on an informal basis and in many cases the pradhans
(panchayat head) deposits it on his own, without bothering to ask the house
hold to pay the tax (SFC, Report Uttaranchal). In Karnataka, the house taxes
of households varies between a minimum of 200 rupees to a maximum of
even 1000 rupees in a year depending on the rental value of the houses.
Besides panchayats also don not collect other user charges like drinking
water fees, sanitation fees,etc. from the people in many states. Other aspects
are: (i) wherever the minimum and maximum rates have prescribed in the
act, the general tendency is to impose the minimum rate only; (ii) states
have developed a lukewarm attitude to effectively mobilize the resources;
and (iii) solution lies in setting up of proper administrative machinery,
particularly, at the grassroots level for effective tax collection. Neither
panchayats are being empowered to collect taxes nor are they willing to
impose taxes, fees and user charges on the public because of vote bank
politics.
ix) As far as the direct financial devolution to the local bodies from the state
government is concerned, it is very poor and varies from state to state. The
state government like Kerala, Madhya Pradesh and Karnataka kept directly
devolved some finance to the PRIs in nature of united money which they
can spend basing on the needs of village micro-plan. Starting in 1996, about
40 percent of the state government controlled funds were devolved from
the bureaucracy to panchayat village planning council in Kerala. But overall,
the Panchayati Raj Institutions in many states depend on the financial help
from the centre and state government and this financial dependency has
made them not self government rather protégé performing certain desired
functions with the tied money provided to by the centre and state governments
and by the central and state finance commissions. There is no denying fact
that panchayati raj institutions are financially crippled and unable to u1ack
of political and bureaucratic will.
40
2.7 LET US SUM UP Panchayati Raj Institutions
The panchayat in rural India and municipalities in urban India are defined in the
constitution as institutions of local-self government. The popular saying of ‘panch-
pardhan’ from the ancient times connotes that the panchayat had deep roots in
the Indian culture. After the 73rd Amendment to the Indian Constitution,
Panchayate Raj System has come to occupy a pivotal place in the Indian
democratic system. With this land mark amendment, the local governments have
become the third-tier in federal system after the union and the states. Village-
level democracy became a real prospect for India in 1992 with the 73rd
amendment to the Constitution, which mandated that resources, responsibility
and decision-making be devolved from central government to the lowest unit of
the governance, the Gram Sabha or the Village Assembly. A three-tier structure
of local self-government was envisaged under this amendment. The nationwide
euphoria that greeted this about-turn in bureaucracy was seen again with the
enactment of 73rd constitutional amendment and formulation of Panchayati Raj
Acts by different state governments the State Election Commissions have been
established, helping the state governments in holding periodic elections to PRIs.
Almost all states have constituted State Finance Commission; despite the fact
that their recommendations are being poorly implemented by many state
government. A large number of women, Scheduled Caste and Scheduled Tribe
have been elected to these bodies and a tradition of justice and gender equality in
political representation has been widely established.
2.8 REFERENCES AND SUGGESTED READINGS

Aiyar, Mani Shankar, “Panchayati Raj: The Way Forward”, in Jain, L.C, 2005,
op.cit.
Aziz, A. and Arnold D.D. (1996) Decentralised Governance in Asian Countries.
New Delhi, Sage Publications.
Bagchi, S. and S. Chattopadhyay (2004) Decentralised Urban Governance in
India: Implications for Financing Urban Infrastructure. Economic and Political
weekly, December 4.
Bordoloi, W.N, Local Finance in Assam, Dutta Branch and Co., Gauhati, 1972.
Das H.H. (1990) Introduction to Panchayati Raj and Community Development
in India, Kalyani Publishers.
Ghatak and Ghatak, “Recent reforms in the Panchayat System in West Bengal:
Towards great Participatory governance”, Economic and Political Weekly, January
5, 2002.
Gurumurthy, U. (1987) Jawaharlal Nehru’s statement quoted from book by
Panchayati Raj and Weaker Sections. New Delhi. Ashish Publishinh House.
Harischandran, C, “Need for Panchayati Raj Finance Commission”, Kurukshetra,
16th February, 1974.
Hedge, R.K, “Local Self-Government in Karnataka, Planning from Below”, in
Malcom S. Adishiahe, (ed.) Decentralized Planning and Panchayati Raj
Proceedings of D T Lakdawala Memorial Symposium, New Delhi, ISS & Concept
41
Democratic Decentralization Publishing House, 1994.
Oommen M.A. (2005) Twelfth Finance Commission and Local Bodies. Economic
and Political Weekly, May 15.
Maddhick, H, Panchayati Raj: A Study of Rural Local Government in India,
Longman, 1970.
Mannual for Capacity Building of Local Self Government Institutions in Pubjab
(2006) Chandigarh. Centre for Research in Rural and Industrial Development.
Mathur, O.P. (ed.) (1999) India: The Challenge of Urban Governance, National
Institute of Public Finance and Policy, New Delhi in collaboration with Centre
for Urban & Country Studies, University of Toronto. New Delhi: NIPFP.
Pai, S, “Panchayati Raj and Rural Governance, Experience of a Decade”,
Economic and Political Weekly, January 10, 2004.
Patnaik, S K, “More powers to Panchayati Raj Institutions: An overview”,
Kurukshetra, September, 2003.
Siva Subrahmanyan, “Dynamics of Devolution in Panchayats”, Indian Social
Science Review, Vol. 5, No. 2, July-December, 2003.
2.9 CHECK YOUR PROGRESS – POSSIBLE

ANSWERS
1) Describe the existence of panchayat during ancient period.
Answer: Ancient Indian history has provided evidence of the existence of village
panchayats comprising five informally elected elderly members to
settle dispute in the village. A reference to an organized system of
rural local self-government (panchayat) has been found in ancient Vedic
literature. Rig Veda has mentioned about ‘Gramini’, the village head
employed by the king for civil and military purposes; while Atharva
Veda envisaged the institution of ‘sabha’,’samiti’,’sabhapati’ and
‘sabhasad’ primarily performing judicial functions. A mention of
village institutions had been made in the great epics, the Ramyana and
the Mahabharat, where the gramini was responsible for collecting statue
dues, keeping village records, settling disputes and controlling crime.
Kautaliya’s Artha Shastra gives a comprehensive account of the system
of village administration prevailing in ancient India.
2) Discuss the contribution of British rule to the panchayati system.
Answer: The history of local self-government in India under the British rule
can be conveniently divided into four phases. “Local finance being a
counterpart of local administration and its mainstay, has of course,
been an expression of the purpose implicit in different phases of local
government.” The first phase may be assumed to have ended in 1882,
when Lord Ripon issued his well-known resolution on local self
government. The second phase covers developments from 1882 to
1919, when more powers were transferred from the centre to the
provinces, and the recommendations of the Decentralisation
42
Commission of 1907, besides discussing other matters, suggested some Local Self Government and
changes in local self-government. The third phase extended up to 1935,
during which the Indian Taxation Enquiry Committee (1925)
considered the problems of local taxation, along with central and
provincial finances. The fourth phase covers developments up to 1947.
During this phase, the struggle for independence was intensified and
with the introduction of provincial autonomy in 1937, and coming
into power of congress ministries in many provinces, local bodies,
particularly village panchayats, received a great stimulus and there
was democratisation of local bodies.
1) Describe the first five commission constituted by Government of India
for strengthening of Panchayati Raj Institutions?
Answer: The first five commission constituted by Government of India for
strengthening of Panchayati Raj Institutions are i) Balwantray Mehta
Committee constituted in 1957 ii) Ashok Mehta Committee (1977)
iii) The Sarkaria Commission on Centre-State relations appointed in
(1983) iv) GVK Rao committee (1985) v) P.K. Thungon (1986) and
vi) L. M. Singhvi Committee (1987).
2) Discuss the history and growth of Panchayat in Kerala.
Answer: The history of panchayat in Kerala shows that before the formation of
Kerala in 1956, there were panchayats urban local bodies in the three
different regions of the state, namely Travancore, Cochin and Malabar.
The Kerala Panchayat Act 1960 provided that government could
authorize the panchayats to exercise functions such as collection of
land revenue, maintenance of survey and village records, collection of
village statistics, supervision and control over primary schools, health
centres, public health, child welfare and maternity institutions and
execution of community development works. The Act was amended
in 1964, 1967 and 1978, before the conformity Act came into operation
in 1994.
43
UNIT 3 LOCAL SELF GOVERNMENT AND
URBAN LOCAL BODIES
Structure
3.1 Introduction
3.2 Urban Governance: Concept and Need
3.3 Urban Local Bodies and Municipal Governance in India
3.4 Urban Governance in India: Structural Changes and Innovations
3.5 Impediments in Improved Governance
3.6 Measures to Strengthen Urban Governance
3.7 Let Us Sum Up
3.8 Keywords
3.10 Check Your Progress - Possible Answers
3.1 INTRODUCTION
Governance, in the modern times, has been becoming an important means for
achieving societal development objectives. Although governance improvements
are perceived differently in the developed and developing worlds, it is also
becoming an area of convergence where both developed and developing societies
could learn from experiments and make use of it for transforming respective
societies. Governance is a concept which is used in different meanings in different
contexts; it varies from narrow structural definition of its management of public
affairs by government constituents i.e., legislation, executive and judiciary, to
the processes that ensure deliveries, participation, justice, respect of rights,
innovation and networking. Urban Governance is derived from the concept of
governance in relation to urban areas to be reflective of how the various
constituents of public service delivery are organized to increase the welfare of
citizens (both current and future).
After reading this unit, you will be able to:
• Define urban governance
• Explain Urban Local Bodies and Municipal Governance in India
• Describe structural changes and innovations in urban governance
• Discuss the impediments of improved urban governance
• Measures to strengthen Urban Governance
3.2 URBAN GOVERNANCE: CONCEPT AND

NEED
Urban Governance is derived from the concept of governance in relation to urban
areas to be reflective of how the various constituents of public service delivery
are organized to increase the welfare of citizens (both current and future). It can
44
only be measured relatively, and somewhat subjectively, how effective the Local Self Government and
Urban Local Bodies
institutions are in terms of the principles of sustainability, decentralization,
efficiency, equity, participation, transparency, accountability, civic engagement
and citizenship, and security. It requires a periodic strengthening of these aspects
of city management in order to ensure service delivery, which is considered
achievable through strategies of enabling, participation and capacity building.
The urban or city governance definition and process are essentially those
pertaining to governance in general i.e., central to the concept of city governance
is the notion that a multitude of actors are involved in the city governance process.
However, initiatives towards better governance can come not only due to the
pressures of urbanization but also with increasing financial constraints and
fragmented responsibilities, which is making many cities to realize now that
only a collegiate effort can improve city and its competitiveness, thereby the
cities can discover the virtuous circles.
In this context, city governance is more concerned with a network of system of

governance rather than government, in which all sectors (public, private and
other social organizations) and geographies (cities, regional and national) interact
in the decision making process in order to produce an efficient and effectively
managed city as well as promoting city at a global level. This perspective has
important implications for city strategists, planners, businesses and real estate
players, because, once adopted, it involves all of them in a complex and networked
process of decision making that can shape and change the future of their city. In
fact, the realization of this is leading to the emergence of new networks that
create new platforms for discussion and debate on how to make the cities better
governed and what resources are required to make it happen.
It is the partnerships which need to be forged, developed and in order to improve

the overall city governance. However, city governance can be understood not
only in the static framework of interactions but also as a dynamic interaction
between these major stakeholders and external agencies operating outside the
city. Sometimes, these agencies might provide a direction to the change, known
as good urban governance. In many ways, urban governments in the developing
countries are a classic case for the application of ‘good governance prescription
because of:
• multiple government agencies with poor interconnection
• government major provider of services, but often inefficient ,
• extensive but uneven regulation
• conflicting agency agendas producing regulatory stalemate
• frustration of development opportunities
• widespread evasion of regulation
• considerable scope for corruption
45
Democratic Decentralization 1) What are principles of good governance?
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2) How do you measure effective Urban Governance?
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3) Who are the key players in decision making and implementation process of
governing the cities?
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3.3 URBAN LOCAL BODIES AND MUNICIPAL

GOVERNANCE IN INDIA
Municipal governance in India was first introduced in 1687 when the Madras
Municipal Corporation was formed, followed by the creation of the Calcutta
Municipal Corporation and the Bombay Municipal Corporation in 1726. In 1850,
the Improvements in Towns Act was passed by the Government of India that
established a system of councillors and gave them administrative authority.
Subsequently, Lord Mayo’s Resolution of 1870 instituted the system of city
municipalities and called for the introduction of an elected president to lead
them.
In 1882, Lord Ripon’s Resolution of Local Self-Government created the outline

and structure of municipal governance in India. It introduced a two-tier system
of governance to increase governance efficiency through decentralisation of
functions. Based on the 1918 Montague-Chelmsford Report, the Government of
India Act 1919 introduced the system of ‘Dyarchy’, where power-sharing
arrangements between the state and the local bodies differed, but conformed to
the same organisational pattern.
46
The District Municipalities Act of 1920 transformed the Municipal Councils Local Self Government and
Urban Local Bodies
into elected bodies and granted them powers to flesh out their own budgets. The
Government of India Act 1935 brought local government within the purview of
the state or provincial government and granted them enhanced powers.
The following types of urban local bodies are found in India:

1) Municipal Corporation- Municipal Corporation is established by the Act
of state government for the big cities of states and by the Act of Parliament
for the big cities of Union Territories. A corporation has three authorities.
First is the corporation council headed by the Mayor, who is assisted by the
Deputy Mayor. The councillors and Mayor are directly elected by the people.
Council is a deliberative and legislative organ of the corporation. Second
organ of the corporation are the standing committees to deal with various
activities like health, education, public works and are empowered to take
decisions in their respective fields. The third authority of the Corporation is
the Municipal Commissioner, who is a government officer and is responsible
for the implementation of the decisions taken by the council and standing
committees.
2) Municipalities- They are setup by the Acts of state legislature for the
administration of small cities or towns. It also has three authorities. First
the municipal council is the legislative branch of the municipality, and is
headed by the Chairman, who in turn is assisted by a Deputy Chairman. The
standing committees facilitate the work of municipality in various fields
such as health, taxation finance etc.
The third authority of the municipality is the Chief Municipal Officer, who
is appointed by the state government and is responsible for the general
administration of the municipality. The municipality may be known by other
names also such as Municipal Board, Municipal Council or Municipal
Committee etc.
3) Notified Area Committee- This may be created either in a town which is

fast developing or which may not fulfill the conditions for the creation of a
municipality. It is known as Notified Area Committee because it is created
through a notification of the state government published in the official
gazette. It is not a statutory body and all its members and chairman are
nominated by the government. It performs similar functions as performed
by a municipality.
4) Town Area Committee-It is created by a separate Act of state government

for the administration of small towns. It performs a limited number of
functions like street lighting, drainage etc. As provided in the Act, it may be
wholly elected or totally nominated or partly elected or partly nominated
body.
5) Cantonment Boards- They are established to perform municipal functions

for civilian population living in cantonment or military areas. Its noticeable
feature is that it is created and works under the central Act of 1924 under
the administrative control of Ministry of Defence. There are three types of
Cantonment Boards depending upon the number of civilian population in
the Cantonment Area. It consists of partly elected and partly nominated
47
Democratic Decentralization members. The members are elected for a three year term. The military officer
commanding the cantonment station is the ex officio chairman of the
Cantonment Board.
6) Townships- Townships are established by a public sector undertaking as its
housing colony to provide civil amenities to its employees living in township.
It has no elected members and its affairs are managed by a Town
Administrator appointed by the public sector undertaking.
7) Port Trusts-Such urban bodies are established by an Act of the Parliament
to manage and protect ports and to provide civic amenities to the port area.
It is headed by an official appointed by the central government. It has both
elected and nominated members.
8) Special Purpose Agencies- The state governments establish some special
purpose agencies to perform some specific functions of municipalities. They
function as separate bodies not under the control of municipalities. They
may be created either by an act of State Legislature or by an order of the
executive. Some of these agencies are Housing Board, Water Supply
Undertaking, Electricity Supply Undertakings, Urban Development
Authorities etc.
3.3.1 The 74th Constitution Amendment Act of 1992 and Urban

Local Bodies
Prior to 1992, Indian local governments did not have a constitutional status but
only a statutory status under state law. Therefore, the governance of urban areas
was directly under the control of the state government. This changed with the
enactment of the 74th Constitution Amendment Act, 1992. For the first time in
the history of urban governance, Urban Local Bodies (ULBs) were granted a
constitutional position as the third tier of government.
These bodies were given a constitutional outline for conducting regular elections,
powers and financial devolution. The Amendment assigned local bodies with
the responsibility of providing basic services.
Urban Local Bodies (ULBs) are classified depending on the population:
• Nagar Panchayats: for ‘rurban’ areas
• Municipal Councils: for smaller urban areas
• Municipal Corporations: for metropolitan areas
“In many States local bodies have become weak and ineffective on account of a
variety of reasons, including the failure to hold regular elections, prolonged
supersessions and inadequate devolution of powers and functions. As a result,
Urban Local Bodies are not able to perform effectively as vibrant democratic
units of self-government.”
Municipalities were designed to incorporate elected representatives, experts and
the Municipal Chairperson. They were awarded a five-year term with re-election
scheduled for within 6 months of dilution. Towards this, a state-level Election
Commission was established.
The 74th Constitution Amendment Act also sought to institute the Directive
Principle of decentralisation in the urban context. ULBs were granted powers
48
and responsibilities in terms of preparation of plans, implementation of Local Self Government and
Urban Local Bodies
development schemes, and administration of taxes. A state level Finance
Commission was established to review the finances of ULBs falling within its
purview.
Table1: Main Characteristics of Urban Local Governments

Type of Rationale for Constitution and Brief Characteristics
Municipality Before 1992 After 1992
Municipal • Established in metropolitan areas or • Constituted in

Corporation big cities “large urban
• Wider functions and larger powers areas”*
than councils, enjoy more autonomy
and have larger revenue resources
• Separation of deliberative from
executive functions and vesting of all
executive powers in an appointed
authority who is independent of the
elected body
Municipal • Most popular form of local • Constituted in
Committee/ government in urban areas “small urban
Council • Set up in cities and large towns areas”*
• Extent of State control is relatively
larger than corporations
Nagar • Constituted after 1992 • Constituted in

Panchayat “areas in
transition from
rural to urban”*
Notified Area • Set up by State government in medium Abolished
Committee and small towns
• Created for areas which do not fulfill
conditions for constitution of councils
but are otherwise important
• Also created for newly developing
towns or areas where industries are
being established
• All members including chairman are
nominated by State government and
not elected
Town Area • Semi-municipal authority constituted Abolished
Committee for small towns
• Members are either wholly nominated
or wholly elected, or partly nominated
and partly elected
Source: Report of the Committee of Ministers Constituted by the Central Council of Local Self
Government (1963); Government of India (1966); Sachdeva, Pardeep (1993); Constitutional
Provisions Relating to Village Panchayats and Municipalities in India (1999).
Note: *A “large urban area”, a “small urban area” and a “transitional area” are defined as such
area “as the Governor may, having regard to the population of the area, the density of the population
therein, the revenue generated for local administration, the percentage of employment in non-
agricultural activities, the economic importance of such other factors as the Governor may deem
fit, specify by public notification” (Constitutional Provisions Relating to Village Panchayats
and Municipalities in India, 1999). 49
Democratic Decentralization In addition to these three tiers of local government, two other important
organisational structures — the District Planning Committee and the Metropolitan
Planning Committee— have been created under the Constitution. The 74th
Constitution Amendment Act also added the ‘Twelfth Schedule’ to the
Constitution. The Schedule (Article 243W) enumerates the functional
responsibilities that the municipalities are meant to shoulder.
The number of municipalities (i.e., municipal corporations, municipal councils

and nagar panchayats) differs from State to State. It is obvious that States with
a large number of urban areas have a higher number of municipalities. There are
some States where municipal corporations and/or nagar panchayats do not exist.
This is due to the fact that the urban areas in such States do not fulfil the conditions
for the constitution of a particular type of local government.
unicipalities are constituted by the State government, which specifies the class
to which a municipality shall belong in accordance with the provisions of the
municipal Act. For this purpose, size of the urban population is the main criterion.
However, in some States consideration is also given to other criteria, such as
location of the urban area and the per capita income.
Table 2: Criteria for Constitution of Municipalities in some States
Name of Municipal Municipal Nagar Panchayat

State Corporation Council
Haryana Population of Population of Population of not more than

300,000 or more than 50,000
more 50,000 and not
exceeding
500,000
Rajasthan Population of Population of Class II: Located at District
500,000 or morethan Headquarter; population of
more 100,000 and 50,000 or more and not
notexceeding exceeding 100,000; per
500,000 capita income of Rs. 200 or
more
Class III: Population of
25,000 or more and
notexceeding 50,000;
population of less than
25,000 and per capita
income of Rs. 150
Class IV: Population of less
than 25,000
Source: Municipal Law in Rajasthan, Vol. II (2005: 549-50); The Haryana Municipal Act, 1973
(2005: 47); United Provinces Municipalities Act, 1916 (2004).
Note: In Rajasthan, Nagar Panchayats (also known as Municipal Boards) have been further
classified as Class II, III, and IV municipalities; Municipal Corporations and Municipal Councils
are referred to as Class I municipalities.
50
3.3.2 Municipal Legislation Local Self Government and
Urban Local Bodies
Urban local governments are governed by the provisions of the State municipal
Acts. Every State has its own municipal Act. The State legislature is empowered
by the central government to decide on the structure, functions and powers to be
entrusted to the local governments. Although the content and format of various
State municipal Acts is more or less uniform, there are striking differences in the
provisions for devolution of powers, functions and funds to local governments
since this is determined by the condition of both the State and the local
government. The system is regulated by enactments passed from time to time by
State legislatures. Furthermore, municipalities possess powers to draft local
byelaws on various provisions for the furtherance of municipal administration.
This is due to the fact that each urban area has its own distinct character. The
byelaws are sent to the State legislature for approval. The municipal Act is,
therefore, a comprehensive guiding legal document for the local government
officials and the elected representatives, and byelaws are framed to further clarify
the administrative procedures.
In every State, two different types of Acts are generally in use – one for the
Municipal Corporations and a common Act for the Municipal Councils and Nagar
Panchayats. In a few States where several municipal corporations exist, the
legislature has framed municipal Acts especially for some corporations. The
remaining corporations in the State are governed by a common municipal
corporations Act.
3.3.3 Composition of Municipalities

There have been significant changes in the composition of municipalities since
their constitution. In the ancient period, municipal administration was in the
hands of the ruling class or the ruling government and their subordinate offices
and departments. Urban citizens were not happy with the prevailing ‘centralized
approach’, which was characterized by excessive bureaucracy. It was gradually
realized that because local governments were formed for the welfare of the urban
citizens, it was necessary to involve them. This thinking paved the way for citizen’s
participation in municipal affairs. A select number of urban citizens are now
chosen by holding elections to municipalities. For this purpose the municipal
area is divided into several wards delineated on the basis of population. There is
a contest for the seat/post of councilors in municipalities among the eligible
voters at the ward level. One person from each ward is elected to the post of
councilor. Elections are also held for the post of a mayor in municipal corporations
and a chairperson (also known as a president/chairman) in municipal councils
and nagar panchayats.
The State government departments are responsible for the organisation of

municipal elections. Besides the State government appointed staff and persons
nominated by the State government, citizen’s representatives have become a
part of the local government. Whereas the appointed staffs are trained to handle
their duties, citizens’ representatives are more aware of the quality of life at the
ward level. The effort of the government has been on maintaining a balance in
the distribution of power between the officials and the non-officials and on
establishing a democratic form of local government. To enable wider participation
in municipal affairs, seats in local governments are reserved for some sections
of the society .In addition to the appointed, nominated and the elected
51
Democratic Decentralization functionaries, ex-officio persons are also affiliated to the local government. A
typical composition of an urban local government is shown below:
Table 4: Composition of Urban Local Governments
Category Type of Municipality

Municipal Corporation Municipal Council/
Nagar Panchayat
Elected Members • Mayor; Deputy Mayor • Councillors/Elected
Ward Representatives • Chairperson/President; Vice-President
• Councillors/Elected
Ward Representatives
Ward Representatives • MPs • MPs
• MLAs • MLAs
• MLCs • MLCs
Ex-officio Members • •
Appointed Staff • Municipal • Subordinate Staff
Commissioner
• Executive Officer • Subordinate Staff
Nominated Members • Selected Citizens • Selected Citizens
Source: State Municipal Acts.
Notes: i) Elected Members: There is one seat of Mayor/President, Deputy Mayor/Vice-
President in a municipality; there are as many councillors as the number of wards in
a municipality.
ii) Ex-officio Members: MP – Member of Parliament; MLA – Member of Legislative
Assembly; MLC – Member of Legislative Council.
iii) Appointed Staff: There is one position of Municipal Commissioner/Executive Officer
in a municipality; the various sub-committees of a municipality are run by the
subordinate staff in association with the elected members and the Municipal
Commissioner/Executive Officer. Such staffs do not have the right to vote in the
meetings of the municipality.
iv) Nominated Members: A certain number of persons having special knowledge or
experience in municipal administration are nominated by the State government. Such
members do not have the right to vote in the meetings of the municipality.
Box 2 : Reservation of Seats in Municipalities (Article 243 – T)

1) Seats shall be reserved for the SCs and STs in every Municipality and the
number of seats so reserved shall bear, as nearly as may be, the same
proportion to the total number of seats to be filled by direct election in that
Municipality as the population of the SCs in the Municipal area or of the
STs in the Municipal area bears to the total population of that area and
such seats may be allotted by rotation to different constituencies in a
Municipality.
2) Not less than one-third of the total number of seats reserved under clause
(1) shall be reserved for women belonging to the SCs or as the case may
be, the STs.
3) Not less than one-third (including the number of seats reserved for women
belonging to the SCs and the STs) of the total number of seats to be filled
by direct election in every Municipality shall be reserved for women and
52
such seats may be allotted by rotation to different constituencies in a Urban Local Bodies
Municipality.
4) The offices of Chairpersons in the Municipalities shall be reserved for
the SCs, the STs and women in such manner as the Legislature of a State
may, by law, provide.
5) The reservation of seats under clauses (1) and (2) and the reservation of
offices of Chairpersons (other than the reservation for women) under clause
(4) shall cease to have effect on the expiration of the period specified in
Article 334.
6) Nothing in this Part shall prevent the Legislature of a State from making
any provision for reservation of seats in any Municipality or offices of
Chairpersons in the Municipalities in favour of backward class of citizens.
Today, there are around 5161 ULBs with municipal corporations, municipal
councils and Nagar Panchayats, besides cantonment boards.
3.3.4 Duties of Municipalities

The basic objective of an urban local government has changed from the
maintenance of law and order in the early years to the promotion of the welfare
of the community in recent times. The State municipal Acts provide an exhaustive
list of functions, which are classified into obligatory and optional or discretionary
functions. The former have to be necessarily performed by the local government
and for which sufficient provision in the budget has to be made. Failure to perform
any of these functions may compel the State government to supersede a
municipality. Discretionary functions may be taken up depending upon the
availability of funds. Municipal functions listed in the State municipal Acts
generally fall in the following broad categories: (a) public health and sanitation;
(b) medical relief; (c) public works; (d) education; (e) development; and (f)
administrative .
Table 3: Functions of Urban Local Governments
S. No. Category Description
1 Public Health and Water supply, public vaccination, control of
Sanitation diseases, prevention of pollution, collection
& disposal of rubbish, maintenance of sewers,
etc.
2 Medical Relief Establishment & maintenance of health
institutions, etc.
3 Public Works Construction & maintenance of streets,
bridges, etc., control & regulation of building
activity, street lighting, tree plantations, etc.
4 Education Establishment & maintenance of educational
institutions, etc.
5 Development Construction & maintenance of markets,
shopping centres, drinking water standposts,
wells, parks, gardens, etc.; preparation of
comprehensive plans for development &
growth of town, etc.
53
6 Administrative Preparation of annual reports, maintenance
& development of municipal property,
regulation of traffic, registration of births &
deaths, etc.
Source: Government of India (1966: 20-23); Municipal Acts of various States.
Furthermore, the Seventy-Fourth Amendment Act, 1992 provides that State

legislatures may endow municipalities with 18 functions. Whereas many of these
functions (such as urban planning, water supply, sanitation, slum improvement,
etc.) were already listed in the municipal Acts of most States, certain new functions
have been included, namely planning for economic and social development; urban
forestry, protection of the environment and promotion of ecological aspects;
safeguarding the interests of weaker sections of society, including the handicapped
and mentally retarded; urban poverty alleviation; and promotion of cultural,
educational and aesthetic aspects. It is understood that the listing of the 18
functions has been done to ensure that State governments give priority to at least
those functions that are of importance to every urban area. In most State municipal
Acts, the list of 18 functions has been inserted.
Box1 : Powers, Authority and Responsibilities of Municipalities

(Article 243 – W)
Subject to the provisions of this Constitution, the Legislature of a State may,

by law, endow –
a) the Municipalities with such powers and authority as may be necessary
to enable them to function as institutions of self-government and such
law may contain provisions for the devolution of powers and
responsibilities upon Municipalities, subject to such conditions as may
be specified therein, with respect to:
i) the preparation of plans for economic development and social justice;
ii) the performance of functions and the implementation of schemes
as may be entrusted to them including those in relation to the matters
listed in the Twelfth Schedule;
b) the Committees with such powers and authority as may be necessary to
enable them to carry out the responsibilities conferred upon them
including those in relation to the matters listed in the Twelfth Schedule.
Twelfth Schedule
1. Urban planning, including town planning;
2. Regulation of land-use and construction of buildings;
3. Planning for economic and social development;
4. Roads and bridges;
5. Water supply for domestic, industrial and commercial purposes;
6. Public health, sanitation, conservancy and solid waste management;
7. Fire services;
8. Urban forestry, protection of the environment and promotion of ecological
aspects;
54
9. Safeguarding the interests of weaker sections of society, including the Urban Local Bodies
handicapped & mentally retarded;
10. Slum improvement and upgradation;
11. Urban poverty alleviation;
12. Provision of urban amenities and facilities, such as parks, gardens,
playgrounds;
13. Promotion of cultural, educational and aesthetic aspects;
14. Burials and burial grounds; cremations, cremation grounds and electric
crematoriums;
15. Cattle pounds; prevention of cruelty to animals;
16. Vital statistics, including registration of births and deaths;
17. Public amenities, including street lighting, parking lots, bus stops and
public conveniences; and
18. Regulation of slaughterhouses and tanneries.
Source: Constitutional Provisions Relating to Village Panchayats and Municipalities in India
3.3.5 Division of powers - elected, nominated and

administrative
The 74th Constitution Amendment Act provides the outline for elected and
nominated councillors. The number of elected councillors varies according to
the population of an area. Nominated councillors are to be selected by the elected
councillors for their expertise in municipal administration. However, they are
not granted voting rights.
The municipal corporation – organisational Structures

The 74th Constitution Amendment Act does not specify any specific organisational
structure for municipal administration in India. This is an issue for state legislation
and the structure differs from state to state.
The Ministry of Urban Development drafted a Model Municipal Law, 2003 which
was circulated to state governments. The rationale for the lack of a centrally
administered Municipal Model is that local bodies need to be flexible to respond
better to local requirements. As detailed below, two broad models are commonly
in use.
Commissioner system
The mayor
The Mayor in the Municipal Corporation is typically chosen through indirect
elections by the councillors among themselves, for a term of one year which is
renewable. The Mayor does not have executive authority. Councillors and
Committee Councillors act as a committee. The most powerful committee is the
standing committee, which functions as the steering board exercising executive,
supervisory, financial and personnel powers. It is composed of elected members
varying in number between seven and sixteen through a system of proportional
representation of councillors.
55
Democratic Decentralization The Executive
The Municipal Commissioner acts as the Chief Executive Officer and head of
the executive arm of the Municipal Corporation. All executive powers are vested
in the Municipal Commissioner. The powers of the Commissioner are provided
by the statute and delegated the Standing Committee.
Mayor in council model

This form of city governance is similar to a cabinet government and follows the
framework of state and national governments. This model consists of a Mayor
and a cabinet, with individual portfolios, chosen from among the elected
councillors. The Municipal Commissioner acts as the Principal under the
supervision of the Mayor who is the Chief Executive Officer.
Although the above “model” structure may seem relatively simple, in reality
urban governance is a confusing mix of multiple agencies. Some are new while
others are legacies of older regimes; some are answerable to local government
while others to state level or even national government.
1) What are main components of 74th Constotution Amendment Act ,1992?
......................................................................................................................
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2) What are the duties of municipality?
......................................................................................................................
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3.4 URBAN GOVERNANCE IN INDIA:

STRUCTURAL CHANGES AND
INNOVATIONS
India has been experiencing several changes in the political and economic space,
56 which have some implications to governance and, so also, to urban governance.
India had followed mixed economic model with public sector leading the economy Local Self Government and
Urban Local Bodies
and public spending determining the welfare of the society. There was a significant
deviation in this approach through economic policy reforms in 1991 that were
brought as a necessity to make India emerge as a strong economy in line with
competition from other countries. With this added pressure on services, in addition
to the pressures from rapid urbanization gripping the country in 1980s, markets
emerged as important institution in the wider allocation of resources, in their
ability to mop-up and bring-in private resources in economic activities and in
representing the needs (and aspirations) of growing consumer class in cities.
3.4.1 Legal Provision relating to Municipal Governance

74th Constitutional Amendment Act in 1992 sought to give a new lease of life to
municipal bodies by identifying them as the third tier of urban governance.The
Amendment Act focused on devolving additional functions to the municipal
bodies and urging the state governments to assign them more taxation powers
commensurate : to their additional responsibilities.These are as follows:
i) Municipal elections and functioning of ward committees

As per a study conducted by the NIUA {National Institute of Urban Affairs),
municipal elections have been held by most of the states. Nine states have
constituted ward committees to ensure representation from each ward in
the decision-making process. However, ward committees are functional
only in Tamil Naduand Kerala. In fact, Kerala is the only state where the
ward committees are functioning successfully in each and every ward and
in towns having population above 1 lakh .
ii) Transferring of functional responsibilities

Most of the states have incorporated provision in the Municipal Acts for
the devolution of power to the municipal bodies. However, the extent of
functions devolved differs from state to state. The states of Kerala, West
Bengal, and Tamil Nadu have in fact assigned some additional
responsibilities apart from those mentioned in the 12th Schedule.
iii) State finance commission and financial reforms

The finance commissions constituted in various states of India have
attempted a detailed review of the financial position of the municipal bodies.
Most states have constituted two SFCs (state finance commissions) so far:
iv) Constitution and functioning of DPCs and MPCs

The DPCs (district planning committees) were constituted with a view to
achieving integrated regional planning. It was envisaged that the DPCs
would prepare draft development plans, including spatial plan for the district,
and would integrate the common interest of the rural and urban areas within
the district. Their role would also be advisory to the local bodies in
preparation of development plans and their effective implementation.
Coordination and monitoring of implementation of district development
plans and allocation of resources to local bodies for planning and
implementation of local-level projects contained in the district development
plans would be another area of intervention by the DPCs.
57
Democratic Decentralization MPCs (metropolitan planning committees) were to be constituted in every
metropolitan area. The purpose was to accord constitutional recognition to
metro- regional planning with a view to augmenting investment in economic
activities and infrastructure, by putting in spatial planning inputs. MPCs
would be responsible for functions such as preparation of draft development
plan for the metropolitan areas, spatial coordination of plans prepared by
the municipalities and panchayats in the metro area, and recommending
modifications in the local area plan. The MPCs would also advise local
bodies in preparation of development plans and, thereafter, monitor effective
implementation of approved development plan of the region.
It is widely held in the public finance literature that the Act, however, did
not address the mobilization of resources to cover financial requirements
of service provision but, rather, exacerbated it by the addition of new
functions. Yet, as noted earlier, cities have not done enough in terms of
improving governance modes and building governance structures that can
anticipate changes and prepare themselves for the same. The capacity of
many local governments to plan and manage their cities is limited and, as a
result, they are not able to meet the challenges of increasing demands.
3.5 IMPEDIMENTS IN IMPROVED URBAN

GOVERNANCE
Urban governance and management have predominantly been the constitutional
domain of state government. The municipal bodies have been functioning under
state governments, which have been delegating authority, powers, and functions
to them through state legislative enactment. These local institutions of urban
government have become weak over the years due to a host of factors, including
encroachment on traditional and legitimate municipal functions by creating
parastatals and urban development authorities, weak executive system, fragile
fiscal health, and inadequate staffing and expertise in municipal management .
i) Issues in decentralization
As discussed in the earlier section on implementation of the 74th
Constitutional Amendment, states have incorporated provisions in their
Municipal Acts for transferring additional functions to the municipal body,
but the extent of functions transferred differs from state to state. Further,
the performance of Municipal Bodies in undertaking these functions varies
from city to city even in the same state. Discussions with stakeholders brought
out that capacity and resource constraints of municipal bodies are the major
reasons for this difference in their performance. While the larger municipal
corporations still have access to funds, the smaller municipal councils are
financially very weak. Further, the devolution of functions to the municipal
bodies is also affected by the fact that in some cities, the parastatals, which
traditionally delivered certain basic functions, have not been dismantled.
As a result, they continue to perform certain functions that may have legally
been passed on to the municipal bodies. The continued existence of the
parastatals has led to overlaps and often conflicts in the roles and
responsibilities of each agency involved in municipal governance. In such a
scenario it becomes difficult for the citizens to hold any particular agency
responsible for inadequate service delivery.
58
ii) Financial impediments Local Self Government and
Urban Local Bodies
The ULBs are financially weak, and while there is provision to levy and
collect adequate user,charges, such provisions are not fully utilized,
Many municipal bodies are running into deficits and are heavily dependant
on government grants. The state budgetary allocations have, however, been
drying up for most states, and it is being realized that the traditional system
of funding based on plan and budgetary allocations will only reduce in the
future.
iii) Operational capacity issues

Most ULBs face problems due to lack of capacity, improper staffing patterns,
and lack of standardization. They do not have the institutional, operational,
educational, and legal capability to develop commercially viable
infrastructure projects, mobilize resources for the projects, and implement
them.
Lack of adequate training is the main impediment in introducing new

technologies and management styles in the working of the municipal
corporations. E-governance initiatives, accounting reforms, and in fact, even
private participation all require a certain level of training of the staff on IT
systems, accounting norms, and so on.
iv) Insufficient public participation

The urban governance system lacks people’s involvement in the decision-
making process. While there is little effort on part of the municipal bodies
to include people in the process, the problem gets compounded by the fact
that there is very little awareness amongst citizens themselves on their role
in the governance process.
v) Issues in transparency and accountability

The lack of transparency and accountability in the working of urban local
bodies has already been brought out in the earlier discussions on the
Municipal Disclosure Law. The main impediment towards achieving
transparency and accountability is not the lack of understanding on the need
for the same but the lack of means to achieve the same. Most ULBs are
severely capacity constrained both in terms of funds and manpower. In such
a scenario, it becomes difficult to put in places systems that would enhance
accountability. In fact, the root cause of the problem of inefficient service
delivery is the capacity constraints of ULB.s.
3.6 MEASURES TO STRENGETHEN URBAN

GOVERNANCE
The Planning Commission of India constituted a Working Group on Urban
Governance for formulation of 12th Five Year Plan. Some of the recommendations
of the committee for strengthening urban governance are as follows:
1) Standardizing the classification of ULBs: The states should adopt standard
norms for classification of ULBs. It would be advisable that all the
municipalities should be reclassified into three categories: Municipal 59
Democratic Decentralization Corporation for large urban areas of 5 lakh and more population; Municipal
Council for urban areas of 1 lakh to 5 lakh population and Nagar Panchayat
for towns below 1 lakh population.
2) Strengthening Ward Committees: There is wide variation in the
functioning of ward committees across the state. Although the legal
provisions for the constitution of a Wards Committees have been made in
most of the states, the actual spirit of the Amendment is diffused. Hence,
constitution of ward committees and their functioning needs to be
incentivized. Further, there is a need to establish area sabhas and to create
the linkage between area sabhas and ward committees so as to ensure that
accountability and participatory processes became a reality.
3) Strengthening Metropolitan Planning Committees: The 74th Amendment
specific establishment of a Metropolitan Planning Committee (MPC) for
preparing development plans at the metropolitan level. However, MPCs are
yet to evolve as per the spirit of the constitutional amendment. Only a few
states have initiated creation of such entities. The central government needs
to support the state government in this respect.
4) Empowerment of political office bearers: The Mayors or Chairpersons
of the LBs should be accountable to people and need to have power and
tenure commensurate with this objective. The local conditions should
determine whether the cities should adopt a “Mayor in Council” system or
an “Executive Mayor” system. In addition, there is a critical need for building
the capacity of the political executive specifically in areas such as
sensitization vis-à-vis the need for reforms, service level benchmarks etc.
5) Convergence of functions of parastatals / state bodies with Local Bodies:
Historically, due to poor staffing and technical capabilities of the Local
Bodies, a number of Para-Statal Bodies were created for providing services
listed in the 12th Schedule Consequently, a large number of parastatals,
including Development Authorities, Water Supply & Sewerage Boards, Slum
Housing & Development Boards, PWD etc. have been performing various
functions which could have been vested with the Local Bodies in accordance
with the mandate of the 74th Amendment. The multiplicity of agencies
providing various services in the Urban Sector has led to overlapping,
ambiguity and wastage of resources. Over and above that, the parastatal
bodies are not elected Bodies and are not directly answerable to the citizens.
There is a need for activity mapping for these bodies.
6) Framework for Governance of Mega Cities: The problems of megacities
are admittedly complex. The large scales of interventions required for core
services such as water supply, sanitation and roads, leads to formidable
administrative challenges. This is made more complex as trunk services
historically have not been mapped or digitized, unregulated use of vacant
lands have lead to haphazard growth, proliferation of slums, unauthorized
construction and encroachment. Therefore, the challenge before the mega
cities is how to ensure good municipal administration keeping in vies such
large complexities. There is a need for creating a governance system for
these cities.
7) Strengthening the Organisational Capacities: The poor quality of urban
managers is one of the major reasons for sub optimal urban administration.
60
The manpower available in most of the urban local bodies is not equipped Local Self Government and
Urban Local Bodies
with the necessary technical and planning skills to meet the growing urban
challenges. There is an urgent need for increased investment, financial
management and audits in local bodies. Thus, creation of a municipal cadre
is essential.
8) Regulatory mechanisms for delivery of basic urban services: An

Independent Urban service Regulator is the need of the hour as the current
paradigm of service provider deciding service levels and tariff is outdated.
The regulator would monitor provision of service as well as tariff regime
and ensure transparency and efficiency.
9) Public Private Partnership: PPPs which are structured around a robust

revenue model (including user charges, targeted subsidies, and viability gap
funding) and offer a good prospect of return on investment can contribute
to systemic gains and better management of urban services. The State
governments should bring out a legislative framework to address the entire
gamut of issues in implementation of PPP Projects and develop clear policies
with regard to identification of projects which can be developed and
implemented on PPP basis, delivery processes, project development,
approval and implementation process, guiding principles of contract
management etc.
10) Accountability and Citizen Participation: A more interactive and

participative framework should be followed by ULBs to ensure greater
accountability to the citizens. Citizen Report cards, like the one prepared by
the Public Affairs centre in Bengaluru, need to be replicated across all cities.
11) Use of E-Governance and Technology for improvement of delivery of

services and need for database: The information Technology (IT) can play
an important role in improving governance. With municipal administration
becoming increasingly complex, the benefits of IT adoption are becoming
more and more visible across several municipalities. The tools of IT and E-
Governance should be strengthened and adopted in all the ULBs and for
this, whatever skill upgradation is required, should be done.
1) What are the impediments in improved urban governance?
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61
Democratic Decentralization 2) What are the broad aims of implementing e-governance in
municipalities?
......................................................................................................................
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3.7 LET US SUM UP

The phenomenon of urbanization, globalization and liberalization are increasing
pressure on service delivery in the cities of developing countries that are engulfed
by vast number of problems. Unfortunately, most of the cities are ill equipped to
tackle the problems and pressures because either they gave inadequate thought
about the trajectories of city growth or because they did not plan and allocate
resources to do it; even otherwise, there are inefficiencies built-in through
traditional designs of institutions of service delivery made on political and
bureaucratic forces. This is leading to government failures in service delivery,
which can be addressed by institutional innovations under partnership mode
(apart from governance reforms) to steer urban governance in right direction.
However, policy reforms are also needed so that right kinds of incentives prevail
for nurturing new institutions.
3. 8 KEYWORDS
Governance, Partnership, Management, Network, Municipal, Organisational,
Efficiency, Urban, Reform, Accountability, Participation

i) Chamaraj K. 2006, Jawaharlal Nehru National Urban renewal Mission
JNNURM) -a critique
ii) Delhi Human Development Report 2006
iii) Mathur M P. 2007,Impact of the Constitution (74th) Amendment Act on
the urban local bodies: a reviewNIUAWP 07-02 (National Institute of Urban
Affairs). 2007
iv) Documentation of Best PracticesDelhi: NIUA
v) Tewari, V. Municipal reforms for sustainable urban infrastructure
development in India,Paper presented at the United Nations Asia Pacific
Leadership Forum:Sustainable Development for Cities, Hong Kong, 25-
27 February 2004
vi) Aijaz R. 2007,Challenges for Urban Local Governments in India Asia
Research Centre, London School of Economics and Political Science
62
vii) Chaubey P K. 2006,Urban Local Bodies in India: quest for making them Local Self Government and
Urban Local Bodies
self-reliant New Delhi: Indian Institute of Public Administration.
vii) Jha G. 1993, Seventy-Fourth Constitution Amendment and the
empowerment of municipal government: a critique Urban India Xl1l Gune-
December)
viii) Jha G. 2003 Municipal Financial Resource Mobilisation Status, Concerns
and Issues New Delhi: Infrastructure Professionals Enterprise (P) Ltd
ix) Jha G. 2006, Urban Governance: municipal finance imperatives Pune:
State Institute of Urban Development, YASHADA
x) Mathur 0 P. 2006,Urban Finance, India Infrastructure Report Delhi: Oxford
University Press
xi) Ravindra A. 2004,An Assessment of the Impact of Bangalore CitiJen Report
Cards on the Performance of Public Agencies Washington DC: World Bank
[BCD Working Paper Series 12]
xii) Sarkar A, Bandyopadhyay A, and Roy A. 2007, Participatory Planning
Process: the Kusp Model of West Bengal Institute of Town Planners of
India
xiii) Savage D and Dasgupta S. 2006, Governance framework for delivery of
urban services in India Infrastructure Report 2006 Delhi: Oxford University
Press
xiv) Swanson D and Pinter L. 2006,Governance Structures for National
Sustainable Development Strategies,Study of Good Practice Examples,
Canada: IISD (International Institute for Sustainable Development)
xv) Transparency International and United Nations Human Settlements
Programme. 2004 Tools to support transparency in local governance,[Urban
Governance Toolkit Series]
xvi) Venkatchalam P. 2005,Innovative Approaches to Municipal Infrastructure
Financing: case study of Tamil Nadu Development Studies Institute, London
School of Economics and Political Science,[LSE Working Paper]
xvii) Wood J. year,Development of urban and regional planning in India,Land
Economics 34 (4): 310-315 USA: University of Wisconsin Press Stable,[
xviii) World Bank. 2007,Engaging with Citizens to Improve Services: case studies
New Delhi: World Bank
xix) Report of the Working Group on Urban Governance
3.10 CECK YOUR PROGRESS - POSSIBLE

ANSWERS
1) What are principles of good governance?
A) (a) Participation (b) Rule of Law (c) Transparency (d) Responsiveness (e)
Consensus orientation (f) Equity, Efficiency and Effectiveness (g)
Accountability (h) Strategic Vision 63
Democratic Decentralization 2) How do you measure effective Urban Governance?
A) Urban Governance is derived from the concept of governance in relation to
urban areas to be reflective of how the various constituents of public service
delivery are organized to increase the welfare of citizens (both current and
future). It can be measured relatively, and somewhat subjectively, how
effective the institutions are in terms of the principles of sustainability,
decentralization, efficiency, equity, participation, transparency,
accountability, civic engagement and citizenship, and security.
3) Who are the key players in decision making and implementation process
of governing the cities?
A) There are two key players involved in the decision-making andimplementing
process, and also of the institutional structures that support them.The decision
makers can be categorized into two broad categories:
Government: This includes in a federal state the Union, State and Local
Governments .
Civil Society: This includes community groups, the urban poor, NGO’s,
business establishments, and the media. Effective governance at the last
mile, in a healthy democracy is dependent on the participation of citizens
and the capacity of local governments to govern efficiently.
1) What are main components of 74th Constotution Amendment Act ,1992?
A) The 74th Constitution Amendment Act also sought to institute the Directive
Principle of decentralisation in the urban context. ULBs were granted powers
and responsibilities in terms of preparation of plans, implementation of
development schemes, and administration of taxes. A state level Finance
Commission was established to review the finances of ULBs falling within
its purview. In addition to these three tiers of local government, two other
important organisational structures — the District Planning Committee and
the Metropolitan Planning Committee— have been created under the
Constitution. The 74th Constitution Amendment Act also added the ‘Twelfth
Schedule’ to the Constitution. The Schedule (Article 243W) enumerates
the functional responsibilities that the municipalities are meant to shoulder.
2) What are the duties of municipality?
A) The State municipal Acts provide an exhaustive list of functions, which are
classified into obligatory and optional or discretionary functions. The former
have to be necessarily performed by the local government and for which
sufficient provision in the budget has to be made.Discretionary functions
may be taken up depending upon the availability of funds. Municipal
functions listed in the State municipal Acts generally fall in the following
broad categories: (a) public health and sanitation; (b) medical relief; (c)
public works; (d) education; (e) development; and (f) administrative .
1) What are the impediments in improved urban governance?
64 A) Issues in decentralization
The devolution of functions to the municipal bodies is also affected by the Local Self Government and
Urban Local Bodies
fact that in some cities, the parastatals, which traditionally delivered certain
basic functions, have not been dismantled. As a result, they continue to
perform certain functions that may have legally been passed on to the
municipal bodies.
Financial impediments
The ULBs are financially weak, and while there is provision to levy and
collect adequate user.,charges, such provisions are not fuly utilized.
Operational capacity issues

Lack of adequate training is the main impediment in introducing new
technologies and management styles in the working of the municipal
corporations.
Insufficient public participation

The urban governance system lacks people’s involvement in the decision-
making process.
Issues in transparency and accountability

The main impediment towards achieving transparency and accountability
is not the lack of understanding on the need for the same but the lack of
means to achieve the same.
2) What are the broad aims of implementing e-governance
inmunicipalities?
A) Focus on clearly identified citizen services that would be covered with clearly
laid down service levels and outcomes to be achieved.
• Improve efficiency and effectiveness in interaction between local
government and its citizens and other stakeholders.
• Improve quality of internal local government operations and
management information systems to support and stimulate good
governance.
• Bring about transparency and accountability in urban local body
operations.
• Help improve reach of the delivery of services to citizens.
65
UNIT 4 PESA AND ITS IMPLEMENTATION
Structure
4. 1 Introduction
4. 2 Characteristics and Features of Scheduled Areas
4. 3 Tribes and Fifth and Sixth Schedule Areas
4. 4 Bhuria Committee Recommendations and 73rd Constitutional Amendment
4.5 Provisions of the Panchayats (Extention to the Schedule Areas) Act, 1996
(PESA)
4. 6 Gram Sabha and its Role
4. 7 Ramifications of the Act 40 of 1996
4. 8 Operational Issues and Suggestions for Proper Implementation
4.9 Let Us Sum Up
4. 1 INTRODUCTION
The Constitution of India provides special protection to the tribals, who constitute
more than eight per cent of the total population of India and are spread unevenly
over different regions of the country. The tribal communities have remained
comparatively isolated and they maintain an uninterrupted long tradition of well
knit, cohesive social structure and value system, which is governed by their own
customs and traditions. They also have their own self-governing local institutions,
which are gradually becoming weak and inactive. In fact it is a challenging task
to assimilate these tribal groups in the mainstream developmental effort without
disturbing and destroying their cultural identity and socio-economic milieu.
In order to strengthen the local bodies and to provide self-rule for tribals, the
Part IX of the Constitution has been extended through a Parliament Act called
the provisions of the Panchayats (Extention to the Scheduled Areas) Act, 1996
(Act No.40 of 1996), popularly known as PESA (herein after the term PESA
will be used to denote the Extention Act). Prior to this Act, a committee was
constituted to examine various dimensions of self - rule for tribals, the
Constitutional requirements and to suggest how the provisions of Part IX of the
Constitution could be extended to the Scheduled Areas.
This unit provides details about the Act known as PESA, its status and operational
aspects including gaps and measures for strengthening the system.
After studying this unit, you should be able to
• Define self rule and fifth and Sixth Schedule Areas
• Describe the provision under PESA,1996
• Discuss the status of Conformity Panchayat Acts passed by the states
• Analyse operational issues and suggestions for proper implementation
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PESA and its Implementation
4.2 CHARACTERISTICS AND FEATURES OF
SCHEDULED AREAS
Historically, the idea of administration of underdeveloped areas originated with
the British administration in the latter half of the 18th century. With the declaration
of Regulation 1 of 1796, the concept of having a distinct and special arrangement
essentially for the isolated tribal regions gained general acceptance and, in turn,
special laws came into practice for administering these areas. The Government
of India Act, 1919, had separate administrative arrangements for these areas and
they were kept out of the purview of the legislatures. Subsequently, on the basis
of the recommendations of the Simon Commission, the Government of India
Act, 1935, provided for the declaration by an Order in Council of ‘Excluded
Areas’ and ‘Partially Excluded Areas’ (Sections 91 and 92). Under the provisions,
no act of the Federal Legislature of the Provincial Legislature would apply to
these areas except on the direction of the Governor, who was empowered to
make such exceptions and modifications, as he considered necessary.
The Secretary of State indicated broad principles as to which areas could be

taken up under the provisions of the Sections 91 and 92 of the Government of
India Act, 1935. As per the principles announced, for ‘Excluded Areas’, the
selection must be based upon strict necessity and the range should be as limited
as possible in scope consistent with the needs of the tribal population. Regarding
the areas to be classified as ‘Partially Excluded Areas’, any area containing a
preponderance of tribals which was of sufficient size to make possible the
application of special legislation and special administrative treatment should
qualify for inclusion. Keeping these principles in view, the Government of India
recommended that the frontier and border regions of Assam, the Laccadive and
Minicoy Islands and the Lahaul and Spiti areas in the Punjab should be declared
‘Excluded Areas’. Extensive tribal tracts in the provinces of Madras, Bombay,
Bengal, United Provinces, Bihar, Central Provinces and Orissa should be declared
as ‘Partially Excluded Areas’.
A sub-committee of the Constituent Assembly with A V Thakkar as its chairperson
was constituted to examine the erstwhile arrangement of ‘Excluded and Partially
Excluded’ and review the central issues relating to tribals and make
recommendations on the subject. In this report, the sub-committee on Excluded
and Partially Excluded Areas (other than Assam) observed that in the new
democratic set up the problems of the tribals should be an integral part of the
development of the Indian people as a whole. By and large, the recommendations
of the committee were accepted and adopted in the Constitution and provision
was included for separate administration of this Areas.
The President is empowered to declare any area, where there is a substantial
population of tribal people, as a scheduled area under the Fifth Schedule or in
Assam as a tribal area under the Sixth Schedule. The criteria for declaring any
territory as ‘scheduled’ adopted by the sub-committee of the Constituent Assembly
were: (a) preponderance of tribal population; (b) the stage of advancement and
degree of assimilation; and (c) to a slightly lesser extent the susceptibility of
these areas to special administrative treatment.
Subsequently, the Scheduled Areas and Scheduled Tribes Commission headed
by U.N. Dhebar prescribed slightly different indicators. According to the
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Democratic Decentralization commission, the criteria for determining a scheduled area under the Fifth Schedule
may be based on four factors: (a) preponderance of tribals in the population, (b)
compactness and reasonable size, (c) underdeveloped nature of the area, and (d)
marked disparity in economic standards of the people. Similarly, under the
provisions of Article 342 of the Constitution, the President is empowered to
notify in consultation with the Governor of the State any tribe as a Scheduled
Tribe. The criteria generally followed for classifying a tribal community as
Scheduled Tribe are:
• Geographical isolation,
• Shyness of contact with community at large’
• Distinct culture, and
• General backwardness
• Primitive traits
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Articles 244 (1) and (2) in Part X of the Constitution of India describes about PESA and its Implementation
‘Scheduled Areas’ and ‘Tribal Areas’ under the Fifth and Sixth Schedules
respectively. It envisages a special system of administration for these areas. The
Fifth Schedule is tribal dominated areas covering nine states of the country,
namely, Andhra Pradesh, Chattisgarh, Gujarat, Himachal Pradesh, Jharkhand,
Madhya Pradesh, Maharashtra, Orissa and Rajasthan.
4. 3 TRIBES AND FIFTH AND SIXTH SCHEDULE

AREAS
The Constitution of India provides self-rule for the tribal communities. It ensures
to safeguard their ethnic culture, common property resources and community
control. Administratively, the scheduled areas are part of the states in which they
are situated. The rationale for the Scheduled Areas has been to assist the tribal
population in enjoying their existing rights unobstructed, and to develop the
area as well as to promote the economic, educational and social progress of the
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Democratic Decentralization scheduled tribes. Besides, it will help in protecting their rights and interests and
prevent their exploitation. The Governor has been given specific powers for the
administration of Scheduled Areas. These powers are: (a) to modify central and
state laws in their application to them, (b) to frame regulations for their peace
and good governance and particularly for the protection of the rights of tribals in
land, (c) allotment of land and, (d) their protection from moneylenders. However,
in framing these regulations, the Governor is required to consult the Tribes
Advisory Council (TAC) in the state established under the provisions of Part B,
Para 4, of the Fifth Schedule of the Constitution. Further, the Governor is required
to submit to the President a report annually or whenever so required regarding
the administration of the Scheduled Areas in the State.
4.3.1 Fifth Schedule Areas

For the Fifth Schedule Areas, the scheme of administration visualizes a division
of responsibility between the state governments and the union government. It is
the duty of the state government to screen legislation unsuitable for extension to
the Scheduled Areas. Moreover, the State Government is responsible for framing
regulations relating to such items. The state government has also to implement
special schemes pertaining to welfare and general development of Scheduled
Tribes in the state. The union government extends guidance with regard to
administration and provides additional funds for the betterment of the tribal
community. Further, Article 339(2) of the Constitution provides:
“The executive power of the Union shall extend to the giving of directions to a
state as to the drawing up and execution of schemes specified in the direction to
be essential for the welfare of the Scheduled Tribes in the State”.
Part B, Para 4 of the Fifth Schedule envisages setting up of a Tribes Advisory

Council (TAC) comprising not more than twenty members. Of these, three-fourth
shall be the representatives of the scheduled tribes in the Legislative Assemble
of the state. In case the number of representatives of the scheduled tribes in the
Legislative Assembly is less than the number of seats in the TAC to be filled by
such representatives, other members of these tribes shall fill the remaining seats.
The Governor is empowered to make rules prescribing or regulating the number
of members of the council, the mode of their appointment, the appointment of
chairperson, the conduct of meeting and its procedure in general and other
incidental matters. In fact, the TAC is an advisory body meant to act as an
instrument for prevention of exploitation and discrimination. It facilitates
governance of the scheduled areas in the larger interest of the tribes.
4.3.2 Sixth Schedule Areas

Paragraph 2 of the Sixth Schedule provides for the setting up of District Councils
(DC) and Regional Councils (RC) in each autonomous district and region. The
District Council is a body corporate having perpetual succession with a common
seal, and the right to own and dispose off property, and with the right to sue and
be sued. The DC will have not more than thirty members, of whom the Governor
shall nominate not more than four persons. A simple majority elects members on
the basis of adult suffrage from a single member constituency. The elected
members of DC shall have a term of five years from the date of appointment for
the first meeting of the Council. In order to give greater functional autonomy to
the district councils, it has been well structured with three functional organs,
70
that is, the Legislature, the Executive and the Judiciary. The Regional Council PESA and its Implementation
for an autonomous region will be constituted separately in respect of all areas
within such region notified by the Governor. The powers of regional councils
and the district councils have been enumerated in the Schedule.
Now we have discussed about Scheduled areas and the fifth and sixth Schedule.
Try to answer the following questions in the Check your progress-1
1) What are the criteria for declaring Scheduled Area?
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2) What is Fifth Schedule?
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4. 4 BHURIA COMMITTEE RECOMMENDATIONS

AND 73RD CONSTITUTIONAL AMENDMENT
A high level committee chaired by D S Bhuria, MP, was constituted in June
1994 to examine how provisions of the 73rd Constitution Amendment could be
extended to the Schedule areas and make recommendations. The rationale for
inclusion of provisions as contained in Article 243M with regard to applicability
of Part IX of the Constitution to Scheduled and Tribal Areas under Fifth and
sixth Schedule Areas would be recognized and appreciated once it is accepted
that the people in these areas need to be given protection to safeguard their
interests.
The Committee, after discussing the issues emanating from the terms of reference
and considering various aspects of the subject, submitted its report in January
1995.
Some important recommendations of the committee are listed below:

71
Democratic Decentralization • While passing the law under Article 243M (4) (b), important provisions of
the 73rd constitutional amendment and certain unique characters of tribal
societies and tribal areas should be kept in view since many tribal societies
have their mode of living organizations, cultural mores, present-day
predicament of exploitation, deprivation and marginalization. Many tribal
communities have been living autonomously. They have exercised control
over the natural resources moulding their institutions. The Gram sabhas
and village councils have been vibrant institutions in the field of
administration, religion, politics, economics, justice and son. Therefore, it
is necessary to have in the Panchayati Raj framework a mix of traditional
and modern institutions.
• While drafting the law, advantage should be taken of both the Fifth and
Sixth Schedules. The Fifth Schedule should be the fountainhead of essential
and beneficial legislation. The design and contents of the Sixth Schedule
could serve as a relevant reference frame for a district within the broader
canvas of the Fifth Schedule. However, ethnic, regional and other related
variations should be given due consideration. The Sixth Schedule should
be viewed in this context with such reform as is necessary.
• The Tribes Advisory Council, envisaged in the Fifth Schedule as a

consultative body at the state level, needs to be reformed into an effective
organization. The Chief Minister of the State should be its chairperson and
its meetings should be held once in every three months.
• The Central Advisory Council at the Centre should be revived. It should

serve as a sounding board for tribal policies and programmes and render
advice in disputes between a state government and the Tribes Advisory
Council or between the District Council and the Tribes Advisory Council.
It advice should be normally be binding. The Prime Minister should chair
its meetings and its members may be the ministers for welfare, home and
rural development and the deputy Chairperson of the Planning Commission.
• The present day administrative boundaries may be considered for

reorganization based on geographic, ethnic and demographic considerations
and finalized within a couple of years.
• The lower functionaries of departments like police, excise, forest and revenue
should be assigned a minimal role and should work under the control of
concerned panchayats.
• The Gram sabhas should be allowed to exercise their customary role

unhindered. Further, a gram sabha may have a traditional village council,
which performs varied functions – religious, political, economic, judicial
and so on, on its behalf. The gram sabha may nominate its executive council
or village council, which may be a traditional body and may delegate to it
the execution of development works.
• Constituencies may be delimited for election of members to the intermediate

and district tier panchayats.The district level panchayat may be called
Autonomous District Council (ADC).
• In certain districts the Scheduled Tribe population may be less than 50 per
cent of the total population, but it may be concentrated in a part of parts of
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the district, say in some blocks or sub-divisions. Sub-District Council may PESA and its Implementation
be constituted for such areas, called the Autonomous Sub-District Councils
(ASDCs). ASDCs should be at a par with ADCs. However, this may be
regarded as an interim arrangement, pending reorganization of administrative
boundaries as suggested earlier.
• The organizational structure of an ADC should be based on the broad outline

of Autonomous District Councils in the Sixth Schedule Areas. Some scope
should be opened up through setting apart seats (not exceeding 5 in number)
for nomination in the District Council of minority tribal communities, who
cannot find representation through the election process. The nomination
may be made in consultation with the Governor.
• Lok Sabha Scheduled Tribe MPs should be associated with the intermediate
(block) panchayat and the district council. But the representation should
not be restricted to Scheduled Tribe MLAs and even non-ST MLAs should
be associated with both tiers.
• Since the Scheduled Areas and Tribal Areas are expected to have a majority
of tribal population, the different tier panchayats therein should have a
majority of Scheduled Tribe members. Further, both the chairpersons and
vice-chairpersons should belong to STs.
• The Sixth Schedule confers powers of legislation and administration of

justice on the district councils apart from the executive developmental and
financial responsibilities. The districts in Scheduled Areas should adopt the
Sixth Schedule format, but expand it to include subjects that are indicated
in the Eleventh Schedule of the Constitution.
• The legislative powers of the autonomous district councils in the Fifth

Schedule Areas have been proposed more or less on the same lines as in the
Sixth Schedule, with some amendments. In so far as justice is concerned,
the committee has emphasized that a traditional jury-based legal system
evolved by tribal societies should be recognized and continue to function.
There should be no police interference in cases not involving heinous
offences. Such cases should be confined to the gram sabha domain. As far
as development functions are concerned, the functions enumerated in the
Sixth Schedule as well as in the Eleventh Schedule should be discharged by
the ADCs.
• The panchayats in these areas may receive funds under Articles 243H and
243I and funds as per the first provision to Article 275(I) should continue to
be available normally.
• For the purposes mentioned in the first proviso to Article 275(I) funds
received from sources other than the panchayats’ own, should be placed in
‘charged’ category in the respective government’s budgets as opposed to
‘voted’ category. This will enable funds to remain fully available for purposes
related to tribal interest, without fear of misutilisation or diversion.
• To prevent wrong financial practices occurring in the tribal sub-plan field,

the tribal sub-plan funds (whether relating to state plan or special central
assistance or any other) pertaining to different sectors of development should
be quantified and placed at the disposal of the ADCs for distribution among
73
Democratic Decentralization the panchayats in the district. Moreover, to the extent possible, the central
and state governments should device procedures for direct allotment of funds
to the ADCs.
• All government functionaries of institutions concerned with panchayats in

a scheduled area are located within its jurisdiction should be under its control.
• As per the provision in the Sixth Schedule, the governor may appoint a
commission to examine and report on all matters relating to the
administration of Autonomous District Councils. Representation should be
given to Scheduled Tribes in the commission.
• The TACs and ADCs in the scheduled areas should review the relevance of
the existing laws. Action to exclude irrelevant laws should be completed
within a stipulated period of about two years.
• The law passed by Parliament will supersede such and any other related
laws that have been enacted in pursuance of the 73 rd and 74th Constitution
Amendment Acts.
• The process of scheduling of tribal areas in the country commenced earlier

has remained incomplete. It is necessary that the remaining tribal pockets
should be included in the scheduled areas.
• The framework of the Sixth Schedule should be looked at afresh in the

northeastern region in the light of suggestions made by the committee.
Evidently, the committee looked into various facets of the tribal situation which
could be considered for drafting legislation. The suggestions made by the
committee assimilate various provisions of the Fifth and the Sixth Schedules
and the 73rd Constitution Amendment. A special treatment has been given to the
social, political, cultural and economic aspects of tribal life. The committee has
taken note of the tribal areas that do not find place either in the Fifth or the Sixth
Schedules of the Constitution. The recommendations of the committee paved
the way for drafting the Extension Act.
Now we have discussed about recommendations made by Bhuria Committee.

Try to answer the following questions in the Check your progress-2
1) What are main recommendations of the Bhuria Committee?
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PESA and its Implementation
4. 5 PROVISIONS OF THE PANCHAYATS
(EXTENTION TO THE SCHEDULE AREAS)
ACT, 1996 (PESA)
According to the provisions of the 73rd amendment, introducing Part IX for a
panchayat structure in country is not applicable automatically to these areas rather
it is envisaged to bring through special provisions and modifications by
subsequent legislations. In order to do so, an Act was passed by Parliament titled
“The Provisions of the Panchayats (Extention to the Scheduled Areas) Act, 1996;
no. 40 of 1996, on 24th December, 1996. This Act is popularly known as PESA.
This Act envisages providing Self-governance to tribes. It takes care to preserve
customary laws, social and religious practices and traditions of tribes. It also
provides self-management by tribes. This is a historical piece of legislation. It
has some distinct features. The provisions can be classified into two categories,
that is, mandatory and general provisions. The mandatory provisions are
compulsory.
4.4.1 Mandated Provisions

• Any legislation on the Panchayats for the tribal areas shall be in consonance
with the customary law, social and religious practices and traditional practices
of management of community resources.
• A village shall ordinarily consist of a habitation, a group of habitations, a
hamlet or a group of hamlets comprising a community and managing its
affairs in accordance with the traditional and customs.
• Establishment of Gram sabha for every village comprising persons whose
names figure in the electoral rolls.
• Empowering the gram sabha to safeguard and preserve the traditions, customs
and cultural identify of the people, community resources and to settle local
disputes by customary methods.
• The gram sabha should identify and select beneficiaries for poverty
alleviation and other programmes.
• Every village panchayat must obtain a certificate of utilization of funds
from the gram sabha for the projects and programmes of social and economic
development under the state poverty alleviation and other programmes.
• The acquisition of land for development projects and rehabilitation or
resettlement of persons affected by such projects in the scheduled areas has
to be done in consultation with either the gram sabha or the panchayat at the
appropriate level. Planning and implementation of the projects will be
coordinated at the state level.
• Panchayats at the appropriate level have to manage and plan for minor water
bodies in these areas.
• Grant of prospecting license or lease of land for mining, minor minerals can
be given only on the recommendations of the gram sabha or the panchayat
at the appropriate level.
75
Democratic Decentralization • Grant of concessions for the exploitation of minor minerals by auction has
to be given on the recommendations of the gram sabha or the panchayat at
the appropriate level.
• Besides these powers and functions, the gram sabha or the panchayats at
the appropriate level shall have the following mandatory powers, (i) to
enforce prohibition or to regulate and restrict the sale and consumption of
any intoxicant; (ii) the ownership of minor forest produce and management
of all types of village markets; (iii) to prevent alienation of land and to take
appropriate action to restore any unlawfully alienated land of a scheduled
tribes in scheduled areas; (iv) to exercise control over money lending to
tribes; and control institutions and functionaries working in the social sectors
in the area; (v) to exercise control over local plans and their resources,
including tribal sub-plans.
• Reservation of seats at all tiers of panchayats for the scheduled tribes shall
not be less than one-half of the total number of seats and reservation for
other communities indicated in Part IX of the constitution shall be one the
basis of the proportion of their population.
• The post of chairperson at all panchayat levels will be reserved for the
scheduled tribes.
• At the intermediate or district level panchayats, in the case of scheduled
tribes which have no representation the state government shall nominate a
person to represent such tribes but the number of persons to be nominated
cannot exceed one-tenth of the total elected members in the panchayat.
• While devolving powers and authority to panchayats, it should be ensured
that panchayats at the higher level do not assume the powers and authority
of any lower level panchayat or the gram sabha.
• The pattern of the sixth schedule to the constitution has to be maintained
while designing the administrative arrangements for the district level
panchayat.
STATES COVERED BY PESA

• ANDHRA PRADESH
• CHHATISGARH
• HIMACHAL PRADESH
• JHARKHAND
• MADHYA PRADESH
• MAHARASHTRA
• ORISSARAJASTHAN
4. 6 GRAM SABHA AND ITS ROLE

According to the provisions of the Act, every village shall have a Gram Sabha
consisting of persons whose names are included in the electoral rolls for the
Panchayat at the village level. Moreover, a village shall ordinarily consist of a
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habitation or group of habitation or a hamlet or a group of hamlet comprising a PESA and its Implementation
community and managing its affairs in accordance with traditions and customs.
In the Act, definition of village has been given which is not available in the 73 rd
amendment.
It is striking to note that Gram Sabha has been empowered to play a prominent
role. Such specific role of Gram sabha has not been provided in the main 73 rd
Act. Therefore, it is highly significant that decision making rest with the people
and it will function as forum for deliberative democracy.
The Gram Sabha has been assigned with the following functions:
• To approve plans, programmes and projects for social and economic
development before such plans, programmes and projects are taken up for
implementation by the panchayat at the village level;
• Be responsible for the identification or selection of persons as beneficiaries
under the poverty alleviation and other programmes.
• Establishment of Gram sabha for every village comprising persons whose
Now we have discussed about mandatory provisions of PESA and about Gram
Sabha.Try to answer the following questions in the Check your progress-3
1) What are the mandatory powers of Gram Sabha or Panchayats in the
PESA Act of 1996?
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Democratic Decentralization 2) Define Gram Sabha? What are its specific powers?
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4.7 RAMIFICATIONS OF THE ACT 40 OF 1996

In the extention Act the gram sabha has been mandated to deal with plans and
programmes and projects for social and economic development and selection of
beneficiaries for all village panchayat programmes. But this is likely that power
may be misused by the politicians or the bureaucracy in the implementation /
management of the development programmes. It would be better if provision
had been made that the identification of schemes and their location should be
left to the Gram Sabha.
Another provision enjoins upon the state legislature to devolve powers and
authority on the panchayats to enable them to be ‘institutions of self-government’,
it is expected that the powers assigned to the panchayats, other than those already
specified in the act, would be specific and unambiguous. Panchayats should not
be treated as merely executing ‘agencies’. Sufficient freedom and autonomy
should be given to them to enable them to take their own decisions and manage
their own affairs and to have identity as effective units of self-government.
Further, the provision tries to ensure that the process of devolution is based on
the cardinal principle that what is appropriate for a given tier should be decided
by that tier and not by a higher level. Thus, the legislation must prevent the
higher level from the assuming the responsibility of lower level or of the gram
sabha. Therefore, for a smooth operation at each panchayat level a mechanism
for coordination among them must be evolved and a package of required and
powers and functions should be granted. To ensure further that the panchayats
are manned by the tribals, all positions of chairpersons of panchayats at all levels
are to be reserved for tribals.
The Administrative arrangements at the district level panchayat in these areas

may adopt the pattern of ADCs prevailing in the Sixth Schedule areas. The Sixth
Schedule confers the autonomous councils apart from the executive,
developmental and financial powers. This means that the district level panchayats
will have enhanced power and authority similar to ADCs in addition to the powers
devolved by the 73rd Constitution Amendment Act. Thus the powers of the district
panchayat in the scheduled areas will be greater compared to their counterparts
in the unscheduled areas of the States. The Extension Act has better features
than the framework provided under Part IX of the Constitution. Moreover, the
blending of these frameworks has certain advantages compared to the provisions
of the 73rd Constitution Amendment Act, which have many limitations.
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• The PESA has lot of ramifications and require recasting of certain policies, PESA and its Implementation
which has direct bearing upon. Among the laws that attracts immediate
attention are: (i) Land Acquisition Act, 1894, (ii) Mines and Minerals
(Development and Regulation) Act, 1957, (iii) Indian Forest Act, 1927, (iv)
The Forest Conservation Act, 1980, (v) The Indian Registration Act.
Intervention is also required in the area of Social audit U/s 4(f), Prohibition
U/s 4 (m) (i), Ownership of Minor Forest Produce U/s 4(m) (ii), Land
Alienation U/s 4 (m) (iii); Regulation of Money Lending U/s 4 (m) (iv);
Control of Functionaries U/s 4 (m) (vi). In so far as the policies and central
schemes are concerned, certain policies pertaining to waste lands, water
resources and extraction of minerals from lands in Schedule V Areas do not
seem to reflect the intent and purpose of PESA. There were occasions, it
was observed, that these policies while implementing is given rise to
confrontation between the tribal people and the administration. Therefore
suitable devise has to be address.
• The National Policies on Re-settlement and Rehabilitation of Project

Affected Persons, 2003, National Water Policy, 2002, National Mineral
Policy, 2003, Environment Policy 2004, also required detailed examination
in view of the provisions of PESA.
4. 8 OPERATIONAL ISSUES AND SUGGESTIONS

FOR PROPER IMPLEMENTATION
4.8.1 Operational Issues
The operational issues and gaps relating to PESA are as follows:
i) The Act is applicable to the Fifth Schedule Areas only and does not cover
the Sixth Schedule Areas. Moreover, there are some tribal areas in the country
not covered by any of the two schedules. What will be the organizational
framework of local governance for tribals in these areas? The limitations of
the applicability of the Extension Act will prevent these tribal people from
taking advantage of the special constitutional provisions mentioned above.
ii) The Sixth Schedule Areas, which are beyond the purview of the Extension
Act, have the structure of autonomous district areas which are not necessarily
co-terminus with the administrative district boundaries. They do not have
any statutory body at the intermediate or at the village level. In some places,
at the sub-district level, there is neither a democratic nor traditional structure.
Consequently, a void is created at the grassroots level and in the absence of
such grassroots structure, no organic link can be maintained between the
lower and higher level bodies.
iii) Under the provisions of the Fifth Schedule, a Tribal Advisory Council (TAC)
is to be constituted to advice on matters pertaining to the welfare and
advancement of the Scheduled tribes in the state. A question arises whether
the TAC will obstruct the growth of the Panchayati Raj structure at the local
level because if the functional domain of panchayats is curtailed they may
perceive the TAC as a rival center. Secondly, the panchayats will be the
creation of the state legislature and to some extent the administrative control
over them will be in the hands of the state government. In such a situation
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Democratic Decentralization will the advice and guidance of the TAC be binding upon the Panchayats?
The Panchayats might receive two types of instructions from these two bodies
which occasionally may be contradictory. What will be the linkage between
TAC and panchayats? A view is being expressed that when the new
dispensation is established the TAC may become irrelevant. However, if
the TAC must continue as only an advisory body what would be the
modifications required in its structure and functioning.
iv) While passing the State Panchayat Acts, it should be seen that they are in
consonance with the custom, society and religion of the tribals concerned.
These aspects vary among tribes within each state. Will it be possible to
assimilate all types of practices in a single piece of legislation? It may not
be possible to have different laws for each tribe within a district or state.
Furthermore the customary laws are not properly codified and documented.
v) Section 4 (b) defines a village as “ordinarily consisting of a habitation or a

group of habitations or a hamlet or a group of hamlets comprising a
community and managing its affairs in accordance with traditions and
customs”. It means every community will have a separate village. In a village,
several communities may be found spread over different geographical areas.
It may be difficult to demarcate a village in this way. In this situation the
revenue village may not be co terminus with the social village. The term
`community’ is not clearly defined in the Act and therefore, it would be
difficult to delimit a village. This will certain lead to complications. Usually
in tribal areas hamlets are more common than big villages. Therefore,
declaring each hamlet as a village panchayat area may not be economically
viable.
vi) Reservation of seats has been provided to all communities as per the
provisions of Part IX of the Constitution to SCs and STs and one-third of all
seats are reserved for women. Regarding reservation for backward class
communities the state legislature must decide. Once again, the term
community has been used in its wider sense which includes other than tribal
community. When a village is defined on the basis of a community, the
question of other communities living in it does not arise. If so, then
reservation is only applicable to SCs and in some cases backward classes
and also women. Another question is whether schedule castes and women
can be considered as communities for reservation purposes.
vii) It is mandated that chairpersons at all panchayat levels shall be reserved for
Scheduled Tribes. Which means the office of chairperson will permanently
be reserved for STs. They may go against the judicial verdict on the subject.
Part IX of the Constitution contemplates that the reservation of offices will
be allotted by rotation to different panchayats at each level. At a lower level
it may be viable but at the district level it may cause some difficulty. There
are certain districts, which are not tribal majority districts, and tribals do
not constitute more than 50 per cent of the total population of the district. In
these districts permanent reservation of poses for tribals will be generally
resented.
80
viii) Under Section 4 (O) of the Act, the Panchayat at the district will be designed PESA and its Implementation
on the lines of the autonomous district council under the Sixth Schedule.
The ADC has legislative and judicial functions in addition to executive
powers. If only the tribal district panchayats are given legislative and judicial
functions, anomalies in the district panchayats within a state will evidently
grow. The ADC is empowered to appoint judges for the administration of
justice in their areas and they can raise their own police force. These
provisions must be examined carefully while extending such powers and
authority under the Extension Act. The ADC has limited development
functions compared with the Eleventh Schedule of the Constitution. Many
states have not devolved powers and functions to panchayats as per the
Eleventh Schedule. If the state governments are not willing to devolve
powers, authority and responsibilities to local government then the spirit of
the 73rd Amendment will be violated.
4. 8.2 SUGGESTIONS FOR PROPER

IMPLEMENTATION OF PESA
• The provisions of PESA are enabling framework for preventing exploitation
of tribal and for providing good governance and self-rule in Schedule V
Areas. Implementation of PESA is a direct responsibility of state legislature
and, therefore, inconsistencies in Conformity Act should be modified and a
comprehensive Panchayat law removing inconsistencies has to be brought.
• The state may be impressed upon the examination comprehensively other

relevant state laws for their inconsistencies and suitably amend the laws,
rules, regulations and procedure in force which are at variance with the
provisions of PESA. The states, where PESA is applicable should formulate
rules and regulations which is pending for along time. This will give effect
to better implementation of provisions of PESA.
• It has been found that the awareness about the provisions of PESA is very
low among all stakeholders that include officials, elected representatives
and tribals. Therefore, there is a need for capacity building of officials and
elected representatives and awareness building of the common people. It
requires identifying training institutes and developing training modules to
cover all stakeholders in the PESA Areas. Advocacy should be prominently
introduced in this area. The Some best practices in the implementation of
PESA have also been observed. These best practices should be documented
and further be disseminated for replication in other parts.
• The Ministry of Panchayati Raj has to play an important role in the
implementation of the provisions of PESA in letter and spirit. The
Government of India should issue a specific direction in accordance with
the powers to issue directions under Proviso 3 Part III of the fifth Schedule.
The Government of India should also prepare model guidelines for framing
rules under PESA, which should be circulated among the states to frame
their respective rules at the earliest.
Now we have discussed about gaps in PESA and suggestions for improving the
gaps. Try to answer the following questions in the Check your progress-4
81
Democratic Decentralization Check Your Progress 2
1) What are operational gaps in PESA?
......................................................................................................................
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2) Suggest how to improve the situation? How PESA can become
meaningful?
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4.9 LET US SUM UP

In the above unit, we read about the features and characteristics of Scheduled
areas, about fifth and sixth scheduled areas, about Bhuria Committee and PESA,
1996.We discussed about the gaps in the PESA Act and also the suggestions
made in regards to its improvement.

Alex Inkeles, 1964, What is Sociology?, Prentice Hall International, New York.
Committee on Plan Projects, 1969, Report of the Study Team on Tribal

Development Programmes – All India, Planning Commission, p.13.
Debates on the Fifth and Sixth Schedules, Indian Social Institute, New Delhi.
Dhebar, U.N. 1960-61, Report of the Scheduled Areas and Scheduled Tribes
Commission, Government of India. p.69, New Delhi.
Ministry of Rural Development, 1995, Report of the Committee of Members of

Parliament and Experts to make Recommendations on Law covering extension
of Provisions of the Constitution (Seventy – third Amendment) Act, 1992 to
Scheduled Areas (D S Bhuria Committee), New Delhi.
82
Singh, K. S. 2005, Self-Governance for Tribals, Six volume series, National PESA and its Implementation
Institute of Rural Development, Hyderabad.
Thakkar Committee, 1947, Report of the Excluded and Partially Excluded Areas
Sub-Committee, Himalaya Publishing House, Gurgaon
The Provisions of the Panchayats (Extention to the Scheduled Areas) Act, 1996
(Act No.40 of 1996). 73rd Constitutional Amendment, 1992.
Vidyarthi, L.P. and B K Rai, 1976, The Tribal Culture of India, Concept
Publishing Company, New Delhi.
William F Ogburn and Meyer F Nimkoff, 1996, A Handbook of Sociology, Eurasia

Publishing Company.
4.11 CHECK YOUR PROGRESS-POSSIBLE

ANSWERS
1) What are the criteria for declaring Scheduled Area?
Ans. According to the commission, the criteria for determining a scheduled
area under the Fifth Schedule may be based on four factors: (a)
preponderance of tribals in the population, (b) compactness and
reasonable size, (c) underdeveloped nature of the area, and (d) marked
disparity in economic standards of the people.
2) What is Fifth Schedule?
Ans. The Fifth Schedule is tribal dominated areas covering nine states of the
country, namely, Andhra Pradesh, Chattisgarh, Gujarat, Himachal
Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Orissa and Rajasthan.
1) What are main recommendations of the Bhuria Committee?
Ans.Some important recommendations of the Bhuria Committee are listed below:
• While passing the law under Article 243M (4) (b), important provisions of
the 73rd constitutional amendment and certain unique characters of tribal
societies and tribal areas should be kept in view since many tribal societies
have their mode of living organizations, cultural mores, present-day
predicament of exploitation, deprivation and marginalization.
• While drafting the law, advantage should be taken of both the Fifth and
Sixth Schedules.
• The Tribes Advisory Council, envisaged in the Fifth Schedule as a

consultative body at the state level, needs to be reformed into an effective
organization.
• The Central Advisory Council at the Centre should be revived. It should

serve as a sounding board for tribal policies and programmes and render
advice in disputes between a state government and the Tribes Advisory
83
Democratic Decentralization Council or between the District Council and the Tribes Advisory Council.
• The present day administrative boundaries may be considered for

reorganization based on geographic, ethnic and demographic considerations
and finalized within a couple of years.
• The lower functionaries of departments like police, excise, forest and revenue
should be assigned a minimal role and should work under the control of
concerned panchayats.
• The Gram sabhas should be allowed to exercise their customary role

unhindered.
• Constituencies may be delimited for election of members to the intermediate

and district tier panchayats.
• In certain districts the Scheduled Tribe population may be less than 50 per
cent of the total population, but it may be concentrated in a part of parts of
the district, say in some blocks or sub-divisions. Sub-District Council may
be constituted for such areas, called the Autonomous Sub-District Councils
(ASDCs).
• The organizational structure of an ADC should be based on the broad outline

of Autonomous District Councils in the Sixth Schedule Areas.
• Lok Sabha Scheduled Tribe MPs should be associated with the intermediate
(block) panchayat and the district council
• Since the Scheduled Areas and Tribal Areas are expected to have a majority
of tribal population, the different tier panchayats therein should have a
majority of Scheduled Tribe members.
• The Sixth Schedule confers powers of legislation and administration of

justice on the district councils apart from the executive developmental and
financial responsibilities.
• The legislative powers of the autonomous district councils in the Fifth

Schedule Areas have been proposed more or less on the same lines as in the
Sixth Schedule, with some amendments
• The panchayats in these areas may receive funds under Articles 243H and
243I and funds as per the first provision to Article 275(I) should continue to
be available normally.
• For the purposes mentioned in the first proviso to Article 275(I) funds
received from sources other than the panchayats’ own, should be placed in
‘charged’ category in the respective government’s budgets as opposed to
‘voted’ category.
• To prevent wrong financial practices occurring in the tribal sub-plan field,

the tribal sub-plan funds (whether relating to state plan or special central
assistance or any other) pertaining to different sectors of development should
be quantified and placed at the disposal of the ADCs for distribution among
the panchayats in the district.
84
• All government functionaries of institutions concerned with panchayats in PESA and its Implementation
a scheduled area are located within its jurisdiction should be under its control.
• As per the provision in the Sixth Schedule, the governor may appoint a
commission to examine and report on all matters relating to the
administration of Autonomous District Councils.
• The TACs and ADCs in the scheduled areas should review the relevance of
the existing laws.
• The law passed by Parliament will supersede such and any other related
laws that have been enacted in pursuance of the 73 rd and 74th Constitution
Amendment Acts.
• The process of scheduling of tribal areas in the country commenced earlier

has remained incomplete.
• The framework of the Sixth Schedule should be looked at afresh in the

northeastern region in the light of suggestions made by the committee.
1) What are the mandatory powers of Gram Sabha or Panchayats in the
PESA Act of 1996?
Ans. The Gram sabha or the panchayats at the appropriate level shall have
the following mandatory powers, (i) to enforce prohibition or to regulate
and restrict the sale and consumption of any intoxicant; (ii) the ownership
of minor forest produce and management of all types of village markets;
(iii) to prevent alienation of land and to take appropriate action to restore
any unlawfully alienated land of a scheduled tribes in scheduled areas;
(iv) to exercise control over money lending to tribes; and control
institutions and functionaries working in the social sectors in the area;
(v) to exercise control over local plans and their resources, including
tribal sub-plans.
2) Define Gram Sabha? What are its specific powers?
Ans. According to the provisions of the Act, every village shall have a Gram
Sabha consisting of persons whose names are included in the electoral
rolls for the Panchayat at the village level. Moreover, a village shall
ordinarily consist of a habitation or group of habitation or a hamlet or a
group of hamlet comprising a community and managing its affairs in
accordance with traditions and customs. In the Act, definition of village
has been given which is not available in the 73rd amendment
The Gram Sabha has been assigned with the following functions:
• To approve plans, programmes and projects for social and economic

development before such plans, programmes and projects are taken up for
implementation by the panchayat at the village level;
• Be responsible for the identification or selection of persons as beneficiaries

under the poverty alleviation and other programmes.
85
Democratic Decentralization • Establishment of Gram sabha for every village comprising persons whose

1) What are operational gaps in PESA?
Ans. The operational issues and gaps relating to PESA are as follows:
i) The Act is applicable to the Fifth Schedule Areas only and does not cover
the Sixth Schedule Areas.
ii) The Sixth Schedule Areas, which are beyond the purview of the Extension
Act, have the structure of autonomous district areas which are not necessarily
co-terminus with the administrative district boundaries.
iii) Under the provisions of the Fifth Schedule, a Tribal Advisory Council
(TAC) is to be constituted to advice on matters pertaining to the welfare
and advancement of the Scheduled tribes in the state.
iv) While passing the State Panchayat Acts, it should be seen that they are in
consonance with the custom, society and religion of the tribals concerned.
These aspects vary among tribes within each state.
v) Section 4 (b) defines a village as “ordinarily consisting of a habitation or a
group of habitations or a hamlet or a group of hamlets comprising a
community and managing its affairs in accordance with traditions and
customs”. It means every community will have a separate village.
vi) Reservation of seats has been provided to all communities as per the
provisions of Part IX of the Constitution to SCs and STs and one-third of
all seats are reserved for women.
vii) It is mandated that chairpersons at all panchayat levels shall be reserved
for Scheduled Tribes.
viii) Under Section 4 (O) of the Act, the Panchayat at the district will be designed
on the lines of the autonomous district council under the Sixth Schedule.
2) Suggest how to improve the situation? How PESA can become
meaningful?
Ans. Few of the suggestions through which PESA can be become meaningful
are as follows:
• Inconsistencies in Conformity Act should be modified and a comprehensive

Panchayat law removing inconsistencies has to be brought.
86
• The states, where PESA is applicable should formulate rules and regulations PESA and its Implementation
which is pending for along time. This will give effect to better implementation
of provisions of PESA.
• It has been found that the awareness about the provisions of PESA is very
low among all stakeholders that include officials, elected representatives
and tribals. Therefore, there is a need for capacity building of officials and
elected representatives and awareness building of the common people.
• The Ministry of Panchayati Raj has to play an important role in the

implementation of the provisions of PESA in letter and spirit.
87
MDV-111
and Development
Block
2
LOCAL GOVERNANCE AND LOCAL
ORGANIZATIONS
UNIT 1
Formal and Informal Organizations and
Local Self Governance 5
UNIT 2
Public Private Partnership and Local Self Governance 16
UNIT 3
Parallel Bodies and Local Self Governance 32
Ahmedabad
Prof. Kumar B. Das

Prof. Preet Rustagi
Prof. V. Raghupati Prof. P. P. Balan
Gandhigram Rural Institute (Unit 1) Centre For Research in Industrial Development
(Content Editor)
Prof. G. Palanithurai
Gandhigram Rural Institute (Unit 2&3) Mr. Praveer Shukla (Language Editor)
Prof. B.K. Pattanaik, IGNOU
PRODUCTION TEAM
March, 2019
ISBN: 978-93-88980-31-9
BLOCK 3 LOCAL GOVERNANCE AND LOCAL
ORGANIZATION
Local governments in India are established by law and they have constitutional
status. They are responsible for local governance and for the implementation of
development schemes of the government. According to the 73rd and 74th
Constitutional Amendment Acts, local governments are the self governing
institutions at the grass root level, and they are expected to work for social justice
and planned economic development. Local governance and local organization
have evolved with an objective of meeting the felt needs of the people spread in
all remote, rural far flung areas in meeting their developmental needs and
addressing their actual problems.
Unit 1, Formal and Informal Organizations and Local Self Governance,

focuses on building our understanding on all types of existing formal and informal
organizations in our country. Formal local organizations include registered
voluntary organizations, organizations sponsored by governments and political
organizations. Informal organizations include traditional organizations,
unregistered groups, caste and religious groups.
Unit 2, Public Private Partnership and Local Self Governance, describes the
evolution of private and public partnership concepts. Private partnership with
Panchayat is the offshoot of the new arrangement between the market and the
government. The new partnership is for enhancing the economic activities and
effective service deliveries to the communities. But the new partnerships
compensate the loss of decentralization. The new arrangement can be for
economic development, effective service delivery and for any advantage of the
stakeholders who are involved in this process of transaction.
Unit 3, Parallel Bodies and Local Self Governance, discusses how these
organizations and institutions were created by communities for their own
advantage and conveniences. They are: the constitutionally created governance
institutions, like the Panchayati Raj institutions; community created organizations,
like temple committees, water bodies management committees, forest
management committees, committees to resolve petty disputes within the
community and the government created scheme based committees, like the Village
Education Committee, Village Health Committee, and Village Water and
Sanitation Committee and a number of other such committees.
Local Governance and Local
Organizations
4
Formal and Informal
UNIT 1 FORMAL AND INFORMAL Organizations and Local Self
Governance
ORGANIZATIONS AND LOCAL
SELF GOVERNANCE
Structure
1.1 Introduction
1.2 Formal and Informal Organization: Meaning and Differences
1.3 Formal Organization
1.4 Informal Organizations
1.5 Local Organizations and Local Development
1.6 Civil Society Organizations and Local Self Governance
1.7 Role of Civil Society in Local Governance
1.8 Let Us Sum Up
1.1 INTRODUCTION
Local governments in India are established by law and they have constitutional
status. They are responsible for local governance and for the implementation of
development schemes of the government. According to the 73rd and 74th
Constitutional Amendment Acts, local governments are the self governing
institutions at the grassroot level, and they are expected to work for social justice
and planned economic development.
Local governments are not working in a vacuum at the grassroot level. Other
types of formal and informal bodies operate at that level, too. Formal local
organizations include registered voluntary organizations, organizations sponsored
by governments and political organizations. Informal organizations include
traditional organizations, unregistered groups, caste and religious groups.
After going through the study material of this unit, the reader will be able to
• distinguish between formal and informal organizations
• explain characteristics and types of formal and informal organization
• describe the role of civil society organizations in local governance.
1.2 FORMAL AND INFORMAL ORGANIZATION:

MEANING AND DIFFERENCES
Before discussing the workings of formal and informal organization at the
grassroot level, it is essential to define the term ‘organization’. According to
J.D.Mooney, an “organization is the form of every human association for the
attainment of a common purpose”. L.D.White has defined ‘organization’ in this
way: “Organization is the arrangement of personnel for facilitating the
accomplishment of some agreed purpose through allocation of functions and
responsibilities”. 5
Local Governance and Local The term ‘formal organization’ refers to a deliberately planned structure, while
Organizations
an ‘informal organization’ is a network of individual and social relationship.
According to Sharma and Sadona, the term ‘formal organization’ means: “The
organization as deliberately planned, designed and duly sanctioned by competent
authority. While the term informal organization is a ’shadow‘ organization
without clear objectives and comes into being to satisfy the needs of members of
the organization.
The distinction between the formal and informal organization is given below, in
Table 1.
Table-1: Differences between Formal and Informal Organization
Formal Organization Informal Organization

1) In a formal organization the 1) In the case of informal organizations, the
relationship between the network of personal and social relations is
authority and subordinate is. spontaneously development between people
associated with each other.
2) The primary focus of the 2) The primary focus in the case of informal
formal organization is the organization is the individual and his
position that an individual association with other individuals in the
holds in the organization. organization.
3) In the formal organization, 3) In an informal organization, power is derived

power is delegated from the from the membership of the informal groups
top down to the bottom. within the organization.
4) A formal organization is 4) While informal organization, the conduct of

governed by the rule that is individuals within organization is governed
what can be done and what by norms that is social rules of the behaviour.
can not be done.
Website, http//ummhasan.wordpress.com
1.3 FORMAL ORGANIZATION

1.3.1 Characteristics of formal organization
Some distinct characteristics of formal bodies are given below.
i) Stability: an important characteristic of a formal organization is its stability.
Therefore, the formal organization grows and expands with the passage of
time.
ii) Division of Labour: the structure of formal organization is based on jobs
to be performed by the individual, and not vice versa. Roles are hierarchical
and work is assigned to individuals on the basis of expertise and capability.
iii) Structured: a formal organization is structured and organized to accomplish

the organizational mission. One exponent has remarked that the “absence
of structure is illogical, cruel, wasteful and inefficient”. Because of this
feature, roles and responsibilities of individuals in an organization are
clearly defined.
6
iv) Permanence: As the organization is structured, it has continuity of Formal and Informal
Organizations and Local Self
operations. They last for long time and grows over the period of time. Governance
v) Rules and regulations: formal organizations follow rules and regulations.

Individuals working in formal organizations do not perform activities
according to their whim. Rather, they act according to the rules and
regulations framed by the organization. For example, if a cooperative bank
has to sanction a loan to a Panchayat for its development, the manager of
the bank has to follow guidelines before sanctioning the loan.
1.3.2 Types of Formal Organization at the Grassroots

Some of the important formal organizations at the grassroots are narrated below:
i) Cooperatives
a) Farmer’s Cooperatives: farmers form a group or cooperatives that
enable them to connect with the consumer on one hand, and interface
with the market place, on the other. Besides, through cooperatives
they share their knowledge and experiences, and enhance their
bargaining power in the purchase of inputs.
b) Dairy Cooperatives: one of the important source of development in

many Indian states are dairy cooperatives. Milk producers market
the milk products of the milk produces and to after value addition to
them. in addition, they receive technical inputs for the improvement
of milk production.
c) Tribal Cooperatives: these are being formed for receiving assistance

from the government and other agencies for development. The
National Cooperative Development Corporation provides financial
assistance.
d) Fishermen’s Cooperatives: The fishermen Cooperatives are being

formed for the well being of fishermen. Through cooperatives,
fishermen get help to improve their skill, acquire knowledge about
technology, the market, and management. Cooperatives can help
fishermen to enhance production, processing, storage, transport
capacity, and provide financial support.
ii) Nehru Yuva Kendras: the Government of India promotes youth

organizations at the village Panchayat level. Youth clubs, sports clubs, and
cultural clubs get support. The Nehru Yuva Kendra NYKS, or, Nehru Youth
Centres, are the largest group of youth organizations in India. and were
started in 1969. Today, 80 lakh non student rural youths in the age group of
15 years to 35 years are associated with Nehru Youth Centres. 2.20 Lakh
youth volunteers have been trained at Nehru Yuva Kendras. Nehru Yuva
Kendra has a four tier organizational structure and they operate at the village,
district, state , and national levels. They promote voluntary association of
youths at the village level, build leadership capacity, and offer skill building
and training programmes. They promote cultural, sports and service
activities among rural youth.
7
Organizations 1.4 INFORMAL ORGANIZATIONS
1.4.1 Characteristics of Informal Organization
A few key characteristics of informal organization are given below.
i) The formation of informal organizations is a natural process. People who
share common values, codes of behaviours, and goals come together to
form these organizations.
ii) Membership is voluntary. The informal organization is based on human

relationships and there is hardly any compulsion. A person can become
member of more than one informal organization. According to D.C. Miller
and William H. Form, informal organization is based on the network of
personal and social relation which are not defined or prescribed by formal
organizations.
iii) Informal leadership: Leadership in informal organizations cannot be

autocratic. Individuals with similar motivations and amicable nature can
become a successful leader of an informal organization.
iv) Follow common rules-Informal organization formulate its own rule for
reward and punishment of its member. As it is based on human relation,
the common rules is flexible and having less rigid clauses.
1.4.2 Types of Informal Organizations at the Grassroots

Some informal organizations at the Panchayats and municipality level are given
below.
• Traditional Panchayats
• Caste Associations
• Temple Committees
• Sports Groups
• Cultural Groups
• Festival Committees
• Neighbourhood Associations.
After reading this section, you might have gained idea about the informal
organization. Now you would be able to answer the questions given in Check
Your Progress-1
Note :(a) Write your answer in about 50 words
(b) Check your answer with possible answers given at the end of the unit
1) Illustrate some examples of Formal and Informal Organizations.
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8
Formal and Informal
1.5 LOCAL ORGANIZATIONS AND LOCAL Organizations and Local Self
Governance
DEVELOPMENT
A local society has diverse needs. Some of the needs of local society can be
fulfilled by local governments. But, local governments alone cannot fulfil all the
needs of the people. Local governments cannot fulfil some of the needs of the
people because they are not directly connected with local governments. Certain
groups of people have specific and specialized needs and local governments are
not equipped to fill such needs. To fulfil such needs, local communities form
local organizations on their own. They are both formal and informal organizations.
Informal local organizations have sometimes evolved by tradition. Particularly,
faith based religious organizations have evolved by tradition. These organizations
may not have formal structures and rules. They are governed by norms and cultural
practices.
Some of the community based local organizations are very powerful and they
function independently. Local governments may not be able to control or regulate
the functioning of these organizations. Local governments may have common
objectives with some of the organizations. In such cases, local governments and
local organizations can work together for the development of the local community.
Sometimes, local organizations may also have conflict of interest with local
governments. Some local organizations serve only specific sections of the local
community. These organizations do not give importance to the interests of the
public at large, and, sometimes, they try to promote their own parochial interests.
Particularly, some of the local organizations work against social justice and
empowerment of women and Dalits.
i) Influence of the electoral process of local governments

The formal and informal local organizations like caste groups, religious
and groups influence the outcome of election results of local governments.
These groups nominate candidates in local body elections and work for
their victory. Particularly in rural areas women candidates for reserved
positions are, generally, nominated by such groups.
ii) Control of elected representatives

Local organizations have a significant level of influence over the elected
representatives. In rural Local governments, local community organizations
are able to command the elected leaders. In states like Kerala, local political
party units are able to control the behaviour of elected representatives. In
most of the states, caste organizations try to control the functioning of
rural local governments
iii) Support to local governments

Local governments need the support of various groups of the local
community for their effective functioning. Some of the functions of the
local governments cannot be discharged without the cooperation of the
local communities. Particularly, functions related to sanitation, drinking
water, and environmental issues require the cooperation of local community
organizations. Local community organizations, in some parts of the country,
have supported such activities of the local governments.
9
Local Governance and Local iv) Implementation of development projects
Organizations
Local community organizations are play an important role in the
implementation of development projects that are run by local governments,
particularly development projects related to schools, hospitals, and libraries.
Programmes like total sanitation, enrolment in schools, and employment
guarantees can be effectively implemented with the support of local
organizations.
After reading this section, you might have gained idea about local organization
and local development. Now you would be able to answer the questions given in
Check Your Progress- 2
1) Explain the significance of local organizations.
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1.6 CIVIL SOCIETY ORGANIZATIONS AND

LOCAL SELF GOVERANCE
1.6.1 Meaning and Nature
Civil Society is the realm of activity and Associations of people free from the
control of the state. Civil society deals with public issues and not with private or
house hold issues.
According to Tocqueville, civil society is the realm of intermediate associations

between state and individuals.
Civil society facilitates public participation in public issues through non

government and non market institutions.
Civil society is a web of autonomous organizations free from state control and
has the ability to influence public policy.
Civil society is different from political society. Civil society consists of self
organized associations and social movements that may attempt to influence the
states. On the other hand, political parties and organization want to capture
political power
10
Civil society consists of voluntary civil and social organizations that form the Formal and Informal
basis of the functioning of a society. Civil society is different from state Governance
organizations and market institutions. Civil society includes different types of
non state and non market institutions; it consists of non governmental
organizations, community organizations, faith based organizations, professional
associations, trade unions, self help groups, industry associations, and service
organizations.
1.6.2 Examples of Civil Society Organizations

The following organizations in India can be given as examples of civil society
organizations.
NGOs
1) People’s Union for Civil Liberties
2) Gandhi Peace Foundation
Professional Associations
Indian Medical Association
Service Organizations
Red Cross Society
Trade Unions
Indian National Trade Union Congress
Sports Organization
Indian Olympic Association
Local Civil Society Organizations
The following are examples of Local Civil Society Organizations
1) Resident’s welfare associations
2) Rotary Club
3) Village festival committees
4) Friends of Police
5) Schools committees
6) Walker’s clubs
7) Merchant’s associations
8) Senior citizen’s clubs
9) Library committees
10) Children’s Parliament
11) Local consumer forum.
1.6.3 Some of the Possible Benefits from Local Civil Society

Organizations
1) Protecting the interest of consumers
2) Working for the welfare of senior citizens
11
Local Governance and Local 3) Developing the standard of the local schools
Organizations
4) Helping the police in maintaining law and order
5) Spreading voters awareness
6) Promoting reading habits
7) Protecting the environment of the area
8) Protecting human rights of the local people
9) Promoting blood donation in the local community.
After reading this section, you might have gained idea about civil society
organizations and local self governance. Now you would be able to answer the
questions given in Check Your Progress-3
Note :a) Write your answer in about 50 words
1) Illustrate various types of civil society organizations and the advantages of
having civil society organizations.
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1.7 ROLE OF CIVIL SOCIETY IN LOCAL

GOVERNANCE
Some of the needs of the people cannot be satisfied by state institutions and
markets. Civil Society provides space for people to generate collective actions
independently from state and market. State and market are the two powerful
instruments that control the life of individuals and sometimes they work against
the interests of the people. Civil society can play a critical role in changing the
social structure in favour of the poor and marginalized. In India civil society
organizations have contributed to the empowerment of women, Dalits, and
Tribals.
Local governance needs a high level of people’s participation to function

effectively. Due to various reasons such as poverty, illiteracy, caste divisions,
and gender bias, people in the villages are not able to come to a public forum and
collectively address their common problems. They are divided into many groups
and sub groups based on caste and religion. Women are generally discouraged
from public participation and people from scheduled caste and tribes are excluded
from public participation.
12
Civil society organizations are able to bring all these groups, particularly Formal and Informal
marginalized groups, to the arena of public participation. In villages civil society Governance
can bring social changes through sensitization and awareness programmes.
• CS can work for the development of village society by bringing new ideas
to the villages.
• SC play role in linking local government with local community.
• CS can ensure accountability of local government and bring transparency
in local governments.
• CS can protect the rights of minorities, women, SC and ST, and empower
them to participate in local government.
• CS also can ensure justice in delivering services by local governments to
these marginalized sections.
• CS can play a role in building organizations like users groups, watershed
committees, village educations committees, village health committee and
village environment committees.
Civil society can play a role in promoting issues of public good at grass root
levels. The villagers normally are not encouraged by the state agencies to
collectively negotiate with them. Due to poverty, caste, and religious diversities,
and illiteracy, marginalized individuals are not able to join together to demand
their rights and justice. They try to individually struggle to meet their livelihood
needs. They do not demand an enhanced ability of the services delivery of
government agencies and local governments. Civil society can play a key role in
preparing the people for such activities.
1.8 LET US SUM UP

In this unit, we discussed the significance of local organizations in local
governments. We can understand the role of local organizations in the successful
functioning of local governments. We also studied the importance of civil society
in general and in local governance. We also discussed the role of self help groups
in women’s empowerment and their contributions in local governments. The
role of youth groups in local development was also discussed.

Maheswari, S. 1991, Local Government in India, Orient Longman, Mumbai.
Mohanty, R. and Rajesh Tandon (eds), 2006, Participatory Citizenship: Identity,
Exclusion Inclusion, Sage Publications New Delhi.
Palanithurai G, Ragupathy V, 2008, Communities, Panchayats and Governance
at Grassroots , Concept Publishing Company, New Delhi.
PRIA, 2003, Civil Society and Panchayats, New Delhi.
Rahadive, J.D. 2005, Women in Self Help Groups and Panchayati Raj Institutions:
Suggesting synergetic linkages, Centre for Women’s Development Studies, New
Delhi.
13
Local Governance and Local Saraswathi, S. 1988, Youth in India, Indian Council for Social Science Research,
Organizations
New Delhi.
Tandon, R. and Ranjitha Mohanty (eds), 2003, Does Civil Society Matter-
Governance on Contemporary India, New Delhi.
1.10 CHECK YOUR PROGRESS - POSSIBLE

ANSWERS
1) Illustrate some examples of Formal and Informal Organizations.
Ans. Some of the important formal organizations are narrated below:
a) Farmer’s Cooperatives
b) Dairy Cooperatives
c) Tribal Cooperatives
d) Fishermen’s Cooperatives
e) Nehru Yuva Kendras
Some informal organizations at the Panchayats and municipality level are
given below.
a) Traditional Panchayats
b) Caste Associations
c) Temple Committees
d) Sports Groups
e) Cultural Groups
f) Festival Committees
g) Neighbourhood Associations.
1) Explain the significance of local organizations.
Ans. The significance of local organizations can be realized in the following
roles:
i) Influence of the electoral process of local governments
ii) Control of elected representatives
iii) Support to local governments
iv) Implementation of development projects
1) Illustrate various types of civil society organizations and the advantages
of having civil society organizations.
Ans. The following organizations in India can be given as examples of civil
society organizations:
i) NGOs
14
ii) Professional Associations Formal and Informal
iii) Service Organizations Governance
iv) Trade Unions

v) Sports Organization
vi) Local Civil Society Organizations
Some of the possible benefits from local civil society organizations

10) Protecting the interest of consumers
11) Working for the welfare of senior citizens
12) Developing the standard of the local schools
13) Helping the police in maintaining law and order
14) Spreading voters awareness
15) Promoting reading habits
16) Protecting the environment of the area
17) Protecting human rights of the local people
18) Promoting blood donation in the local community.
15
Organizations UNIT 2 PUBLIC PRIVATE PARTNERSHIP
AND LOCAL SELF GOVERNANCE
Structure
2.1 Introduction
2.2 Public Private Partnership (PPP): Meaning and Scope
2.3 Need for Public Private Partnership
2.4 Basic Principles in Public Private Partnership
2.5 Types of Public-Private Partnership
2.6 Case Studies of Public Private Partnership with Local Governance
2.7 Let Us Sum Up
2.1 INTRODUCTION
‘Globalisation’ and ‘Decentralisation’ are the new dispensations considered to
be the instrument for achieving prosperity and distributing prosperity to all
segments of the society. Reform is the process which facilitates through regulating
the institutional mechanisms to make use of both globalization and
decentralization for achieving the desired results of both dispensations. In order
to achieve maximum results in any institutional ventures, a new framework has
been evolved in the new context which is called public private partnership. In
the new context both government and market failures have been admitted and at
the same time, realized that both have strengths. Both market and government
are to be used integrally for the benefit of the society by the active participation
of the stakeholders. Private partnership with Panchayat is the offshoot of the
new arrangement between the market and the government. The new partnership
is for enhancing the economic activities and effective service deliveries to the
communities. Here one important factor has to be recognized and taken into
account. Decentralization is loosing the benefit and advantage of scale. But the
new partnerships compensate the loss of decentralization. The new arrangement
can be for economic development, effective service delivery and for any advantage
of the stakeholders who are involved in this process of transaction. In this unit
we will see how the new partnership works in service delivery. The framework
of such partnership for service delivery, effectiveness of the service delivery and
problems associated with service delivery will be captured in this unit. How PPP
framework works will be explained through case studies.
After reading this unit, you should be able to:
• Explain the meaning and scope of public private partnership
• Describe the need for public private partnership
• Explain basic principles of public private partnership
• Discuss about various types of public-private partnership
16 • Narrate a few case studies of public private partnership
Public Private Partnership
2.2 PUBLIC PRIVATE PARTNERSHIP (PPP): and Local Self Governance
MEANING AND SCOPE

2.2.1 Meaning of Public –Private Partnership (PPP)
Pubic private partnership is an arrangement between the private sector companies,
institutions and organizations and government for the purpose of providing
infrastructure facilities, community facilities and service deliveries for the benefit
of the people. This arrangement is to enhance the quality and quantity of facilities
and services more efficiently and effectively to satisfy the stakeholders. It is a
process by which market comes to the rescue of government by extending its
support by providing the services which ought to be done by the government.
While doing such services, people will get advantages of quality and cost
effectiveness. At the same time the private companies which deliver services
will make profit. Hence it is a win-win for all the three namely government,
company and stakeholders. In this process both government and private share
the investment, risks, responsibilities and rewards. This partnership will perform
the activity in financing, designing, constructing, operating and maintaining the
public infrastructure and services. It is a new phenomenon and it works all over
the world. There are success stories, struggles and failures. Consolation of factors
is responsible for the success, failures and struggles. Success of such a scheme
depends on the nature of regulatory mechanism creates and maintains by the
government. In some types of public private partnerships cost of service will be
borne by the tax payers and some other types the cost of service is born by the
users. Governments encourage the private players come into the domain of
government service by extending concessions to the private players as they share
the burden of the governments. For this new arrangement, one will find ardent
support as well as powerful opposition by citing arguments from the experiences
suitable to the position they take either to support or to oppose. But the
fundamental question here is why such initiatives were taken?
Some of the definitions of public-private partnership are given below:
• Is a legally binding contract between government and business for the

provision of assets and the delivery of services that allocates responsibilities
and business risks among the various partners.
• A cooperative venture between the public and private sectors, built on the
expertise of each partner, that best meets clearly define public needs though
the appropriate allocation of resources risks and rewards.
• Describes a range of possible relationships among public and private entities

in the context of infrastructure and other services.
• Cooperation of some sort of durability between public and private actors

in which they jointly develop products and services and share risks, costs
and resources which are connected with these products through on
institutional lens.
• Sustainable cooperation between public and private actors in which joints

and/or services are developed and in which risks, costs and profits are
shared.
17
Local Governance and Local 2.2.2 Scope of Public Private Partnership (PPP)
Organizations
The PPP has been playing important role in the development of infrastructure in
the areas health, education, sanitation, drinking, agriculture, road, housing, etc.
The scope of PPP is enhancing day by day because of the obvious advantages:
i) It is more efficient than the development formulated and implemented by

government alone.
ii) Public private partnership minimizes costs and maximizes benefits where
the public sector deliver the services with efficiency and effectiveness.
iii) Public private partner’s resources and unique strengths so that results are
sometimes attained in less time, at lower costs and with greater sustainability
than efforts by any single partner.
iv) It is believed that both public and private sector brought to their table their
own experiences and strengths, making the partnership a solid team with a
common vision (B.Lopez, USAID, Guatemala).
v) Public private partnership is now a days developing as an alternative

arrangement of development. According to World Bank the PPPs, maximize
benefits for development through collaboration. ADBI consider PPP as
alternative development process. To ADBI, PPP as a collaborative activities
among interested groups and actors based on a mutual recognition of
respective strengths and weaknesses, working towards common agreed
objectives development though effective and timely communication.
After reading this section, you might have gained idea about the public private
partnership, meaning and importance. Now you would be able to answer the
1) What are the advantages that are enhancing the scope of Public Private
Partnership(PPP)?
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18
2.3 NEED FOR PUBLIC PRIVATE PARTNERSHIP and Local Self Governance
It is unequivocally argued that many of the governments in the World failed

miserably in delivering the basic goods and services to the people.
There are many problems associated with the poor delivery of services by the
government institutions. The problems are: a growing salary burden and under
management of the institutions, weak accountability mechanism, corruption,
political financing and rent seeking in administration. In the event of government
failure solutions are sought in market domain. It is to be understood that market
also met with failures. But the new arrangement is a fashion of both government
and market synthesis. The new framework has got certain key instruments which
will improve delivery of services to the people. They are (i) promoting
competition, (ii) simplifying transactions, (iii) restructuring agency processes,
(iv) reinforcing provider autonomy, (v) fostering community participation and
decentralization, (vi) building political support for program delivery and (vii)
strengthening accountability mechanisms.
By operating the new arrangement, communities get benefits which are of different
in nature. They are: a. we get adequate infrastructure facilities; b. faster
implementation; c. reduction of whole life costs; d. better risk sharing; e.
performance incentives; f. quality of service improved; and g. additional revenue
will be generated; h. better management system in place.
There are many arguments in favour of this new dispensation and equally
arguments are against this partnership. For both we have evidences in the world.
All the negative points against such arrangements were generated from the initial
experiences and from the unregulated implementation of the new framework.
Further, this new arrangement is considered and perceived as privatization of
public services or government services. Further any private player will work for
enhancing his / her profit rather than delivering services effectively. A common
problem with public private partnership projects is that private investors obtained
a rate of return that was higher than the government’s bond rate even though
most or all of the income risk associated with the project was borne by the public
sector. Many of the drawbacks noticed in this model are due to no monitoring of
the operation of the new framework through a new regulatory body and the
absence of involvement of the stakeholders in the whole of monitoring exercises.
A properly structured regulatory mechanism and active monitoring of the same
with the active involvement of the stakeholders will weed out many of the
problems in the process of implementation of the new exercises.
2.4 BASIC PRINCIPLES IN PUBLIC PRIVATE

PARTNERSHIP
There are certain key principles which operate in the new dispensation. If they
are in place the image it created among the public that the private sector having
interest only in profits without any regard to the interests of the consumers can
be challenged. The principles are: a. proper market conditions have to be created;
b. a competitive environment has to be created; and c. adherence to rule of law is
made mandatory. By doing so private players will be compelled to offer the best
deal and services to the people. For their survival the private players will be in
19
Local Governance and Local proper service delivery. It is to be seen that the private players should also be in
Organizations
a position to make profit. Otherwise private players will not perform their
responsibilities by incurring loss in their venture. Hence a coordinated supervision
and regulation are to be in place. It can be seen in telecom sector. Best deal has
been given to consumers in India. Quality of service is yet another bone of
contention in this new arrangement. But it could be talked through the fine tuning
of the contract and monitoring of the same by the stakeholders. The private players
are accountable to the regulatory authority, public and media. Cost of service is
yet another controversial area in the new arrangement. Normally private players
charge more as they are in market mode to make profit. This could be avoided by
considering the company for service only if the rate of service is lesser than the
cost of service of the government institutions. Reality could be seen only if we
analyze an event. Hence case studies are projected.
The public private partnership arrangements are being done at the federal, regional
and local levels. Local governments are also involved in such a kind of
arrangements for effective service delivery with the objective of reducing the
cost and increasing the efficiency by infusing professionalism in service delivery.
There are different forms and types. They are given below in the form of a table:
Table-1 Forms of PPP

Types of Asset O&M Capital Comme- Duration
Contracts Ownership Investment rcial Risk (Years)
Service Public Private & Public Public 1-2
Contract Public
Management Public Private Public Private 3-5
Contract
Lease Public Private Public Private 8-15
Concession Public Private Private Private 25-30
BOT/ Private & Private Private Private 25-30
BOOT Public
Source: ‘Public Private Partnership, a guide to local government’, Pg. 13, Ministry of Municipal
Affairs, British Columbia cited in centre for civil society, Public Private Partnership: That
Government is Best Which Governs least New Delhi, 2007.
After reading this section, you might have gained idea about the basic principles
in public private partnership. Now you would be able to answer the questions
given in Check Your Progress-2
Note :(a) Write your answer in about 50 words
(b) Check your answer with possible answers given at the end of the unit
1) Enumerate the basic principles of Private Public Partnership (PPP).
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20
...................................................................................................................... Public Private Partnership
and Local Self Governance
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2.5 TYPES OF PUBLIC-PRIVATE PARTNERSHIP

The various types of Public Private Partnership is given in Table-2
Table-2 Types of Public Private Partnerships
Type of PPP Features Local Government Advantages Disadvantages
Applications
1 Operations The local government A broad range of • potential service • collective agreements may
and contracts with a municipal services quality and efficiency not permit contracting out
Maintenance private partner to including water and improvements
• costs to re-enter service if
operate and maintain a wastewater treatment • cost savings contractor defaults
publicly owned plants, solid waste
facility, removal, road • flexibility in • reduced owner control and
maintenance, parks structuring contracts ability to respond to
maintenance/ changing public demands
• ownership vests with
landscape local government
maintenance, arenas
and other recreation
facilities, parking
facilities, sewer and
storm sewer systems,
2 Design - The local government Most public • access to private Operating and maintenance
Build contracts with a infrastructure and sector experience costs if life cycle approach not
private partner to building projects, taken
• Opportunities for
design and build a including roads innovation and cost
facility that conforms highways, water and savings
to the standards and wastewater treatment
performance plants, sewer and • Flexibility in
requirements of the water systems, arenas, procurement
local government. swimming pools and • Opportunities for
Once the facility has other local increased efficiency
been built, the local government facilities. in construction
government takes
ownershipand is • Reduction in
responsiblefor the construction
operation of the • Reduction in
facility. construction time
• Increased risk placed
on private sector
• Single point
accountability for the
owner
• Fewer construction
claims
21
Organizations
3 Turnkey The local government This form of public • Places construction • Reduced local government
Operation provides the financing private partnership is risk on the private control over facility
for the project but applicable where the partner operations
engages a private public sector • Proposal call can
partner to design, • More complex award
maintains a strong control design and
construct and operate procedure
interest in ownership location requirements
the facility for a but seeks to benefit as well as operational • Increased const to
specified period of from private objectives incorporate changes in
time. Performance construction and design and operations
objectives are • Transfer of operating
operation of a facility. once contract is completed
established by the obligations can
This would include enhance construction
public sector and the • Depending on the type of
most infrastructure can occur faster
public partner infrastructure, financing
facilities, including through fast – track
maintains ownership of risk may be incurred by
water and waste water construction
the facility the local government
treatment plants, techniques such as
arenas, swimming design-build
pools, golf courses construction quality
and local government
buildings. • Potential public sector
benefits from
increased efficiency in
private sector
construction
• Potential public sector
benefits from
private sector
operation of the
facility
4 Wrap A private partner Most infrastructure • Public sector does not • Future facility upgrades
Around finances and constructs and other public have to provide not included in the
Addition an addition to an facilities, including capital funding for the contract with the private
existing public facility. roads, water systems, upgrade partner may be difficult to
The private partner sewer systems, water • Financing risk rests incorporate at a later date
may then operate the and wastewater with private partner • Expense involved in
addition to the facility. treatment plants and • Public partner benefits alteration of existing
The private partner recreation faculties from the private contracts with the private
may then operate the such as ice arenas and partner’s experience partner
addition to the facility swimming pools. in construction
for a specified period • Perceived loss of control
of time or until the • Opportunity for fast-
tracked construction • More complex contract
partner recovers the
using techniques such award procedure
investment plus a
reasonable return on as design build
the investment • Flexibility for
procurement
construction
• Time reduction in
project
implementation
22
5 Lease The local government Can be used for • Improved efficiency in • Reductions in control
Purchase contracts with the capital assets such as construction over service or
private partner to buildings, vehicle infrastructure
• Opportunity for
design, finance and fleets, water and
innovation
build a facility to waste water
provide a public treatment plants, • Lease payments may
service. The private solid waste facilities be less than debt
partner than leases the and computer service costs
facility to the local equipment.
• Assignment of
government for a
operational risks to
specified period after
private sector
which ownership vests
developer
with the local
government. This • Improve services
approach can be taken available to residents
where local at a reduced cost
government requires a • Potential to develop a
new facility or service “pay for performance”
but may not be in a lease
position to provide
financing.
6 Temporary Ownership of an This model can be • If a contract is sell • Perceived of actual loss
Privatization existing public facility used for most structured with the of control of facility or
is transferred to a infrastructure and private partner, the infrastructure
private partner who other public municipality can retain • Initial Contract must be
improves and / or facilities, including some control over written well enough to
expands the facility. roads, water systems, standards and address all future
The facility is then Sewer systems, water performance without eventualities
owned and operated by and waste water incurring the costs of
the private partner for a treatment plants, ownership and • Private sector may be able
period specified in a parking facilities, operation to the costs of ownership
contract or until the local government • The transfer of an and operation
partner has recovered buildings, airports, asset can result in a • The transfer of an asset
the investment plus a and recreation reduced cost of can result in a reduced
reasonable return. facilities such as operations for the cost of operations for the
arenas and swimming local government· local government
pools. Private sector can
• Private sector can
potentially provide
potentially provide
construction and
construction and
operation of the
operation of the facility
facility
• Access to private • Access to private sector
sector capital for capital for construction
construction and and operations
operations • Operational risks rest with
• Operational risks rest the private partner
with the private
partner.
7 Lease The private partner Most infrastructure • If the private partner is • Perceived or actual loss
Develop leases or buys a facility and other public purchasing a facility, a of control of facility or
Operate or from the local facilities, including significant cash infrastructure
Buy government, expands roads, water systems, infusion can occur for
• Difficulty valuing assets
Develop or modernizes it, then sewer systems, water the local government
for sale or lease
Operate operates the facility and waste water • Public sector does not
under a contract with treatment plants, have to provide capital • Issue of selling or leasing
23
Organizations
the local government. parking facilities, for upgrading · capital assets that have
the private partner is local government Financing risk can rest received grant funding
expected to invest in buildings, airports, with the private
• If a facility is sold to a
facility expansion or and recreation partner
private partner, failure
improvement and is facilities such as • Opportunities exist for risk exists-if failure
given a specified arenas and swimming increased revenue occurs, the local
period of time in which pools. generation for both government may need to
to recover the partners reemerge as a provider of
investment and realize • Upgrades to facilities the service or facility
a return or infrastructure may
result in service • Future upgrades to the
quality improvement facility may not be
for users included in the contract
• Public partner benefits and may be difficult to
from the private incorporate later
partner’s experience in
construction
• Opportunity for fast-
tracked construction
using techniques such
as design build·
Flexibility for
procurement
construction
• Time reduction in
project
implementation
8 Build The local government Most infrastructure • Public sector obtains • Possible difficulty in
Transfer contracts with a private and other public the benefit of private replacing private sector
Operate partner to finance and facilities, including sector construction entity or terminating
build a facility. Once roads, water systems, expertise agreements in event of
completed, the private sewer systems, water • Public sector obtains bankruptey or
partner transfers and waste water the potential benefits performance default
ownership of the treatment plants, and cost savings of
facility to the local parking facilities, private sector
government then leases local government operations
the facility back to the buildings, airports,
• Public sector
private partner under a and recreation
maintains ownership
long-term lease during facilities such as
of the asset
which the private arenas and swimming
partner has an pools. • Public sector
opportunity to recover ownership and
its investment and a contracting out of
reasonable rate of operations limits any
return provincial and federal
tax requirements
• Public sector
maintains authority
over the levels of
service(s) and fees
charged
• Compared to a Build-
Operate transfer
model, avoids legal,
regulatory and tort
24
liability issues
• Under occupiers’
Liability Act, tort
liability can be
avoided
• Government control
of operational
performance, service
standards and
maintenance
• Ability to terminate
agreements if service
levels or performance
standards not met,
although facility
would continue to
permit repayment of
capital contributors
and loans and
introduction of new
private partner
• Construction, design
and architectural
savings, and likely
long-term operational
savings
9 Build Own The private developer Most public • Maximizes private • facility may transfer back
Operate obtains exclusive infrastructure services sector financial to the public sector at a
Transfer franchise to finance, and facilities, resources, including period when the facility is
build, operate, including water and capital cost allowance “work” and operating costs
maintain, manage and wastewater systems, • Ensures the most are increasing
collect user fees for a recreation facilities efficient and effective • Public sector loses control
fixed period to airports, local facility is constructed, over the capital
amortize investment. government based on life-cycle construction and initial
At the end of the administration and costs mode of operations
franchise, title reverts operations buildings,
• Allows for a private
to a public authority, parking facilities and • Initial contract must be
sector operator for a
solid waste written sufficiently well
predetermined
management facilities
• Period of time • The private sector can
determine the level(s) of
• The community is
user fees (unless the public
provided with a
sector subsidizes use)
facility, without large
up-front capital outlay • Less public control
and / or incurring of compared to Build-
long-term debt Transfer-Operate structure
• all “start-up” problem • Possible difficulty in
are addressed by the replacing private sector
private sector partner or determining
operator agreements if bankruptcy
• access to private or performance default
sector experience,
management,
equipment, innovation
and labour
relationships may
25
Organizations
result in cost savings

risk shared with
private sector period
of time
• The community is
provided with a
facility, without large
up-front capital outlay
and / or incurring of
long-term debt
• all “start-up” problem
are addressed by the
private sector operator
• Access to private
sector experience,
management,
equipment, innovation
and labour
relationships may
result in cost savings
• Risk shared with
private sector
10 Build-Own- The local government Most public • no public sector • The private sector may not
Operate either transfers infrastructure and involvement in either operate/construct the
ownership and facilities, including providing or operating building and /or service “in
responsibility for an water and wastewater the facility the public good” the public
existing facility or systems, parking • Public sector can sector has no mechanism to
contracts with a private facilities, recreation “regulate” the private regulate the “price” of the
partner to build, own facilities, airports, sector’s delivery of a service, unless it is a
and operate a New local government “regulated specifically regulated
facility in perpetuity. administration and monopolistic” service commodity
The private partner operations buildings area private sector
• The good/service being
generally provides the operators the Service
delivered is subject to all
financing in the most efficient
federal, provincial and
manner, both short-
municipal tax regulations
term and long-term
• No public sector • no competition, therefore
financing is required necessary to make rules
• income tax and and regulations for
property tax revenues operations and to control
are generated on pricing
private facilities,
delivering a “public
good”
• long-term entitlement
to operate facility is
incentive for
developer to invest
significant capital
Source: ‘Public Private Partnership, a guide to local government’, Pg. 13, Ministry of Municipal Affairs, British Columbia
cited in centre for civil society, Public Private Partnership: That Government is Best Which Governs least New Delhi, 2007.
26
Box-1 Public Private Partnership
The main types of partnership arrangements in the area of urban local
bodies are explained in Box
• Build-Own-Operate (BOO) - An arrangement whereby a private entity is
responsible for the financing, construction and operation of an
infrastructure facility and where the private entity retains the ownership
of the facility.
• Build-Operate-Transfer (BOT) - this is a arrangement where a private
entity is responsible for the financing, construction and operation of an
infrastructure facility and the private entity transfers the facility to
government agency at the end of the specified period.
• Build-Own-Operate-Transfer (BOOT) - Here the private entity provides
finance for construction, owns, operates, and maintains the facility for a
specified period and then transfers ownership to local government. The
condition of the asset on transfer must be specified by the public agency.
• Competitive-Tendering (CT)- The process of seeking a number
competitive tenders for a defined service to be performed under contract.
• Compulsory-Competitive-Tendering (CCT) - same as CT, but is carried
out through force of legislation or regulation.
• Contracting-Out – In this arrangement, the local government contracts
with private firms or other agencies to perform particular operation or
maintenance functions for a fixed period and for a specified compensation.
• Co-operatives- Self governing voluntary organizations designed to serve
the interests of their members.
• Franchising- In this arrangement, a private partner takes over the
responsibility for operating a service and colleting charges and possible
for funding new investment in fixed assets, mostly within a defined
geographical area.
• Concession- An arrangement whereby a private partner entity leases assets
for service provision from a public authority for an extended period and
is also responsible for financing specified new fixes investments during
the period. These new assets then revert to the public sector at the expiry
of the contract.
• Afformage- In this arrangement, the public authority controls the
construction, owns the fixed assets, but contracts out operations,
maintenance and billing.
• Leasing- An arrangement whereby a private party (lesser) contracts with
a public authority for the right to operate a facility (and the right to flow
of revenues from providing a specific service) for a specified period of
time. The facility continues to be owned by the public authority. Unlike
in a concession, the lesser does not have the responsibility for investment
in fixes assets.
• Management Buy Out (MBO)- The management of well run internal
function negotiate the purchase of that function and becomes a private
venture.
• Privatization – The entire public service is sold to private company. 27
Organizations • Vouchers- Vouchers enable consumers to obtain goods and services free
or at reduced cost while retaining the power to choose between competing
suppliers.
• Management Contract- An arrangement whereby a private agency assumes
the responsibility for a full range of operation and maintenance functions,
with the authority to make day-to-day management decisions. Competition
may be based partially on the services rendered ( as for service contracts)
and partially on the performance achieved (as in profit sharing)
The main types of partnership arrangements in the area of urban local bodies
are explained in Box
Source: Vinod Kumar and Jasjeet Kaur, 2010, Political economy journal of India, Vol 19, No-2,
Page No-59
2.6 CASE STUDIES OF PUBLIC PRIVATE

PARTNERSHIP WITH LOCAL
GOVERNANCE
2.6.1 Case Study I
NGO Panchayat Partnership Narrative of Panchayat Experience
Sakkarakkottai Gram Panchayat in Ramanathapuram district of Tamil Nadu is a
classic case for partnership between the Panchayats and Non Governmental
Organisations. The Panchayat president Mr. Noor Mohammed took all such
initiatives.
He also gave importance to the health and sanitation of the village. After
undergoing training in solid waste management, he joined hands with an NGO
called Neat and Clean Service Squad (NACSS) to remove the garbage from the
village. He said that it was because of the District Collector that he attended a
training programme. After that he decided to take a risk in garbage collection.
His idea is to undertake a venture which is new and which should attract all and
be beneficial to the people. Since his village is very near to Ramanathapuram
Town, it carried a heavy waste and the whole village was facing the problem of
waste. Then he decided to invite the NGO to help the Panchayat in cleaning the
village. The NGO has moved into his Panchayat area and started the work. He
got the approval of the people for this new scheme. He created a structure for
this new scheme by providing vehicles to collect the garbage and erecting two
sheds for processing the waste. A very big open yard has been given to the NGO.
He collects Rs.I0 per house per month remove the garbage and hands over
Rs.23,500/- to NACSS as their service charge. In turn the NACSS, through
processing, converts these wastes into manure and this manure is branded as
“PUNYA” and sold at a price of Rs.6 per kg. Totally 13 persons are working as
full-time employee including one supervisor. These workers are paid by the
NACSS from the amount handed over by the Panchayat as collecting service
charges. The Panchayat also earns money by selling the manure and the minimum
they get is Rs.2000 and the maximum they get is Rs.3000 per month by selling
the manure. A shed has been constructed at a cost of Rs.60, 000/-. The Panchayat
also gets Rs. 4000/- out of the service charges which they pay the NACSS. Further
28 13 persons, who earlier worked part-time, now get employment full-time. Through
this the President has saved the village from environmental degradation and the Public Private Partnership
Panchayat also earns wealth from the waste. By this exercise, people have been
conscientized on cleanliness. A President can not make a village clean unless the
people of the village cooperate. The President said that he has succeeded in his
attempt to bring about a culture among the people for cleanliness.
2.6.2 Case Study II

Haryali Kisaan 13 azaar in Ladwa, Kurukshetra
Dcu Shriram consolidated limited has launched Haryali Kisaan Bazaars in around
160 locations in Haryana, Rajasthan and Uttar Pradesh. This Ladwa Kisaan Bazaar
has a turnover of Rs 80,000 per day. It provides quality input to farmers and
enable the farmers to sell their products in competitive price for the advantage of
the farmers. Apart from the farming inputs, usual consumables are also in the
same Bazaar. A LPG cylinders supply chain and a petrol station along with a
bank are additions to attract more people to this Bazaar. In the absence of
government extension services, this Kisaan Bazaar is being used effectively by
the farmers to increase their yield and their profit. Panchayat leaders extended
all possible help to the Kisaan Bazaar to help the farmers. To help the farmers in
the absence of government extension service the elected panchayat representatives
used this Kisaan Bazaar. Panchayat has to facilitate the Kisaan Bazaar to organize
series of meetings with different stakeholders for development engagement.
2.6.3 Case Study-III

Gitanjali- An Example worth Emulating in Public-Private-Partnership
“Gitanjali Industries” in Mumbai is an excellent example of a public-private-
partnership that is owned by Ms. Jain, a lady entrepreneur. This privately owned
industry works in coordination with the MCGM for dry waste recycling. It
employs 350 waste pickers, who collect various kinds of wastes, such as, Bisleri
bottles; scrap iron; polythene bags; and e-waste like television, computer screens,
and electronic parts; from six centre in the city. This is transported to the factory
site (given by the MCGM) by six trucks and is then sorted by twenty sorters.
Each category of waste has its own utility value. The industry has its marketing
outlets in ten cities- Bangalore, Belgaum, Gurgaon, Goa, Jammu, Bhubaneshwar,
Sambalpur, Ranchi, and Mumbai. The industry has adopted twenty-five gutters
in the area surrounding its unit, which are cleaned by sweepers; they are also
involved in maintaining community bins, from where dry garbage is collected
by rag pickers. Ms Jain pays the sweepers for keeping the area clean on a daily
basis.
2.6.4 Case Study-IV

Slum Sanitation Programme, Pune
The Slum Sanitation Programme was a major experiment that was carried out in
Pune city to build toilets in slums through community participation by giving
contracts to NGOs. A partnership between NGOs, CBOs slum dwellers/ users,
financial institutions, and Pune Municipal Corporation was forged to enable a
sense of ownership, reduction of cost of the project, reduction in time of project,
reduction in time of project implementation, and to ensure quality of the project.
In built provision of caretaker residence in the toilet block was made and provision
of baby toilets was also included. NGOs were asked to dispense with
29
Local Governance and Local implementation charges. Regular weekly meetings were held with the stakeholders
Organizations
for monitoring purposes.
220 toilet blocks with about 3,500 toilet seats through NGOs in 1999-2000 were
constructed in the first phase. So far, more than 400 toilet blocks with an excess
of 10,000 toilet seats have been constructed benefiting 5 lakh slum dwellers in
Pune city, assuming that 50 persons can use a toilet seat on a given day.
2.7 LET US SUM UP

Public-Private Partnership (PPP) is one of the important arrangements for
achieving the goal of development. The PPP with the local governance is being
adopted by many urban local bodies and also Panchayat Raj Institutions in order
to effectively implement various projects at the grassroots. This unit covers the
mean, scope, role and various principles of PPP. A detail analysis of various
types of PPP with local self government and its advantages and disadvantages
have been discussed in detail. A few case studies has been presented in the last
portion of the unit in order to enable the learner to understand the implementation
of PPP model and its benefit to the local self governance.

Centre for Civil Society, 2007, Public Private Partnership: That Government is
best which Governs Least, Centre for Civil Society, New Delhi.
Ministry of Housing and Urban Poverty Alleviation, (2009), India Urban Poverty
Report, 2009. MHOUPA, Government of India, Oxford University Press, New
Delhi.
Palanithurai, G. and R.Ramesh, 2008, Globalisation Issues at the Grassroots,
Concept Publishing Company, New Delhi.
Palanithurai, G., M.A.Thirunavukkarasu and G.Uma, 2008, Change Makers at
Grassroots: Local Governance in Action, Concept Publishing Company, New
Delhi.
Singh, H 2010, Creating Vibrant Public Private Panchayat Partnership for
Inclusive Growth through Inclusive Governance, Academic Foundation, New
Delhi.
Vikram K.Chand (ed), 2006, Reinventing Public Service Delivery in India, Sage
Publications, New Delhi.
World Bank, 2006, Reforming public services in India: Drawing lessons from
success, Sage Publications, New Delhi.

ANSWERS
1) What are the advantages that are enhancing the scope of Public Private
Partnership (PPP)?
30
Ans. The advantages that are enhancing the scope of Public Private Partnership Public Private Partnership
(PPP) are:
i) It is more efficient than the development formulated and implemented by
government alone.
ii) Public private partnership minimizes costs and maximizes benefits where
the public sectors deliver the services with efficiency and effectiveness.
iii) Public private partner’s resources and unique strengths so that results are
sometimes attained in less time, at lower costs and with greater sustainability
than efforts by any single partner.
iv) It is believed that both public and private sector brought to their table their
own experiences and strengths, making the partnership a solid team with a
common vision (B.Lopez, USAID, Guatemala).
v) Public private partnership is now a days developing as an alternative
arrangement of development. According to World Bank the PPPs, maximize
benefits for development through collaboration. ADBI consider PPP as
alternative development process.
1) Enumerate the basic principles of Private Public Partnership (PPP).
Ans. The basic principles of PPP are:
a) proper market conditions have to be created;
b) a competitive environment has to be created;
c) adherence to rule of law is made mandatory.
31
Organizations UNIT 3 PARALLEL BODIES AND LOCAL
SELF GOVERNANCE
Structure
3.1 Introduction
3.2 Parallel Bodies: Meaning and Concept
3.3 Type, Role, and Effect of Parallel Bodies
3.4 Non-parallel Bodies
3.5 Factors Responsible for Growth of Parallel Bodies
3.6 Examples of Parallel Bodies
3.7 Let Us Sum Up
3.1 INTRODUCTION
Ever since human beings started leading a community life consciously,
organizations with structural arrangements came into being. The organizations
created by the communities looked after land, fisheries, and forest lands. Mostly
natural resources are the common property of communities. They are protected,
and enriched by the active participation and involvement of the communities
that they belong to. In fact, people never developed aspiration to exploit natural
resources for amassing wealth. It was only during the British Administration
that properties were given to individuals by settlements and land became tradable
commodities. Even then, many of the responsibilities had been carried out
collectively by the informal organizations created by the communities. After the
advent of the modern state system, arrangements for governance were created at
the grassroots with active linkages with other, higher level governing institutions
at regional and national levels. Yet, grassroots’ level governance institutions were
not as strong as state and national level institutions. But the institutions for
governance at the grassroots level – the Panchayats - along with other
organizations and institutions which had been with communities and evolved by
the communities over a period of time grew simultaneously and later developed
into a formal institution. Most organizations and institutions were created by
communities for their own advantage and conveniences. They were all well
regulated as per the norms and procedures evolved by the communities over a
period of time. These organizations and institutions were called informal
institutions after the advent of Panchayat Raj institution which was created by
the central government for governance. There is yet another set of organizational
mechanisms was created by the government for speedy implementation of many
programmes and schemes. They are called committees for centrally and states’
sponsored schemes. Thus, there are organizations and institutions evolved by
the communities as well as those that are imposed on communities by the federal
and state governments through the programmes and schemes functioning at the
grassroots. Broadly speaking, there are two types of organizations and institutions
at the grassroots level. They are both formal and informal institutions and
organizations created by governments and government departments are formal
32
institutions and organizations created by the communities over a period of time Parallel Bodies and Local Self
Governance
are informal. As a result, there are three set of organizations and institutions
functioning at the grassroots level. They are: the constitutionally created
governance institutions, like the Panchayati Raj institutions; community created
organizations, like temple committees, water bodies management committees,
forest management committees, committees to resolve petty disputes within the
community and the government created scheme based committees, like the Village
Education Committee, Village Health Committee, and Village Water and
Sanitation Committee and a number of other such committees. The number of
committees and responsibilities of the committees vary from region to region.
Committees that are meant to implement centrally sponsored schemes have a
uniform character, structure, and responsibilities throughout the country. The
committees and organizations are constituted with elected, selected and nominated
members.
After reading this unit you should be able to
• explain the meaning and concept of parallel bodies
• describe different types of parallel bodies
• discuss three tier panchayats and two tier parallel bodies
• explain the factors responsible for the growth of parallel bodies.
3.2 PARALLEL BODIES: MEANING AND

CONCEPT
Parallel bodies are organizations created by communities and government
departments to discharge certain responsibilities in parallel, while the
constitutionally created Panchayati Raj institutions are in position, in the same
geographical area, to discharge the same set of responsibilities. According to
PRIA, the term, ‘parallel bodies’, refers to those bodies whose functional domain
overlaps with that of the PRIs, or, which are functioning in such a way as to
hinder/support the decision-making process/effective functioning of the PRIs in
areas which are constitutionally demarcated to PRIs as per the 11 th Schedule.
There are arguments after the establishment of Panchayati Raj institutions that
the elected local bodies are undermined because of the functioning of parallel
bodies. This argument has to be visualized in the backdrop of the 73rd Amendment
to the constitution of India. The basic objective of creating this governance
mechanism permanently at the grassroots level is by incorporating the same in
part X of the constitution to achieve economic development and social justice
with the active participation of the people through the participatory micro plan.
The objective is to create a responsive, responsible, and representative institutional
mechanism for governance administration at the grassroots. It is a constitutionally
created institution with constitutionally mandated set of duties and responsibilities.
Creation of any other mechanism for administration in the same geographical
area with the same set of duties and responsibilities will weaken the
constitutionally created governance institutions. This is the strong perception of
the scholars of decentralization of powers, governance, and administration. The
broader objective of the constitutionally created institutions takes care of all the
responsibilities of the committees of the centrally sponsored schemes and the
organizations of the communities. The Panchayati Raj system is broad based. It
is not leader-centric as we had the same institution before the passing of the 73 rd
33
Local Governance and Local Amendment to the constitution. Now it is people-centric, development-centric,
Organizations
and participation-centric.
There is yet another argument from the perspective of promoters of parallel bodies
that the parallel bodies are really with serious stakeholders and relevant to the
functioning of the bodies. There will not be any non serious player in the
transaction of these bodies. The members of the parallel bodies are the real
stakeholders, gaining advantage out of their participation. Hence, one will find
effective participation of the stakeholders in all the deliberations of the
committees. Real participation takes place only in the parallel bodies. On the
other hand, the Panchayati Raj is a generalist institution where one will find not
only generalists but also non serious players. Panchayats cannot deliver profit to
all the individuals. The members are politically oriented and they look at issues
from the perspective of political parties, not from development perspectives.
Further, parallel bodies are special purpose vehicles designed to manage specific
programmes of both central and state governments. The centrally sponsored
schemes of the central ministries have evolved specific devices of constituting
focused committees for effective implementation of schemes and programmes.
The major argument in this regard is that while constitutionally created and
mandated Panchayati Raj institutions are in place at the grassroots level to achieve
development and social justice, the centrally sponsored schemes, MLAs and
MPs conveniently bypass the Panchayati Raj institutions. This is being viewed
as factor that weakens the Panchayati Raj institutions. This is to be understood
in a broader perspective, namely, the purpose for which scheme related committees
are constituted, emergence of community based organizations and the logic behind
the standing committees of Panchayati Raj institutions. In reality, all three set of
institutions and organizations function on the ground in the same geographical
area. It is all the more important to visualize that to what extent convergence
could be achieved among these organizations and institutions from the perspective
of effective and efficient delivery of services and goods.
After reading this section, you might have gained idea about the meaning and
importance of parallel bodies, its meaning and basic concept. Now you would
be able to answer the questions given in Check Your Progress-1
1) What do you understand by Parallel Bodies?
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34
Parallel Bodies and Local Self
3.3 TYPE, ROLE, AND EFFECT OF PARALLEL Governance
BODIES
The parallel bodies can be broadly categorized into the following types.
i) Committees of the centrally sponsored schemes
ii) Community based organizations
iii) Three tier Panchayats and two-tier parallel bodies
3.3.1 Committees of the Centrally Sponsored Schemes

From the inception of the Planning Commission it Delhi the culture of evolving
the centrally sponsored schemes had been in vogue. There have been many
exercises and evaluations about the schemes and programmes with the objective
of reducing the number and quantum of centrally sponsored programmes. But,
contrary to expectations, the number of schemes have increased and the quantum
of resources allocated to those schemes has also increased. On one hand, effective
pleas are made for the reduction in the number of centrally sponsored schemes,
and, on the other, conditions are created in such a way that the centrally sponsored
schemes cannot be reduced, and, instead, they are increased. Hence, the centrally
sponsored schemes are in place. As a result, the committees created for the
effective implementation of the centrally sponsored schemes are active and vibrant
at the grassroots level. These committees are not permanent and statutory. They
will be in place as long as the schemes are alive and in operation. One will find
active participation in these committees. There are valid reasons for creating
these parallel bodies, and some of them are: i) to ensure participation of the
beneficiaries in the process of implementation of the schemes, to achieve
maximum impact; ii) to provide technical input for effective implementation of
the schemes; iii) to ensuring efficiency in implementation of the schemes; (iv) to
achieve convergence of the schemes meant for poverty alleviation and rural
development. It is to be understood that the meaning of decentralization of powers
never restricted that powers should be decentralized only to the lower level
governance institutions. Powers can be decentralized even to quasi government
bodies, civil societies and even to the private also. The prime objective is that
people should get effective, efficient, quality service. Now, we will move on to
view community based organizations.
Effect of parallel bodies on centrally sponsored schemes
Parallel bodies created by centrally sponsored schemes and the community based
organizations have stunted the development of the Panchayati Raj institutions.
Panchayati Raj institutions are permanent bodies, but the parallel bodies are
created for a specific task, and for a specific period. Schemes are mostly regime
based. Once the regime is over, the scheme closes. Thus, the parallel bodies
created through centrally sponsored schemes are temporary in nature and ad hoc
in character. Yet, these bodies are effective as they have resources and are
powerful.
While arguing in favour of scheme-based committees against Panchayati Raj,

corruption, ineffectiveness, poor capacity are being presented as reasons for not
preferring Panchayati Raj. But the same are also applicable to the parallel bodies
also, as revealed by studies. The parallel bodies do not have gender equality as 35
Local Governance and Local they do not have adequate number of women in the committees. The Panchayati
Organizations
Raj institutions, however, have the provisions to maintain gender equality.
Panchayati Raj institutions are in the hands of the elected representatives of the
people, whereas the parallel bodies are in the hands of the officials. The 73 rd
Amendment to the Constitution of India has brought women and Dalits to
governance, but the parallel bodies have undermined these leaders. Instead of
strengthening the women and Dalit leadership, the parallel bodies have weakened
them.
3.3.2 Community Based Organizations

After the departure of the colonial power, the modern state system provided an
institutional mechanism to govern and administer society and achieve
development based on the western model of parliamentary democracy. The Afro-
Asian countries borrowed this model and implemented it without much adaptation
to suit the local conditions. The Afro-Asian countries are known for their strong
traditional structures for community governance. One would find strong resistance
to reform in certain parts of society, and, more particularly on governance at the
grassroots level that is based on representative democracy. That is why we find a
new syndrome of modernity in tradition and tradition in modernity in many of
the socio-political processes of society. In one aspect, the modern state has to be
very determined about dismantling certain structures and practices to enable the
marginalized to emerge as respected citizens and claim their entitlements. It is
unfortunate that beyond enacting legislation and evolving polices, the State has
not shown vigour in translating the legislations and the decisions into reality.
Further, in Afro-Asian countries people do not understand the importance of
representative democracy. Despite its being in practice for several decades, people
do not understand the process of governance under representative democracy
excepting ‘voting’. As a result, the governing mechanism is superimposed on
society on the premise that if the state apparatus is expanded, all developmental
responsibilities will be handled effectively, and, thereby, society will be
modernized and equity and equality will be achieved.
The government, through its policies, programmes and schemes has not been
able to achieve the planned target. So, micro institutional structures working at
the grassroots level were identified as effective instruments for delivering services.
To achieve local development and to achieve social reconstruction to address
the issues of social justice, local institutions are considered appropriate. This
was the new premise found out throughout the world. But, the local institutions
have to be reformed as they are traditional in character and not inclusive and
gender sensitive. Hence, it was planned to create local institutions to achieve
development legitimately, and to perform the functions of the local institutions
evolved by the communities. This new initiative is the result of the failure of the
governments in delivering services and goods, because, in many of the developing
countries, state systems became weak and cannot manage reforms.
Even in a modernized society, traditional institutions still do look after the affairs
of the community, such as temples, community properties - especially commons
– and, more particularly, water and local disputes. They also operate a huge
corpus fund. Since there is an accepted and standard mechanism to operate a
fund from the corpus fund in a transparent way, the community reposes confidence
in the leadership. While looking at the basic principles of these traditional
36
structures one finds modern indicators of good governance, namely, Parallel Bodies and Local Self
Governance
accountability, responsiveness, and transparency, but not inclusion of gender
and marginalized groups.
Whenever the bureaucracy is effective, it interferes in the functioning of the

traditional structures while the traditional structures disturb the normal functioning
of the constitutional structures at the grassroots. Wherever there is synergy
between the two, the bureaucracy plays a supportive role. The traditional
institutions which are vibrant in some places by their performance and credibility
are able to bring the constitutional bodies under their fold for which the community
is also supportive. By doing so, the corpus of the traditional structure is enhanced
by using the commons of the constitutional institutions.
The people who are the major source of support to both institutions conduct a
balancing act by extending support to both in many places - extending active
support to traditional institutions and passive support to constitutional institutions.
In some places where there is active social conflict and the affected people are
the marginalized, they extend support to the constitutional Panchayat and
discourage the traditional Panchayat. In a few places, both are in action and
intense conflict prevails between the two with the support of two groups
supporting them. People know the roles of both institutions. If they feel both
institutions are active and deliver services reasonably, they extend support to
both, because people are economically and politically rational. In the event of
failure of the state structure in the delivery of services, people have no option
and, hence, whatever mechanism is available at their level has to be supported.
Whenever the conflict is intense between these two bodies within a geographical
area, where the constitutional Panchayat is co-terminus with the traditional
Panchayat, civil society and the media have to play an active role to expose the
malady and seek the intervention of government institutions. It has been
demonstrated that local institutions are vibrant and capable of achieving local
development, but, at the same time, local development should be on an equitable
basis. To achieve this, the constitutional institutions have to be strengthened.
The search is on throughout the world to find ways and means of strengthening
the constitutional institutions.
The Effect of Parallel Bodies on Community Based Organizations

Community based organizations have strength and weaknesses. After the advent
of Panchayati Raj institutions, in many places they have added strength to
Panchayati Raj institutions by supporting them in delivery of services and goods.
For the effective participation of the people in implementing schemes and
programmes, the community organizations have contributed not only mere
manpower, but, also, needed resources from their corpus. This synergy takes
place where the communities are modernized, and democratized. This synergy
happens in urban districts and industrialized districts. The same community based
organizations are in conflict with the constitutional panchayats, as they want to
retain some of the tasks and responsibilities which are assigned to the
constitutional panchayats. More particularly some of the properties of the
panchayats are with community based organisations. The newly elected
representatives are in the process of retrieving the same from them and as a
result, conflict arises between two bodies. It is evident from the panchayats where
dalits and women are elected to gram panchayats as presidents. This conflict is
more acute in backward and agriculture districts. Whenever the state government 37
Local Governance and Local departments are effective in the process, the role of community based
Organizations
organizations is weak and constitutional panchayats are strong, and wherever
the government departments are dormant, the constitutional panchayats are weak.
3.3.3 Three Tier Panchayats and Two Tier Parallel Bodies

The three tier Panchayat structure is created through the constitution and thereby
it has been incorporated in Part X of the constitution. It is for the governance and
administration of a geographical area called a district. In every district, you will
find a three tier governance structure. The three tiers are: are Gram Panchayat,
at village level; block Panchayat, at middle level; and, district Panchayat, at the
district level. The two tier parallel bodies are created by central and governments
and communities. Specific committees are created by the central government
and state governments for implementation of specific schemes. They are not
permanent and they are not constitutionally created as Panchayat statutory
committees. These committees will disappear once the schemes and programmes
are over. There is yet another set of organizations specifically evolved by the
communities over a period of time. They are permanent. Among the committees
created by the communities, many disappeared as many of the responsibilities
had been taken over by the government. Yet, there are a few organizations that
have functioned at the grassroots level for many years without interruption. All
these organisations are functioning in isolation and sometimes with convergence
and many times with conflicting interests. How they interact with each other,
how they conflict with each other, and how they carry out their activities usurping
each others’ power are areas of study and analysis. Two of these studies are
important and interesting. They have covered wider areas both in context and
samples. The first study was conducted by Participatory Research in Asia (PRIA),
a civil society organization based at New Delhi, and the other is a study conducted
by the Ministry of Panchayati Raj, Government of India, based on the data
provided by the state governments. The details are being given below in a diagram
and in tables.
3.3 Three Tier Panchayats and Two Tier Parallel Bodies
Three Tier Panchayats
Gram Panchayat Block Panchayat District Panchayat
Standing Standing Standing

Committees Committees Committees
38
Governance
Two Tier Parallel

Bodies
Committees Committees
evolved imposed
Norms prescribed by Norms evolved by

the Governments the communities
Community based
organizations Centrally sponsored
schemes and
State sponsored
schemes
After reading this section, you might have gained idea about the types of parallel
bodies, their role and effect. Now you would be able to answer the questions
given in Check Your Progress- 2
1) Enumerate the various categories of Parallel Bodies.
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3.4 NON-PARALLEL BODIES

Parallel bodies do not include certain organizations, association and groups which
perform certain functions at community level which are totally against some of
the fundamental principles of the constitution. Those organizations and
associations undertake responsibilities of the judiciary and deliver judgments on
criminal and civil disputes by establishing their authority through their social
base. They are not being discussed. We discuss about organizations, groups,
committees, associations and institutions which are recognized by the government
for carrying out certain responsibilities in the communities for effective delivery
of services and managing some of the assets created by the government for the
benefit of the communities. 39
Organizations 3.5 FACTORS RESPONSIBLE FOR GROWTH OF
PARALLEL BODIES
The factors outlined below are responsible for the growth of parallel bodies.
i) Participation of Beneficiaries with the launching of the Minimum Needs

Programmes in the Fifth Five Year Plan, both the Central and State
governments, as well as various national and international agencies are
investing a lot of money in socio-economic development. For effective
implementation of these schemes, these agencies have constitution
committees and groups at the village level. Two examples of this are the
Joint Forest Management Committees (JFMs), and Water User Groups
(WUGs). In a study conducted by PRIA, in actual practice these bodies
work independently of the PRIs even though the Eleventh Schedule specifies
that minor irrigation, water management and watershed development, and
minor forest produce come under the preview of PRIs. The bodies are
preparing participant lists and implementing these projects. However, in
other ways they encroach on the areas of functioning of PRIs. In Gujarat,
there is major role conflict between the JFM committees and village
panchayats with regard to minor forest produce.
ii) Provision of Technical Input/ Expertise customarily, Panchayati Raj

institutions, in general, and village panchayats, in particular, do not have
technical experts to handle projects and programme. Because of lack of
expertise, these bodies have been created by the governments and external
donor agencies for implementation of projects and programmes. However,
it is seen that instead of helping and empowering PRIs, these bodies have
converted themselves into parallel bodies hampering the development and
empowerment of PRIs. These bodies have been encouraged and gained
ground in rural and urban municipal areas because of a deficit in available
technical manpower with the elected bodies. The technical and human
resource development in local self government institution restricts the
proliferation of parallel bodies.
iii) Ensure Efficiency the third important function of parallel bodies is its
efficiency in the implementation of developmental projects. Vesting power
with the Panchayati Raj bodies without concurrent development of capability
has given rise to parallel bodies. The efficient and effective functioning of
parallel bodies has enabled them to encroach on the functioning of PRIs.
iv) Non-existence of Statutory Committees the growth of parallel bodies can

be attributed to the non-existence of statutory committees such as an
Education Committee, Health Committee, or Production Committee at
different levels of local self government. Besides, even where they do exist,
these committees are not adequately empowered to carry out the duties and
responsibilities assigned to them by the State Panchayati Raj Act. The parallel
bodies are virtually performing all the duties and responsibilities of these
committees.
v) Bureaucratic Control Mechanism- It is a fact that in most states, the

bureaucratic machinery does not want to delegate power to local self
40 government institutions. They prefer to implement programme through the
parallel bodies rather than through the PRIs. They generally believe that the Parallel Bodies and Local Self
Governance
PRIs do not have capabilities to implement projects and programmes.
Indirectly, they do not want empowerment of PRIs. Thus, bureaucratic
support is one of the reasons for growth of parallel bodies. The Jannabhoom
project, Andhra Pradesh, is one of the best examples. According to PRIA,
all local issues related to the functioning of local intuitions and
implementation of government schemes came under the Janmabhoom
programme, and the functions of the Panchayat were taken over by the
Janmabhom programme through the backdoor.
3.6 EXAMPLES OF PARALLEL BODIES

3.6.1 Summary picture of Parallel Bodies in the 7 states studied by PRIA in
2001, their Areas of Overlap with the PRIs and their Institutional Linkages with
the PRIs is given below.
Table-I: Examples of Parallel Bodies given by PRIA

No. State Parallel Body Areas of overlap/ Institutional
substitution Linkage with PRIs
1. Uttar Water User • Formulating, developing Village Pradhan may be

Pradesh Groups (WUG)/ and approving plans of the ex-officio
Site the area covered by the chairperson of the SIC
Implementation WUG
Committee • Selection of beneficiaries
(SIC) (farmers)
• Construction,
maintenance and
management of link and
main drains
• Policy decisions like
decision on rates of water
charges
2. Haryana Gram Vikas Supervision of construction The samiti consists of 4

Samiti of work out of the funds members of gram
released by HRDF Board, Panchayat Chairperson
decentralized planning or - Sarpanch Elected
any other state Members - one Panch
government scheme each from SC
community, BC
community and a
woman Panch
3. Kerala Expert Preparation of panchayats Technical advisory

Committee development plans body to the panchayats
regarding the plans
prepared by the
Panchayat
4. Andhra Janmabhoomi Planning and Sarpanch and the

Pradesh implementation of concerned ward
development programmes at member finds
the local level representation in the
Habitation Level
Committee of
Janmabhoomi.
41
Organizations 5. Gujarat Joint Forest • Cultivation, collection· • A representative
Management and sale of minor forest of village Panchayat
produce will serve as one of
• Conservation and the member of the
maintenance of common mandal committee. •
property resources Village Panchayat
itself may become a
mandal committee
for the purpose of
JFM.
6. Rajasthan Watershed Minor Irrigation Panchayats can become

Project Implementing
Agency (PIA) for
watershed projects on
priority basis.
7. Himachal Vigilance Supervision of gram Supervisory body

Pradesh Committee Panchayat works/schemes within gram Panchayat
costing upto Rs.50,000/- of the works, schemes
and other activities of
Gram Panchayat.
Source: Parallel bodies and Panchayati Raj institutions (Expertise from the States)< PRIA,
December 2001
3.6.2. Summary Picture of Parallel Bodies as Reported by the States in 2007 to

the Ministry of Panchayat Raj, Government of India.
Table-II: Examples of Parallel Bodies Reported by a few States

No. State Parallel Body Areas of Institutional
overlap/ Linkage with
substitution PRIs
1. Andhra Institutionalized parallel bodies in a Substituted the Since most

Pradesh big way. Passed enabling laws to function of PRIs parallel bodies
register user groups in different in most of the have been
sectors to make them legal entities. relevant areas created as legal
Such bodies are created at the district entities there in
level as well as local level some of little scope for
them at the instance of donors like institutional
World Bank. SHGs are another set linkages with
of parallel bodies which operate PRIs.
fairly successfully but at the cost of
weakening PRIs.
2. Arunachal Not reported

Pradesh
3. Assam Village Education Committees Substitute the Independent of

Watershed Associations Village functions of PRIs PRls
Forest Committees DRDAs in the relevant
areas
4. Bihar Water Users Associations, Mahila Substitute Independent of

Samakhya Groups, etc. DRDAs functions in the PRls
relevant areas
9. Himachal The main parallel bodies are Substitute the of Very

Pradesh DRDAs, Village Forest functions PRls weaklinkages
42
Development Committees, The withPRls. Governance
Parivar Kalyan Avam Salahkar
Samiti, Agriculture Technology
Management Agency and DPDC.
The State Government is taking
action to establish at least one Rural
Business Hub (RBH) in each Block.
It is ascertained that donor agencies
also create parallel bodies. For
example, Village Forest
Development Committees have been
constituted under the forest sector
reforms project, undertaken with the
cooperation of DFID.
14. Madhya The DRDAs continue to exist as A lot of overlap Institutional

Pradesh separate and distinct bodies, with the and substitution Linkages with
President of ZP as its Chairperson. are there PRls are weak.
Funds pertaining to major rural
development programmes are
channeled through the DRDAs. The
DRDAs are expected to be
facilitating and supporting
organizations to the ZPs, providing
necessary executive and technical
support in respect of poverty
reduction efforts. It is reported that
the accounts of the DRDAs are
captured in the accounts of the ZPs.
At the field level, the Gram Swaraj
Legislation of 2001 set up a number
of sub-committees of the Gram
Sabhas directly exercising executive
powers. These could be considered
as extensions of institutions of
peoples’ participation, but to the
extent that they usurped the finances
that were to go to the Panchayats and
executed projects directly within the
functional domain of the Panchayats,
they were considered as the Village
Education Committees. The Gram
Sabha elects some members of these
bodies and the department
nominates a few. In some members
of these bodies, the Sarpanch is also
a member of the committee. In
practice these committees have no
linkages with the Panchayats and
their funding does not find any place
in the Panchayat’s accounts. In many
cases, the funds given to these
parallel committees rival those given
to the Panchayats.
15. Mahara- The main parallel body is DRDA. There is serious Weak Linkages
shtra In spite of the fact that Zilla Parishad problem of
have been strong in Maharashtra, the overlap at ZP
DRDAs have not been abolished. level.
Zilla Parishad President is Chairman
of Governing body whereas the
43
Organizations Chief Executive Officer is Chairman
of Executive Committee of DRDA
vide Government order, dated May,
8, 2001. In March, 2004 the post,
Project Director DRDA was
upgraded to Additional CEO level.
Now senior officer in the rank of
Addl. CEO looks after the working
of DRDA. According to government
of Maharashtra this decision will
certainly improve the working of
DRDA.
16. Manipur The parallel bodies continue to exist Serious problem Weak Linkages
in the State of Manipur. The line of overlap/
Departments have their own bodies substitute are
which have not been brought within there
the umbrella of the Panchayati Raj
institutions. The Central
Government has also got its bodies
like the structure of the ICDS, the
SSA, etc., which are very loosely
connected to the PRls. Even the
District Rural Development Agency
(DRDA), as stated earlier, though
headed by the Adhakshya of the Zilla
Parishad is not fully integrated with
the former. The State Government
of Manipur has undertaken to give
due consideration for merging all
parallel bodies including the DRDA
with the Zilla Parishad.
22. Rajasthan There are parallel bodies like the Very serious Extremely weak
School Development Management problems of linkages
Committee formed by Education overlap/
Department, Water Sanitation substitution
Committee formed by PHED, Social
Forest Committee formed by Forest
Department, etc. and the donor
agencies like World Bank, UNDP,
etc. are funding projects of NHOs
working as parallel bodies.
23. Sikkim The State has only one DRDA. The Serious overlap/ Weak linkages
DRDA is an autonomous body substitution
governed by a Governing Body at
the State level. There are 4 (four)
district level co-ordination
committees which comprised by
MLAs and Zilla Panchayat
members. The primary function of
the DRDA is the constitution of
SHGs of BPL which is done through
identification of BPL persons in
Gram Sabhas
Source: Status of Parallel Bodies vis-à-vis PRls, as Reported by the States up to June 2007.
44
After reading this section, you might have gained idea about the various types of Parallel Bodies and Local Self
Governance
parallel bodies. Now you would be able to answer the questions given in Check
Your Progress-3
1) What are the factors responsible for the growth of Parallel Bodies?
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3.7 LET US SUM UP

In this unit we discussed the meaning and concept of parallel bodies. The parallel
bodies, although playing an important role in rural development, hinder the
functioning of the PRIs in many cases. The parallel bodies are growing because
the statutory bodies of the local self government are not functional in many
states. The examples of parallel bodies given by PRIA and by different state
governments are given in this unit.

Institute of Rural Management, 2009, The State of Panchayats: 2007-2008: An
Independent Assessment: Vol I: Thematic Report, Institute of Rural Management,
Anand.
Jayal, Niraja Gopal, Amit Prakash and Pradeep K. Sharma, 2006, Selection by
Custom and Election by Statute: Interfaces in Local governance in Karnataka
in Local Governance in India (ed), Oxford University Press, New Delhi.
Kripa Ananthpur, 2006, Interfaces in Local Governance A Study in Karnataka
(Working Paper 187), Madras Institute of Development Studies, Chennai.
Ministry of Panchyati Raj, 2007, Status of Parallel Bodies vis-à-vis PRIs as
Reported by the States, Government of India, New Delhi.
Ministry of Panchayati Raj, 2008, Study on Elected Women Representatives in
Panchayati Raj institutions, Government of India, New Delhi.
Palanithurai, G. and V.Ragupath, 2007, Communities, Panchayats and
Governance at Grassroots, Concept Publishing Company, New Delhi.
Palanithurai, G. 2009, Decentralisation in India: Critical Issues from the Field,
45
Local Governance and Local PRIA, 2001, Parallel bodies and Panchayati Raj Instituions, Participatory
Organizations
Research in Asia, New Delhi.

ANSWERS
1) What do you understand by Parallel Bodies?

Ans.Parallel bodies are organizations created by communities and government
departments to discharge certain responsibilities in parallel, while the
constitutionally created Panchayati Raj institutions are in position, in the
same geographical area, to discharge the same set of responsibilities.
According to PRIA, the term, ‘parallel bodies’, refers to those bodies whose
functional domain overlaps with that of the PRIs, or, which are functioning
in such a way as to hinder/support the decision-making process/effective
functioning of the PRIs in areas which are constitutionally demarcated to
PRIs as per the 11th Schedule.
1) Enumerate the various categories of Parallel Bodies.
Ans.The parallel bodies can be broadly categorized into the following types:
i) Committees of the centrally sponsored schemes
ii) Community based organizations
iii) Three tier Panchayats and two-tier parallel bodies
1) What are the factors responsible for the growth of Parallel Bodies?
Ans.The factors responsible for the growth of Parallel Bodies:
i) Participation of Beneficiaries
ii) Provision of Technical Input/ Expertise
iii) Ensure Efficiency
iv) Non-existence of Statutory Committees
v) Bureaucratic Control Mechanism
46
MDV-111
and Development
Block
3
DECENTRALIZED PLANNING AND
DEVELOPMENT
UNIT 1
Decentralised Planning: An Overview 5
UNIT 2
Decentralised Planning Process 20
UNIT 3
Models in Decentralized Planning 36
UNIT 4
Fiscal Decentralisation-A Global Overview 54
UNIT 5
Fiscal Decentralisation in India: An Overview 71
Ahmedabad
Prof. Kumar B. Das

Prof. Preet Rustagi
Prof. G. Palanithurai Prof. P. P. Balan
Gandhigram Rural Institute (Units 1&2) Centre For Research in Industrial Development
(Content Editor)
Mr. P. .Shukla
E-Block, Saket, New Delhi (Unit 3) Mr. Praveer Shukla (Language Editor)
Dr. G. Uma Prof. Nehal A Farooquee, IGNOU
IGNOU, New Delhi (Unit 4)
Prof. B.K. Pattanaik
PRODUCTION TEAM
March, 2019
ISBN: 978-93-88980-32-6
BLOCK 3 DECENTRALIZED PLANNING
AND DEVELOPMENT
Decentralization and decentralized planning is a worldwide phenomenon in recent
years. According to Hanumantha Rao, decentralization through the involvement
of local level representative’s institutions in the formulation of planning for
development as well as their implementation is being advocated in the interest
of efficient utilization of resources and for ensuring more equitable sharing of
benefits from development. Decentralized planning is a strategy suggested over
a period of time to prepare perspective development plan from the lowest unit of
governance and administration with an objective of meeting the felt needs of all
sections and all regions of a country with vast variations in terms of socio
economic conditions and wider cultural diversity.
Unit 1, Decentralized Planning: An Overview, focuses on building our

understanding on the meaning and concepts of decentralized planning, people’s
participation in the local self governance in development. This unit is designed
to make us understand the context, the objectives, the goals, the reasons for
involving stakeholders (people) in the process of planning and the approaches
adopted in decentralized planning. It also explains why there is need for adopting
decentralized planning and explains the role of the stakeholders in the process of
decentralized bottom up process.
Unit 2, Decentralized Planning Process, describes the steps in decentralized

planning, general principles to be followed and steps to be taken and followed in
the preparation of a perspective participatory decentralized planning from below.
Unit 3, Models in Decentralized Planning, discusses the suitability various

available models in decentralized planning. The three models described in this
unit are the Kerala model of district planning; the BRGF and NREGA model of
district planning and the C-DAP model of district planning.
Unit 4, Fiscal Decentralization: A Global Overview discusses the world wide

fiscal decentralisation situation, their differences and similarities and its
significance in todays context. It also brings out the broad policy framework
which has been adopted by different countries. It also analyses the structural
adjustments, and the world wide open economy, which is the basis for policy
similarities all over the world. Due to the opening of market economy, the sub
national governments (municipalities) cannot restrict the movements of goods
and services as well as it cannot control the labour and capital, and so this situation
changes the fiscal policy of sub national government is well depicted here.
Unit 5, Fiscal Decentralization in India: An Overview, describes the devolution

of functions, functionaries and funds from the Central Government to the
provincial and local government in India, as a step for the effectiveness of
decentralisation. It also analyses, how the customarily decentralisation is termed
as delegation of decision making power to the lower levels of governments. It is
an established fact now that the decentralisation improves accessibility, promotes
responsibility and accountability and effectiveness of the government. Dispersal
of financial responsibility is an important component of decentralisation, how
the devolution of funds to the local governments closer to the people believed to
promote faster development both in rural as well urban areas in India.
Decentralized Planning and
Development
4
Decentralised Planning: An
UNIT 1 DECENTRALISED PLANNING: AN Overview
OVERVIEW
Structure
1.1 Introduction
1.2 Meaning and Concept
1.3 Principles of Decentralised Planning
1.4 Meaning of Popular Participation
1.5 Goals of Decentralised Planning
1.6 Actions Needed for Decentralised Planning
1.7 Ways of Practicing Decentralised Planning
1.8 Let Us Sum Up
1.9 Keywords
1.1 INTRODUCTION
Multilevel planning, planning from below, decentralised planning, peoples
planning, participatory planning, district level planning, integrated district
planning and planning at the grassroots are being used interchangeably by the
practitioners and policy makers. Broadly speaking they are one and the same and
they are not new to India. The moment the centralized planning was initiated,
decentralised planning was also thought of from the first five year plan period
itself. The whole discussion emanated from the arguments initiated by Mahatma
Gandhi on Panchayati Raj. He is the author of decentralisation and bottom up
approach of planning and development. He was responsible for a major debate
on Panchayati Raj in Indian National Congress during the freedom struggle which
ultimately extended to constituent assembly first and planning commission
subsequently. Methodology, approach strategy, institutional mechanism may vary
from period to period. The basic objectives and broader meaning are the same.
But the new exercise started in many of the states under the new dispensation
‘decentralisation’ is due to the creation of ‘District Planning Committee’
constitutionally in each and every district in India. It is to be remembered here
that the planning commission at the centre and the planning boards at the states
are not the creations of the constitution of India. In order to make it clear to
every one that it is a constitutional mandate to prepare plan below from the
lowest unit of governance and administration namely gram panchayat or town
panchayat. District Planning Committee is created in the constitution of India.
This unit will make you to understand the context, the objectives, the goals, the
reasons for involving stakeholders (people) in the process of planning and the
approaches adopted in decentralised planning.
5
Decentralized Planning and Objectives
Development
After going through this unit, you should be able to:
• explain the meaning of decentralized planning
• describe the principles of decentralized planning
• judge the need for decentralized participatory multi level planning
• discuss the role of the stakeholders (people more particularly the poor)
participation in the process of decentralised planning
• and discuss the ways of practicing decentralized planning
1.2 DECENTRALIZED PLANNING: MEANING

AND CONCEPT
Decentralised planning is a strategy suggested over a period of time to prepare
perspective development plan from the lowest unit of governance and
administration with an objective of meeting the felt needs of all sections and all
regions of a country with vast variations in terms of socio economic conditions
and wider cultural diversity. Decentralization and decentralized planning is a
worldwide phenomenon in recent years. According to Hanumantha Rao,
decentralization through the involvement of local level representatives institutions
in the formulation of planning for development as well as their implementation
is being advocated in the interest of efficient utilization of resources and for
ensuring more equitable sharing of benefits from development. As opined by
Arvind Kumar, decentralization is referred to as a process of sharing of powers
by the central ruling groups with other groups, each having authority within the
specific area or the state. Though it had been discussed, debated and argued and
justifications were given, from the first five year plan period onwards, real impetus
was given throughout the country only after incorporating a provision in article
243ZD in the Constitution of India. The debate was also on among the academics
and policy makers for sometime whether the planning unit can be created for
decentralised planning activities either at block level or at district level. Now it
is created at the district level constitutionally and it is recognized as a mandatory
process by which people have to be involved in the preparation of plan from the
village panchayat constitutionally.
1.2.1 Historical Background

Even before the dawn of independence, micro level planning or decentralised
planning was thought of and discussed after the publication of a document
“District Development Scheme: Economic progress by Forced Marches” in 1939
by M.Visvesvaraya. It was the first attempt made in this country to evolve
methodology for decentralised planning. In his attempt Visvesvaraya chalked
out an action programme for the economic development of the rural areas. His
aim was to engage people to ensure security to the people for food, clothing
recreation, amusement and to work for their skills. To achieve the above he
suggested a few steps namely, a) people to work systematically and scientifically
to increase production in close cooperation with the community; b) conducting
a survey to assess the economic conditions of the people and identify the problems
and suggest avocation which gives profit; c) every district should have institutional
structure to promote such a kind of development activities; d) spread elementary
6
education among adults to create informed citizenry and thereby efficiency, Decentralised Planning: An
Overview
improvement and prosperity could be achieved. To perform the above he
suggested creation of a council called District Economic Council, a plan, budget
and schedule of activities. This was the first visualization of decentralized
planning in India before achieving independence.
The first two five year plan documents had unequivocally and emphatically
argued for decentralised planning but they did not put into practice as the two
plan documents had not spelt out the needed mechanism to prepare decentralised
plan. The third Five Year Plan though took some initiatives to prepare district
and block plans, in some of the states, they were not integrated in to the state
plan. Only in the fourth Five Year Plan guidelines have been evolved for the
preparation of district plan. Based on the guidelines several states have prepared
their district plans but they could not integrate them with the annual plan of the
states barring Maharashtra, Gujarat and Karnataka. The Fifth Five Year Plan
talked much about block level planning. In this regard a working group was
constituted in the central planning commission to suggest ways and modalities
for planning from below. Based on the guidelines issued by the Planning
Commission some of the states have prepared block plans with the help of private
agencies. During this period another land mark event took place for strengthening
of Panchayati Raj. A committee on Panchayati Raj popularly called Ashok Mehta
Committee was constituted to review the progress of Panchayati Raj Institutions.
The committee submitted its report in the year 1978. The committee also
recommended that unit for planning should be at the district level.
Sixth plan document also reiterates the importance of local level planning. For
the first time in planning, recognition was accorded to reliable, updated, timely,
Scientific data for micro level planning. Thus data generation at the micro level
gained importance. It also stressed the need of strengthening Panchayati Raj
Institutions and of involving people in the process of implementation of
development programmes. During the same period, a working group was set up
in planning commission on district planning and the same submitted its report in
the year 1984. The working group provided a detailed guideline and methodology
for the preparation of plan at the district level. This working group unequivocally
reiterated the need of such a plan at the district level. The Seventh Five Year Plan
also reiterates the need of decentralised district plan as recommended by the
working group of the commission. It is also recommended that the decentralised
planning has to move from district to block. The Eighth Five Year Plan emphasized
the need and relevance of the decentralised planning along with peoples
participation through peoples institution. Ninth Five Year Plan document made
it as an objective to promote and develop peoples participation in planning through
democratic institution like Panchayati Raj Institutions. The district development
plans will have to be prepared through the institutions of the District Planning
Committee which is the creation of the Indian Constitution. 243ZD of the
constitution enables for creation of District Planning Committee. Yet much
progress was not achieved. Tenth and Eleventh Five Year Plans are pushing the
concept of decentralised planning through a centralized drive. Thus decentralised
planning was much discussed and debated subject over a period of time but less
practiced at the ground. It is to be registered here that Kerala is a model the
whole country for pushing decentralised planning through its powerful campaign
approach.
7
Decentralized Planning and Decentralised Planning: Chronology of Events and Committee Reports
Development
S. No. Year Item Ideas and Concepts

1. First Plan Community To break up the planning exercise
1951-56 Development into national, state, district, block
Blocks and local community levels
2. Second Plan District Drawing up of village plans and

1956-61 Development popular participation in planning
Councils through the process of
democratic decentralisation
3. 1957 Balwant Raj Mehta Village, Block, District

Committee Panchayat institutions established
4. 1967 Administrative Resources to be given / local

Reforms variations accommodated,
Commission purposeful plan for area
5. 1969 Planning Formulated Guidelines; detailed

Commission the concept of the district plan
and methodology of drawing up
such a plan in the framework of
annual plans, medium – terms
plans and perspective plans
6. 1978 Prof. M.L. Dantwala Block level planning to form link

between village and district level
planning
7. 1983-84 CSS/Reserve Bank Strengthen district plan / district

of India credit plan
8. 1984 Hanumantha Rao Decentralisation of Functions,

Committee powers, finances; setting up of
district planning bodies and
district planning cells
9. 1985 GVK Rao Administrative arrangements for

Committee rural development; district
panchayat to manage all
development programmes
Source: Report of the Expert Group; Planning at the Grassroots Level: An Action
8
Programme for the 11th Five Year Plan Decentralised Planning: An
Overview
One has to understand why decentralised planning is brought to practice
constitutionally. What are all the merits we find in decentralised planning have
to be explained. Before coming to the merits of decentralised planning we have
to understand the demerits of the centralized planning. Though ‘decentralised
planning’ as a concept is in discussion from the dawn of independence, we practice
in India is centralized planning.
In the centralized planning process macro targets for socio- economic

development had been fixed periodically and strategies and programmes had
been evolved and implemented and yet unmet needs are increased, inequality
increased, regional imbalance has grown, gap between the people and governance
is increased and peoples kill and knowledge are not utilized properly and
profitably. To overcome all those problems decentralisation is through off. One
has to understand the advantages and merits of decentralised planning.
1.2.3 Institutional involvement in Decentralized Planning

In this context in India 73rd and 74th Amendments to the Constitution were
passed and provided opportunity for the people to participate in the process of
preparing micro plan from the villages to the District level. The institutions at
the grassroots are created with a provision to include women and the other
deprived sections. Thus the plan has to be prepared from the lowest unit of
governance to highest level. It is explained through an organ gram below:
Governance Units involved in Planning
National Planning Commission
State Planning Commission/Boards
District Planning Committee
District Panchayats Municipal Corporations
Block Panchayats Municipality
Gram Panchayats Town Panchayats
9
Development
1.2.4 Merits of Decentralised Planning
Decentralized planning enjoys strategic advantages over that of centralized
planning. According to Rondinell(1983) true decentralization could reduce
bureaucratic red-tape, reduce delays, overcome administrations indifferences
towards their clientele; improve quality of service, act as effective channels of
communication between national government and local communities, promote
greater participation of people in planning and decisionmaking. Some of the
merits of decentralized planning are discussed below:
1) Spatial level specific requirements and needs of the people will be met
through the decentralised planning;
2) Efficiently resources will be utilized and wastages could be reduced and
thereby the gap between the supply and demand can be narrowed down;
3) Greater sustainability can be achieved through the decentralised planning;
4) Decentralised planning is cost effective as solutions are found out locally
with the involvement of the stakeholders;
5) Elite capture of the programmes will be eliminated;
6) Corruption in Rural Development and Poverty Alleviation programmes
can be reduced;
7) Poor can emerge from livelihood to achieve economic development;
8) Poor can build vision for their development;
9) Resources and skills available locally will be utilized profitably for the
advantage of the stakeholders;
10) Natural resources will be protected preserved and nurtured;
11) People capacity will be enhanced;
12) Possibility for matching the needs of the people and schemes of the
governments;
13) People’s felt need will be met;
14) It will bridge the gap between people and bureaucracy and thereby
government is brought closer to the people;
15) Regional imbalance will be reduced;
16) People’s talents will emerge and they will be utilized for community
development;
17) Productivity will be increased;
18) Development will be made people centric;
19) Greater mobilization of resources internally;
20) Partnership will be achieved between the people and development agencies.
All the above are the advantages and merits of the decentralized planning. They
are drawn from the limited experience of decentralized planning prepared in
different places. From the above one could visualize the potentials of decentralized
planning. But to realize the potentials of decentralized planning lot of efforts are
needed from the state governments and local bodies and more particularly the
civil society. It could be possible when movement is built up from below for
10
mobilizing the people for participation in the development process. According Decentralised Planning: An
Overview
to Narayana (2000), the success of decentralized planning depends on following
factors: (i) the degrees of willingness of political leaders and bureaucracies to
support decentralization and transfer responsibilities; (ii) degree of dominant
behavior, attitudes and culture conducive to decentralized decision making and
administration mechanism; (iii) proper designing of policies and programmes;
and (iv) adequacies of financial, human and physical resources.
After reading and understanding the concept of decentralized planning, now

attempt the question given in check your progress-1.
1) Evaluate the merits of decentralised planning

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1.3 PRINCIPLES OF DECENTRALIZED

PLANNING
There are certain principles which are imperative for the success of decentralized
planning. They are: a, principle of functional clarity; b, principle of financial
availability and autonomy; c, principle of decentralized administration; d,
principle of public participation; and e, principle of integration.
1.3.1 Principle of Functional Clarity

Decentralised planning would be effective only when all the institutions and
organizations involved in planning process are clear about their roles and
responsibilities. Planning process involves multiplicity of institutions and they
are to work with each other and enable each other. It is possible in the government
sector only when adequate clarity is given to the role every institution has to
play. It not only involves government but also civil society and other agencies.
Having trained in narrow specialization and compartmentalization bringing
synergy among the institutions is not so easy. There should not be any conflict or
overlapping among the institutions and organizations and they should be mutually
helpful and harmonious. Precision and clarity are needed for all involved in the
preparation of plan.
1.3.2 Principle of Financial Availability and Autonomy

Institution which are having earmarked responsibilities should have adequate
resources and autonomy to spend the resources to discharge their responsibilities.
Activities which are earmarked as per the plan document to the units should
11
Decentralized Planning and have financial autonomy to spend the resources on earmarked activities. At every
Development
level untied funds and autonomy to spend the money are imperative for the
preparation of implementation of decentralised and participatory planning.
1.3.3 Principle of Decentralised Administration

To perform the decentralized function, adequate administrative powers have to
be devolved to achieve efficiency. Many of the occasions even for a small scheme
to be implemented at a lower level all nightly gritty will be worked out at the
point where the schemes are evolved and resources are allocated. When the
conditions are different at the ground, they could not implement properly and as
a result one will find wastage of money and another is corruption. Hence no
rules can be laid down at the higher level for operation at a lower level. Rules
can be evolved at the appropriate level for operation of project and activities. In
such a way administrative flexibility should be given to different units of
governance.
1.3.4 Principle of Public Participation

For achieving success and efficiency in decentralised planning public participation
is an imperative. Even this public participation has to be achieved through the
process of empowerment as the marginalized and deprived sections could be
involved in decision making. The public participation should not be a mobilized
participation but an empowerment participation. Normally in the mobilized
participation the participation will raise voice. But it is not their voice. It is a
voice of somebody who mobilized them. In empowered participation, the
individuals at their will participate and reflect their voice. Problems of the poor,
excluded and marginalized could be reflected only through empowered
participation.
1.3.5 Principle of integration

Hallmark of decentralised planning lies in integrating and harmonizing the plan
documents of different sectors and units at all levels. It requires appropriate
framework and skill to integrate the plans from the lowest level. To make the
plan document operation able only through the process of harmonizing and
synthesizing the plan documents. Village level plans are integrated at the blocks
and block plans are to be integrated with District plans. While integrating plans
of different units both urban and rural sectoral plans of different units will be
harmonized with district plan.
After reading and understanding the principles of decentralized planning, now

1) Explain the basic principles of decentralised planning

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12 ......................................................................................................................
1.4 MEANING OF POPULAR PARTICIPATION Overview
The whole exercise of decentralised planning has to be done only through the
participation of people and more particularly the poor. Here it is necessary to
understand the meaning of popular participation. Popular participation in the
development process first noticed in the developed societies as they had high
literacy rate, increased democratic institutions from the top to bottom and the
increased spread of communication. Popularly it has been described that modern
societies are participatory and traditional societies are non participatory. Because
it was a well established truth and fact that in the developed countries more
number of people involved in decision making process whereas in the developing
countries only elites involved in decision making process. But the concept and
practice have been changed in the Third World Countries after 1990’s. The concept
‘Popular Participation’ gained currency in the academic circle and literature
towards the end of 1960s and 1970s. It is in response to a dominant top-down,
blue print development paradigm, arguments emerged for the importance of a
development process which began with the needs and knowledge of the people
themselves. The seed for the new thinking on participation was sown by Paulo
Freire through the book ‘Pedagogy of the oppressed” projecting an argument
that development process is not a gift received from outside but is a process of
transformation gained through critical reflection and action by the people
themselves. Paulau’s approach was picked up and shared by not only development
activists, new generation academics but also the national leaders. They argued
that knowledge and skill of the people have to be used for the development of
the community. The demand for popular participation was strengthened by popular
movements in the south. Thus popular participation was seen as a process through
which those who had been excluded from the decision making process affecting
their lives asserted their demands for inclusion. It is defined as ‘the organized
efforts to increase control over resources and regulatory institutions on the part
of groups and movements hitherto excluded from such control.
The above definition and explanation are about challenging the existing order in
decision making power. But in the 1980’s arguments had been slowly changed
in the development discourse and practice and popular participation was
considered as a form of involvement by the beneficiaries who could help large
development actors better achieve their goals. The conventional argument for
participation is that with the active participation of the beneficiaries or
stakeholders projects would be better targeted and made more appropriate to
needs of the local population, ownership would be built, resource contributed,
and programmes would become more sustainable over time. Though space is
created for peoples knowledge and involvement in development planning and
implementation, this beneficiary approach still maintained.
During the 1990s with the mainstreaming of participation in large scale

development programmes terms like the ‘excluded’ or ‘beneficiary’ began to
give way in mainstream development discourse to use neutral terms as
‘stakeholders’. Thus the World Bank has defined the concept participation is a
process through which stakeholders influence and share control over development
initiatives and the decisions and resources which affect them. Subsequently the
same concept ‘Participation’ is being perceived deliberately not as an opportunity
to be beneficiaries but as a right of the citizens. A renewed emphasis has been
13
Decentralized Planning and added to include the so far marginalized groups in the process of development
Development
and governance. Many aid agencies have made it clear that it is enabling people
to realize their rights to participate in, and access information relating to, the
decision making processes which affect their lives. But it has some pre-requisites.
They are:
a) the presence of democratic institutions which have got the representation
for the poor;
b) the institutions should have the inclusive character based on values of
equality and non-discrimination
c) the institutions should have accountability mechanism to ensure and promote
rights.
In the same line of argument UNDP report in the year 2000 argues that the
fulfillment of human rights requires democracy that is inclusive in character and
nature. When the participation is conceived as a right, the argument moves from
rights of beneficiaries and rights of stakeholders to rights of citizens. It is more
of political ideas stems from the argument that citizens have not only rights they
have responsibilities also. Participation of poor and marginalized as citizen has
several problems and challenges in the societies where inequality and
discriminations, and patriarchy are high.
1.4.1 Advantages of Participatory Plans

1) Participatory planning gives ownership to the stakeholders and hence the
project or development initiative is taken off the ground immediately.
2) It provides the needed exact information about the problems and issues
from the stakeholders with the active participation of them, for the planners.
3) It makes the stakeholders to accept the change willingly to transform
themselves and transform the community and society at large.
4) It reduces the cost as it uses local manpower with local skill and local
knowledge and most often unused resources. Hence it is cost effective.
5) It reduces the time also as the stakeholders involve consciously in the whole
exercise of development programme and completion of the programme
and project will be quick. Because stakeholders are interested in seeing the
results and implications.
6) It increases efficiency and effectiveness. Because the stakeholders have the
perception that they are going to get benefits out of the programme, people
want to maximize the benefits and hence they want to maximize the
efficiency.
7) It envisages a self mentioning mechanism which reduces the cost.
Stakeholders are getting benefits and hence monitoring is integral and
continuous. It is the most efficient way of monitoring the progress and
process of the project.
8) It not only achieves the target outcome but also educates the people. Thus
participatory planning is an educative process. It contributes to human
resource development.
14
1.5 GOALS OF DECENTRALIZED PLANNING Overview
Decentralised participatory planning has got some fundamentals and they are
popularly called as goals. The goals are the referral points and lens to look at the
whole process of decentralised participatory micro plans in the backdrop. They
are; a. economic development b. social justice, c. welfare d. environmental
protection e. coordination f. peoples involvement.
1.5.1 Economic Development

The plan should be developed in such a way that it has to achieve economic
development by increasing the production in agriculture, land reforms, small
irrigation system, animal husbandry, dairy and poultry and fisheries. Economic
development is the key in this process. To achieve economic development, the
whole process should rely on peoples knowledge, skill and integrated use of
appropriate technologies.
1.5.2 Social Justice

The benefits of economic development should reach the various categories of
the community, particularly, it should reach the poor and the socially weaker and
marginalized sections. Further, the plans should facilitate increased income by
providing employment opportunities to the socially disadvantaged and the
marginalized. At every level components for women and Dalits could be integrated
into the plan or sub-plans could be created for Dalits and women.
1.5.3 Welfare
The plan should incorporate schemes for providing infrastructural facilities like
road, water supply, housing, street lights, waste disposal, and also social welfare
schemes like education, welfare of women, children and cultural activities. In
the neo liberal framework, state moves away from the basic welfare activities
and hence in order to overcome that deficiency, welfare activities should be made
integral of the decentralised plan.
1.5.4 Environmental Protection

The plans should have the component to protect nature and environment. It should
not cause damage to the eco-system, flora and fauna. It should have devices to
manage natural resources. It should aim for creating green, clean and thus eco-
friendly villages.
1.5.5 Coordination
The plan should ensure the total development and growth of the entire unit by
incorporating all the development plans of the concerned area, plans of the
respective departments, schemes for individual benefits, schemes that are
implemented by the government departments, schemes that are implemented by
banks, NGOs and other development agencies.
1.5.6 People’s Involvement

The plan should be on the basis of collection of data, confirmation of the same,
assessing the needs, evolving activities and prioritizing the same with the active
involvement of the citizens. At every level people have to be involved and people
15
Decentralized Planning and should own the plan. For this purpose people have to be mobilized and more
Development
particularly the poor and other marginalized sections. When they are mobilized
for participation, it should reflect opinion and voice of the poor and not the
voice of others. Hence mobilization of people should on empowerment mode
and not as beneficiaries. This process of mobilization is different from that of
political mobilization. Often political mobilization reflects the voice of the
mobilizers not the mobilized.
1.6 ACTIONS AND WAYS NEEDED FOR

DECENTRALISED PLANNING
Following are the imperative activities needed to initiate vibrant decentralised
planning:
a) There should be an organic linkage among the three layers of planning
units namely District Planning Committee, State Planning Commission and
Central Planning Commission.
b) Planning units must be created at different levels of governance down below
the District and District Planning Committee is only the integrating and
consolidating unit.
c) Data generation mechanism, data updation and data validation process have
to be done at all levels up to the level of the District Administration.
d) Capacity Building for the Elected Representatives and the officials involved
in planning has to be conducted periodically.
e) Enabling information flow from the lowest unit to the highest unit of
planning and vise versa has to be done.
f) Planning machinery has to be created at every level where planning executive
is done.
g) Decentralised planning module has to be prepared and it is to be followed
at every level.
1.7 WAYS OF PRACTISING DECENTRALISED

PLANNING
For effective decentralised participatory planning civil society organizations,
retired government officials and academic institutions can support the Gram
Panchayats and other layers of local governance for the preparation of participatory
micro plan in the following ways:
• To generate data from the field
• To conduct PRA exercise for prioritizing the activities based on the needs
of the people.
• To draft the plan document
• To organize development seminar at the grassroots level
• To Mobilise people for participation in plan preparation
• To train Local Body Leaders and Functionaries in Decentralised plan
preparation
16
• To implement the plan activities Decentralised Planning: An
Overview
• To monitor the implementation of the planned activities
• To evaluate the plan activities through social audit.
1.8 LET US SUM UP

In this unit we have discussed the meaning and importance of the concepts
‘decentralised planning’ and ‘popular participation’ in the new concept of
globalisation of economy and decentralisation of powers. What are the principles,
goals and merits of decentralised planning, have also been seen in this unit. So
also the importance and advantages of participatory planning have been discussed.
We have seen totally the general background and principles of decentralised
participatory planning.
1.9 KEYWORDS
Decentralisation: Decentralisation refers to transfer of authority to plan, make
decision and manage public functions from the national level to any organization
or agency at the sub-national level. This would mean assigning both powers and
responsibilities for activities.
Decentralised Planning: It is a strategy to prepare perspective development

plan with an objective of meeting the felt needs of all sections and all regions of
a country with vast variations in terms of socio economic conditions and wider
cultural diversity.
Participation : Participation is a process through which stakeholders influence

and share control over development initiatives decisions and resources which
affect them.
Participatory Decentralised Planning : It is a process of involving stakeholders

in the preparation, design, implementation and evaluation of the plan inclusive
of programmes and battery of schemes. The initiatives start from below and they
are integrated with National plan.

Institute of Rural Management (2008.), The State of Panchayats: 2007 – 2008
An Independent Assessment Vol. I, Ministry of Panchayati Raj, New Delhi.
Mahipal, H. (2008), Decentralised Planning and Development in India, Mittal
Mathur, Hari Mohan (1986), Administering Development in the Third World:
Constraints and Choices, Sage Publications, New Delhi.
Ministry of Panchayati Raj (2007), Planning for the Sixth Schedule Areas: Report
of the Expert Committee, Government of India, New Delhi.
Ministry of Panchayati Raj (2006.), Planning at the Grassroots Level: An Action
Programme for the Eleventh Five Year Plan, Government of India, New Delhi.
17
Decentralized Planning and Ministry of Panchayati Raj (2006), The State of the Panchayats: A Mid-Term
Development
Review and Appraisal, Government of India, New Delhi.
Planning Commission (2009), Manual for Integrated District Planning,
Government of India, New Delhi.
Ranjitha Mohanty and Rajesh Tandon (eds) (2006), Participatory Citizenship:
Identity, Exclusion Inclusion, Sage Publications, New Delhi.
State Planning Commission (1997), Report of the Working Group on
Decentralised Planning and Panchayati Raj, Government of Tamil Nadu,
Chennai.
Sundaram, K.V. (1997), Multi Level Planning: Concept Publishing Company,
New Delhi

ANSWERS
1) Evaluate the merits of decentralised planning
Ans.Some of the merits of decentralized planning are discussed below:
21. Spatial level specific requirements and needs of the people will be
met through the decentralised planning;
22. Efficiently resources will be utilized and wastages could be reduced
and thereby the gap between the supply and demand can be narrowed
down;
23. Greater sustainability can be achieved through the decentralised
planning;
24. Decentralised planning is cost effective as solutions are found out
locally with the involvement of the stakeholders;
25. Elite capture of the programmes will be eliminated;
26. Corruption in Rural Development and Poverty Alleviation programmes
can be reduced;
27. Poor can emerge from livelihood to achieve economic development;
28. Poor can build vision for their development;
29. Resources and skills available locally will be utilized profitably for
the advantage of the stakeholders;
30. Natural resources will be protected preserved and nurtured;
31. People capacity will be enhanced;
32. Possibility for matching the needs of the people and schemes of the
governments;
33. People’s felt need will be met;
34. It will bridge the gap between people and bureaucracy and thereby
government is brought closer to the people;
18
35. Regional imbalance will be reduced; Decentralised Planning: An
Overview
36. People’s talents will emerge and they will be utilized for community
development;
37. Productivity will be increased;
38. Development will be made people centric;
39. Greater mobilization of resources internally;
40. Partnership will be achieved between the people and development
agencies.
1) Explain the basic principles of decentralised planning
Ans. Some of the basic principles are outlined below:
1) Principle of Functional Clarity
2) Principle of Financial Availability and Autonomy
3) Principle of Decentralised Administration
4) Principle of Public Participation
5) Principle of integration
19
Development UNIT 2 DECENTRALISED PLANNING
PROCESS
Structure
2.1 Introduction
2.2 Decentralized Planning Process: Meaning and Importance
2.3 Guidelines in Decentralized Planning Process
2.4 Software Available for Decentralised Planning
2.5 Steps in Preparation of Decentralised District Plan
2.6 Steps in Preparation of a Village Panchayat Plan
2.7 Steps to be Followed in the Preparation of a Urban Local Bodies Plan
2.8 Consolidation of District Plan
2.9 Let Us Sum Up
2.1 INTRODUCTION
One cannot find adequate literature on decentralised planning in India. Although,
the discussions and deliberations were on even before the days of independence
and subsequently after independence in all Five Year Plans, sporadically and
sparingly it was put into practice at the ground and of course there were isolated
experiments. Hence, inadequate literature on this area. After passing of the 73rd
and the 74th Amendments to the constitution of India, decentralised planning
gained much currency among the policy makers and administrators. Kerala
emerged as model for decentralised planning and the experiences of Kerala were
given in a separate unit. In the previous unit we have seen the need for
decentralised planning contextually and the importance of peoples participation
in the planning process at the grassroots and the approaches of decentralized
planning. In this unit of principles and steps in decentralised planning you will
understand the general principles to be followed and steps to be taken and followed
in the preparation of a perspective participatory decentralised planning from
below.
After reading this unit, you should be able to:
• Explain the meaning and importance of decentralized planning and process
involved
• Discuss various guidelines of decentralized planning
• Explain steps in decentralized district planning
• Describe steps to be followed in the preparation of village plan, urban local
bodies plan and integrated district plan
20
Decentralised Planning
2.2 DECENTRALIZED PLANNING PROCESS: Process
MEANING AND IMPORTANCE
Decentralised participatory district planning involves people of all sections
through an appropriate devise mechanism and strategy in gathering relevant data,
analyzing it to set priorities, matching the set priorities with available budget
and schemes and programmes of the state and central government. It involves in
defining process of implementation and the setting and monitoring of targets.
This plan comprises what different planning units within a district can achieve
by envisioning collectively, operating their targets, exercising their skills and
leveraging their initiative. In this planning process each planning unit namely
panchayats at gram level, intermediate and district levels, municipalities of
different categories, line departments and parastatals would prepare a plan for
implementation of each of their functions and responsibilities after consultations
with people. While collaborating and coordinating with each other, they would
not trespass into each other’s area of responsibility, unless there are definite
gains to be had and with mutual consent. The final plan would result from a
buckling together of these unit plans through a consultative process of
consolidation. It is the design of government of India.
Box 1
Planning Unit
A planning unit is a body that is entrusted with responsibility of planning.
In a logically organized system of local government the panchayats and
municipalities are easily recognizable as distinct, self contained planning
units. In India the position, status, responsibilities, powers, functions, finance,
functionaries of Local Bodies vary from state to state. Planning exercises
are being done not only by the local bodies but also government line
departments and community organizations by making use of the schemes
and programmes of the state and central governments. In the same way the
donor agencies operate projects through NGOs and they also plan for
activities. Keeping all variations the district planning committee has to
accommodate all without trespassing the others domain.
Source: Planning Commission, Government of India, Manual for Integrated District: Planning
New Delhi: Planning Commission, 2008.
India is at a critical and unique juncture where participatory decentralised planning

is felt imperative and it receives much attention from all segments of the society.
It gains currency at all levels. To operationalise this exercise more scientifically
and in scale and mobilize people of all segments of the society, the innovations
in information and communication technology help is inevitable and essential.
In every sense the time is ripe for preparation of participatory decentralised plan
from below. Local institutions, needed technology, man power and resources
are available now along with the guidelines for preparation of plan from every
local institution and to consolidate the same at the district level through the
District Planning Committee. By making use of the opportunity, people’s felt
needs could be fulfilled and better outcome and results could be achieved in
terms of human development indicators. In the whole process, people will be
mobilized for development tasks and level of awareness and capacity of the
21
Decentralized Planning and people could be enhanced. Participatory district planning is multi dimensional
Development
in nature and hence it calls for adoption of sequence of steps to achieve meaningful
targets.
2.3 GUIDELINES IN DECENTRALIZED

PLANNING PROCESS
i) The decentralized planning process follows certain guidelines which
are delineated below:
There are certain key principles to be followed in the whole process of
planning at the grass root level. They are non negotiable principles. A new
mind set is needed for every one who is involved in the process of
decentralized planning. Following are the principles;
i) Ensuring the participation of stakeholders
ii) Bridging regional disparities
iii) Keeping ecology and environment in the backdrop
iv) strengthening the planning machinery at all levels
v) Building the capacity of the functionaries
vi) Transforming a vertical planning process in to a horizontal process
vii) Using the ICT effectively for participatory planning
viii) Global vision and local action
ix) Proper assessment of resources
x) Law of subsidiary
xi) Downward accountability
ii) Ensuring the participation of stakeholders

The prime objective of this plan is to make the unreached, neglected and
marginalized to participate in the process of planning. The poor do not
find time to take up responsibilities and they concentrate more on their
livelihood. Hence, it is necessary to mobilize the marginalized for
development action. By involving them in the process of decision making
and planning confidence is instilled in the minds of the poor that they are
also being considered as a factor to reckon with and by doing so the whole
process is made inclusive. It requires new mind set and special skill for the
leaders and the functionaries of the local bodies to bring them to the new
exercise for inclusion.
iii) Bridging Regional Disparities

With in a district, wide variations are noticed among the regions. While
seeing the blocks from the perspective of human development indicators,
one will find the wide variations among the blocks within the district and
variations among the districts within a state and among the states within a
country. Removing such variations within the district should be one of the
22 key principles and perspectives of decentralized participatory district
planning. The district planning committee has to look into the disparities Decentralised Planning
Process
among the regions, while micro plan is developed. Allocation has to be
ensured according to the needs of the region.
iv) Keeping Ecology, Environment in the Backdrop

You should know that we are living in a context where ecology and
environment are in peril. Global warming and climate change will affect
food production and disturb the eco system. Against this back ground,
when decentralised rural planning is initiated, it should be done in the
backdrop of ecology and environment. Natural resource conservation,
protection and enrichment are key elements to be considered for
decentralised participatory planning. While planning is initiated in the
context of globalization liberalization and privatization, activities have to
be chalked out on the available new opportunities with the aim of achieving
economic development and prosperity. While doing so care has to be taken
to protect ecology, biodiversity and environment. Optimum utilization of
natural resources has to be kept in mind.
v) Strengthening the planning machinery at all levels

Since planning at grassroots has been made mandatory, planning units at
every level right from Gram Panchayat to District Panchayat, and Town
Panchayat to municipal corporation have to be created and strengthened.
Planning, monitoring and evaluation are to be done continuously and for
which the units have to be equipped with staff, needed technology and
resource support. Unless otherwise planning at grassroots will be adhoc
and irregular and not people centric participatory planning.
vi) Building Capacity of the Functionaries

Capacity building is an imperative need for effective functioning of the
planning units. The key functionaries both elected representatives and
officials have to be trained and oriented periodically in the new process
and principles of evolving decentralised micro plan for poverty alleviation
and development of the poor and marginalized sections. For collection and
analysis of data and prioritization of activities at grassroots, they need
perspective, understanding and vision. In order to make the functionaries
capable, capacity building exercise is an imperative need.
vii) Transforming a vertical planning into horizontal process

Planning exercises have to done both horizontally and vertically. So far
the line departments, mission units, donor projects and local bodies act in
their own orbit without bringing any synergy. Now the weaknesses of the
process is realized and synergy is the missing link and the need for such a
link is felt and hence institutions working in a given geographical space
have to work together keeping their autonomy intact. This is crucial for the
success of the micro plan. By doing this synergization, every unit gets
advantage. In a village, gram panchayat health committee is functioning,
health mission unit is also working, a small NGO getting funds from a
donor agency is also working in the same area and health department
personnel is also functioning. All are working on the health issues. But
23
Decentralized Planning and they are all working not together but separately and they are accountable to
Development
their departments. But now in the planning exercise, all the units are bought
together and work together by keeping their autonomy intact and towards
acting the target and goals. So the vertical processes have to be transformed
into a horizontal process.
viii) Using ICT effectively for participatory planning

At present information is power. People can be empowered through
information. Information are essential need for planning. Data generation,
validation, maintenance, updation should be done in a scientific way and
for which the new technologies are needed. Every planning unit be it a
Gram Panchayat or a small town panchayat, they are to be connected with
newer technologies for transfer of information, generation of data and
analysis of data. ICT can be used effectively not only to collect, collate,
transfer and analysis of data but also for updation, maintenance and
validation of the same. Moreover information dissemination has to be done
in an effective way for wider mobilization of people for development
activities and for which it helps immensely. Moreover it helps to maintain
transparency.
ix) Global Vision and Local Action

We have millennium development goals. They are to be achieved. Countries
have to work for it through their policies, programmes and resources
allocation. But activities have to be carried out only in the society. So work
has to be done only at the grassroots. Macro issues have be tackled through
micro actions. Be it literacy, poverty reduction, malnutrition or anemia or
HIV, they are to be tackled massively by the involvement of people locally.
If macro issues are broken and disaggregated it is easily manageable at the
micro level. If each gram panchayat is empowered functionally and
financially to tackle issues of health and education many of the MDG targets
can be achieved at ease. Vibrant local actions are necessary. The beneficiary
syndrome has to be changed and it is the look out of the people to participate
in the process of development and act on the issues.
x) Proper Assessment of Resources

Local units are traditionally spending units. Now it has to be changed.
Available local resources have to be assessed and mobilized. Natural
resources, human resources, and material resources available within the
jurisdiction of the local governance units have to be assessed and accordingly
decisions have to be taken for resource mobilization. The whole planning
exercise will yield result only it resource planning is done properly. Fund
flow mechanism has to be tracked and assess the resources available at the
unit. Resources identification and tracking is the basic works in the process
of planning at the grassroots.
xi) Law of Subsidiarity

Every unit is autonomous and hence things that could be done at the lowest
level could be allowed to be done at the lowest level. It should not be
replicated or duplicated at the next level. From that perspective, planning
exercise has to be carried out at the grassroots. We find overlapping of
24
activities among the institutions and they are to be avoided. By doing so Decentralised Planning
Process
resources and time can be saved. Over a period of time capacity, skill and
capability will be increased.
xii) Downward Accountability

In a traditional sense, in our governance and administration, accountability
is built upwards. Every unit is accountable to the higher level unit and in
the same way every official is accountable to his / her superior official in
terms of his / her roles and responsibilities. Now it has been reversed and
accountability is built towards the stakeholders. They are empowered to
evaluate the activities through the process of social audit. All units working
at the ground are autonomous in their functional jurisdiction. Hence the
units can work together without trespassing into the jurisdiction of the other.
So far we have seen the basic principles that one has to follow while
preparing the micro plan. Now we will move on to the next aspect the
available software for preparation of micro plan.
After reading and understanding the concept of decentralized planning process,

now attempt the question given in check your progress-1.
1) Bring out the basic principles in decentralised participatory planning

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2.4 SOFTWARE AVAILABLE FOR

DECENTRALISED PLANNING
For planning exercise data generation, data validation and data analysis tools are
so important and imperative needs. For continuous exercises, data storage,
retrieval, validation and updating modern tools are imperative as it will reduce
the wastage of time, resources and manpower. Hence using modern technology
is unavoidable and necessary also.
For the preparation of decentralised participatory planning, government and other

agencies have developed software and many of them are in use and they are
listed hereunder:
i) “Plan plus” is software developed by the NIC for the Ministry of Panchayati
Raj Government of India to simplify and strengthen the decentralised
planning process. It is well developed interactive local language software.
It is suitable software for both the local bodies and line departments of the
government.
25
Decentralized Planning and ii) “National Panchayat Portal” http://panchayat.gov.in. This is also
Development
developed by the NIC for the Ministry of Panchayati Raj, Government of
India. It is a dynamic website for all panchayats. It provides data pertaining
to panchayats. The whole responsibility of managing the content can be
undertaken by the panchayats themselves.
iii) “Gram ++” is a software developed by the IIT of Mumbai and it enables
integration of numerical data on to a global information system for spatial
display.
iv) “Riddhi Soft”. This software is developed by a private company and it

provides a cost effective and versatile GIS platform for local planning.
v) “DISNIC”. It is also a software initiative aimed at collecting extensive

data on local resources in a detailed village wise data base.
vi) “NIC’sGIS”. The NIC has an in house GIS system that accesses data from
remote sensing sources and provides detailed topography, soil; land use
and water cover details which is ideal for watershed and agricultural
planning.
vii) “PRIASOFT”: It is a yet another software developed by the NIC taking

into account the accounting formats developed by the CAG for panchayats
accounts. It can be customized for meeting the requirements of state specific
systems of accounting for panchayats.
viii) “CDAC”: It is software specifically designed to provide Indian language

interfaces that can be adopted and interlinked with other software for easy
multi language use.
ix) “Performance Tracking System”: It is developed by the centre for Good

Governance, Hyderabad for easy monitoring of implementation targets on
a user friendly MIS platform. It is useful for monitoring plan implementation
and it permits feedback to flow back in to the planning process.
x) “District Information and Planning System”. It is developed by a private

vendor and it integrates GIS applications with data and permits resource
allocation to preferences indicated by the people.
xi) “NRDMS”: The Natural Resources Data Management System is a three

decade old initiative of the Ministry of Science and Technology to provide
natural resource data gathered from remote sensing source for local planning.
The data is available on GIS maps in districts covered by the system.
2.5 STEPS IN PREPARATION OF

DECENTRALISED DISTRICT PLAN
i) Stock Taking: Preparation of a district stock taking report for presentation
in the district planning committee is the first step. This becomes the basis
for vision building exercise for the whole district. Where is the district in
terms of poverty, employment, health, education, productivity and where it
wants to reach have to be understood. Once the existing reality is perceived
26 and understood and from where target can be fixed and strategy can be
worked out. To build vision for the district, the existing conditions have to Decentralised Planning
Process
be projected through scientific data. So this is the first exercise in the
preparation of the decentralized district plan.
ii) SWOT Analysis: In the vision building exercise a SWOT analysis has to
be made. Based on the SWOT analysis vision for development has to be
developed in the backdrop of the national and state goals. The distance
between the current status and the goals fixed can be assessed and
accordingly strategy could be worked out to bridge the gap between the
two.
iii) Vision Building: The District Planning Committee based on the existing
conditions in human development indicators and the report of the SWOT
analysis visioning exercise has to be done for the whole district. The vision
should indicate the target to be reached and the approach to be followed
based on the National and State Governments vision and approaches. MDG
should be in the backdrop of the visioning exercise.
iv) Vision Dissemination: Communicating the district vision to different

planning units functioning down below the district planning committee is
the prime task of the District Planning Committee and making them to fix
their vision and target to realize the vision of the district is the next task.
Each and every unit of planning should have clarity on the vision of the
district. To achieve the vision each and every unit has to fix their target in
the form of vision.
v) Finance Tracking: Simultaneously communicating the resources available

for development action to different units is crucial for planning. It is not a
mere document. It is set of implement able targets and reachable goals.
Hence available resources have to be communicated to different agencies.
There are multiplicities of agencies involved in development action. The
total amount spent by various agencies in a specific geographical location
should be communicated to the difficult units of planning.
vi) Enabling the Planning Units: Enabling the planning units at different
levels namely gram panchayat level to District panchayat, town panchayats
to municipal corporations, village mission units to district mission, field
office at the grassroots to district office of line departments to collect data
pertinent to the needs of the people based on the participation of
stakeholders.
vii) Preparing the Plan: At every unit the collected data have to be analysed,
prioritization has to be done through a wider consultation by conducting
development seminar and match the needs with the available resources
come through various agencies.
viii) Plan Integration: Integrating the plan documents of the different units of
planning and creating a district plan document. At a gram panchayat level
plan of the field office of the line departments, mission units of the scheme
mission and donor agencies have to be integrated. In the same way block
panchayat plan has to be created through the process of integration. Likewise
integration of plans has to be done both for rural and urban planning units
at different levels.
27
Decentralized Planning and ix) Monitoring and Evaluation: Establishment of monitoring systems and
Development
social audit mechanisms to ensure effective implementation of the district
plan is the final step in the process of decentralised district planning. So far
we have seen the steps to be followed for the preparation of district plan.
After reading and understanding the various steps in preparation of

decentralized planning, now attempt the question given in check your
progress-2.
Q1) Explain the steps to be followed in preparing the decentralised district plan
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2.6 STEPS IN PREPARATION OF A VILLAGE

PANCHAYAT PLAN
The village panchayat planning process comprises the following steps:
i) Vision Building Exercise: Having got the district vision, the village
panchayat has to take stock of the existing conditions of the people in terms
of human development indicators. Where is the Gram Panchayat in terms
of poverty reduction, education, health, agriculture productivity,
employment and so on has to be captured. On each goal the panchayat has
to fix the target based on the district vision. Thus the vision of the panchayat
has to be stated.
ii) Gram Sabha Discussion: Vision of the panchayat has to be discussed with
the people in the Gram Sabha. People have to be mobilized and sensitized
to think of the development issues. Through a process of discussion in the
Gram Sabha the major issues to be tackled will be listed and they are the
targets.
iii) Data Generation and Data Validation: Relevant data have to be generated
from the community and borrowed from the line departments and other
agencies from their data bank for the purpose of preparation of village
plan. The collected data have to be scrutinized and validated.
iv) Need Assessment and Prioritization: Through participatory Rural
Appraisal method needs have to be assessed and the prioritization has to be
done. Major issues have to be tackled will be identified and fixed as targets.
The whole exercise has to be done through organizing a development
28 seminar in each Gram Panchayat.
v) Matching Exercise: The Gram Panchayat has to identify the available Decentralised Planning
Process
resources through various institutions and match them with the needs of
the people.
vi) Gap Filling Exercises: After matching the available resources and the felt
needs of the people, the gaps have to be filled up where the role of the
panchayat is crucial. Schemes and programmes can be easily linked to
achieve target. The gap has to be filled up with the own resources or to
borrow the same.
vii) Draft Plan Approval: After completing the above steps, the plan document
has to be placed before the Gram Sabha for discussion and approval. Once
it is approved it is a legal plan document of the Gram Panchayat.
Preparation of a Gram Panchayat Plan
Vision Building Exercise at Gram Panchayat Level
Vision Building and Mobilisation at Gram Sabha

/ Ward Sabha Level
Data Generation and Data Validationl
Need Assessment and Prioritization through PRA

Exercises at Ward Level
Matching the Needs with Existing schemes and

programmes of the Central and State
Governments
Gap filling and Final Approval at Gram Sabha
Once village plans are approved, the approved village plans are consolidated at
the block level. The approved plans of the blocks are integrated and consolidated
at the district panchayat level. They are shown in the form of an organogram
below:
29
30
Development
District Panchayat Plan Integration
Block Panchayat Plan Block Panchayat Plan

Block Panchayat Plan Integration
Integration
Integration
Consolidation and Integration of Rural Plans
Village Village Village

Village Village Village Village Village Village
Village Village Panchayat Panchayat Panchayat
Panchayat Panchayat Panchayat Panchayat Panchayat Panchayat
Panchayat Panchayat Plan Plan Plan
Plan Plan Plan Plan Plan Plan
Plan Plan
Decentralised Planning
2.7 STEPS TO BE FOLLOWED IN THE Process
PREPARATION OF A URBAN LOCAL
BODIES PLAN
Unlike the rural planning process, urban planning exercise has to be done
separately for each unit whether it is a town panchayat, or a small municipality
or a big municipal corporation. They are all separate entities and they are not
linked with each other functionally. The plan prepared by these institutions will
be integrated separately at the district level. They are consolidated only at the
district level in the District Planning Committee. Whereas in the case of rural
local bodies they are integrated and consolidated every next level as they are in
a continuum. But urban local bodies are functioning separately. Following are
the steps to be followed in plan preparation in urban local bodies:
i) Vision Building: Vision building exercise has to be done in every Town

Panchayat, every municipality and in every corporation based on the district
vision document. For the vision building exercise yet another document is
necessary. The existing conditions of the people in terms of the development
indicators. By doing this exercise every Town Panchayat, Municipality and
City Corporation should have a vision document.
ii) Mobilization of People: Vision building exercise has to be done in every

ward and every area with the active participation of the people of all sections.
Poor people’s presence and voices are important. The vision of the institution
and the district has to be shared with the people through an exercise. It is a
process by which people have to be mobilized and sensitized on the issues
of development.
iii) Plan Preparation: Data generation, data validation and data analysis have
to be done for the whole unit. For prioritization, development seminar has
to be conducted at the institutional level (Town panchayat, Municipality
and corporation). Once development seminar is over, the needs have to be
matched with the schemes and programme of the central and state
governments and with available local resources.
iv) Gap Filling Exercise: It has to be done by the institution itself and finally
the plan document has to be approved by the competent body in the
respective institutions and all the plan documents will be consolidated and
integrated at the district planning committee level.
The above process is explained through an organogram.
Preparation of an Urban Plan
Vision Building Exercise at Town Panchayat / Municipality /

Municipal Corporation
Vision Building exercise and mobilization of people for plan

preparation at the area / ward level
31
Development
Data Generation and Data Validation at the unit (Town Panchayat,

Municipality, Corporation)
Development Seminar and Prioritization of the works and activities
Matching the needs with schemes and programmes
Gap filling and final approval of the plan document
Urban local bodies whether it is town panchayat, or a municipality, or a city

corporation, they are independent of each other. There is no linkage among
these units. So the plans of these local bodies are consolidated only at the district
planning committee. The rural plans consolidated through the district panchayat
and the plans of the town panchayat, municipality and city corporation will be
consolidated and integrated only at the District Planning Committee.
2.8 CONSOLIDATION OF DISTRICT PLAN

The District Planning Committee has to integrate the rural plan document from
the District Panchayat and the urban plan documents from town panchayat,
municipalities and corporations. Once they are integrated and they are to be
formally approved by the District planning committee after the development
seminar conducted at the district level. It is explained in the following organogram:
Consolidation
District Planning Committee
District Panchayat Plan Corporation Plan
Block Panchayat Plan

Municipal Plan
32 Village Panchayat Plan Town Panchayat Plan

Here it is to be noted that the mission units, line department units and civil Decentralised Planning
Process
society initiatives are to be integrated in the respective level of the planning
units wherever the units are functioning.
After reading and understanding the steps to be followed in the preparation of a

urban local bodies plan, now attempt the question given in check your
progress-3.
1) How a urban local body for instance a municipality prepares a participatory

decentralised perspective development plan?
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2.9 LET US SUM UP

In this unit we have discussed the meaning and importance of decentralised
planning and the process involved in it. What are the guidelines of decentralised
planning, have also been seen in this unit. So also the steps to be followed in
decentralised district planning, village plan and urban local bodies plan have
been discussed.

Hooja, Rakesh and Sunil Dutt (Eds.), 2008, Development Administration and
Multi Level Planning, Indian Institute of Public Administration, New Delhi.
Mahipal, 2008, Decentralised Planning and Development in India, Mittal

Ministry of Panchayati Raj, 2006, Planning at the Grassroots Level An Action

Programme for the Eleventh Five Year Plan: Government of India, New Delhi.
Palanithurai, G., M.A. Thirunavukkarasu and G. Uma, 2008, Planning at

Grassroots: Governance Participation in Peoples’ Action, Concept Publishing
Company, New Delhi.
Planning Commission, 2001, Report of the working Group on Decentralised

Planning and Panchayati Raj Institutions for the 10th Five Year Plan 2002 –
2007, Government of India, , New Delhi.
33
Decentralized Planning and Planning Commission, 1978, Report of the Working Group on Block Level
Development
Planning ,Government of India, (M.L. Dantwala Committee) , New Delhi.
Planning Commission, 2008, Manual for Integral District Planning, Government

of India, , New Delhi
State Planning Commission, 1997, Report of the Working Group on Decentralised

Planning and Panchayati Raj, Government of Tamil Nadu, Chennai.
Sundaram, K.V. 1997, Decentralized Multi level planning, Concept Publishing

Company, New Delhi.

ANSWERS
Q1) Bring out the basic principles in decentralised participatory planning.
Ans. The basic principles in decentralised participatory planning are:

i) Ensuring the participation of stakeholders
ii) Bridging regional disparities
iii) Keeping ecology and environment in the backdrop
iv) strengthening the planning machinery at all levels
v) Building the capacity of the functionaries
vi) Transforming a vertical planning process in to a horizontal process
vii) Using the ICT effectively for participatory planning
viii) Global vision and local action
ix) Proper assessment of resources
x) Law of subsidiary
xi) Downward accountability
1) Explain the steps to be followed in preparing the decentralised district plan.
Ans. the steps to be followed in preparing the decentralised district plan are:
i) Stock Taking
ii) SWOT Analysis
iii) Vision Building
iv) Vision Dissemination Finance Tracking
v) Enabling the Planning Units
vi) Preparing the Plan
vii) Plan Integration
viii) Monitoring and Evaluation:
34
Check Your Progress 3 Decentralised Planning
Process
1) How a urban local body for instance a municipality prepares a participatory
decentralised perspective development plan?
Ans. Following are the steps to be followed in plan preparation in urban local
bodies:
i) Vision Building: Vision building exercise has to be done in every Town

Panchayat, every municipality and in every corporation based on the district
vision document. For the vision building exercise yet another document is
necessary. The existing conditions of the people in terms of the development
indicators. By doing this exercise every Town Panchayat, Municipality and
City Corporation should have a vision document.
ii) Mobilization of People: Vision building exercise has to be done in every

ward and every area with the active participation of the people of all sections.
Poor people’s presence and voices are important. The vision of the institution
and the district has to be shared with the people through an exercise. It is a
process by which people have to be mobilized and sensitized on the issues
of development.
iii) Plan Preparation: Data generation, data validation and data analysis have
to be done for the whole unit. For prioritization, development seminar has
to be conducted at the institutional level (Town panchayat, Municipality
and corporation). Once development seminar is over, the needs have to be
matched with the schemes and programme of the central and state
governments and with available local resources.
iv) Gap Filling Exercise: It has to be done by the institution itself and finally
the plan document has to be approved by the competent body in the
respective institutions and all the plan documents will be consolidated and
integrated at the district planning committee level.
35
Development UNIT 3 MODELS IN DECENTRALIZED
PLANNING
Structure
3.1 Introduction
3.2 kerala Model of Decentralized Planning
3.3 Backward Region Grant Fund (BRGF)
3.4 Nrega Model of District Planning
3.5 Comprehensive District Agricultural Plan- C-DAP
3.6 Let Us Sum Up
3.1 INTRODUCTION
The 73rd and 74th amendment of the constitution gave constitutional status to
local self governments and provided a new platform for decentralized planning.
Participatory planning in the process of development implies participation of
people at all stages such as planning, decision making, monitoring and evaluation.
In the post amendment scenario there are state level variations in the functioning
of panchayati raj institutions. But states like Kerala took the lead in initiating
greater decentralization by devolving functions, functionaries and finances to
the local self governments. The Kerala experience described in the unit focuses
on decentralized planning and the involvement of the people at every stages of
plan formulation.
The constitution also makes it clear that the responsibility of the district planning
committee is to prepare a draft development plan for the district as a whole. The
object of the district planning is to arrive an integrated, participatory coordinated
idea of the development of a district. Envisioning district plan, the unit high
lights the methodology adopted for the preparation of district plan under BRGF,
C-DAP and NREGA. This unit discuss three decentralized planning, these are:
i) Kerala Model
ii) BRGF Model
iii) NREGA Model
iv) C-DAP Model
After reading this, unit, you would be able to
i) Explain Kerala model of district planning.

ii) Describe BRGF and NREGA model of district planning.
iii) Discuss C-DAP model of district planning.
36
Models in Decentralized
3.2 KERALA MODEL OF DECENTRALIZED Planning
PLANNING
Government of Kerala thought of democratic decentralization immediately after
the State was formed in 1956. The Administrative Reforms Committee appointed
by the Government made detailed recommendations in 1958. Despite enactment
of laws, nothing significant in decentralized development was done for over
three decades. As in the case of the rest of India with the formation of a large
number of State-level Boards/Corporations/Authorities for almost all areas, even
the existing village and urban local bodies were weakened over the years since
many of their functions were taken over by such para statals. There was a short-
lived attempt to form District Councils in 1990, following a comprehensive Report
on Decentralization. However, with the passage of the 73rd and 74th amendments
to the Constitution of India in 1992, Kerala carried out pioneering reforms and
embarked a path of Comprehensive decentralization since 1995.
Kerala has provided a model for consolidation of the institutional framework of

panchayat raj system through strengthening the democratic decentralization
process. This was the result of a strong political will and commitment of the
state political system by devolving 30-40 percentage of state plan funds directly
to the local bodies. The traditional concept of decentralization as a tool for political
reform has been transformed and a new concept of social mobilization for
empowering local governments was successfully practiced in Kerala as part of
democratic decentralization. In order to strengthen the PRIs as grass root level
democratic institutions, it was realized that community participation in local
planning could be used as a catalyst for action.
To operationalize decentralization, Kerala chose the path of participatory local

level planning as the entry point. This succeeded to a considerable extent in
harnessing public action in favour of decentralization. In order to push the system
and force the process a campaign approach was followed for decentralized
planning- known as the ‘People’s Planning Campaign”. This campaign created a
powerful demand factor for decentralization to be guided along the right path.
To a large degree the campaign succeeded in setting the agenda for
decentralization.
3.2.1 Steps in Decentralized Planning

Various steps followed during the process of decentralized planning of Kerala
are as follows:
i) Needs identification: Through a meeting of Grama Sabha/Ward Sabha,

i.e., the ward or the electoral constituency of a village panchayat or
municipality, the felt needs of the community are identified. There is a
period of environment creation to mobilize maximum participation in grama
sabha/ward sabha. Statistics reveal that about 10-12% of the rural population
has participated. The meetings are held in a semi-structured manner with
plenary sessions and sub group sessions dealing with specific developmental
issues. The decisions are minuted and forwarded to the local governments.
Each meeting is chaired by the elected member and has an official as its co-
ordinator.
37
Decentralized Planning and ii) Situation analysis: Based on the demands emanating from the first special
Development
grama sabha/ward sabha and based on developmental data, both primary
and secondary, exhaustive development reports have been prepared and
printed in the case of every local government in the State. These reports
describe the status in each sector of development with reference to available
data, analyses the problems and point out the directions for further
development. This is a one time exercise for a plan period and reports were
revised before tenth and eleventh plans.
iii) Strategy setting: Based on the grama sabha/ward sabha feed back and the
development report, a one day seminar is held at the local government
level in which participation of experts, elected members, representatives
nominated by the sabhas, practitioners from among the public is ensured.
The development seminars suggest the board priorities and general strategies
of developmental projects to be taken for a particular year.
iv) Projectisation: The ideas thrown up by the above three stages are translated
in the form of projects by working groups at the local government level.
For each local government there are about eight working groups dealing
with different sectors of development. Each working group is headed by an
elected member and is contended by the concerned government official.
The vice chairman of working group is normally a non-government expert
in the sector. The projects are prepared in the suggested format outlining
the objectives, describing the benefits, explaining the funding and detailing
the mode of execution and phasing of the project.
v) Plan finalization: From among the projects, based on the allocation

communicated, the concerned local government finalizes its plan for the
year and this plan is submitted to the district planning committees (DPCs)
through the technical advisory committees. The panchayat is free to take
up any project, irrespective of its cost, subject of course to the resources
actually available and within the sectoral limits.
vi) Plan vetting: The technical advisory committees at the block or the district
level consisting of official and non-official experts vet the projects for their
technical viability and conformity with the mandatory government
guidelines on planning and costing and forward them to the DPC. They
cannot change priorities or projects; they can only ask for rectification.
vii) Plan approval: The DPC gives the formal approval to the plans after which
the local government can start implementation. It is to be noted that the
DPC also cannot change the priority of a local government. It can only
ensure that government guidelines are followed. Administrative approval
for implementation is given project-wise by the local government. Every
local government has unlimited powers of administrative sanctions subject
only to the limits of its financial resources. Decentralization planning cycle
of Kerala is given in fig.1
38
Fig-1 Decentralized Planning Cycle in Kerala Models in Decentralized
Planning
3.2.2 Salient features of Decentralized Planning of Kerala

i) Transparency and Accountability
Since substantial responsibilities have been passed on to local governments’
accountability systems acquire special importance. In harmony with local
government functioning and participatory budgeting, in addition to
traditional systems of checks and balances, new forms of downward
accountability to the people has also been structured in. The key
accountability systems are given below:
ii) Committee System of decision making.

All decisions of local governments are to be taken by it through consensus
or by voting. Power is not concentrated in individuals.
iii) Right to Information.

The right to information is a democratic right which ensures accessibility
to information and this is one of the best indicators of democratization of a
society. This is one of the offshoots of the process of democratic
decentralization in Kerala. The powerlessness of the people and the
mystification of administration by the bureaucracy never deliver the fruits
of democratic decentralization. The provision of right to information
empowers the people to have access to any information on development
decisions and expenditure of public funds. The opportunities of public
scrutiny lead to greater accountability and responsiveness. It is ensured
that all documents of the panchayat should be made available to the public
for scrutiny, note taking and copying. Penal provisions have also been
39
Decentralized Planning and included in the act itself for unreasonable denial of this important right of
Development
the citizens.
iv) Participatory Budgeting.

The evolution of a budget particularly for development works is through
the comprehensive stage planning process which allows space for citizen
interaction and intervention, expert involvement and final budgeting before
approval by elected bodies. This provides adequate protection against
arbitrary decision making.
v) Due process in selection of beneficiaries.

This is ensured through the following steps:
a) Clear enunciation of eligibility criteria and prioritization criteria at the
time of scheme formulation.
b) Assigning weightages to each prioritization criterion.
c) Calling of application in writing.
d) Enquiry process into applications with awarding of marks to each
criterion.
e) Reading out of marks in grama sabha/ward sabha.
f) Opportunity to each applicant to see all records including application
forms of others.
vi) Technical Sanction.
The process of giving technical sanction has been taken out of the
departmental technical hierarchy. Technical committees have been
constituted at the block/municipal/corporation/district levels consisting of
engineering experts drawn from governmental, academic and
nongovernmental sources. This gives some protection against inflation of
estimates and dilution of technical standards.
vii) Audit System.

The traditional audit system through local fund audit department has been
strengthened with the technical support of the accountant general. A special
concurrent audit system has been designed, manned by surplus staff from
the panchayat and urban affairs departments headed by an officer of the
Indian audit and accounts service. This system called performance audit
acts as an online corrective mechanism helping local governments to put
their systems in proper place. Performance- audit is conducted twice a year
in all the local governments. Since the minimum grant-in-aid to a grama
panchayat is Rs.25 lakhs, the accountant general also carries out grant-in-
aid audit including village panchayats. A technical audit team has been put
in place at the state level consisting of senior engineers mostly from outside
government who are selected for their integrity. This team looks into
complaints regarding execution of public works.
viii) Social Audit.

Social audit can be viewed as an instrument of control exercised by the
community to oversee the functions of the local governments and the manner
40
of spending public money. Grama sabhas are used as an effective system Models in Decentralized
Planning
for social auditing. In the system of social auditing the performance and
the utilization of financial resources can be assessed by the citizens’
representatives and it can be reported to Grama Sabha meetings and in case
of lapses suggestions for corrective measures can be given to the LSGIs.
The experience in some of the Panchayats proves that it is a powerful
instrument of accountability and community control over LSGIs by the
people.
ix) Citizens’ Charter.

In order to ensure an assured standard of service to the people and to lead
the LSGIs towards performance betterment, a provision has been included
in the Kerala panchayat raj act for citizens’ charter. Accordingly, every
panchayat shall proclaim a citizens charter stating the standards of service
which it guarantees to every citizen. The operational value of this provision
is that this will enhance the degree of transparency and is the best guarantee
against corruption and nepotism. The local governments can very well assess
the performance of different transferred institutions with this instrument.
This will also be helpful to increase the accountability of officials to the
local government and the public.
x) Ombudsman.
The Ombudsman is a cost-effective mechanism to check malfeasance in
local governments in the discharge of administrative and development
functions. Even the government can be assign investigation to the
ombudsman on the complaints received against LSGIs. The ombudsman
system goes beyond the judicial process and ensures grievance redressal in
a speedy manner and suggests improvement in the system. Ombudsman
will focus on the process of administration continuously and will be
empowered to check wrong doing at the initial stage (Report of the
committee on decentralization of powers, 1997). Originally there was a
seven-member team and in 2001 the act was amended and the strength of
ombudsman was reduced to one. It has been proving that ombudsman is
one of the speedy and cost-effective and authoritative grievance redressal
mechanisms and is effective to ensure responsible administration at the
local level.
xi) Appellate Tribunals.

This is another instrument useful for the people to curb the arbitrary decision
of local governments. The citizens can make appeal against the decisions
of the local governments in exercising their regulatory powers, like issue
of license, permit and certificate. The appellate tribunal is a judicial official
in the rank of district judge. The appellate tribunal hears the appeals against
the decisions of the LSGIs and also revision petitions. The citizens
themselves can appear before the tribunal to ensure informality and reduce
cost both for the Panchayat and the citizens.
After reading and understanding the Kerala model of decentralized planning,

now attempt the question given in check your progress-1.
41
Decentralized Planning and Check your Progress- 1
Development
1) Write three stages (what you think most important) of participatory planning
in Kerala?
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2) What is Ombudsman? Describe its functions.
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3.3 BACKWARD REGION GRANT FUND (BRGF)

The mid term appraisal of Ninth Five Year Plan drew attention to the wide
disparities among states and among districts within the state. Pockets of high
poverty, low growth, lower human development and poor governance were
identified as the key areas slowing down the growth and development of the
country. In this backdrop, the Tenth Plan marked a shift in approach with reference
to the earlier plans. The new approach signaled the need for complete change in
the ethos of governance and scheme implementation with efficiency and flexibility
as key words. In this context, the Rashtriya Sam Vikas Yojana (RSVY) was
introduced in 147 districts in the country. Later, in 2004-05, the National Common
Minimum Programme (NCMP) spoke of the creation of a Backward Region
Grant Fund (BRGF) to redress the growing regional imbalances among as well
as within the states. The basic ethos of the programme was to carry forward the
participatory approach and to provide more and more say to Panchayats in
deciding what they actually need for their development. The adopted method led
to a paradigm shift of the prevailing development approach, viz., top down
approach to bottom to top approach. To ensure that the approach is followed in
its true sprit, it was made mandatory to constitute district planning committee
(DPC), and it was also made prerequisite to get the approval of the plan culminated
from the Panchayats and consolidated by the DPC. To avoid duplication, it was
also ensured that while preparing the district plan works undertaken under
different centrally sponsored schemes should be taken into account. The existing
structural and institutional deficiencies in RSVY, which covers 147 districts,
have been subsumed into the BRGF programme. The fund provides financial
resources for supplementing and converging existing developmental inflows into
250 identified districts, so as to:
42
a) Bridge critical gaps in local infrastructure and other development Models in Decentralized
Planning
requirements that are not being adequately met through existing inflows,
b) Strengthen, to this end Panchayat and Municipality level governance
with more appropriate capacity building, to facilitate participatory
planning, decision making, implementation and monitoring, to reflect
local felt needs,
c) Provide professional support to local bodies for planning,
implementation and monitoring their plans,
d) Improve the performance and delivery of critical functions assigned
to Panchayats, and counter possible efficiency and equity losses on
account of inadequate local capacity,
This plan is intended to multiple programmes that are in the operation in the
district concerned and therefore address backwardness through a combination
of resources that flow to the district. Programmes identified for implementation
under the fund are selected through people’s participation, particularly through
gram and ward sabhas in the rural areas and areas sabhas and ward committees
in the urban areas. Participatory plans are to be prepared in each panchayat and
municipality, which would take into account at the existing fund flows.
The participatory plans prepared by each Panchayat and Municipality would be
consolidated into the district plan by the District Planning Committee (Article
243 ZD of the Constitution). This would reflect all the financial resources available
in the districts, and ensure their optimal use, without delay, diversion, duplication
and leakage. It is anticipated that the initiative on the Backward Region Grant
Fund would mitigate regional imbalances, contribute towards poverty alleviation
in backward districts, and promote accountable and responsive Panchayats and
Municipalities. Each Panchayat or Municipality within the backward district
concerned is the unit for planning under RGF. The implementation of the
works should be by the Panchayats and Municipalities at each level, in
accordance with the respective activity mapping exercise undertaken. In case the
works are outside the domain of the panchayats and municipalities, the DPC can
decide the implementing department/agency and get the works executed through
them with clear powers of monitoring and supervision with the panchayats
concerned.
BRGF consists of two funding windows i.e. capacity building fund and united
grant for development activities. The allocation of those funds to the local bodies
is to be guided by transparence norms of the DPC. Clear guidelines on social
audit by gram or ward sabhas in rural areas and area sabhas and ward committees
in urban areas are issued by states. The gram sabhas authorize the issuance of
utilization certificates of funds allocated for the plans, projects or programmes
of the panchayat. Transparency has to be maintained. So boards shall be
displayed at worksites indicating names of the schemes and the source
from which these are being funded to enable the local people to know about the
schemes. Each Panchayat publically details of all schemes approved as on date
and their expected commencements/completion dates.
Activity: 3
Meet the Pardhan/Chairman of your village panchayat/municipality and
discuss the critical gaps in the development of that area. Propose a list of the
development works. 43
Decentralized Planning and 3.3.1 Steps for Preparing Plans for BRGF
Development
1) All states will be required to constitute DPCs in conformity with the
provisions of Article 243 ZD of the Constitution. As constitutionally
mandated, each tier of the panchayati raj system- gram panchayat, block
and district- and each Municipality shall prepare the five year perspective
plan and annual plans for their respective jurisdiction.
2) Panchayats will prepare these plans through implementation of programmes

selected through people’s participation.
3) These plans will put together resources channelized to these Panchayats

from all resources including:
a) Sectoral and district segments of the state plan,
b) Centrally sponsored schemes, particularly flagship programmes
c) Fund inflows on account of the National Employment Guarantee
programmes,
d) Tied and untied grants from Central and State Finance Commissions
e) Fund flow on account of Bharat Nirman Programme.
4) BRGF funds will be used by the Panchayats for gap filling, to converge
and to add value to other programmmes, which provide much larger
resources to the same districts. The funds can be also be used to plan for
innovative works for which there is no provision under any scheme or
programme.
5) For simplifying and strengthening the planning process software namely

Plan Plus has been designed and developed. It is a very simple with local
language interface that facilitates generation of district plans through
interactive work flows.
After reading and understanding about the backward region grant fund relating
to decentralized planning, now attempt the question given in check your progress-
1) Write three objectives of BRGF.
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
2) Based on the details described in the unit. Write about the transparency
system in BRGF.
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
44
Models in Decentralized
3.4 NREGA MODEL OF DISTRICT PLANNING Planning
The Indian parliament enacted the National Rural Employment Guarantee Act
(NREGA) in 2005 expressing the consensus of the state to use fiscal and legal
instrument to address the challenges of unemployment and poverty. This was
the first time a country had a passed the law of this nature and scale, guaranteeing
livelihood security to rural households. The rationale for such legislation was
based on the need to provide social safety net to rural households as well as to
create assets that rejuvenate the natural resource base of their livelihood.
National Rural Employment Guarantee Act (NREGA) aims at enhancing the

livelihood security of the households in rural area of the country by providing at
least one hundred days of guaranteed wage-employment in every financial year
to every household whose adult members volunteer to do unskilled manual work.
The objective of the Act is to create durable assets and strengthen the livelihood
resource base of the rural poor. Each district has to prepare a shelf of projects
from the list of permissible works such as water conservation, drought proofing
(including plantation and afforestation), irrigation canals including micro and
minor irrigation works, horticulture and land development on lands of schedule
caste and tribe population and land reform beneficiaries, renovation of traditional
water bodies, land developments, flood protection and rural connectivity. The
choice of the work suggested in the act addresses causes of chronic poverty like
drought, deforestation and soil erosion, so that the process of employment
generation is maintained on a sustainable basis.
The salient features of the Act are summarized below:

a) Adult members of a rural household may apply for employment if they are
willing to do unskilled manual work
b) Such a household will have to apply for registration to the local Gram
Panchayat in writing or orally
c) The Gram Panchayat, after due verification, will issue a Job Card to the
household as a whole. The Job Card will bear the photograph of all adult
members of the household willing to work under NREGA. The job card
with photography is free of cost
d) A Job Card-holding household may submit a written application for
employment to the Gram Panchayat, stating the time and duration when
work is sought. The application for work must be for at least fourteen days
of continuous work
e) The Gram Panchayat will issue a dated receipt of the written application
for employment, against which the fifteen-day guarantee to provide
employment operates
f) Employment will be given within 15 days of submitting the application for
work or from the date when work is sought by an employment seeker
g) If employment is not provided within 15 days, a daily unemployment
allowance in cash has to be paid. Liability of payment of Unemployment
Allowance is on the States
h) At least one-third of persons to whom work is allotted have to be women
i) Wages are to be paid according to minimum wages as prescribed under the 45
Decentralized Planning and Minimum Wages Act 1948 for agricultural labourers in the State, unless
Development
the Centre notifies a minimum wage rate which in any case shall not be
less than Rs 60 per day
j) Disbursement of wages has to be done on a weekly basis and not beyond a
fortnight
k) Panchayat Raj Institutions (PRIs) have a principal role in planning and
implementation
l) Each district has to prepare a shelf of projects. The instruments for providing
employment are to be works selection from the list of permissible works.
The shelf of projects has to be prepared on the basis of priority assigned by
the gram sabha. At least 50% of works have to be allotted to gram panchayats
for execution. A ratio 60:40 between wages and materials has to be
maintained. Contractors and use of labour-displacing machinery are
prohibited. It is stipulated that work should ordinarily be provided within a
5 km radius of the village or else extra wages of 10% are payable. Worksite
facilities such as crèche, drinking water and shade have to be provided at
the worksite. Moreover social audit has to be done by the gram sabha or
other agencies entrusted. The state should put in place appropriate grievance
redressal mechanism for ensuring a responsive implementation process.
All accounts and records relating to the Scheme are to be made available to
any person desirous of obtaining a copy of such records on demand and
after paying a specified fee. The convergence of inter-sectoral programmes
with NREGA brings a synergy between different government programmes
and schemes in terms of their planning, process and implementation; creates
conditions for sustainable development; enhances economic opportunities;
strengthens democratic processes; and mitigates the effects of climate
change. The objective of convergence is to optimize public investments
made under existing schemes through suggested linking and steering towards
a common end, thus avoiding duplication. The current areas of convergence
initiatives are water, forests, agriculture and technology.
The district perspective plan for NREGS will have the following features:
i) Village based: with the village as the unit for planning. The perspective
plan shall be prepared through actual survey of every village to facilitate
the Gram Sabha and GP to assess local needs.
ii) Holistic: attempt has to be made to cover all aspects of natural resource
management along with socio-economic infrastructure requirements s as
to identify all critical aspects of development in the local area.
iii) Diagnostic: Need to include a causal analysis of poverty. This will identify
gaps and needs and indicate the nature of interventions required.
iv) Finalize: The works that can be included under the NREGA.
v) Indicate outcome-based strategies.
vi) Indicate methods of measurement of outcomes.
vii) Identify the existing programmes and financial resources and assess the
additional resources required.
The district perspective plan then will enable the adoption of a project approach
46 to works rather than just an activity approach. It will also facilitate an inter-
sectoral approach so that Districts can address certain fundamental causes of Models in Decentralized
Planning
poverty in the area. The Development plan will have three key components.
i) Assessment of labour demand.
ii) Identification of works to meet the estimated labour demand.
iii) Estimated cost of works and wages.
The various steps to be followed in the preparation of NREGS plan are follows:
Step-1: Preparation of Panchayat Plan: A detailed exercise to assess Panchayat

wise total quantum of resource inflow, identification of missing infrastructure,
activities to be taken up with estimated cost and expected employment generation
under all ongoing programmes meant for infrastructure development and
employment generation have to be carried out other five year period on priority
bases as a fist step. Than a village plan will be prepared
Step-2: Preparation of Block Plan: The above Panchayat wise exercise will be
followed by a block wise consolidation of information, in order to give a clear-
cut picture of how any activities will be taken up in the concerned block.
Step-3: District Plan: Finally the information of all the blocks will be
consolidated into one statement which presents the picture of the entire district.
This will give the picture of activities to be taken up under the NREGA during
five year. This is called the district perspective plan for NREGS.
After reading and understanding the NREGA model of district planning, now
1) Write five permissible works under NREGA.
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
2) What is the most important aim of NREGA?

......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
47
Development 3.5 COMPREHENSIVE DISTRICT
AGRICULTURAL PLAN- C-DAP
The National Development Council (NDC) decided to rejuvenate agriculture
during XI plan. It made agriculture growth as an essential element of the strategy
to make growth more inclusive and fixed the growth rate target for this sector at
4 percent per annum. The NDC in its resolution advised State Government to
prepare District Agriculture Development Plan (DADP) that will fully utilize
available resources and will include livestock and fishing, and be integrated with
minor irrigation projects, rural development works and schemes for water
harvesting and conservation.
The Comprehensive District Agricultural Plan (C-DAP) has been defined a

documentation for development of agriculture and allied sectors, both in physical
and financial terms with an objective to achieve continuous and sustainable growth
in agriculture during the Eleventh five year plan period. It is further stated that
this plan will address all the major issues related to the agriculture and allied
sectors, identify and plan for filling gaps, converge various programmes of state
and central government, involve all the agencies with the ultimate objective of
increasing farmer’s income besides increasing agricultural production and
achieving national goal of food security.
Agricultural Planning requires much of technical support from experts in

agriculture and allied sectors. Therefore agriculture planning units at different
levels of local bodies need to be constituted involving a group of experts from
various disciplines relevant to the needs of the area. Such units will be named as
agriculture planning units. Accordingly, district agriculture planning unit (DAPU),
at zilla parishad level should be constituted at the District level. Similar units
should be constituted at the Block/Taluka Panchayat level (BAPU/TAPU) and
Village Panchayat level (VAPU). These units should work inclose contact with
Panchayati Raj Institutions.
Activity: 6
Meet agricultural officer of your locality and discuss agriculture related issues.
Prepare a note on the strategy to overcome the problem.
The planning processes have to go through the following stages:-
Stage I: Formulation of Vision Statement

The vision would primarily be articulated to address three important aspects of
development namely human, infrastructure and production leading to better
productivity and employment. The vision statement, incorporating the envisioned
state of the community through optimum utilisation of the resources should be
clearly detailed in the beginning.
In this stage the aspiration and developmental needs of the districts will be broadly
spelt out keeping a specific timeframe for achievement. This vision prepared at
the district level in consultation with all stakeholders will act as a guide to all
concerned in the preparation of the plan. Vision should be approved by the District
Planning Committee.
48
Stage II: Needs analysis Models in Decentralized
Planning
It is necessary to compile the indices which will tell present the current status of
the district in various spheres of development. All the basic statistics of the district
may be used for working out the indices, like the population density, average
land holding, health coverage etc. These can be compared to the state’s/country’s
averages. Based on SWOT (Strength Weakness Opportunity and Threats) analysis,
the needs and core sectors may be identified to focus on, for further development.
These indices will be made public in consultative meetings with the panchayats
so that development strategies could be decided collectively.
Stage III: Discussion on the Vision

It is important that all the planning units in the district follow the participative
methodology so that a feeling of ownership is created. The vision details should
be given to all the panchayats and they should discuss this in their meeting. The
outcome of these discussions should be given publicity in each village.
Simultaneously, the block level plan coordinators who have been trained at the
district level should provide training to the village/panchayat data enumerators
and planners.
Stage IV: Preparation of Participatory Panchayat Plans

Panchayat/Village level planning will be the most important exercise in the
preparation of C-Dap. Panchayat/village level agriculture planning unit (PAPU/
VAPU) shall ensure the participation of all the sections of the people, specifically
women and the disadvantaged sections of the society.
Stage V: Integration of Village Panchayat Plans into a Block/Taluk Plan-

Intermediate Level
The main activity at Block/ Taluk level is to consolidate the village level plans
prepared by PAPU/VAPU. The Block Development Officer (BDO) coordinates
the compilation and aggregation of panchayat/village level plans at block level.
This plan will also ensure the inclusion of initiatives required for development
at Taluk/Block Level, which are not captured at Panchayat/Village Level. The
Intermediate level should also assist in various of planning at the panchayat/
village level.
Stage VI: Integration of Taluk/Block Plans into a District Plan

At the district level the District Planning Committee has to constitute technical
advisory groups in each sector to analyse the data and coordinate with experts so
as to prepare the plan for each sector. This group will consist of line department
officials, locally available technical experts (either in service or retired), NGO
etc. finally this group will consolidate the plan for the district.
Stage VII: Approval by DPC

The District Planning Committee will have to ensure that in the interest of efficient
use of resources there has to be only one district plan prepared through a common
planning process and not a set of separate plans prepared in accordance with the
guidelines of each programme. The draft plan has to be approved by the DPC.
49
Decentralized Planning and Stage VIII: Submission of District Plan to State Government and Feedback
Development
to the District/Panchayats
Since the district plan will have sector wise components, it is necessary to involve
the line departments at the state level for compilation at state level. The planning
process can also be improved in the subsequent years by comparing with other
districts of the state.
Stage IX: Monitoring

Once the plan is approved and taken for implementation, it will be necessary to
closely monitor the progress. Fort this, quarterly review of the physical and
financial progress is necessary at all levels. The discussions should be made
public for everyone to know the progress.
After reading and understanding the comprehensive district agricultural plan,

now attempt the question given in check your progress- 4.
1) What necessitates the preparation of C-DAP?
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
2) Preparation of the vision document of the district is the basis for C-DAP.
Name the stakeholders to be involved in this activity.
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
3.6 LET US SUM UP

The state of Kerala has devolved finances, functions and functionaries to the
local self institutions (LSGIs) according to the activity mapping of each tier of
panchayat and municipality. This has tremendously enhanced the confidence of
people in local governance. The innovative methodology for participatory
planning helped the LSGIs to mobilize people and make use of the human capital
in local development and public management of local governments. This was a
deliberate attempt to make local governments accessible to people and their
50
informal organizations. The constant support rendered by the state government Models in Decentralized
Planning
to democratic decentralization greatly changed the mindset of bureaucrats and
they were forced to open up new patterns of elected representative- official
interactions. The democratic decentralization process provided space for a large
number of new platforms and this has significantly contributed towards
consolidating the mass base of PRIs and has ushered in a new era in local
governance. Democratic decentralization created a new political culture and an
enabling environment for qualitative participation in Kerala.
Infact, participatory planning is the core of the innovative approach adopted for
the preparation of plan for BRGF and C-DAP. In NREGA projects are to be
prepared on the basis of the priority assigned by gram Sabha. Panchayati raj
institutions in general and the people in particular have a central role in planning
and implementation of various projects under this scheme.

Balan, P.P. and M. Retna Raj, (2006), Decentralised Governance and Poverty
Reduction- Lessons from Kerala, Kila, Kerala.
Ministry of Panchayati Raj, (2007), Backward Region Grant Fund (BRGF)

Programme Guidelines, Government of India, New Delhi.
Ministry of Rural Development, (2008), National rural Employment Act

(NREGA): Two Years 2006-08, Government of India, New Delhi.
Planning Commission, (2007), Comprehensive District Agriculture Plan (C-

DAP), Programme Guidelines, Government of India, New Delhi.
Ranjan, Nilay (Coordinator), (2008), National Rural Employment Guarantee

Act (NREGA)- Design, Process and Impact, UNDP, New Delhi.
Report of the Expert Group, (2006), Planning at the Grassroots Level, Ministry
of Panchayati Raj, New Delhi.
Thomas Issac, T.M, and Richard Franke, (2000), Local Democracy and
Development: People’s Campaign for Decentralized Planning in Kerala,
Leftword Books, New Delhi.
United Nations development Programme, (2002), Decentralization in India:

Challenges and Opportunities, New Delhi.

ANSWERS
1) Write three stages (what you think most important) of participatory planning
in Kerala?
Ans. Three important stages of participatory planning are:
51
Decentralized Planning and a) Need identification by convening the gram Sabha
Development
b) Situation analysis and the preparation of development report
c) Protestation by working groups
2) What is Ombudsman? Describe its functions.
Ans. The functions of Ombudsman are audit Systems:

a) Local fund audit
b) Performance audit
c) Social audit
d) Accounts General’s audit
1) Write three objectives of BRGF.
Ans. The Three objectives of BRGF:
a) Bridge critical gaps in local infrastructure and other development
requirements that are not being adequately met through existing inflows,
b) Strengthen, to this end Panchayat and municipality level governance with
more appropriate capacity building, to facilitate participatory planning,
decision making, implementation and monitoring, to reflect local felt needs,
c) Provide professional support to local bodies for planning, implementation
and monitoring their plans
2) Based on the details described in the unit. Write about the transparency
system in BRGF
Ans. Boards shall be displayed at work sites indicating names of the schemes
and details of the funds. Social audit will be conducted after the completion of
each work
1) Write five permissible works under NREGA.
Ans. Permissible works under NREGA

i) Water Conservation
ii) Drought Proofing (including plantation and afforestation)
iii) Irrigation canals including micro and minor irrigation works
iv) Minor Irrigation, horticulture and land development of lands of SC/ST/
BPL/IAY and Land Reform beneficiaries
v) Renovation of traditional water bodies
2) What is the most important aim of NREGA?
Ans. National Rural Employment Guarantee Act (NREGA) aims at enhancing

the livelihood security of the households in rural area of the country by providing
at least one hundred days of guaranteed wage-employment in every financial
52
year to every household whose adult members volunteer to do unskilled manual Models in Decentralized
Planning
work. The main objective of the Act is to create durable assets and strengthen
the livelihood resource base of the rural poor.
1) What necessitates the preparation of C-DAP?
Ans. The National Development Council (NDC) decided to rejuvenate agriculture

during XI plan. It made agriculture growth as an essential element of the strategy
to make growth more inclusive and fixed the growth rate target for this sector at
4 percent per annum. The NDC in its resolution advised State Government to
prepare District Agriculture Development Plan (DADP) that will fully utilize
available resources and will include livestock and fishing, and be integrated with
minor irrigation projects, rural development works and schemes for water
harvesting and conservation for sustainable development.
2) Preparation of the vision document of the district is the basis for C-DAP.
Name the stakeholders to be involved in this activity.
Ans. Stakeholders of the vision document are Members of Gram Sabha,

Agriculture Plan Units, District, Block and Village level elected representatives
and officials, social actives and NGOs. Preparation of draft District Plan is the
most important activity of DPC. It is expected that at the District Planning
Committee will constitute technical advisory groups in each sector to analyses
the data and coordinate with experts so as to prepare the plan for each sector.
This group consists of line department officials, locally available technical experts
(either in service or retired), NGO etc. finally this group consolidate the plan for
the district. The District Planning Committee will have to ensure that in the
interest of efficient use of resources there has to be only one district plan prepared
through a common planning process and not a set of separate plans prepared in
accordance with the guidelines of each programme. In addition, DPCs vet the
plans of the lower tier of Panchayats and municipality.
53
Development UNIT 4 FISCAL DECENTRALISATION- A
GLOBAL OVERVIEW
Structure
4.1 Introduction
4.2 Fiscal Decentralisation: Exigencies and Dimensions
4.3 Municipal Borrowing
4.4 Fiscal Decentralisation in Developed Countries
4.5 Fiscal Decentralisation in Developing Countries
4.6 Let Us Sum Up
4.1 INTRODUCTION
Financial responsibility is a core component of decentralisation. If local
governments and private organisations are to carry out decentralised functions
effectively, they must have an adequate level of revenues –either raised locally
or transferred from the Central Government– as well as the authority to make
decisions about expenditures. Fiscal decentralisation can take many forms,
including:
a) Self-financing or cost recovery through user charges,
b) Co-financing or co-production arrangements through which the users
participate in providing services and infrastructure through monetary or
labour contributions;
c) Expansion of local revenues through property or sales taxes, or indirect
charges;
d) Intergovernmental transfers that shift general revenues from taxes collected
by the central government to local governments for general or specific uses;
and
e) Authorisation of municipal borrowing and the mobilisation of either national
or local government resources through loan guarantees.
In many developing countries local governments or administrative units possess
the legal authority to impose taxes, but the tax base is so weak and the dependence
on central government subsidies so ingrained that no attempt is made to exercise
that authority.
Developing and transition countries with population over five millions have
adopted some form of transfer of fiscal level from Central to Sub-national
government (local government). Even highly centralised countries like Kingdoms
of Jordan and Morocco have also inherited fiscal decentralisation. As Robert D
Ebel opined, the issues that each decentralising country faces are at the same
time very different and very similar. The differences arise from the diversity in
national economic and demographic structure, institutions, traditions, geography
and access to new technologies. As for instance, while designing local property
tax systems, Middle Eastern policymakers often take into consideration a complex
54
combination of national, colonial and local tribal law. But the concept of markets Fiscal Decentralisation-A
Global Overview
as a basis for land valuation is relatively straightforward. In contrast in (some)
countries property rights are well organised, however, the market concept is yet
to be sufficiently accepted so that it can serve as a guide for wide spread adoption
of add valorem taxation. When we look into the world wide fiscal decentralisation,
differences and similarities are there. But similarities provide broad policy
framework and also it will address the policy options of different countries which
will help us to learn from each others experiences. The structural adjustments
and the world wide open economy is the basis for policy similarities all over the
world. Due to the opening of market economy, the sub national governments
(municipalities) cannot restrict the movements of goods and services as well as
it cannot control the labour and capital. So this situation changes the fiscal policy
of sub national government.
In this Unit, we will learn about different countries (both developing and
developed countries) experience of fiscal decentralisation as case analysis.
After studying this Unit you should be able to:

• Describe the need for fiscal decentralisation;
• Explain the different models of decentralisation with suitable examples;
and
• Analyse the cases of fiscal decentralisation in developed, developing and
transition countries
4.2 FISCAL DECENTRALISATION: EXIGENCIES

AND DIMENSIONS
4.2.1 Exigencies of Fiscal Decentralisation
In the entire world, fiscal decentralisation is associated with issues ranging from
the broad issues of achieving a desired degree of both vertical and horizontal
balance, to more narrow (but not less important) concerns of expenditure impacts
of unfunded mandates imposed by “higher levels of government” and restrictions,
economic and political, and on the choice of local revenue sources. In this regard
it should be noted that western countries that have relatively long traditions of
fiscal decentralisation have much to gain from fiscal decentralisation debate-
and research – that is newly emerging in the transition economy (Hegebus and
Tosics, Peteric). Apart from this reason the following reasons have also likely to
be contributed:
• The reactions from the below to long years of extensive central control.
• The fiscal expediency where the central governments to ease their own
strained finances by reducing transfers and shifting responsibilities down
often with little or more regard to the ability of sub national government to
pay for their new responsibilities.
With the following assumption the fiscal decentralization has emerged:
• The establishment of performing inter governmental system will execute

the economic reforms adopted by the national government.
55
Decentralized Planning and • To strengthen the economic reforms at the local level, developing and
Development
strengthening autonomous local governments is essential and rationalizing
the inter-governmental fiscal relationship is also essential.
• The fiscal reform will bring comprehensive changes thus bringing reforms
is not difficult politically.
4.2.2 Dimensions of Fiscal Decentralisation

There are three basic dimensions for fiscal decentralization.
i) Devolution
ii) De-concentration
iii) Delegation
i) Devolution
Independently established sub national governments are given the responsibility
for delivery of public services. The authority will impose fees and taxes for
those services. The sub national governments have flexibility to select the services
to provide to their citizens. The sub national governments will get some types of
financial support from the national government. The following is an example of
this model:
Box No:4.1 Water supply in Hungary

In Hungary, the law on Local Municipalities Act No.33 of 1990 made the
drinking water supply as the obligatory duty of the municipalities. The law
authorised municipalities to establish municipality institutions or companies
to operate public utility services. The managers of these companies were also
assigned by the municipalities. Furthermore, the law declares that the public
utilities belong to the basic property of the municipalities. The municipalities
had to create a new structure of public utility water service in accordance with
the changed conditions. The most visible change in the Hungarian public utility
water service was the fragmentation of the service provider companies and
their numbers increased from 28-350. The mechanism of the specification of
water and sewage fees also changed fundamentally. The representative body
of the municipalities become the price authority of the municipality owned
water works companies.
Reference: MRI, Budapest, 1999 and Inter Governmental Fiscal Relations
and Local financial Management, Distance learning module, Central European
University, Summer University Programme.
ii) De-concentration
De-concentration is the establishment of Central Government offices at the
regional level with some autonomy in decision making but the centre should
approve all deviations from normal practice. You will learn the above definition
by applying the following country example from Poland:
Box No 4.2 Polish Decentralisation in the 1980s
In the 1980s Poland was divided into 49 Voivodships, and, at the local level
2365 Gminy. The imposition of Martial Law in December 1981 (in effect
until July 1983) shifted the balance of power between central and local
56
administrative branches. By the end of 1980s Voivodships had achieved a Fiscal Decentralisation-A
Global Overview
considerable independence from the central government, with central
intervention circumscribed by constraints on information to access political
activities. Voivodships were responsible for numerous public services,
including health, welfare and transportation, while Gminy were mainly
responsible for local services, including garbage collection and public housing
maintenance. Although the Gminy had some autonomy, it was not clearly
delineated or guaranteed. De-concentration reforms, though accompanied by
some devolution of power, essentially transferred authority within an integrated
administrative system. Lower administrative levels remained subject to central
control.
Bird-Ebel-Wallich: Decentralisation of the Socialist State, World Bank

1995
iii) Delegation
Delegation is an intermediary between devolution and de-concentration. In this,
sub national governments are given responsibility to deliver certain services but
the Central Government will supervise and provide some forms of finance. All
these types may fit in between centralisation and decentralisation. But federalism
is different in which public sector decisions can be taken at various levels of
government. But in unitary system sub national government act as an
administrative unit of national government. You can understand this concept by
reading the following case study:
Box 4.3 Social Services in Estonia
In Estonia the health care regulation law leaves only special medical services
to be handled at state level, which means that providing health care should
basically be the task of local authorities, and most of the hospitals should be
placed under state government administration. Considering the small size of
Estonia’s local authorities, the individual authorities should form hospital
alliances (in most cases one for each county) for the administration of hospitals,
through which the communal, construction and remodelling expenses could
be financed. Treatment expenses will be covered through the system of health
insurance. In practice, the Ministry of Social Welfare has financed the
communal and remodelling expenses for all hospitals, up until now.
A similar problem exists with nursing homes, which are financed primarily
by the Ministry of Social Welfare, even though, according to law, nursing
homes, as a rule, should be in the possession of local governments and financed
out of local budgets.
Source: http://www.ceec-logon.net
4.3 MUNICIPAL FINANCE

To strengthen the fiscal domain of municipalities there are different ways.
Municipal development funds and intermediaries is one such. The municipal
development fund is defined as a pool of money operated at a level above the
individual local government primarily for investment in infrastructure. Municipal
development intermediaries are the institutions which manages the municipal
57
Decentralized Planning and development fund such as banks or government agencies.
Development
At the global level, municipal finance is broadly categorized into three types:
i) Institutional Borrowing
ii) Municipal Development Fund
iii) Municipal Bunds
In the fiscal decentralisation the municipal governments are augmenting the
resources from different sources like borrowing from financial institutions, user
charges, transfers, issuing of bonds, loans from financial institutions etc. The
banks which finances the municipalities was first started in the United States
(US) and later European countries adopted. The following case study will explain
you further:
4.3.1 Borrowing from Financial Institutions

Box 4.4 The Municipal Bank in Slovakia
The First Communal Bank in Slovakia was established by several municipalities

as a specialized bank for the municipal sector in 1993. In 1996 the bank obtained
a universal banking license allowing it to operate as a regular commercial bank.
Currently, 367 municipalities have 19.62% share in the bank. The majority
stakeholder in the bank is Dexia Kommunalkredit holding with a 78.4% stake.
This group took over the bank in 2000 as part of its strategy to become the key
bank for the municipal sector in Central and Eastern Europe.
During its ten year history the bank focused on the municipal financing sector,
as well as the retail and corporate sectors. After the entry of the Dexia group,
the bank decreased its activities in the corporate sector and focused primarily
on the municipal sector and utilities. According to the bank, the municipal
sector is less risky to do business than with corporations. The overall volume
of credit funds provided to municipalities is around 3.5 billion Sk. Of this
total, about one percent of the loans have repayment problems. Starting in
2000, the bank decreased the volume of credits provided to the private sector
and increased its credit involvement in the municipal sector. In the course of
the last five years over 75% of all credit funds provided to municipalities has
come from the bank. Further areas of service to the municipal sector are deposits
and consultancy in municipal and project financing. The bank accounts for 40
to 50% of total municipal deposits in the Slovak banking sector.
The bank also engages in the financing of environmental and investment projects
supported by special state funds. The bank is an administrator for the financial
funds of the State Environmental Fund and the State Fund for Housing
Development. Additional activities of the bank include: mobilisation of sources
and funds of municipalities; municipal bond issues; funding activities directed
to renewal of municipalities; separate care of the municipal financial funds;
depository activity for the first-owners’ associations; leasing and consultancy.
Source: Local Government Borrowing, Open Society Institute (OSI), Budapest,

Hungary, 2004
58
4.3.2 Municipal Development Fund Fiscal Decentralisation-A
Global Overview
A “Municipal Development Fund” (MDF) is defined as a pool of money operated
at a level above the individual local government primarily for investment in
infrastructure. The MDFs are managed by different institutions such as banks or
government agencies. These are the “Municipal Development Intermediaries”
(MDIs).
With very few exceptions, Western European countries as well as Japan have
had for decades a well established MDI channelling investment credit to local
governments. In many European countries these institutions were established
also to provide a reliable outlet for private savings. Over the past several decades
MDFs have spread rapidly through Asia, Latin America, and Africa. In many of
these countries the financing of capital infrastructure has been combined with
objectives for longer term institutional development.
The main objective of development funds is to mobilise resources from private

lenders, central government, donor agencies, and local governments themselves,
and make them available for investment in urban infrastructure. A second
objective is to strengthen the operation capacity and efficiency of local
governments by assisting them in the design, appraisal, and execution of
investment programmes, rationalisation of programmes moving away from ad
hoc investment practices, and injecting rational criteria in the geographical and
sectoral distribution of funds. Development funds are best suited to address the
needs of smaller cities which tend to lack skilled administrators and lack access
to capital markets. Development funds also provide a way to adopt larger projects.
The most common approach in Western Europe has been to introduce an

autonomous institution with a legal and financial identity separate from the Central
Government. However there is great variance in the real degree of autonomy
and the precise nature of the institution. The examples are as follows:
Municipal development banks which are primarily concerned with financing

municipal investment. These include Belgium and Danish Municipal Credit
Associations, Bank for The Netherlands Municipalities, and the Municipal Bank
of Norway. In all these cases municipal government representatives control the
management board.
Municipal or local government windows within institutions established to manage

state controlled pensions and insurance funds. This is the case in France, Italy,
and Spain. In these cases, management is appointed by the central government
but municipal governments are represented in the decisions. The British Public
Works Loan Board is 100 percent controlled by the Central Government, but
half of the board draws membership from local governments.
Direct administration by the central government is the mode adopted by many

developing countries. The central agency is the Ministry of Local Development
or the Interior or, in some cases, the Ministry of Finance. Problems with some of
these new funds included lack of capacity for sustained assistance, under-
capitalisation, poor loan repayment discipline.
In Western Europe and Japan most of the activities of MDFs are funded by direct
access to financial markets. However, the initial subscription of shared capital
59
Decentralized Planning and by either central or local governments, though not representing any significant
Development
resources for lending, has been important in establishing credibility and control.
Additional resources are tapped by competing for private savings deposits. Other
financial institutions (banks, insurance companies and pension funds) have been
major sources of funds either through the purchase of bond issues or through
directly negotiated deposits. In contrast, developing country MDIs have been
largely financed with public funds. Even though most of these institutions have
the power to issue bonds, most of them do not.
MDFs lend money to local governments for long-term investment at preferential

rates which cover interest and administration costs. In some cases there are
elements of grant or subsidised interest. These take different forms, such as
matching grants attached to loans that vary with the repayment capacity of the
local government or with the type of the project. Most often eligibility is
unrestricted in which the allocation of funds depends on the bids of individual
authorities. In some cases, local governments, especially large units, are given a
maximum quota.
Assessing debt service capacity of local governments is one of the most difficult
aspects of managing a MDF. In most cases the policy is to rely on the statutory
limitations established in the law, stating a maximum ratio of debt or debt service
for local government revenues. However, in the case of self-liquidating
investment, as for public utilities, the limitation depends on the internal financing
viability of the enterprise and not the local government per se. There are exceptions
to this rule. For example, the French Caisse de Depots bases it’s lending to local
governments on financial forecasts, not on debt service ratios.
(Adapted from “Latvia: Local Government Expenditures and Resource Transfers”

The World Bank, Report No. 14470-LV, July 20, 1995 and based on “Municipal
Development Funds and Intermediaries,” by Kenneth Davey, Background Paper
for the 1988 World Development Report, The World Bank, July 1988.)
4.3.3 Municipal Bonds

The USAID and the World Bank introduced municipal bonds in transition and
European countries based on American experience. Unlike other borrowing there
are two reasons which restrict the development of bonds in transition and
developing countries.
i) There is no tax exemption for the citizens purchasing bonds in transition

and developing countries which restricts the interest of the citizens. But
tax exemption is given in US, and Central and Eastern European countries.
ii) Reforms in bond market will encourage the citizens to invest.
The following(Box-4.5) is the best practice in US with regard to bond market:
Box 4.5 Diversification in the US local bond market
In most transition countries local bond markets are still largely dominated by
general obligation bonds, issued against the full faith and credit of the issuer.
As markets develop, however, local governments will tend to diversify their
borrowing instruments and rely more on structured bond instruments.
60
Fiscal Decentralisation-A
The US bond market provides a vivid illustration of the wide diversification Global Overview
of instruments. Beyond the general obligation bonds, the US local bond market
offers a wide range of revenue bonds that are issued for project or enterprise
financings, in which the security for the bond is the revenue generated from
the financed projects. For example water revenue bonds are issued to finance
the development of water treatment plans, pumping stations, distribution
systems etc., with revenues from connection fees and water charges paid by
users. The so called tax allocation bonds are used in the construction sector,
secured by additional property taxes collected from new or improved property.
In addition to these various bond structures and instruments, the US market

has been characterized by the emergence of a wide array of internal and external
credit enhancement structures for municipal bonds, such as refunded bonds,
insured bonds, bonds backed by letters of credit etc.
Source: Building Sub-national Debt Markets in Developing and Transition

Economies. A Framework for Analysis, Policy Reform and Assistance Strategy.
Michel Noel, World Bank Policy Research Working Paper 2339, May 2000
In this session you read about the importance of financial decentralisation and
now answer the questions given in Check Your Progress-1
1) Differentiate between Devolution, De-concentration and Delegation.

......................................................................................................................
......................................................................................................................
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......................................................................................................................
2) Define Municipal borrowing and what are the different types of Municipal
borrowing?
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61
Development 4.4 FISCAL DECENTRALISATION IN
DEVELOPED COUNTRIES
The fiscal decentralisation of a few developed and transition countries are narrated
below.
4.4.1 United States

The United States has a loose and flexible structure of fiscal federalism. The key
point of the US local government finance system is the absence of too many
specifications. State governments assign local governments taxes and their
maximum rates. Rules are clear on whether local governments may seek voter
referenda on fiscal decisions such as tax rates, new borrowings and so on. They
can formulate their own user charges. On the whole, local government revenues
finance about 40 to 70 percent of the expenditure.
Some of the important sources of fiscal earnings of the local governments are:
i) Property tax
Property tax amounts to 70-75 percent of all local tax revenues in USA.
The tax is based on capital value of property (often at a rate exceeding 1
percent). It gives a stable source of local funds to local government. It
provides a degree of independence to the local bodies from the state and
federal governments.
ii) Local option Income tax

State like Alabama, Arkansas, Delaware, Georgia, Kentucky, Indiana,
Maryland, Michigan, Missouri, New York and Pennsylvania authorise their
municipal authorities to levy local income tax. Some states like Georgia
mandate a local choice of either an income tax of a general sales tax. While
local jurisdictions usually collect the local option income tax themselves,
some states like Indiana and Maryland collect it on behalf of their local
governments by piggy-backing onto state income taxes.
iii) General Sales tax

This tax is generally popular among taxpayers because it is collected in
small amounts with many transactions. Local rates of this tax ranged from
0.25% to 6% in the United States in 1993.
iv) Excise Taxes

Excise taxes are sales taxes imposed on specific goods and services and are
most commonly assessed on lodging, alcoholic beverages and tobacco
products, utilities and motor fuel (local option gasoline tax). Some local
jurisdictions levy an excise tax on new construction.
v) User Charges and Fees

User fees and fees pay for the cost of operating and maintaining public
facilities and services, as well as repay outstanding debts. Road tolls, park
admission fees and water and sewer charges are representative user fees in
the United States.
62
vi) Revenue Bonds Fiscal Decentralisation-A
Global Overview
Revenue Bonds are designed to finance revenue-generating facilities, backed
by a stream of revenues pledged from user charges for services like water
supply, sewerage, drainage, toll roads etc.
4.4.2 Canada
The main sources of municipal finance in Canada include: property tax, business
tax, special taxes to raise revenue to pay for a specific service or purpose and
local improvement taxes. Some of the services taxes imposed by the local
governments are waterworks tax, sewer tax, boulevard tax, dust treatment tax,
paving tax, ambulance service tax, fire protection area tax, drainage ditch tax,
tax to provide water supply for the residence of a hamlet and recreational service
tax.
Local improvement taxes in Canada are generally in the form of betterment levies
linked to benefits accruing to specific local areas due to the provision of
infrastructure as a result of implementation of local improvement plans.
4.4.3 United Kingdom

The fiscal decentralisation in UK is more systematic and well decentralization.
The finance regimes of local authorities in England includes, as follows:
i) A system of non-domestic rates, being a property tax levied on industrial

and commercial property- set by the Secretary of State for Environment for
England and Wales, collected into the national pool and then distributed
among the local jurisdictions based on adult population,
ii) A system of exchequer grants to local authorities, principally the Revenue
Support Grant (RSG) designed to compensate local authorities are also
able to participate in partnerships with the private sector under the Private
finance Initiative and
iii) A system of local domestic taxation, known as the Council tax.
4.4.4 Hungary
Hungary is the most decentralised country in the central and eastern European.
In the year 1990, the local government act of Hungary brought fundamental
changes in financing Hungarian local governments. The act regulates the scope
of mandatory services that local governments can supplement with other services
according to their needs. The act regulates the structure, service financing, assets
and revenues of local governments. The act also gives more local autonomy. In
this process actors like businesses, banks, investors are considered to be important
partners in the budget process. The act also considers local citizens are important
in decision making process and this will strengthen the democracy. This act also
delegated broad economic and political authority to local government making
region.
The four year programme “Modernising Municipal Financial Management” in
Hungary was launched in 1996 with the following objectives:
• Include revenue and expenditure breakdowns of municipal activities that
provides a clear picture of how much the municipality spend on various
items. 63
Decentralized Planning and • Documents should be suited in identifying and pursuing the strategic sectoral
Development
and programme goals of the municipality.
• Monitoring should be ongoing focused on issues and outcomes.
• Format and content should be comprehensible and informative to specialist
citizens and other participants in municipal financial management.
The notion of programme budgeting was applied during the project period. The
programme budgeting approach transform the local budget from a simple
accounting, control oriented into a tool for promoting effective and accountable
management of city resources. The programme budgeting relates revenues and
expenditures to municipal goals, objectives, strategies and anticipated outcomes.
4.5 FISCAL DECENTRALISATION IN

DEVELOPING COUNTRIES
The fiscal decentralisation in a few developing countries narrated below are
i) China
ii) Brazil
iii) South Africa
4.5.1 China
China’s fiscal system is highly decentralized among the 31 provincial, 331
prefecture, 2,109 county and 44,741 township-level units. Nearly 70 percent of
total public expenditure in China takes place at the sub- national (that is provincial,
prefecture, county and township) level of which more than 55 percent takes
place at sub-provincial levels. Key sub-national expenditure responsibilities in
China include sub-national administration, local capital construction, basic local
services, maintenance, repair and operation of urban infrastructure, primary and
secondary schooling, health and hospitals, support for agricultural production,
price subsidies, poverty alleviation, cultural and heritage protection,
environmental conservation, local and regional development and physical
planning.
The revenue assignment between Central and Sub-national Governments after
1994 reforms stands as follows.
• Central revenues in China comprise import tariffs, consumption taxes,
income taxes, import-related consumption taxes and VATs, taxes imposed
on banks, non-bank financial institutions and insurance companies
(including business taxes, income taxes and the urban maintenance and
development tax) and taxes on railroads.
• Sub-national revenues consist of business taxes(excepting taxes imposed
on banks ,non-bank financial institutions, insurance companies and
railroads), company income tax( excluding local banks, foreign banks and
non-bank financial companies), personal income tax, urban land use tax,
urban maintenance and development tax (excluding banks, non-bank
financial institutions, insurance companies and rail roads), fixed asset capital
gains tax, house property taxes, stamp taxes, agriculture and related taxes,
tax on contracts and land-value increment taxes.
64
• Shared revenues include VATs (75 percent central and 25 percent, sub- Fiscal Decentralisation-A
Global Overview
national governments), stamp taxes on security exchange (50:50 sharing)
and resource taxes.
4.5.2 Brazil
In Brazil, municipalities are granted full autonomy. The consumption and
production taxes are assigned to all three levels of government. The main
municipal taxes in Brazil are those on services (ISS) and urban property (IPTU).
ISS rates are set by the municipalities, subject to ceilings introduced by the federal
government. IPTU is levied on the capital value of land and buildings.
Based on Constitutionally mandated revenue sharing, the municipalities are

entitled to
a) 25 percent of the revenue from state Value Added tax (ICMS) ,
b) 50 percent of revenue from the state tax on motor vehicles registration
(IPVA)
c) 22.5 percent from the federal Value Added Tax (IPI) and income Tax (IR),
d) All revenue from the income tax held at source (IRPF) and paid by the
municipalities or by their decentralized agencies,
e) 70 percent of revenue from the federal financial-transactions tax levied on
transactions with gold (IOF-Quro)
f) 50 percent of revenue from the federal rural-property tax (ITR).
Municipalities also receive compensatory transfers and transfers related to
healthcare and investment programmes.
4.5.3 South Africa

The using of application called measuring expenditure needs approach in South
Africa transfer fiscal resources equitably to the provinces (South Africa 2006).
The equitable share formula applicable for 2006–08 focuses almost entirely on
need factors, with only a 1 percent weight given to negative needs (per capita
GDP). The formula uses the following shares:
• A basic share (14 percent weight) is derived from each province’s share of
the national population.
• An education share (51 percent) is based on the size of the school-age
population (5–17) and the average number of learners (grades R–12) enrolled
in public ordinary schools over the past three years.
• A health share (26 percent) is based on the proportion of the population
with and without access to medical aid.
• An institutional component (5 percent) is divided equally among the
provinces.
• A poverty component (3 percent) is based on incidence of poverty.
• An economic output component (1 percent) is based on data on GDP by
region.
65
Decentralized Planning and 4.5.4 Commonwealth Countries
Development
There are two models that are typical for local government revenues in developing
countries of the Commonwealth:
i) Local government rely very much on their own sources of revenues
especially taxes user charges/ fees (i.e. Zambia & Swaziland);
ii) Local governments are heavily depended on transfers from central
government &/ or donor contribution (i.e. Ghana).
The source of revenue of local self governments of different Common Wealth
Countries are given in table below:
Country Source of local government revenue
Australia Grants and general or special purpose payments of

federal and state governments comprise 23 per cent of
local government revenues. Other sources included tax
on immovable property, fees and fines, net operating
surplus of trading enterprises and interest.
Bangladesh Taxes, rates, fees and charges levied by local bodies,

rents and profits accrued from their properties and money
received through its services. Government grants,
international project funding and loans raised by local
bodies are additional sources of income. Taxes are the
most important source of income, while loans and
voluntary contribution are rare.
Cameroon Council taxes, business levy and licenses.
Cyprus Municipal taxes, duties and fees.
Fiji Islands Revenues from land tax (town tax) and other local
incomes such as grants-in-lieu, rental fees, market and
bus station fees, business license fees, building fees and
parking fees. Most councils also loans from the local
capital market. Grants from central government are rare.
Ghana Taxes, user fees and charges.
India Tax revenue- properties, octroi, professions and vehicles,

non-tax revenue- licenses and service charges, grants-in
aid and state/Central Governments loans and borrowings.
Fees and charges, water and sewerage fees, local property

Kenya
taxes and business permits.
New Zealand Property rates, user charges, fees, fuel taxes and returns
on investments. Some central governments financial
assistance. The rating and charging powers have been
provided for in law since 1988 and are important sources
of local tax revenue.
66
Malaysia Local taxation (assessment rate, rents and fees for services, Global Overview
grants/ subsidies given by state or central government. Some
local authorities receive grants-in-lieu of rates. Other sources
include miscellaneous forms of charges and fees (licenses,
payment for various forms of services, rental penalties and
compounds and interest).
Pakistan Tax and octroi (comprising 60 per cent of local governments’

revenues) and non-tax sources. Property related taxes (such
as local rates or leases on all land assessable to either rent,
land revenue or use). Tax on the transfer of property and octroi
are the largest sources of revenue.
Sri Lanka Rates, taxes duties, fees, fines, penalties and other charges as
well as money from sales, leases or other transactions,
revenues derived from properties and grants from other
governments’ spheres.
Source: Kevin Sproasts, Local Government in Asia an the Pacific: A comparative analysis of
fifteen countries; and CLGF (2005)
In this session you read about the financial decentralisation in various countries
and now answer the questions given in Check Your Progress-2
1) Discuss Fiscal Decentralization in Canada.

......................................................................................................................
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2) Discuss the Measuring Expenditure needs approach in South Africa to
transfer fiscal resources equitably to the provinces.
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67
Development 4.6 LET US SUM UP
In this we have discussed the different experiences of fiscal decentralization in
different countries. Decentralisation has to be looked from different perspectives
like political, social and economic perspective. In this Unit fiscal decentralisation
was explained from economic perspective. The transition countries are vigorously
implementing fiscal decentralization. Developed countries like US and Canada
have evolved fiscal decentralized structure. In worldwide fiscal decentralisation
is considered as a viable option to address socio economic political issues. But
due to lack of political will and untrained man power made developing countries
to implement fiscal decentralisation unsuccessfully.

Andrea Tçnkõ, “Municipal Budget Reforms in Hungary- have they made a
difference?, in George M.Guess (Ed), Fast Track: Municipal Fiscal Reform in
central and eastern Europe and the Former Soviet Union, Budapest: Local
Government and Public Service Reform Initiative, 2007.
Bird-Ebel-Wallich, Decentralisation of the Socialist State, World Bank 1995.
http://www.ceec-logon.net
Issues in Intergovernmental Relations in Bulgaria, The World Bank, 2004.
J.R. Hines, Jr., and R.H. Thaler, “Anomalies the Flypaper Effect”, Journal of
Economic Perspectives-Volume 9, Number 4-Fall1995-Pages 217-218
Local Government Borrowing, Open Society Institute (OSI), Budapest, Hungary,
2004.
Metropolitan Research Institute, Budapest, 1999 and Inter Governmental Fiscal
Relations and Local financial Management, Distance learning module, Central
European University, Summer University Programme.
Michel Noel, World Bank Policy Research Working Paper 2339, May 2000.
Pritha Venkatachalam, Innovative Approaches to Municipal Infrastructure
Financing: A Case Study on Tamil Nadu, Working paper Series, 2005,
Development Studies Institute, London School of Economics and Political
Science.
The OECD 2000 Survey on Fiscal Design across Levels of Government, Country
Report: Czech Republic.
Shah, Anwar, A practitioner’s guide to inter governmental physical transfers in
Inter governmental Fiscal Transfers principles and Practice eds Boadway, Robin
and Anwar Shah, Washington, DC: The World Bank, 2007
Urban finance assessment of TNUDP-III, 2004, TNUDF: Activity Report 2003-
2004.
South Africa, Government of. 2006. Budget 2006. National Budget Review.
Pretoria: Government Printing Service.
68
4.8 CHECK YOUR PROGRESS – POSSIBLE Global Overview
ANSWERS
Answer 1: In devolution, independently established sub national governments
are given the responsibility for delivery of public services. The authority will
impose fees and taxes for those services. The sub national government have
flexibility to select the services to provide to their citizens. Whereas de-
concentration is the establishment of central government offices at the regional
level with some autonomy in decision making but the centre should approve all
deviations from normal practice. Delegation is an intermediary between
devolution and de-concentration. In this, sub national governments are given
responsibility to deliver certain services but the central government will supervise
and provide some forms of finance.
Answer 2: In the fiscal decentralisation the municipal governments are

augmenting the resources from different sources like borrowing from financial
institutions, user charges, transfers, issuing of bonds, loans from financial
institutions etc. To strengthen the fiscal domain of municipalities there are
different kinds of municipal borrowings which are discussed as follows:
a) Municipal Development Fund: A “Municipal Development Fund” (MDF)

is defined as a pool of money operated at a level above the individual local
government primarily for investment in infrastructure. The MDFs are
managed by different institutions such as banks or government agencies.
These are the “Municipal Development Intermediaries” (MDIs).
b) Municipal Bonds: The USAID and the World Bank introduced municipal
bonds in transition and European countries based on American experience.
Answer 1: The main sources of municipal finance in Canada include: property
tax, business tax, special taxes to raise revenue to pay for a specific service or
purpose and local improvement taxes. Some of the services taxes imposed by
the local governments are waterworks tax, sewer tax, boulevard tax, dust treatment
tax, paving tax, ambulance service tax, fire protection area tax, drainage ditch
tax, tax to provide water supply for the residence of a hamlet and recreational
service tax.
Local improvement taxes in Canada are generally in the form of betterment levies
linked to benefits accruing to specific local areas due to the provision of
infrastructure as a result of implementation of local improvement plans.
Answer 2: The using of application called measuring expenditure needs approach

in South Africa transfer fiscal resources equitably to the provinces (South Africa
2006). The equitable share formula applicable for 2006–08 focuses almost entirely
on need factors, with only a 1 percent weight given to negative needs (per capita
GDP). The formula uses the following shares:
• A basic share (14 percent weight) is derived from each province’s share of
the national population.
69
Decentralized Planning and • An education share (51 percent) is based on the size of the school-age
Development
population (5–17) and the average number of learners (grades R–12) enrolled
in public ordinary schools over the past three years.
• A health share (26 percent) is based on the proportion of the population
with and without access to medical aid.
• An institutional component (5 percent) is divided equally among the
provinces.
• A poverty component (3 percent) is based on incidence of poverty.
• An economic output component (1 percent) is based on data on GDP by
region.
70
UNIT 5 FISCAL DECENTRALISATION IN Global Overview
INDIA: AN OVERVIEW
Structure
5.1 Introduction
5.2 Fiscal Decentralisation-Meaning and Importance
5.3 Fiscal Decentralisation in India
5.4 Sources of Local Government Revenue
5.5 Sources of Revenue of Urban Local Bodies in India
5.6 Sources of Revenues of Panchayati Raj Institutions in India
5.7 Criteria for Fiscal Devolution
5.8 Measures for Strengthening Fiscal Decentralisation
5.9 Let Us Sum Up
5.11 Check Your Progress - Possible Answer
5.1 INTRODUCTION
Decentralisation has become one of the important dimensions of governance of
modern democracy. The devolution of functions, functionaries and funds from
the Central Government to the provincial and local government is propagated as
a step for the effectiveness of decentralisation. Customarily decentralisation is
termed as delegation of decision making power to the lower levels of governments.
It is studied that decentralisation improves accessibility, promotes responsibility
and accountability and effectiveness of the government. Thus decentralisation
intends to disperse decision-making governance closer to people. Dispersal of
financial responsibility is an important component of decentralisation. Devolution
of funds to the local governments closer to the people believed to promote faster
development both in rural as well urban areas. After reading this unit you should
be able to:
• Explain the meaning and importance of fiscal decentralisation
• Describe the sources of local government revenue
• Discuss the fiscal decentralisation in India
• Analyse the criteria of fiscal decentralisation and measures for strengthening
fiscal decentralisation.
5.2 FISCAL DECENTRALISATION: MEANING

AND IMPORTANCE
5.2.1 Meaning of Fiscal Decentralisation
The Central Government is increasingly finding difficulty to meet all of the
numerous competing needs of their various constituencies at the regional and
local levels. Its therefore attempting to build local capacity by delegating
responsibilities downwards to their regional governments and local governments.
71
Decentralized Planning and At the same time, the local governments are also demanding more functional
Development
and financial autonomy. As a result two things have happened:
i) Firstly, Central Government is looking towards local and regional
government to assist them on devising economic development strategies;
ii) Secondly, regional and local political leaders are demanding more autonomy
and want the taxation powers that comensurates with their expenditure
responsibility.
According to Kenneth Davey, fiscal decentralisation comprises the financial
aspects of devolution to regional and local government and it covers two
interrelated issues:
a) First is the division of spending; and
b) The amount of discretion to be given to regional and local governments to
determine their expenditures and revenues.
The concept, fiscal decentralisation caught attention of the various countries
only after 1990. However, there are evidences that show that countries like Brazil,
Peru and Mexico introduced a system of fiscal decentralisation in their economy
in the 1990s. Fiscal decentralisation has become worldwide reform agenda
supported by the World Bank, USAID, Asian Development Bank and many other
bilateral and international agencies. World Bank perceives fiscal decentralisation
and the devolution of power as an important engine for shaping governance and
development. James Edwin Kee opines that ‘Fiscal decentralisation’ is the
devolution by the Central Government to local governments such as states, region
and municipalities of specific functions with the administrative authority and
fiscal revenues to perform those functions. Chio states that, fiscal decentralisation
means that the authority of tax collection or expenditure is transferred from
superior to subordinate offices. He advocates that fiscal decentralisation has two
aspects that is qualitative and quantitative. The qualitative aspect of fiscal
decentralisation analyses finance held by a local government, where as the
quantitative aspect estimates the presence of autonomy authority in finance.
According to N. Feruglio, fiscal decentralisation is a process of shifting decision
making power on the composition of expenditure responsibilities and on the
composition and level of revenues from the Central Government to elected sub
national governments. M. A. Oommen opined that fiscal decentralisation means
fiscal empowerment of local governments. More specifically it means devolution
of taxing and spending powers to lower levels of government. According to
World Bank, fiscal decentralisation accords substantial revenue and expenditure
authority to intermediate and local government.
Thus fiscal decentralisation is not only the allocation of resources by the Centre
to the regional and local governments but also generation of resources by the
regional and local governments. One of the purposes of the fiscal decentralisation
in China is to grant the provinces and localities greater flexibility in collecting
revenues and making expenditure decisions. The Government of India also made
Constitutional provisions for fiscal decentralisation to state and local government.
5.2.2 Importance of Fiscal Decentralisation

The fiscal decentralisation hold merits for several reasons and some of the reasons
are as follows::
72
i) Fiscal decentralisation promotes economic value. The fiscal federalism like Fiscal Decentralisation in
India: An Overview
the political concept of democracy is considered to be an optimal institutional
arrangement. It has the provision of public services with cost minimisation
and welfare maximisation. It also combines the advantages of
decentralisation with the benefits from economies of scale.
ii) Fiscal decentralisation leads to good governance, by ensuring fiscal

responsibility to the lower level of government that is. local self government.
Governance values include responsiveness and accountability, diversity and
political participation. Decentralisation places allocation decision making
close to the people. As a result, this places greater responsiveness to local
officials and greater accountability to citizens.
iii) Fiscal decentralisation would enhance political participation at the local

level. This has the potential to enhance democratic value and political
stability at the local level. It provides a forum for local debate about local
priorities and can be a proving ground for future political leaders. It imparts
financial education to the local leaders at the grassroots levels.
iv) The fiscal decentralisation is supposed to reduce poverty through the need-
based and demand-driven approach of utilisation of resources through
participation of locals at the grassroots. The counties like China and India
are very much in the favour of fiscal decentralisation for poverty reduction.
v) With fiscal decentralisation, funds are effectively used as

a) they are demand-driven and there is high degree of local involvement;
b) their operations are transparent and accountable;
c) they are carefully targeted to low income group; and
d) free from official red tapism.
vi) According to Stigler, fiscal decentralisation brings government closer to
the people. However a representative government functions in better manner,
when it is close to the people. The theoretical perceptive of this argument
goes like this “each public service should be provided by the jurisdiction
having control over the minimum geographical area that would internalise
benefits and costs of such provision.”
vii) In a fiscally decentralised system where citizens’ participation in decision

making is encouraged, locally elected governments have the power to pursue
the agenda mandated by voters.
After reading this section, you might have gained idea about the meaning and
importance of fiscal decentralisation. Now you would be able to answer the
1) What do you mean by fiscal decentralisation?

73
Decentralized Planning and ......................................................................................................................
Development
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2) Discuss a few merits of fiscal decentralisation
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5.3 FISCAL DECENTRALISATION IN INDIA

In India, fiscal decentralisation assumed importance after 73rd and 74th
Constitutional Amendments, which envisaged the devolution of functions,
functionaries and funds to the local self government institutions. Before 1992,
that is prior to the passing of the 73rd and 74th Constitutional Amendment,
several committees and commission recommended for the fiscal decentralisation.
Let us discuss in detail the recommendations of various committees and
constitutional measures undertaken for fiscal decentralisation in India.
5.3.1 Committees
Various committees and commissions were constituted for suggesting measures
for establishing financial autonomy of the Panchayats and municipalities. In the
light of these suggestions, the States have made appropriate provisions in their
Panchayat Raj Acts. Let us now review the recommendations of various
committees appointed from time to time about decentralisation of finances to
local self government institutions.
i) Finance enquiry committee

In 1951, the Local Finance Enquiry Committee studied this problem and
recommended unconditional assignment of 15% of land revenue to be raised
in the panchayat area and the proceeds of surcharge levied on the transfer
of immovable property to the Panchayats. Panchayats were also to be
empowered to raise their own resources by levying certain taxes in their
territories.
ii) Taxation enquiry committee

In 1954, the Taxation Enquiry Committee recommended for reserving
certain taxes such as tax on land and building, octroi, tax on non-mechanical
74
transport, tax on property, tax on profession, tax on advertisement other Fiscal Decentralisation in
India: An Overview
than newspapers, theatre tax, and duty on transfer of property, etc. for
Panchayats.
iii) Santhanan Committee

The Santhanan Committee formed in 1963 strongly recommended that it
was essential for stability and growth of local institutions to have substantial
and growing resources, which were entirely within their power to exploit
and to develop.
iv) Ashok Mehta committee

In 1978, the Ashok Mehta Committee recommended that besides
government support, panchayats should mobilise enough resources of their
own, as no democratic institution can continue to maintain its operational
viability by depending upon external resources.
v) Singhvi Committee
In 1966, the Singhvi Committee among others, suggested pattern of
compulsory and optional levies. The State Governments shall levy and
collect taxes and fees on behalf of PRIs and shall disburse to them based on
the recommendation of the Finance Commission in each State. In order to
ensure and safeguard the financial autonomy of the PRIs, they should be
freed from relying on the “Untied Funds”. But encouraged instead to take
to innovative resource mobilisation such as generation of income from
entrepreneurial activities, projected loans, public contribution, tax-sharing
,tax-assignments and matching grant incentives for tax collection.
5.3.2 Commissions
The 73rd Constitutional Amendment provides for devolution of functions and
transfer of functionaries and funds to the three tiers of Panchayati Raj Institutions.
The article 243G of the Constitution states, “Subject to the provisions of the
Constitution, the legislature of a state, by law, may endow the panchayats with
such powers and authority as may be necessary to enable them to function as
institutions of self-government. Such laws may contain provisions for the
devolution of powers and responsibilities upon panchayats at the appropriate
level, subject to such conditions as may be specified therein, with respect to:
a) The preparation of plans for economic development and social justice; and
b) The implementation of schemes for economic development and social
justice as may be entrusted to them including those in relation to matters
listed in the Eleventh Schedule.
Article 243A of the Constitution of India embodies the spirit of the democratic
decentralisation.
While 280 (3) (bb) of the Constitution enjoins the Central Finance Commission
to suggest measurers needed to augment the consolidated fund of a state to
supplement the resources of the panchayats and municipalities on the basis of
the recommendations made by the Finance Commission of the State.
Article 243-H of the Constitution, empowers the state legislatures to enact laws:
75
Decentralized Planning and a) To authorise a panchayat to levy, collect and appropriate such taxes, duties,
Development
tolls and fees;
b) To assign to a panchayat, certain taxes, duties, tolls levied and collected by
the state government;
c) To provide for making grants-in-aid to the panchayats from the consolidated
fund of the state; and
d) To provide for the constitution of such funds for panchayats and also the
withdrawal of such money there from; as may be specified by law.
Article 243-I of the Constitution envisages for the setting up of the State Finance
Commission (SFC) once in every five years to review the financial position of
the panchayats and to make recommendations to the Governor as to:
i) The principles which should govern-
a) The distribution between the state and the panchayats of the net
proceeds of the taxes, duties, tolls and fees levied by the state. It may
be divided between them under this part and the allocation between
the panchayats at all levels of their respective shares of such proceeds;
b) The determination of the taxes, duties, tolls and fees which may be
assigned to, or appropriated by the panchayats;
c) The grants-in-aid to the panchayats from the consolidated fund of the
state
I) The measures needed to improve the financial position of the
panchayats;
II) Any other matter referred to the finance commission by the
Governor in the interests of sounds finance of the panchayats.
The 74th Constitutional Amendment also states that the State Finance
Commission to review the financial position of the urban local bodies, their
revenue and capital account requirements. It recommended devolution of taxes,
charges, fees, tolls, duties, shared revenues, inter-government transfers and grants
from the state to the municipalities. It suggested measures for the mobilisation
of municipal resources.
5.3.3 The Central Finance Commission

Direct devolution by CFCs to ULBs began with the Xth CFC after insertion of
clause 280(c) in the Constitution and entailed an allocation of Rs.1,000 crore for
1995-2000. It was calculated on the basis of:
ii) Slum population;
iii) Matching contribution by municipalities;
iv) Funds to be used for the non-establishment segment of O&M.
CFC has also suggested a reform agenda at the state and municipal level to
enable full devolution (2.5% of divisible funds) after the first year (2010-11) of
the five-year period of 2010-15. This includes a 1% share of divisible pool on
taking up the reform agenda of the XIIIth CFC covering:
76
• Introduction of double entry municipal accounting system based on the Fiscal Decentralisation in
India: An Overview
Government of India National Municipal Accounting Manual. It will bring
transparency in accounts and enhanced efficiency in the mobilization of
assets.
• Improved auditing though assignment of technical guidance and supervision
(T&GS) to CAG (Comptroller and Auditor General), Government of India,
which will induce fiscal discipline.
• Appointment of Independent Local Body Ombudsman to check corruption
and malpractices.
• Grants to be transferred electronically to ensure transparency and timely
disbursement.
• Laying out qualifications for the members of state finance commission to
improve equality and competence of SFC.
• Property tax should be levied on all properties, including central/state
government properties.
• States should constitute a Property Tax Board that will lay down norms for
the PT system to ensure complete coverage and revenue enhancement.
• States/ULBs should set out service standards (as 31st March) to be
accomplished during the next financial year, particularly in relation to core
municipal services such as water supply, sewerage, storm water drainage
and solid waste management.
All towns with a population above one million should have their own fire fighting
service.
5.3.4 The State Finance Commissions

Chapters 243-I and Y of the 73th and 74th Constitutional AmendmentActs,
respectively, made it mandatory for state governments to constitute state finance
commissions (SFCs) every five years to review the financial position of the
panchayats and urban local governments, and to make recommendations for the
subsequent five-year period on:
a) the principles to govern the distribution and allocation of the taxes, duties,
tolls and fees levied by the state, and the allocation between the panchayats
/local governments of such proceeds;
b) the determination of the taxes, duties, tolls and fees which may be assigned
to, or appropriated by, the panchayats /local governments;
c) the grants-in-aid to the panchayats /local governments from the
Consolidated Fund of the state;
d) the measures needed to improve the financial position of the panchayats /
municipalities; and
e) any other matter referred to the SFC by the governor in the interests of
sound finance of the panchayats /local governments.
77
Development 5.4 SOURCES OF LOCAL GOVERNMENT
REVENUE
The various sources of
local government can
broadly be categorized Box: Delegation of financial powers to urban
into four heads: local bodies: 74th Constitional Amendment:
i) Local Taxation The State may, by law:
ii) User Charges • Authorise a municipality to levy, collect and
iii) Inter Govern- appropriate such taxes, duties, tolls and fees in
mental Transfers accordance with such procedures and subject
to such limits;
iv) Capital Finance
• Assign to a municipality such taxes, duties and
i) Local Taxation:- tolls and fees levied and collected by the State
The local self Government for such purposes and subject to
government in such conditions and limits;
different countries
used to impose • Provide or make such grants-in-aid to the
local taxes as a municipalities from the consolidated fund of
source of revenue. the State; and
However, it varies • Provide for constitution of such fund for
from state to state crediting all moneys received, respectively, by
and region to or on behalf of the Municipalities and also for
region depending the withdrawal of such moneys therefrom.
on decision of the
concerned state government. Local taxes are generally divided into three
categories such as taxes on property, income and sale of goods and services.
Generally it is observed that highly progressive and mobile tax bases are
assigned to the centre. While, user charges and fee are found to be vested
with the local governments. Therefore, decentralized (local) levels of
government rely mainly on taxes like property tax, user charges and fees.
ii) User charges:- The local governments charges user fee for the services
which they provide to the citizen of the municipal areas. Now day local
governments are under increasing pressure to increase tariffs to meet the
full cost of services which they provide.
Intergovernmental Transfers: - The intergovernmental transfer are of two
types:
i) Share of national taxes distributed either by formula (i.e. per capital)
or by origin (i.e. to the local government where they are located).
ii) The second is the grants/ subversions which are either targeted to
support specific expenditure (i.e. social benefit, education, etc.) or
untargeted and used at discretion of local government (often know as
block grants).
Targeted grants are usually intended to stimulate a specific type of expenditure
which is favoured or mandated by national government. The untagged or untied
grants the other hand can be used by the local governments based on local needs.
78
iii) Capital Finance:- Capital expenditure is normally financed from one or Fiscal Decentralisation in
India: An Overview
more of the following sources:
i) Grant from the state budget or national funds;
ii) Operating surplus representing excess of current revenue over current
expenditure
iii) Sale of assets;
iv) Credit (loans and bonds) grants from the state is a common phenomenon.
5.5 SOURCES OF REVENUE OF URBAN LOCAL

BODIES IN INDIA
Some of the important sources of revenues of the urban local bodies in India are
as follows:
i) Tax Revenue:- Urban local bodies levy a few taxes in their area such as
octroi, property tax, profession tax, entertainment tax, advertisement tax,
animal tax, market tax, water tax, pilgrim tax, toll on new bridges, etc.
Now- a- days most of the states have abolished octroi tax, which was a
major source of revenue for the urban local bodies. Besides, the urban local
bodies also get a percentage of tax revenue from stamp duty, electricity tax
and motor vehicle tax imposed by the state government.
ii) Non-Tax Revenue:- It consists of fees, receipts, fines or income from
remunerative activities of urban local bodies. The fees is collected through
various forms and processing fees. Besides, fees are collected from park
and exhibition ground, halting places, public market, etc.
a) Grant-in-Aid:- The State Government gives grants-in-aid to the urban
local body. It varies from state to state depending on the
recommendations of the concern state finance commission.
b) Loans & Bonds: Under the respective Municipal Acts, the Urban Local
bodies are entitled to raise loans from the state governments. The loans
are to be paid back within prescribed time limit along with the interest.
Besides, the now a days many municipalities and municipal
corporations are sailing bonds to enhance their revenue base.
Revenue of ULBs
79
Decentralized Planning and The progress of implementation of accounting reforms by the ULBs in India is
Development
very slow. Only a few states have introduced the measures for raising finance as
per the recommendation of the Central Finance Commission.
The Central Finance Commission has suggested several measures to augment

the consolidated fund of the state for municipal resource mobilisation. These
include land taxes, surcharged cess on state taxes, and property tax. It was also
suggested for enhancing of local resources through property tax and fixation of
user charges in such a way that the full cost of operation and maintenance is
recovered. However, all these suggestions have not been dutifully implemented
by various states. Even the state government does not release the funds received
on the recommendation of the Central Finance Commission.
The JNNURM (Jawaharlal Nehru National Urban Renewal Mission) has included
following mandatory and optional reforms with the objectives to improve pricing
and cost recovery of user charges.
i) Mandatory reforms:
a) Levy of reasonable user charges by ULBs with the objective that full
cost of O & M is collected within next five years.
b) Internal earmarking within local body budget for basic services to the
urban poor.
c) Provision of basic services to urban poor including water supply,
sanitation, etc.
ii) Optional reforms:
a) Revision of by-laws to make rain water harvesting mandatory in all
building to come up in future and for adoption of water conservation
measures.
b) By-laws on re-use of reclaimed water.
c) Encouraging public-private partnership.
In this section, you read about various sources of local government revenue.
Now answer the questions given in Check Your Progress-2
1) What are the various sources of local revenue?

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2) How local taxation is an important source of revenue? Fiscal Decentralisation in
India: An Overview
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5.6 SOURCES OF REVENUES OF PANCHAYATI

RAJ INSTITUTIONS IN INDIA
Panchayati Raj Institutions (PRIs) receives revenues from various sources. The
important sources of revenue of the PRIs in India are as follows:
i) Revenue from the Central Government: Every state gets revenue from
the Central Government as per the recommendations of the Central Finance
Commission. This is based on the criteria fixed by the Central Finance
Commission. The PRIs of states also get grant from the National Planning
Commission.
ii) Revenue from the State Government: The two main sources of revenue
from the state government to the PRIs are:
a) Allocation as per the recommendation of the State Finance
Commission;
b) Scheme specific grant from the State Planning commission.
iii) Internal resources of Revenue: The PRIs in different state applies various
mechanisms for internal resources mobilisation. The important sources are
a) Taxable income and fees
b) Non-taxable income like income from the common property resources,
sales of goods and services, borrowings, income from live stocks, etc.
The revenue sources of Panchayati Raj Institutions is given in the form of a
diagram below
Revenue of PRIs
81
Decentralized Planning and The PRIs in Kerala, Karnataka and Gujarat enjoy greater financial autonomy. In
Development
Kerala, 40 per cent of plan funds go directly to panchayats. In Karnataka, each
panchayat get Rs.3,00,000 annually directly from the state government and in
Madhya Pradesh each panchayat gets a grant of rupees Rs.1,00,000 every year
from the state government. These are untied funds to be spent according to the
need and requirement of each panchayat.
For example, the sources of income of village panchayats in Karnataka include:

i) Statutory grant (Rs 5 lakhs) from the state government
ii) Property tax, water tax, professional tax, fair and exhibition tax and
professional tax. These taxes constitute nearly 17 per cent of the total revenue
and
iii) Grants from the Central Finance Commission and Central Plan.
In Kerala, a village panchayat levies and collects taxes from the local people.
Taxes levied by the village panchayats are property tax, profession tax,
entertainment tax, advertisement tax, service tax, show tax including surcharge,
cess on conversion of land use and surcharges. The government devolves 40 per
cent of plan budget directly to village panchayats in Kerala.
In Madhya Pradesh, in order to make every village self-reliant (gram swaraj) a

provision has been made that every village needs to have a gram kosh (village
fund). The fund comprises funds collected in the form of taxes, Central and
State Government grants and funds given by the district panchayat. Any other
income of the village panchayat shall also be deposited in the gram kosh. The
gram kosh shall have four components such as:
• Food Kosh
• Commodity Kosh
• Labour Kosh; and
• Cash Kosh.
The sources of income of the village panchayat in Madhya Pradesh are:
• Taxes: house tax, sanitation tax, lighting tax, business tax
• Income from minerals
• Income from fishery
• Grant-in-aids from Central and State government
• Income from common property
• Income from livestock
5.7 CRITERIA FOR FISCAL DEVOLUTION

The following criteria may be suggested for the effective transfer of resources to
the local self governments by the central government.
i) Autonomy: The essence of decentralisation is self-rule and autonomy. The

transfer mechanism in no way should result in a dependency syndrome.
Fiscal discipline and own resource mobilisation are the key to autonomy.
82
Therefore, the local self government institutions creativity in mobilisation Fiscal Decentralisation in
India: An Overview
of resources must be encouraged.
ii) Equity: The well-known dictum of equity, namely,. ‘from each according
to one’s ability and to each according to one’s needs’ is relevant in
considering resource mobilisation and intergovernmental resource transfers
as well. It should be noted that Panchayats at all levels are very unequal in
size, resources and development attainments. Given the extreme regional
disparities, decentralisation in such conditions can produce the desirable
results.
iii) Predictability: The PRIs should know the amount and timing of the transfers
to make provision for planning, budgeting and implementation of their
activities. Irregular payments are not conducive to efficiency. Quite often it
happens that allocations may not even be paid, resulting in overdue, which
eventually may be permanently lost to them.
iv) Efficiency: The resource transfer should be so designed as to facilitate

efficient management and discourage inefficient and uneconomic practices.
The transfer mechanism should not turn out to be a “gap-filling” approach.
v) Absorptive Capacity: The resource transfer should be in the tune with the
utilisation ability of the receiving Panchayat or municipal ward. In other
words, principle should be each according to its need. The allocation of
fund to the panchayat and municipal ward must be free from bias.
vi) Simplicity: The formula for transfer the inter-governmental resources

should be simple and transparent. Besides formula formulated by the Central
Finance Commission, the state government must device its own formula
based on its socio-economic, geographical and population composition for
allocation of resources to panchayat and municipalities and also among the
different levels of panchayat and urban local bodies.
vii) Promotion of Incentives: There should be adequate built-in arrangements

for encouraging resource mobilisation and penalising wasteful and
uneconomic practices. The panchayat which mobilize and generate their
own local resources must be given additional matching grant, which will
create competitiveness among the local self government institutions.
viii) Poverty Reduction: Removal of poverty should be the main aim the fiscal
decentralization. Panchayats and municipalities taking proactive measures
in poverty reduction must be given incentives for their initiatives.
ix) Reduction of Disparities: Socio-economic disparities are one of the main

concerns of the governments. The local self government can play a vital
role in narrowing disparities at the grassroots. This must be a basis for the
allocation of revenue among various local self government institutions.
The formula recommended by the 11th Central Finance Commission for

the inter se share of the states in tax devolution is given in Table-1.
83
Decentralized Planning and Table-1: Criteria and Relative weights for determining inter se shares of
Development
states
S.No. Criterion Relative weight (percent)
1 Population 10.0
2 Income 62.5
3 Area 7.5
4 Index & Infrastructure 7.5
5 Tax effort 5.0
6 Fiscal discipline 7.5
Source: Report of Eleventh Finance Commission
The percent share of different sates according to the formula is given in Table-2
Table-2 Inter se share of states

States Share (percent)
Andhra Pradesh 7.701
Bihar 14.59
Gujarat 2.82
Haryana 0.94
Jammu & Kashmir 1.29
Karnataka 4.93
Kerala 3.05
Madhya Pradesh 8.83
Maharashtra 4.63
Orissa 5.05
Punjab 1.14
Rajasthan 5.4
Tamil Nadu 5.38
Uttar Pradesh 19.79
West Bengal 8.11
5.8 MEASURES FOR STRENGTHENING FISCAL

DECENTRALISATION
Fiscal decentralisation can be strengthened by various ways:
i) Deciding institutional system to strengthen inter-governmental economic

relations. The economic relation among the centre, state and local
84
governments must be cordial and healthy. Besides, the basis of financial Fiscal Decentralisation in
India: An Overview
devolution among the different tiers of local self government must be clearly
defined, this will lead to fiscal collaboration rather confrontation.
ii) Planning fiscal transfers to assure regional fiscal equality and to build an
effective environment for advanced and competitive service delivery.
iii) Restructure tax responsibility to allow local revenue autonomy, efficiency

and accountability. Delegation of responsibility to the local government to
collect and spend their taxes according to the local needs will strengthen
the fiscal decentralisation.
iv) Determining the functionary funds of different levels of government on the

criteria of equality and efficiency.
v) Providing sub-national government an access to responsible credit market.

However, with the globalization, the local self government institutions must
have access to capital market.
vi) According to Bahl, a measure of fiscal decentralisation should reflect the

key characterises of a fiscally decentralised system, such as existence of
elected local council, approved budget, local government to collect taxes.
vii) Institutional reforms that minimize adverse incentives and promote

transparency, accountability and predictably should be executed to have an
effective fiscal decentralization.
In these sections, you read about fiscal decentralisation in India, criteria of fiscal
decentralisation and measures to strengthen fiscal decentralisation. Now answer
the questions given in Check Your Progress-3
1) What are the various sources of revenue of PRIs in India?

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2) Explain three criterions for fiscal decentralization?

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85
Development 5.9 LET US SUM UP
In this unit you read about the fiscal decentralisation. Fiscal decentralisation is
an important component of democratic decentralization. The fiscal
decentralization process started since 1990 and in India it was geared up after
1992 with the implementation of 73rd and 74th constitution amendment. In
common parlance fiscal decentralization aims at shifting of financial
responsibilities from the central to the lower level of governments. As the financial
responsibilities become closer to the people, it is believed that it will lead to
good governance, transparency and accountability. Besides, meaning and
importance of fiscal decentralization, this unit also covers sources of local
government revenue in general and of local self government institutions in India
in particular. Lastly, this unit also covers criteria for fiscal decentralization and
measures to strengthen fiscal decentralization.

M Govinda Rao and Sen, T K (1996), Fiscal Federalism in India Theory and
Practice, Macmillan India, Delhi, 1996.
Planning Commission (1986), Report on the Task Force on Financing of Urban

Development, Planning Commission, Government of India, New Delhi.
CRRID (2006), Manual for Capacity Building of Local self Government

Institutions in Punjab, Centre for Research in Rural and Industrial Development,
Chandigarh.
Bird, M Ricard and Vaillancourt, F (1998), Fiscal Decentralization in Developing

Countries, Cambridge University Press, UK.
Kee, J Edwin, “Fiscal Decentralisation: Theory as Reform”, The George

Washington University, http//www.gwu.edu/-clai/working_papers

ANSWERS
Answer 1: Fiscal decentralisation means decentralisation of financial power to
the lower levels of governments. According to N. Feruglio fiscal decentralisation
is a process of shifting decision making power on the composition of expenditure
responsibilities and on the composition and level of revenues from the central
government to elected sub national governments. M. A. Oommen opined that
fiscal decentralisation means fiscal empowerment of local governments. More
specifically it means devolution of taxing and spending powers to lower levels
of government.
Answer 2: Two important merits of fiscal decentralisation are:
i) Fiscal decentralisation promotes economic value. The fiscal federalism like
the political concept of democracy is considered to be an optimal institutional
arrangement for the provision of public services with cost minimisation
86 and welfare maximisation;
ii) Secondly, fiscal decentralisation leads to good governance, by ensuring Fiscal Decentralisation in
India: An Overview
fiscal responsibility to the lower level of government i.e. local self
government. Governance values include responsiveness and accountability,
diversity and political participation.
Answer 1: The various sources of local government can broadly be categorized
into four heads:
iii) Local Taxation
iv) User Charges
v) Inter governmental Transfers
vi) Capital Finance
Answer 2: The local taxes are important sources revenue for the local self
government. Higher the local taxes imposed by the local self government
institutions, lower will be their dependence on the central and state governments
for grant. However, it is seen that the local self government are reluctant to
impose taxes on the people because their very closer to the people.
Answer 1: The important sources of revenue of the panchayati raj institutions in
India are as follows:
Revenue from the Central Government: Every state gets revenue from the central
government as per the recommendations of the Central Finance commission;
ii) Revenue from the state government: The two main sources of revenue from
the state government to the PRIs are:
a) Allocation as per the recommendation of the State Finance
Commission; and
b) Scheme specific grant from the State Planning commission and
iii) Internal resources of Revenue: The PRIs in different state applies various
mechanism for internal resources mobilization. Two important sources are
i) Taxable income and fees
ii) Non-taxable income like income from the common property resources, sales
of goods and services, borrowings, income from live stocks, etc.
Answer 1: The three important criteria for fiscal decentralization are
i) Autonomy: The essence of decentralisation is self-rule and autonomy;
ii) Equity: The well-known dictum of equity, viz. ‘from each according to
one’s ability and to each according to one’s needs’ is relevant;
Predictability: The PRIs should know the amount and timing of the transfers to
make provision for planning, budgeting and implementation of their activities.
87
MDV-111
and Development
Block
4
PEOPLES PARTICIPATION
UNIT 1
Peoples Participation in Governance and Development 5
UNIT 2
Participatory Tools and Methods 22
Ahmedabad
Prof. Kumar B. Das

Prof. Preet Rustagi
Dr. Abha Ranjan Prof. P. P. Balan
Rani Durgavati University (Unit 1) Centre For Research in Industrial Development
(Content Editor)
Dr. V. Dhar
NIUA, New Delhi (Unit 2) Mr. Praveer Shukla (Language Editor)
Prof. B.K. Pattanaik, IGNOU
Dr. Pradeep Kumar, IGNOU
PRODUCTION TEAM
March, 2019
ISBN: 978-93-88980-33-3
BLOCK 4 PEOPLES PARTICIPATION
People’s participation leadership and capacity building help in better governance,
participation and implementation of development programmes. Capacity building
helps in the creation of an enabling environment with appropriate policy and
legal frameworks, institutional development and human resources development
and strengthening of managerial systems. Capacity building is facilitated through
the provision of technical support activities, training, specific technical assistance
and resource networking. The understanding of the methodologies of
decentralized governance and functions of grass root institutions like Gram Sabha
and Ward Sabha enables you to comprehend the democratic processes of our
political system.
Unit 1, People’s Participation in Governance and Development, focuses on

building our understanding on the meaning and concepts of people’s participation
in the local self governance in development. It also discusses the importance of
local self Governance, people’s participation in development.
Unit 2, Participatory Tools and Methods, describes how the participatory tools
and methods area the means by which the principles of participation are translated
into the actual practice of development. Participatory methods ensure that all
stakeholders become involved in a number of different activities which are integral
to the development process. They provide a structured approach to participation
with clear guidelines of who should be involved, when and to what extent, It
also covers how the participatory tools are specific activities designed to encourage
joint analysis, learning and action.
Peoples Participation
4
Peoples Participation in
UNIT 1 PEOPLES PARTICIPATION IN Governance and Development
GOVERNANCE AND
DEVELOPEMNT
Structure
1.1 Introduction
1.2 People’s Participation- Meaning and Concept
1.3 Importance of People’s Participation in Governance and Development
1.4 Gram Sabha and Peoples Participation
1.5 Ward Sabha and Peoples Participation
1.6 Inclusive Participation
1.7 Let Us Sum Up
1.8 Keywords
1.1 INTRODUCTION
The challenges of development have opened many avenues unexplored in the
journey of a nation. The traditional approach of centralized planning and top
down approach focused on economic growth as an objective. This approach is
based on presumption that higher economic growth leads to redistributive justice
to all. However, decades of experiments and experiences have proved otherwise.
The search for new alternatives has thrown many avenues which focus on people
centric development, decentralized governance and participatory approach to
development.
Decentralized governance, meaning involving all stake holders in the process of

development is an instrument for promoting equitable development. In this unit,
we will focus on people’s participation in governance and development. There
have been significant changes in policy directions for development like
reactivation of Panchayat Raj in rural India and more participatory Municipal
Bodies. We shall study the meaning of people’s participation and why it is a
necessity in today’s context and how the same is being ensured through formal
and informal institutional structures at grass root level. The understanding of the
methodologies of decentralized governance and functions of grass root institutions
like Gram Sabha and Ward Sabha enables you to comprehend the democratic
processes of our political system.
After studying this unit, you should be able to –
• Understand the meaning and concepts of participation, Local Self

Governance in development.
• Discuss the importance of local Self Governance, people’s participation in
development.
5
Peoples Participation • Comprehend the role of Grass root institutions like Gram Sabha, Ward Sabha,
and Panchayati Raj Institutions in development through self governance.
• Differentiate between various methods of Governance.
1.2 PEOPLE’S PARTICIPATION - MEANING AND

CONCEPT
1.2.1 Meaning of Participation
Most simply defined, participation means taking part. In the context of
development theories, participation means direct involvement of all those people
in the decision making process which is likely to affect their lives. “The way
participation is defined largely depends upon the context and background in
which participation is applied. While the Economic Commission for Latin
America (1973) considers contribution by the people to Public Programmes to
the complete exclusion of any involvement in the decision making process as
participation. Cohen and Uphoff (1977) maintains that participation includes
the people’s involvement in the entire decision making process. FAO (1982)
emphasizes participation in all decision making process but by the people’s own
Organization and through self organized actions. Paul (1987) introduces the
concept of enhancement of well being in terms of values cherished by the
communities as being the ultimate objective of participation.” (Somesh Kumar,
2002)
Participation can be seen in two extreme forms. It can begin as passive
participation where people are told what is going to happen or happened. People
are just objects on whom action is thrust. On the other extreme is self mobilisation
where people participate by taking initiatives independent of external Institutions
to change systems. Participation starts from the conception stage up to the delivery
of the product and its consumption. The process involves decision making at
various stages independent of any external influence. Participation can be
categorized into various stages in which degree of involvement varies. The
Typology of Participation are:
• Passive Participation
• Participation in Information giving
• Participation by consultation
• Participation by Material Incentives
• Functional Participation
• Interactive Participation
• Self Mobilsation
In the above typology passive participation is at the one end of the spectrum
where people are told what to do while on the other end is the self Mobilsation
where local people themselves are in total command. As one moves from passive
participation to self Mobilsation control of local people increases and outsiders
decreases. “The principle of participation is widely recognized as a right in itself.
The right to take part in the conduct of public affairs means that every person
and all people are entitled to participate in, contribute to, and enjoy civil,
6 economic, social and political development.” (Zubair Meenai, 2008)
Participation as a concept has found favour among masses, policy makers, Peoples Participation in
Governance and Development
politicians, and sociologists alike – Croft and Bensford (1994) have elaborated
some arguments for participation.
• Most people want to be involved - People have intrinsic desire to get

involved.
• People have right to be involved - people have the legal entitlements to be
involved, the rights to redress, to comment and to be consulted on issues
impacting their lives and society.
• Participation has accountability - Accountability means not just being
responsive but also answerable to the people. People have the right to know
what is happening and why? Increased direct involvement of the service
users results in more effective accountability of the service providers.
• Participation makes more efficient and cost effective services.
• Involving people challenges institutionalized discrimination.
The Food and Agriculture PARTICIPATION

Organisation (FAO) looks at Functional participation: to increase
participation from three efficiency and effectiveness of Research &
perspectives: (a) Functional, (b) Development.
Empowering and (c) Philosophical. Empowering Participation: To increase the
Participation is understood at independence, awareness and capacity of
various levels. Conceptualization of marginalized groups.
participation has ranged from Philosophical Participation: Participation
contributions by the people to to allow expression of alternative views.
Public Programme to the Source: FAO Org./Participation
involvement of people in the entire
decision making process. (Zubair Meenai, 2008).
Participation as a process - If seen as a process in development Programme,

there is involvement of local people in implementation of externally designed
initiative. There is collaboration along with external agency and local population
whereby externally designed development activities are implemented in a
participatory manner. Thus, participation is a means or instrument to implement
a programme to achieve desired goals.
Participation as an end - Participation as a goal of a policy initiative entails

empowering people in terms of their acquiring skills, knowledge and experience
to take greater responsibility for their development. People are provided access
to power and resources to create opportunities which are self sustaining.
Bastain (1997) sketches four different thematic variations in the concept of

participation. ( Murleedharan, 2006)
• First, participation is employed as a simple means of getting unpaid labour
from the people. It serves the purpose of creating a sense of belonging among
the public about the public utilities created.
• Second, Participation is interpreted as an attempt to provide self reliance.
• Third, participation approach is resorted as a technique to create ideal
villages.
7
Peoples Participation • Finally, participation is resorted as a method of Project Management.
1.3 IMPORTANCE OF PEOPLE’S PARTICIPATION

IN GOVERNANCE AND DEVELOPMENT
“The essence of development is nothing but peoples’ participation. There are
many components that are involved in development like money, material,
resources, technology, human etc. Of all the social factors, human factors are the
crucial elements. People are the pivot around whom the entire development
processes are supposed to revolve.”(Joel and Bhore, 2003).
The above statement underlines the importance of peoples’ participation in

development process. Ever since societies have strived to develop, the methods
of development have been widely debated. The early phase of development era
emphasized on the Top down approach to development based on trickle down
theory. During this phase, the emphasis was on planning at the top with focus on
achieving higher growth rate. This approach was based on the premise that
centralized planning ensures higher growth which automatically trickles down
to grass root level. “During 1950s and 1960s – modernisation theories had been
so pervasive that it was almost impossible to separate modernisation from
development linked to capitalism and economic growth.”(Zubair Meenai, 2008).
However, the experience gained during this time reflected that these development
strategies were loosing battle against the poverty and hunger. Even a higher growth
rate could not ensure equitable growth and disparities in development levels
continued to either remain or get wider and wider. Participation as a concept and
a strategy of development is an outcome of the profound disillusionment with
the established development strategy in post Industrial Revolution period. The
experiences of the Fifties and Sixties have demonstrated the fundamental
weakness of the Top down, GNP focused, growth centered strategy of
development based on professional expertise and modernized technologies. The
development strategy followed during this period emphasized economic growth
and industrialization in the context of increasingly centralized planning and
control over the distribution of resources. (Joel and Bhore, 2003).
The origin of participatory approach to development is based on the failure of

the growth centered approach to achieve all around development. This
phenomenon was observed across the countries and international agencies like
UN, UNDP, ADB, FAO, hotly debated the feasibility of this model. Gunnar
Myrdal, the Noble Prize winning Economist in the late 1960s urged governments
to plan their economies actively, adopt social policies that enhanced people’s
welfare and take steps to redistribute income and wealth. This led to the
publication of a major policy document from the UN (1971), ‘Social Policy and
Planning in National Development.’
The shift in focus of development strategy from growth centered to people

centered has necessitated planning from grass root level involving all the stake
holders in the process. “People must be at the centre of human development.
Development has to be woven around people not people around development.
David C Korten has articulated such concept of people’s involvement as “People
Centered Development”. People are the primary subject matter in people centered
development.”(Joel and Bhore, 2003).
8
Development is no longer a favour or a privilege to the people. It has to revolve Peoples Participation in
around them. They cannot be treated as mute observer or objects or passive
receivers as they are powerless and un-endowed. They are supposed to be prime
movers of development at any given point of time. FAO, while emphasizing the
role of people’s participation in governance and development, has listed various
ways by which people’s participation can be strengthened.
• Participation by information - a unilateral means of providing information

to people without seeking their response.
• Participation in information giving – people do not participate in process
of decisions making but are encouraged to share their views.
• Consultation – People participate by being consulted – The programmes
and plans are subject to modifications based on response and input from
people. However, same is non-obligatory.
• Joint Planning – people participate in joint planning, analysis and
formulations of new methods. Local groups control local decisions and
hence have stake in maintaining structures and practices.
• Decision making - when consensus is acted upon through collective
decision, this marks the initiatives of shared responsibilities for outcomes
that may result.
• Empowerment - The ultimate objective of participation wherein the local
Community has the right and capability to have a say in decision concerning
their lives.
Peoples’ Participation - Advantages
Participation in development is now being sought in world over, not because it
is fad but because there has been a consensus on the usefulness of people’s
involvement in governance and development. This has several advantages like–
Efficiency: Participation can ensure effective utilization of available resources.

The people and other agencies work towards achieving their objectives,
involvement and cooperation among all stake holders improve efficiency and
effectiveness of planning process.
Effectiveness: Failure of conventional growth strategy because of lack of grass

root knowledge and absence of people’s role in development made most of the
plans ineffective. People’s participation can make the development strategy more
effective by granting a say in dividing the objectives and strategies and
participation in management ensures effective utilization of resources.
Self Reliance: More often, it is noticed that people at local level look up to the
external experts or Government for solutions to their problems. This leads to
distortions and ineffectiveness of planning due to lack of local knowledge. If the
local resources are utilized on the basis of decisions taken by the people
themselves, the realization grows that many problems faced by the people have
local solutions at their levels. With active involvement of the local people, it is
possible not only to break the psychological barrier of dependence, but also to
increase their awareness, self confidence and control of the development process.
9
Peoples Participation In fact, the involvement in decision making, implementation and monitoring
helps in developing local human resources.
Coverage: People’s participation in decision making process widens the coverage

among all sections including deprived and weaker sections.
Sustainability: External interventions through government or other agencies

lack potential for long term sustainability of schemes if local participation is not
ensured. People’s involvement in governing the scheme creates local capability
and ownership of resources. It is a sustainable development alterative for long
term solutions to local problems.
Activity 1
Talk with several of your extension colleagues and ask them to define what
they mean by Participation. Compare those definitions with the one given
in this unit.
1.3.1 People’s Participation in Indian Governance

India has had a long history of local governance. The concept of village as a self
sufficient unit and existence of Panchayats at village level have existed since
ancient times. Panchayats were institutions of local people for governance and
resolutions of disputes at local level. Despite having no codified laws for
functioning of Panchayats, they existed as potent institutions to maintain law
and order, stability and utilization of local resources for common good of the
community. Panchayats were democratic means of involving people in decision
making, using local resources and talent to manage all affairs of the society.
Panchayats were least dependent on external agencies and were the best examples
of local governance through democratic participation.
In the modern India, the concept of participatory development had been

experimented much before it took shape in the development discourse. The first
such attempt of structural participation of people in development was through
Community Development Programme in 1952 as a Programme of aided self
help. This Programme intended to be planned and implemented by the villagers
themselves, government offering technical and financial assistance. The
community development Programme failed miserably because of lack of political
patronage as well as bureaucratic lethargy. The country in its endeavor to fast
track growth, focused on growth centered approach through centralized planning.
There was no political priority to decentralize the governance system. This
happened despite the fact that the Constitution of India had recognized Panchayat
bodies as units of Self Government drawing its inspiration from the historical
legacy of Panchayat Systems of Indian villages.
The importance of people’s role in overall development framework was well

enshrined in the Indian Constitution although in the Directives Principles of
state Policy. Article 40 of the Constitution reads as “ Organization of village
Panchayats: The State shall take steps to organize Village Panchayats and
endow them with such powers and authority as may be necessary to enable
them to function as units of Self Government.” However, the non-obligatory
nature of its reference in the Constitution resulted into complete exclusion of
Panchayat System from policy priority. From independence up to 73rd and 74th
10
amendment to the Constitution of India several efforts were made towards Peoples Participation in
decentralization emphasizing the role of participatory governance at grass root
level. Some of the salient steps were:
• Balwant Rai Mehta Committee (1957): this Committee was set up to

study the problems and suggest ways and means for implementing the
scheme of Panchayati Raj on some uniform line throughout the country.
• Ashok Mehta Committee (1977): to suggest measures to revitalize
panchayati raj institutions (PRIs).
• C.H.Hanumantha Rao Committee (1984): to suggest the methodology
for district level planning.
• G.V.K.Rao Committee (1985): to study the administrative arrangements
for rural development programmes and poverty alleviations schemes.
• Sanghvi Committee (1987): to examine the functioning of PRIs,
recommended reorganizations of villages for creating viable Gram
Panchayats.
• 64th Constitutional Amendment Bill (1989): to set up panchayats in
every state, but could not be passed in Rajya Sabha.
• 73rd Constitutional Amendment(1992): A Constitutional obligation
to set up Panchayats in states, hold elections with provisions for
reservations and devolve powers, administrative and financial to Panchayati
Raj Institutions for grass root participation of people in planning and
development process.
Since independence, India has experimented with its policies partially on the
lines of its own history and partially going by the global trends of the times. The
periods of 1950s-1980s were periods of Centralized governance systems even
internationally with growth Centered top down approach to development. India
while giving token value to its own history in self governance, borrowed the
concept of centralized planning with top down approach. GDP growth was the
prime mover of the policy presuming it will take care of redistributive part.
The international failure of growth centered approach excluding the masses was
almost replicated in India also. India had multi dimensional issues to address on
development front like poverty, hunger, illiteracy, extreme inequalities, and rural
urban divide. Fortunately, the importance of all round development with active
people’s participation was realized sooner than later. The emphasis shifted from
‘top down’ to ‘bottom up approach’ meaning thereby transfer of planning,
decision making and delegations of administrative authority from the Central
and State Government to Local Administration units of Government. “ It was
increasingly realized that democracy could play an important role in promoting
development, eradicating poverty and improving the quality of life, which
makes strengthening of local democracy an end to itself. Thus efforts to
institutionalize the participation of citizens in decision making, development
planning and management by giving more powers and resources to the gross
root level was aimed to be brought about by the 73rd and 74th Constitutional
Amendment Acts(1993). These Constitutional Amendments, the 73rd pertaining
to rural local government and 74th for urban local government have given a
shot in the areas of decentralization .” 11
Peoples Participation These actions fully guarantee the vital role of people in harnessing their own
talents and govern their own resources for their own development, State or any
external agency being a nominal facilitator in the process. The 73rd Amendment,
which is a watershed in the sphere of rural governance has an attached Eleventh
Schedule to the Indian Constitution which covers 29 functional areas ranging
from agriculture, land reforms, forestry, small industries, drinking water, rural
electrification poverty alleviation, education, development of women and children
etc. Local Government, be it rural or urban, is essentially a manifestation of
popular participation in the process of governance at the grass root level.
All political power in democracy stems from people. Access to political power
is critical for economic and social empowerment. Central, therefore, to
governance is empowerment of people by increasing their control over
governance. Till the 73rd Amendment there were few structural Institutions of
governance at local level. People were largely excluded from the development
process. A policy shift towards decentralization of political power took place in
India through the 73rd and 74th Amendments to the Constitution of India. This
was an outcome of growing concern about increasing inefficiency and costs of
delivery systems of development programme.
After reading and understanding the concept of participation, its importance and
relevance in Indian context, now attempt these question given in check your
progress-1.
1) What do you understand by Participation? Explain why it is important for
development.
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
2) Is the concept of self sufficient village of ancient India an ideal example of
people’s participation in their affairs?
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
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12 ......................................................................................................................
Peoples Participation in
1.4 GRAM SABHA AND PEOPLES Governance and Development
PARTICIPATION
Right from the Gandhian Economics of the grass roots and Schumacher’s ‘Small
is beautiful’ much has been written and said about taking economic development
to the rural areas and with it the smallest unit of the Indian democratic set up,
the village.” The dream of such visionaries was realized in modern India through
the 73rd Amendment to the Constitutions which provided for creation of three-
tier structure of Panchayats. The creation of this system was made constitutional
obligations on all states leaving no discretion with them. Thus democracy began
to flow from lowest level of society and development became people centric.
The setting up of Gram Sabha at village level has strengthened the people’s
direct involvement in their affairs. The Gram Sabha has been set up in each
Village consisting of all members of the village who are eligible to vote in
Elections. Gram Sabha take complete control of all the developmental issues of
village and has a binding duty to discuss them in meetings to obtain consensus
of its members. Gram Sabha has been recognized as the basic tier of Panchayati
Raj. According to Article 243(b) a Gram Sabha consists of all persons registered
as voters in the electoral roll.
Composition of Gram Sabha
• There will be at least two meetings of Gram Sabha every year, one in the
first and the other in the last quarter of the financial year.
• Gram Sabha can also meet on the written request of one tenth of its members,
or if required by Panchayat Samithi, Zila Parishad or the State Government.
• Participation of people in meeting is ensured by Panchayat by placing before
the Gram Sabha - (in first quarter)
1) Annual Statement of Accounts
2) Report on the Administration of the preceding financial year
3) The development and other programmes proposed for the financial
year
4) Last Audit Report -
In the meeting held in last quarter of the year following issues are discussed.
a) Statement of Expenditure incurred during the year
b) Physical and Financial programmes taken during the year.
c) Proposals for any changes in the Programme
d) Budget of the Panchayat and tax proposals of the Panchayat.
Besides above any other matter referred by Panchayat, Panchayat Samithi, Zila
Parishad, the State Government is also taken up by Gram Sabha.
Quorum: The quorum for a meeting of the Gram Sabha shall be one tenth of the
total members out of which at least 40 per cent should be women.
13
Peoples Participation Presiding Officer: The meeting of the Gram Panchayat shall be convened and
presided by the Sarpanch of the Panchayat or, in his absence, by the Upsarpanch
of such Panchayat.
Functions of Gram Sabha:
• To consider and approve the annual plan prepared by the Gram Panchayat.
• To generate proposal and determine the priority of all schemes and
development programmes.
• To identify and select individuals for beneficiary oriented programmes.
• To disseminate information on development and welfare schemes
• To assist Gram Panchayat in collection and compilation of details about
the village for development plans.
• To collect information about functioning of Gram Panchayat and share in
Gram Sabha.
• To generate awareness among people about programmes and schemes for
development.
In addition to above Gram Sabha discharges almost all functions which are
required in the village for the development including persuading members to
pay taxes and loan repayment.
Constraints:
• Lack of awareness, lack of attendance, domination, force caste.
• Lack of awareness about legal provisions of Gram Sabha, Panchayat.
• Poor not confident that their issues are taken up.
The above structure of Gram Sabha incorporates all members of the community.
The decisions are collective in nature and rely on utilization of resources for the
benefit of the society. Meetings of the Gram Sabha are convened to ensure the
development of the people through their participation and mutual cooperation.
The attendance ratio of people in Gram Sabha meetings is the best indicator of
peoples’ participation in planning and development.
To make participation in Gram Sabha effective there is need to take following

positive action:
• Creation of objective conditions in the society
• Democracy cannot succeed with inequality and poverty.
• Effective role of political parties in educating and mobilizing people for
Gram Sabha
• Panchayat leadership to be more democratic and open to criticism
• Freedom of speech to be ensured
• Information dissemination of positive works of Gram Sabha and Panchayat
to be highlighted.
• Govt agencies to be responsive to people.
14
• Advice and decisions of the Gram sabha to be binding on the Gram Peoples Participation in
Panchayat.
• State to ensure penal action for not holding Gram Sabha meetings.
• Motivate members for meaningful participation and effective role in Gram
Sabha.
Activity 2
Visit a Village near your residence and attend one Gram Sabha meeting and
note down the discussions in the meeting. Compare them with what is
explained in this unit.
1.5 WARD SABHA AND PEOPLES

PARTICIPATION
The 74th Constitutional Amendment Act, 1992, provided for creation of Urban
Local Bodies for wider participation of people in development of urban areas.
The background for this was weak and ineffective local bodies due to failure to
hold regular elections, prolonged supersession and inadequate devolutions of
powers and functions. Urban Local Bodies were not acting as vibrant democratic
institutions of self governance with active peoples’ participation.
The Constitutional Amendment created viable municipal bodies in urban areas

which represented the people of the municipality. Municipalities were to have
wards within their territorial jurisdictions. However, the Ward Committees and
Municipalities did not develop into the institutions of people’s participation.
Urban decentralisation has not matured to the extent it is done in rural areas. Our
cities and towns do not have bottom up structures that create more proximity
between the citizen and their urban local government. People’s participation is
at the heart of democracy. The absence of people has several adverse consequences
on the functioning and accountability of those managing these institutions.
1.5.1 Ward Sabha in Panchayati Structure

The Ward Sabha in Gram Panchayat have been more effective instruments of
airing popular views and opinion at decision making level.
Composition of Ward Sabha

The Ward Sabha comprises of all adult persons of the ward in the panchayat
circle. The members of the ward elected through direct election, a panch as head
of the ward who represents the people of the ward in all Gram panchayat meetings.
Quorum
The quorum for the meeting of a ward sabha shall not be less than one tenth of
the total members in the ward sabha or twenty members whichever is less. To
ensure wider participation of all sections of the society, not less than thirty percent
of the voters attending the ward sabha shall be women. The persons belonging
to SC/ ST shall be represented in proportion of their population in the ward
sabha.
15
Peoples Participation Functions and powers of Ward Sabha
• To generate proposals and determine the priority of schemes and

development programs in the area of ward sabha and forward the same to
the Gram Sabha or Gram Panchayat for inclusion in the development plan.
• To identify eligible persons for beneficiary oriented schemes.
• To verify the eligibility of persons getting various welfare assistance from
Government.
• To collect information about services, plans and decisions taken in Gram
Panchayat concerning the ward.
• To mobilise voluntary action for public goods and services.
• To ensure that members of Ward Sabha pay taxes and repay loans.
• To suggest location of public services like street light, toilets, public wells
etc.
• To impart awareness on matters of public interest such as environment,
sanitation, pollution.
Ward Sabha also takes up any other issue which concerns the members of the
ward and raises it at Gram Sabha, Gram Panchayat level for resolving the
problems. Ward Sabha has been effective channel for people to directly participate
in managing their development needs.
Meetings of Ward Sabha

Subject to orders of the Government ward sabha meets at least once in six month.
Limitations
Ward Sabha is a viable mechanism for active participation of all section of people
at the very root of the society. However, there are limitations which can thwart
people’s role in governance
• Lack of education among majority in rural areas.
• Lack of awareness among weaker sections.
• Lack of knowledge among panchs and Sarpanchs about provisions of ward
sabha.
• Domination of rich and elite in decision making.
• Exclusion of women and other weaker sections from ward sabha meetings.
Activity 3
Select some adult members in your locality and ask them about their
perception of Ward Sabha. Also ask some Ward representatives and question
them on Ward Sabha meeting. Note down the difficulties involved in direct
questioning.
1.6 INCLUSIVE PARTICIPATION

The right to participate in linked to rights of inclusion and to rights to obligations,
16 through which poor people may expect to hold governments more accountable
and responsive. It is essential that civil society and government must work together Peoples Participation in
to make sure that participatory local governance programmes are inclusive and
equitable in order to correct power imbalances that exist at local level. For
inclusive governance the existence of diversity and differences has to be
recognised. The salient features of inclusive participation are-
• Team work and collaboration.

• Individual and group activity.
• Action and ownership.
• Reflection and learning.
It has been observed that due to wide disparities in economic, social and political
status of people in India, many individuals or sometimes the whole section are
excluded from development because of their gender, ethnicity, disability or
poverty. The effect of such exclusion is huge deepening the already existing
inequalities.
Development must encompass the whole spectrum of the society so that all
stakeholders in the outcome of development have participation and say in the
process. Gram Sabha, Panchayat institutions are instruments for inclusive
participation if their potential is properly harnessed. These institutions have inbuilt
mechanism to include all sections of society in all decision making and
development process. It ensures optimum utilisation of local resources including
human resources for capacity building of local population. The legal provisions
of Panchayat act ensure compulsory participation of women, SC/ST and other
weaker sections. Inclusive participation is at the centre of achieving equitable
development where in the fruits of the process of development are consumed at
all levels. The mere inclusion of all ensures its correct path and optimization of
resources. The effect of not harnessing the great potential of women as human
resource has been felt all around.
1) The 73rd Constitutional Amendment Act has led to true empowerment of
people at grass root level by giving equal opportunity to all in development.
Comment.
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17
Peoples Participation 2) How Gram Sabha controls the resource utilisation in its geographical
jurisdiction? Is it a true representative of all sections of society?
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
3) Decentralisation of governance is better than centralized governance in a

developing country. Explain the merits and demerits of the statement.
......................................................................................................................
......................................................................................................................
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......................................................................................................................
......................................................................................................................
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1.7 LET US SUM UP

In this unit, we discussed the meaning and concept of participation. The
significance of participation in development policy was examined with reference
to international experiences and in Indian context. We examined various ways
of involving people in development process and disadvantages of non
participation in the process. We had a look at experience of Decentralised
governance in India since Independence and background which paved the way
for enactment of 73rd Constitutional Amendment Act in 1992. Later we studied
the structure of Panchayati Raj in rural areas and examined in some detail about
the role and functions of Gram Sabha and Ward Sabha in formalising the local
self governance in India. The importance of Inclusive Participation was briefly
highlighted in the last section of the unit.
1.8 KEYWORDS
Participation: Taking part in an activity which impacts the individual itself or
his community.
Sustainability: Used with reference to development for planning and schemes

which create capacity for long term self survival and not meant for short term
objective.
Panchayati Raj Institution: A three tier structure of local self governance as

part of policy of Decentralised governance. A constitutional obligation for Indian
States to establish the Panchayati Raj Institutions in rural areas.
18
Gram Sabha: A general assembly of all members of a Village who are enrolled Peoples Participation in
as voters in electoral roll. Meets at least twice a year to discuss development
issues of village.
Sarpanch: The head of the Gram Panchayat directly elected by the electorates
in a Gram Panchayat.

Allen, J (ed.) (2003) Inclusion, Participation and Democracy: What is the
Purpose? Springer.
Das, Purnendu Sekhar (ed) (2005) Decentralised Planning and Participatory

Rural Development, Vidya Sagar University, Dept. of Economics with Rural
Development New Delhi.
Datta, Prabhat (2006). Decentralisation, Participation and Governance, Kalpaz

Publication, New Delhi.
Joseph, T.M. (ed.) (2003) Local Governance in India- Ideas, Challenges and
Strategies. Concept Publishing Co. New Delhi.
Joel, S. and G R Bhore (2003) NGOs and Rural Development. Concept Publishing
House New Delhi.
Kumar, Somesh (2002) Methods for Community Participation, Vistaar

Publications New Delhi.
Murleedharan, K. (2006) Participatory Development Issues and Lessons, Serials

Publications New Delhi.
Planning Commission of India- India Vision 2020, GOI, New Delhi.
Planning Commission of India- National Human Development Report 2001,

GOI, N.Delhi.
Subramanium, K. C. (ed.) (2006) People’s Participation in Urban Governance,

Institute of Social Sciences, Concept Publishing House New Delhi.
Zubair Mennai (2008) Participatory Community Work. Concept Publishing

Company N. Delhi.
Wesites www.iiasiisa.be, FAO.org/participation,
www.infochange.org

ANSWERS
1) What do you understand by Participation? Explain why it is important for
development.
19
Peoples Participation Answer: Participation literally means taking part in some activity. By taking
part in an activity an individual or group can exert its opinion and views
based on the first hand information about any place, environment or any
enabling condition that may be essential for successful implementation of
a scheme or policy. In development sphere, it is important to know the
local know how to correctly devise and plan schemes compatible with
local conditions. Hence, participation is extremely essential in development
field to collect local information by involving local people at all stages.
2) Is the concept of self sufficient village of ancient India an ideal example of

people’s participation in their affairs?
Answer: India has had a long history of self governing village societies
through Panchayat institutions. The relative isolation of villages in India
in ancient times made it almost compulsive for people to learn to govern
themselves. The Panchayats had the sanction of the society to engage into
not only development issues but many a times they were called upon for
maintenance of law and order, discharge judicial functions and resolution
of disputes in its territory. They worked as perfect institutions of governance
at that time but in today’s modern times it may not feasible to expand their
sphere beyond development issues since there are other structures to take
care of other functions on an all India level. Panchayats are potent
institutions for development purposes even today as reflected in the success
of Panchayati Raj in many places.
1) The 73rd Constitutional Amendment Act has led to true empowerment of
people at grass root level by giving equal opportunity to all in development.
Comment.
Answer: The 73rd Constitutional amendment has provided for local self
governance and participation of all sections in the development process by
giving reservations to weaker sections including women. The Gram Sabha
and Gram Panchayats are true representatives of people who have stake in
the process of development. However the dynamics of rural society, polity
and economy does play role in determining the functions of Panchayats at
grass root level. For example on a reserved seat for women either the women
of ruling elite get elected or women is by proxy represented by male of the
family thus diluting the very concept of democratization.
2) How Gram Sabha controls the resource utilisation in its geographical

jurisdiction? Is it a true representative of all sections of society?
Answer: Gram Sabha is the general assembly of people in a village which

decide on all matters related to the village. The functions include decision
on beneficiary of schemes, approval of development plans for the village,
collection of information on all issues of development. The decisions taken
in Gram Sabha are collective where all sections of society have equal
representation.
3) Decentralisation of governance is better than centralized governance in a

developing country. Explain the merits and demerits of the statement.
20
Answer: Decentralisation of governance is a better method of development Peoples Participation in
since it involves participation of people in the very process itself rather
than at the end of it when end result is given to people. In developing
societies, there is need to involve people to ensure equitable distribution
of development. The centralized planning approach followed world over
failed to do justice to large majority widening the gap between elites and
deprived. However decentralized planning needs to be followed with care
as majority of people in developing countries are illiterate and unaware.
21
UNIT 2 PARTICIPATORY TOOLS AND
METHODS
Structure
2.1 Introduction
2.2 What are Participatory Methods?
2.3 Why is Participatory Management Important?
2.4 Application of Participatory Methods
2.5 PLA: Underlying Principles and Techniques
2.6 Working with Stakeholders
2.7 Using Participatory Methods: Advantages, Challenges and Ways Forward
2.8 Relevant Terms Explained
2.9 Let Us Sum Up
2.1 INTRODUCTION
Participatory tools and methods are the means by which the principles of
participation are translated into the actual practice of development. Participatory
methods ensure that all stakeholders become involved in a number of different
activities which are integral to the development process. They provide a structured
approach to participation with clear guidelines of who should be involved, when
and to what extent. They are very important to programme and project planning
when clear procedures need to be identified and approved, rather than relying on
an ad hoc approach. Participatory tools are specific activities designed to
encourage joint analysis, learning and action. Special ‘packaged’ techniques can
be very powerful ways of getting people involved. However, no one tool or
technique is applicable to all situations.
A wide range of distinctive tools and methods have been developed over the last
decade or two. This Unit provides a cross section of participatory methodologies.
It is by no means a comprehensive list of all existing methodologies but is intended
rather, to provide an example of the range of resources available to those who
wish to expand participation at any level of their operations from the internal
organizational level to the external programmes/projects supported. It should
also noted that none of these methods need be used exclusively; rather they can
be used in combination. Each has its own strengths and weaknesses and different
methods can be used for different purposes.
After studying this unit, you should be able to:

• explain why participatory tools and methods are important in participatory
process management;
• describe participatory tools and methods;
• appreciate the principles and techniques of participatory methods; and
22
• describe the attitudes and actions that are critical to applying participatory Participatory Tools and
Methods
methodologies.
2.2 WHAT ARE PARTICIPATORY METHODS?

Participatory methodologies aim to actively involve people and communities in
identifying problems, formulating plans and implementing decisions.
They are often seen as a set of principles for generating insights about people
and the communities in which they live. However, for those involved in using
them, they are not only often flexible and informal, they are also continually
evolving. In addition, there is no one standard methodology or set of methods to
employ in any given situation: different techniques therefore need to be developed
for particular situations.
Participatory methodologies enable people to do their own investigations,

analyses, presentations, planning and action, and to own the outcome. The
principles behind participatory methodologies are:
• That it is possible, and desirable, to increase participation in development

by involving those immediately affected by a particular need;
• Involving people so affected enables activity designers and managers to
explore a range of real circumstances and systems rather than concentrating
on statistical samples;
• Issues can be investigated from different perspectives and using a range of
approaches, such as involving multidisciplinary teams;
• Informal approaches are often more appropriate and can be changed as the
work progresses.
Participatory methods are most commonly associated with the spread of

diagramming and visual techniques which began to be developed in the 1970s.
These originated in a number of scientific disciplines interested in analysis of
complex systems: biological science, ecology, agricultural economics and
geography. It became increasingly important to work with farmers to develop
more sophisticated models to explain their responses to development programmes.
The increasing influence of applied anthropology in development agencies from
the 1980s also led to greater awareness of the need for a more sophisticated
understanding of poverty, social processes and grassroots perspectives on
development. The end of the 1980s diagramming techniques had combined
bringing together the insights from these different disciplines into a flexible
methodology commonly referred to as Rapid Rural Appraisal (RRA). By the
mid 1990s it was becoming increasingly evident that the mechanical application
of these techniques was often failing to really reach and capture the views of
poor people, particularly women, children and socially excluded. There was
renewed interest in methodologies for participation, drawing on earlier traditions
of participatory action research which had been long established as an integral
part of many grassroots organizations.
Participatory methods are therefore a diverse and flexible set of techniques for
visual representation and stakeholder involvement characterized by a set of
23
Peoples Participation underlying ethical principles. There is no one set of techniques to be mechanically
applied in all contexts for all participants. There is on the one hand a set of visual
tools to be flexibly applied to assist the synthesis and analysis of information
which can be used in group settings and also as part of individual interviews.
On the other hand are a set of guidelines for facilitating participation and
negotiation in focus group discussions and workshops bringing together different
stakeholders. These may or may not make substantial use of visual techniques.
Generally both visual techniques and participatory facilitation are combined in
different ways. The emphasis is on innovation and creativity in adapting previous
practice to new contexts and needs.
Participatory methods have a useful contribution to make in analysis of the

findings of impact assessment. They provide a useful means of investigating and
crosschecking information gained by quantitative and qualitative methods at
appropriate stages during the assessment. At the same time information obtained
through participatory methods should also be cross-checked through triangulation
with other methods to test their validity and increase their credibility.
Participatory methods have an important contribution in the systematic

identification of realistic ways forward based on the information obtained from
the impact assessment. As noted above, diagramming techniques are frequently
used in management consultancy for this purpose. In addition the participatory
process facilitates communication between donors, policymakers, development
practitioners and those affected by interventions. The different stakeholders
therefore both have their own opportunity to present their views and
recommendations, and also to comment on those presented by other stakeholders.
This participatory process needs to be carefully facilitated in order not to raise

unrealistic expectations or create tensions which cannot be resolved. It is crucial
that the potential limitations on change are clear to all those concerned, particularly
in relation to resources available and the skills of development agencies. It is
also important again to ensure fair representation of different stakeholders through
the detail of focus group and workshop design.
A particularly important contribution of participatory methods is their role in

capacity building of the different stakeholders. Where sufficient attention is paid
to these participatory methods have the potential to build up the necessary
information resources and networks for a learning process which will be
sustainable beyond the term of the one particular impact assessment. This can
include:
• Group-level learning
• Ongoing participatory monitoring and evaluation
• Multi-stakeholder networks for policy assessment
Thus the costs of integrating participatory methods can be seen as a contribution

to development in themselves, leading to much longer term benefits. These
benefits have included reducing the costs of project administration, reducing
default in micro-finance programmes, making training programmes more
attractive to clients prepared to pay for services. This is therefore also a
contribution to longer term financial sustainability of interventions.
24
Participatory methods have an important contribution to make at all stages of an Participatory Tools and
Methods
impact assessment:
• Initial identification of impact goals, indicators, categories for sampling

and analysis and initial exploration of hypotheses
• During the impact assessment process for crosschecking and further
exploration of issues raised by other methods
• Towards the end of the assessment to systematically identify and test the
possible implications of any recommendations for improvement in projects
or policy with different stakeholders
2.3 WHY IS PARTICIPATORY MANAGEMENT

IMPORTANT?
Participatory management will not arise spontaneously: it is a conscious and
informed activity to be advocated and implemented at every stage of the activity
cycle. And it s important that senior staff recognize participatory management as
necessary to the success of any development activity or intervention: senior staff
are key because they act as powerful role models for other staff; and the practices
they espouse should filter through to influence the way whole teams of staff
interact with their partners.
The process of continued, active stakeholder involvement in an activity results

in various improvements.
• Sustainability and sustainable impact:

More people are committed to carrying on the activity after outside support
has stopped;
Active participation helps develop skills and confidence.
• Effectiveness:
There is a greater sense of ownership and agreement of the processes to
achieve an objective.
• Responsiveness:
Effort and inputs are more likely to be targeted at perceived needs so that
outputs are used appropriately.
• Efficiency:
Inputs and activities are more likely to result in outputs on time, of good
quality and within budget if local knowledge and skills are tapped into and
mistakes are avoided.
• Transparency and accountability:
This accrues as more and more stakeholders are given information and
decision making power.
• Equity:
This is likely to result if all the stakeholders needs, interests and abilities
are taken into account.
25
2.4 APPLICATION OF PARTICIPATORY
METHODS
Participatory methodologies can be used at any stage of the Activity Cycle:
• At the Design stage, by involving people in identifying problems during
the planning and designing stage, e.g. needs assessments, feasibility studies;
• At the Implementation stage, through examination of a particular problem
or topic e.g. identifying priorities, or implementing new activities where
information
• needs to be collected;
• At the Monitoring and Evaluation stage, by enabling participants to
implement procedures to examine their own activities.
The precise information requirements of the different stages are diverse. However
they all depend on the systematic collection of data about the households and
communities served by the activity and the environments in which they live and
work.
Three of the more common methodologies are:

1) Participatory Learning and Action;
2) Participatory Rapid Appraisal;
3) Participatory Action Research.
See Box 1 (overleaf) for more information on these.
Box 1: Common Participatory Methodologies
Participatory Learning and Action (PLA)

An approach, which seeks to enable those with smaller, less dominant
voices, to be heard and to take control over decisions, which affect their
lives. PLA is a process of LEARNING from, with and by the community;
of using a set of tools, methods, techniques and exercises to
UNDERSTAND the needs, problems, and concerns of people. Participatory
Learning and Action combines:
• a set of diagramming and visual techniques originally developed for
livelihoods analysis;
• underlying grassroots participation principles of human rights activism
which involve rethinking power relations and partnerships between
development agencies, experts and poor people. These are now being
developed further to facilitate negotiations between different
stakeholders in projects and policy dialogue.
Participatory Rural Appraisal (PRA) is a cross-disciplinary, cross-sectoral
approach to engaging communities in development through interactive and
participatory processes. PRA builds upon the techniques of Rapid Rural
Appraisal (RRA) pioneered to involve communities in their own needs
26
Participatory Tools and
assessment, problem identification and ranking, strategy for implementation, Methods
and community action plan. It uses a wide range of tool, often within a
focus groupdiscussion format, to elicit spatial, time related and social or
institutional data.
Participatory Action Research (PAR) involves three key elements:

research, education and socio-political action. It is an experiential
methodology for theacquisition of serious and reliable knowledge upon
which to construct power, or countervailing power for the poor, oppressed
and exploited groups and socialclasses — the grassroots — and for their
authentic organizations and movements. Its purpose is to enable oppressed
groups and classes to acquire sufficient creative and transforming leverage
as expressed in specific projects, acts struggles to achieve the goals of social
transformation.

1) What are the principles behind participatory methodologies?

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2) Why are the different stages where participatory methodologies can be used?
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2.5 PLA: UNDERLYING PRINCIPLES AND

TECHNIQUES
A wide range of distinctive methods have been developed over the last decade or
two. This chapter provides a cross section of participatory methodologies. It is
by no means a comprehensive list of all existing methodologies but is intended
rather, to provide an example of the range of resources available to those who
wish to expand participation at any level of their operations from the internal
27
Peoples Participation organizational level to the external programmes/projects supported. It should
also noted that none of these methods need be used exclusively; rather they can
be used in combination. Each has its own strengths and weaknesses and different
methods can be used for different purposes.
The participatory methods discussed here are now generically referred to as

Participatory Learning and Action (PLA). Participatory Learning and Action
combines:

livelihoods analysis and now widely used in Natural Resources departments
in development agencies. They have since been adapted for use in other
sectors including enterprise development.
• underlying principles of grassroots participation from human rights

activism which involve rethinking power relations and partnerships between
development agencies, experts and poor people. These are now being
developed further to facilitate negotiations between different stakeholders
in projects and policy dialogue.
The underlying principles and most common techniques are summarized in

Box 2.
Participatory methods for impact assessment are most commonly associated with
the spread of diagramming and visual techniques which began to be developed
in the 1970s. These originated in a number of scientific disciplines interested in
analysis of complex systems: biological science, ecology, agricultural economics
and geography. It became increasingly important to work with farmers to develop
more sophisticated models to explain their responses to development programmes.
The increasing influence of applied anthropology in development agencies from
the 1980s also led to greater awareness of the need for a more sophisticated
understanding of poverty, social processes and grassroots perspectives on
development. By the end of the 1980s diagramming techniques bringing together
the insights from these different disciplines had been combined into a flexible
methodology commonly referred to as Rapid Rural Appraisal (RRA). Parallel to
these developments in the South, methodologies like Soft Systems Analysis and
Cognitive Mapping also became increasingly common in areas like management
consultancy, organizational research and planning. Here diagrams were used for
institutional analysis, highlighting problem areas and brainstorming possible
solutions. Workshops for organizations and enterprises included senior executives
and managers.
By the mid 1990s it was becoming increasingly evident that the mechanical
application of these techniques was often failing to really reach and capture the
views of poor people, particularly women, children and socially excluded. There
was renewed interest in methodologies for participation drawing on earlier
traditions of participatory action research which had been long established as an
integral part of many grassroots organizations in the South. In India for example
SEWA and other women’s organizations based their programmes on the findings
of focus group discussions in the 1970s and 1980s. MYRADA and AKRSP
developed participatory methodologies for grassroots mobilization. In Latin
America Paolo Freire developed methodologies for action research which were
28 later adopted in other countries. These methodologies were based on underlying
principles of human rights and aimed to use the research process itself as a means Participatory Tools and
Methods
of empowerment through use of diagrams as a focus for discussion and other
methodologies like drawing and role-play. More recently these methodologies
have been extended to include photography and video by grassroots groups and
looking at ways in which grassroots groups can record their own information in
diaries.
BOX 2: PLA : UNDERLYING PRINCIPLES AND TECHNIQUES
UNDERLYING PRINCIPLES
• embracing complexity
• recognition of multiple realities
• prioritizing the realities of the poor and disadvantaged
• grassroots empowerment
• from assessment to sustainable learning
• relating learning to action
TECHNIQUES
Visual Techniques
• Diagrams: Flow/causal diagram; Venn/Institutional diagram; Systems
diagrams; Pie charts; Histograms
• Ranking Techniques: Preference ranking and scoring; Pair wise
ranking; Direct matrix ranking; Ranking by voting; Wealth ranking
• Time Trends Analysis: Historical and future (visioning) mapping;
Time trends charts; Oral Histories
• Mapping Techniques: Mobility mapping; Social mapping; Transect
(walks)
• Calendars: Seasonal calendar; Historical seasonal calendar
• Ethno-Classifications: Proverbs, Stories, Indigenous Categories and
Terms, Taxonomies
Group and team dynamics methods
• Focus Group discussions
• Role-play
• Participatory workshops Recent Innovations
• Photo and Video production with grassroots groups
• Grassroots diaries using diagrams and simple numerical and written
information
OTHER COMPLEMENTARY QUANTITATIVE AND
QUALITATIVE METHODS OF INVESTIGATION
• Secondary Data Review
• Structured questionnaires
• Semi-structured interviewing
29
• Case studies
• Participant observation
• Direct observation,
• Qualitative anthropological fieldwork
Initially the term PRA (Participatory Rural Appraisal) was used to describe the
bringing together of RRA and activist research. It was emphasized that the most
important aspect was not the diagramming tools but their flexible application
based on a number of underlying principles:
• Embracing complexity and seeking to understand it rather than
oversimplifying reality in accordance with predetermined categories and
theories
• Recognition of multiple realities to be taken into account in analysis or
action.
• Prioritizing the realities of the poor and most disadvantaged as equal
partners in knowledge creation and problem analysis.
• Grassroots empowerment: aiming not only to gather information about
impact, but to make the assessment process itself a contribution to
empowerment through linking grassroots learning and networking into
policy-making.
More recently the term Participatory Learning and Action (PLA) has become
preferred because it more effectively incorporates the underlying human rights
tradition through emphasizing the importance of:
• changing from appraisal to learning and hence moving away from the use
of participatory methods as an extractive process by outsiders to a sustainable
learning process involving different stakeholders as equal partners.
• the importance of relating learning to action incorporating programme

and policy improvement as an integral part of the learning process.
Participatory methods are therefore a diverse and flexible set of techniques for
visual representation and stakeholder involvement characterized by a set of
underlying ethical principles. There is no one set of techniques to be mechanically
applied in all contexts for all participants. There is on the one hand a set of visual
tools to be flexibly applied to assist the synthesis and analysis of information
which can be used in group settings and also as part of individual interviews. On
the other hand are a set of guidelines for facilitating participation and negotiation
in focus group discussions and workshops bringing together different
stakeholders. These may or may not make substantial use of visual techniques.
Generally both visual techniques and participatory facilitation are combined in
different ways. The emphasis is on innovation and creativity in adapting previous
practice to new contexts and needs.
2.6 WORKING WITH STAKEHOLDERS

Understanding the stakeholders, including their literacy levels, local languages,
gender roles, indigenous management practices and work ethics, is one important
30
step. This information can be used to design logframe planning activities that Participatory Tools and
Methods
are more appropriate to the local context and more conducive to local
participation. A second, related step is to learn roughly equivalent terms in local
languages for key logframe concepts (such as Goal, Purpose, Outputs,
Assumptions). This often has to be done through discussions with local people.
Sometimes the terms need to be renegotiated in logframe workshops when there

is more of a context for the discussion and a better understanding of key concepts.
Each of the above require that the preparation for logframe planning workshops
be thoughtful and rigorous, including ample time for stakeholder interviews in
advance of the session and adequate time for designing and preparing specialized
planning sessions that are responsive to local requirements.
For planning work with illiterate or semi-literate participants, the traditional

(literacy-based) version of the logframe is inappropriate. In these groups, more
literate and more articulate elites may dominate discussions, even with the
assistance of an outside facilitator. In these situations local ownership of activity
designs will not result and the disbenefits of using the logframe approach far
outweigh its benefits.
Through adequate planning and preliminary stakeholder interviews, this kind of

situation should be recognized well in advance of the arrival of a planning team.
Where use of the logframe approach is not appropriate, Participatory Learning
and Action (PLA) or Participatory Rural Appraisal (PRA) planning methodologies
will be more appropriate (Refs), because they rely more on images rather than
words. If need be, the results of these planning methods may be eventually be
married with the logframe, preferably through a planning process involving more
articulate local representatives. If necessary, though this is less desirable, planning
experts can synthesis PRA planning decisions into a logframe format.
In these kinds of planning settings, using the formal, literacy-based version of

the logframe will created a bias against local participation. Again, more literate
and articulate elites will tend to dominate the planning process. In these situations,
the logframe approach can be used subtly with little explicit mention of its
technical terms.
One planning process used in this situation combines consensus-based approaches

for determining objectives that have more of a visual focus or an intuitive appeal.
In using and blending these planning methods the visual focus and visioning
provides a common basis for communication and building consensus and
ownership amongst local groups.
2.7 USING PARTICIPATORY METHODS:

ADVANTAGES, CHALLENGES AND WAYS
FORWARD
Participatory methods have the potential to bring together information from a
diversity of sources more rapidly and cost effectively than quantitative or
qualitative methods alone.
• Relevance of impact goals and indicators
• Stakeholder representation 31
Peoples Participation • Reliability of understanding of development processes
• Credibility of practical inference
However participatory methods also face a number of inherent challenges which
need to be taken into account. Some of these are common to all impact assessment
methodologies; some are due to the visual tools and some to the participatory
process. The degree to which participatory methods realise their potential
contribution depends critically on how carefully they are used and in what context.
Participatory methods are not a fixed set of mechanistic tools but a diverse range
of possible techniques which need to be flexibly adapted to particular situations
and needs. In some cases problems can be resolved through innovation in the
methods themselves. Sometimes limitations can only be, others can only be
addressed through triangulation with other quantitative and qualitative methods.
Using participatory methods provides a useful way of:

• Rapidly identifying the range of potential impacts through exploring the
inter linkages between different dimensions of livelihoods and poverty
• Prioritizing the different possible impact goals for assessment by identifying
which of the range of possible impacts are most important for the primary
stakeholders e.g. increased income versus decreased leisure, levels of income
and/or working conditions expected
• Identifying reliable measurable or qualitative indicators which can be used
in different contexts or for different target groups.
These potential contributions of participatory methods also have their own

challenges:
• Challenge of standardization for comparison because of the emphasis on
locally identified impact goals and indicators there are added challenges
for comparative assessment. It is however possible to agree on common
impact goals to be applied across contexts and then weight locally specific
indicators by which they are to be measured. This is merely an extension of
the weighting procedure itself, which inevitably involves a certain amount
of rather imprecise measurement and assumptions. The participatory process
enables the rather arbitrary nature of a priori weighting to be based on
local rather than external priorities.
• Challenge of sensitive information: it cannot be assumed that the
participatory process will necessarily yield in-depth information on sensitive
issues. In some cases the inevitably unpredictable nature of participation
has enabled generally private issues like domestic violence or controversial
issues like caste discrimination to be raised. Including techniques like role-
play has been found useful in highlighting dimensions of power relations.
In other contexts this sort of sensitive information may require in-depth
investigation by qualitative methods.
The participatory process also has a number of inherent challenges which include:
• Emphasis on consensus may serve to privilege dominant views and further
marginalize the most disadvantaged through giving the appearance of
participation. Explicit attempts are likely to be needed to include the very
32 poor, women and socially excluded and also to ensure that they are not
only present, but their voices are heard. This requires careful attention to Participatory Tools and
Methods
the participatory process: who participates which may require particular
attention to location and timing, how they participate which may require
separate meetings or special allocation of time to particular participants.
• The differences and also potential conflicts of interest may be difficult to
resolve and may require careful skills of negotiation. Recognizing and
addressing these differences and potential conflicts is nevertheless still
essential to ensuring that the impact assessment is a reliable representation
of contribution to poverty reduction.
Participatory methods have the potential to bring together information from a

diversity of sources more rapidly and cost effectively than quantitative or
qualitative methods alone. As indicated in Box 2 they have a number of potential
key contributions in increasing:
• Relevance of impact goals and indicators
• Stakeholder representation
• Reliability of understanding of development processes
• Credibility of practical inference
Although there are inherent challenges faced by the use of participatory methods,
these are no greater than for quantitative or qualitative methods. Much of the
problem with participatory research in the past has been because of under
resourcing, leading to mechanical use of tools by people with insufficient
experience or understanding of context. Participatory methods cannot be seen
as a cheap option. People with the skill and experience to flexibly adapt the
different techniques to the particular issues, contexts and institutions being
assessed, must treat them as a serious and integral part of impact assessment
requiring management. In many contexts a skilled facilitator would be able to
train programme staff, local investigators and/or grassroots leaders to replicate
selected simple exercises to extend the scope and coverage of the participatory
investigation. This is particularly the case for longer-term impact assessments
and/or where at least some local people already have experience of participatory
methods as co-facilitators or participants. Skilled participatory facilitators would
also be able to identify any limitations in the information obtained and indicate
ways in which the information obtained through participatory methods can best
be triangulated with other quantitative and qualitative methods.
Box 2: Participatory Methods: Advantages, Challenges And Ways Forward
Advantages Challenges Ways for

Relevance • rapidly identifying • standardization of • using the same
of impact the range of impact goals and impact goals,
goals and potential impacts indicators to allow weighting locally-
indicators comparative specific indicators
• participatory
assessment • role play and/or
prioritisation of
different impact • ensuring that triangulation with
goals sensitive issues are qualitative methods
aired
• identification of
locally relevant
indicators
33
Representation • identifying • the focus on • paying attention to
of different relevant consensus may participatory
stakeholders stakeholder mask differences process: location,
categories for timing, composition
• ensuring that the
assessment, of discussion groups
most vulnerable
control groups and and discussion
are present and
analysis agenda
their voices are
• involving different heard • triangulation with
stakeholders in a quantitative survey
• resolving
participatory or informal
differences
process, including qualitative targeted
between
the most interviews
stakeholders
vulnerable
Reliability of • rapidly obtaining • scale and • using quantitative
findings impact and other representation PLA methods eg
information for beyond mapping and voting
whole physically • careful
communities or identifiable documentation of
groups communities context and the
• exploring processes • focus on diagram assessment process
and hypotheses outputs may • triangulation with
• rapidly detract from other methods
investigating analysis of
underlying or side processes
issues
Credibility • increases • may raise • attention to
of practical communication unrealistic identifying and
inference between donors, expectations clarifying the
policymakers, limitations of the
• may create programmes and
development
tensions which policies
practitioners and
cannot be
those affected by • careful attention to
resolved
interventions the participatory
• makes information process
immediately
accessible to
different
stakeholders
2.7.1 The Role of a Facilitator

• Help the participants to organise more quickly and effectively.
• To create a conducive environment where participants can be comfortable
with one another.
• Guide the participants through a process of learning.
• Encourage the participants to become involved in the training program.
• Help the sub groups to establish proper roles and responsibility.
• Help the participants in setting up agenda and develop an attitude among
them that it is in their best interests.
34
• Ensure that both the participants and the facilitator(s) are honest, open in Participatory Tools and
Methods
their behaviour and actions.
• To provide a process, which will help the participants to discuss their own
content in the most satisfactory and productive way possible.
• Facilitator is positive about the content of the training and has equal stake
in the decisions that are taken by them.
• Facilitator may face many challenges with the participants but ultimately
the participants must solve it on their own.
2.7.2 Facilitation Skills

Adapting: to the changing conditions, allowing freedom to change the mind
and adjust to suit the particular needs of the moment.
Communicating: thoughts, feelings and ideas about the happenings. Enables

to contribute and share; also helps to develop a sense of freedom to act in
appropriate way.
Listening: in an open and quiet way. Helps to understand what and how it is
happening. and gives basis for the choices to act.
Questioning: in an enquiring and learning way. Gain knowledge to make choices.
Reviewing: what is happening here and how. Helps to assess what changes
your action has had on what is happening.
1) What do you understand by participatory learning action?

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2) What are the advantages of participatory methods?

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35
2.8 RELEVANT TERMS EXPLAINED
• Access to resources
A series of participatory exercises that allows development practitioners to
collect information and raises awareness among beneficiaries about the ways
in which access to resources varies according to gender and other important
social variables. This userfriendly tool draws on the everyday experience of
participants and is useful to men, women, trainers, project staff, and field-
workers.
• Analysis of tasks
A gender analysis tool that raises community awareness about the distribution
of domestic, market, and community activities according to gender and
familiarizes planners with the degree of role flexibility that is associated
with different tasks. Such information and awareness is necessary to prepare
and execute development interventions that will benefit both men and women.
• Focus group meetings

Relatively low cost, semi-structured, small group (four to twelve participants
plus a facilitator) consultations used to explore peoples’ attitudes, feelings,
or preferences, and to build consensus. Focus group work is a compromise
between participant observation, which is less controlled, lengthier, and more
in depth, and preset interviews, which are not likely to attend to participants’
own concerns.
• Force field analysis

A tool similar to one called “Story With a Gap,” which engages people to
define and classify goals and to make sustainable plans by working on
thorough “before and after” scenarios. Participants review the causes of
problematic situations, consider the factors that influence the situation, think
about solutions, and create alternative plans to achieve solutions. The tools
are based on diagrams or pictures, which minimize language and literacy
differences and encourage creative thinking.
• Logical Framework or LogFRAME

A matrix that illustrates a summary of project design, emphasizing the results
that are expected when a project is successfully completed. These results or
outputs are presented in terms of objectively verifiable indicators. The Logical
Framework approach to project planning, developed under that name by the
U.S. Agency for International Development, has been adapted for use in
participatory methods such as ZOPP (in which the tool is called a project
planning matrix) and Team UP.
• Mapping
A generic term for gathering in pictorial form baseline data on a variety of
indicators. This is an excellent starting point for participatory work because
it gets people involved in creating a visual output that can be used immediately
to bridge verbal communication gaps and to generate lively discussion. Maps
are useful as verification of secondary source information, as training and
36 awareness raising tools, for comparison, and for monitoring of change.
Common types of maps include health maps, institutional maps (Venn Participatory Tools and
Methods
diagrams), and resource maps.
• Needs assessment
A tool that draws out information about people’s varied needs, raises
participants’ awareness of related issues, and provides a framework for
prioritizing needs. This sort of tool is an integral part of gender analysis to
develop an understanding of the particular needs of both men and women
and to do comparative analysis.
• Participation
Participation refers to involvement whereby local populations in the creation,
content and conduct of a program or policy designed to change their lives.
Participation requires recognition and use of local capacities and avoids the
imposition of priorities from the outside
• Participatory development
An approach to “development” that empowers individuals and communities
to define and analyze their own problems, make their own decisions about
directions and strategies for action, and lead in those actions. The approach
is contrasted with “top-down” development processes, in which outsiders,
with greater socioeconomic and political power, make the key decisions about
local resource use and management.
• Participant observation
A fieldwork technique used by anthropologists and sociologists to collect
qualitative and quantitative data that leads to an in depth understanding of
peoples’ practices, motivations, and attitudes. Participant observation entails
investigating the project background, studying the general characteristics of
a beneficiary population, and living for an extended period among
beneficiaries, during which interviews, observations, and analyses are
recorded and discussed.
• Preference ranking
Also called direct matrix ranking, an exercise in which people identify what
they do and do not value about a class of objects (for example, tree species
or cooking fuel types). Ranking allows participants to understand the reasons
for local preferences and to see how values differ among local groups.
Understanding preferences is critical for choosing appropriate and effective
interventions.
• Public participation
A process that consists of a series of activities and actions conducted by a
sponsoring agency or other entity to both inform the public and obtain input
from them. Public participation affords stakeholders the opportunity to
influence decisions that affect their lives. Other terms for public participation
include public involvement and public engagement.
• Role playing
Enables people to creatively remove themselves from their usual roles and
37
Peoples Participation perspectives to allow them to understand choices and decisions made by
other people with other responsibilities. Ranging from a simple story with
only a few characters to an elaborate street theater production, this tool can
be used to acclimate a research team to a project setting, train trainers, and
encourage community discussions about a particular development
intervention.
• Seasonal diagrams or seasonal calendars

Show the major changes that affect a household, community, or region within
a year, such as those associated with climate, crops, labor availability and
demand, livestock, prices, and so on. Such diagrams highlight the times of
constraints and opportunity, which can be critical information for planning
and implementation.
• Secondary data review

Also called desk review, an inexpensive, initial inquiry that provides
necessary contextual background. Sources include academic theses and
dissertations, annual reports, archival materials, census data, life histories,
maps, project documents, and so on.
• Semi-structured interviews
Also called conversational interviews, interviews that are partially structured
by a flexible interview guide with a limited number of preset questions. This
kind of guide ensures that the interview remains focused on the development
issue at hand while allowing enough conversation so that participants can
introduce and discuss topics that are relevant to them. These tools are a
deliberate departure from survey-type interviews with lengthy, predetermined
questionnaires.
• Socio-cultural profiles
Detailed descriptions of the social and cultural dimensions that in
combination with technical, economic, and environmental dimensions serve
as a basis for design and preparation of policy and project work. Profiles
include data about the type of communities, demographic characteristics,
economy and livelihood, land tenure and natural resource control, social
organization, factors affecting access to power and resources, conflict
resolution mechanisms, and values and perceptions. Together with a
participation plan, the socio-cultural profile helps ensure that proposed
projects and policies are culturally and socially appropriate and potentially
sustainable.
• Surveys
A sequence of focused, predetermined questions in a fixed order, often with
predetermined, limited options for responses. Surveys can add value when
they are used to identify development problems or objectives, narrow the
focus or clarify the objectives of a project or policy, plan strategies for
implementation, and monitor or evaluate participation. Among the survey
instruments used in Bank work are firm surveys, sentinel community
surveillance, contingent valuation, and priority surveys.
38
• Tree diagrams Participatory Tools and
Methods
Multipurpose, visual tools for narrowing and prioritizing problems,
objectives, or decisions. Information is organized into a treelike diagram
that includes information on the main issue, relevant factors, and influences
and outcomes of these factors. Tree diagrams are used to guide design and
evaluation systems, to uncover and analyze the underlying causes of a
particular problem, or to rank and measure objectives in relation to one
another.
• Village meetings
Meetings with many uses in participatory development, including
information sharing and group consultation, consensus building, prioritization
and sequencing of interventions, and collaborative monitoring and evaluation.
When multiple tools such as resource mapping, ranking, and focus groups
have been used, village meetings are important venues for launching
activities, evaluating progress, and gaining feedback on analysis.
• Wealth ranking
Also known as wellbeing ranking or vulnerability analysis, a technique for
the rapid collection and analysis of specific data on social stratification at
the community level. This visual tool minimizes literacy and language
differences of participants as they consider factors such as ownership of or
use rights to productive assets, lifecycle stage of members of the productive
unit, relationship of the productive unit to locally powerful people, availability
of labor, and indebtedness.
• Workshops
Structured group meetings at which a variety of key stakeholder groups,
whose activities or influence affect a development issue or project, share
knowledge and work toward a common vision. With the help of a workshop
facilitator, participants undertake a series of activities designed to help them
progress toward the development objective (consensus building, information
sharing, prioritization of objectives, team building, and so on). In project as
well as policy work, from preplanning to evaluation stages, stakeholder
workshops are used to initiate, establish, and sustain collaboration.
• Stakeholders
Stakeholders are any individual, group or institution, which could be
involved in the transfer of knowledge and best practice to improve the urban
development process, can be considered a stakeholder.
2.9 LET US SUM UP

Development practitioners use a wide variety of different methods, tailored to
different tasks and situations, to support participatory development. Each of the
methods described above is a combination of tools, held together by a guiding
principle. Dozens of exercises exist to cultivate collaborative development
planning and action. These are the tools with which social scientists and other
development practitioners encourage and enable stakeholder participation. Some
tools are designed to inspire creative solutions; others are used for investigative
39
Peoples Participation or analytic purposes. One tool might be useful for sharing or collecting
information, whereas another is an activity for transferring that information into
plans or actions
It would be misleading to claim that any tools or methods are inherently

participatory or that they spontaneously encourage ownership and innovation
among stakeholders. The participants in development planning and action—the
users of these methods and tools—must be the ones who encourage and enable
participation. The tools themselves facilitate learning, preparation, and creative
application of knowledge. They make it easier for Task Managers and borrowers
who are committed to participation to collaborate with a broad range of
stakeholders in the selection, design, and implementation of development projects.
These same methods, however, can also be implemented in a “top-down” manner,
which merely pays lip service to participation. The ultimate responsibility for
using these methods well, therefore, rests with the users and facilitators.

Bandyopadhyay, D, Mukherjee, A and Gavai, Mitali Sen (2003). Empowering
Panchyats: Handbook for Master Trainers Using Participatory Approach. Concept
Publishing House, New Delhi,
Kumar, Somesh (2002). Methods for Community Participation: A Complete
Guide for Practitioners. Vistaar Publications. New Delhi
UNDP(1998). CSOPP Documents: Empowering People: A Guidebook to
Participation http://www.undp.org/csopp/CSO/NewFiles/docemppeople3.
html#Anchor-6491
Further Readings on Participatory Methods

Deshler, David. 1995 Participatory Action Research: Traditions and Major
Assumptions. Cornell Participatory Action Research Network. Cornell University.
GTZ 1988. ZOPP: An Introduction to the Method. Frankfurt: GTZ
GTZ 1991 Methods and Instruments for Project Planning and Implementation.
Frankfurt: GTZ.
INTRAC/South Research 1994. A Tool for Project Management and People-
driven Development. Proceedings of the INTRAC and South Research Workshop
on the Logical Framework Approach (LFA) and Objective Oriented Intervention
Planning (OOIP) Leuven, Belgium, 16-18 May 1994. Part 1: Main Report and
Part 2: Annexes
Kumar, K. 1995. Choosing Between Rapid Appraisal and Formal Methods.
Washington D.C.: USAID
Mikkelsen, B. 1995. Methods for Development Work and Research: A Guide
for Practitioners. Delhi: Sage Publications
Overseas Development Administration 1995. A Guide to Social Analysis for

Projects in Developing Countries. London: HMSO
40
Overseas Development Administration 1995. Guidance Note on How To Do Participatory Tools and
Methods
Stakeholder Analysis of Aid Projects and Programmes. Social Development
Department. London: ODA
Pratt, B. and Loizos P.1992. Choosing Research Methods: Data Collection for
Development Workers. Development Guide Series Number 7. Oxford: Oxfam
Pretty, J. N., Guijt, I., Thompson, J. and Scoones, I. 1995. Participatory Learning
and Action: A Trainers Guide. London: IIED
Rennie, K. and Singh, N. 1996. Participatory Research for Sustainable

Livelihoods: A Guidebook for Field Projects. Manitoba: IISD
Salmen, L.F. 1995. Beneficiary Assessment: An Approach Described.

Environment Department Papers no. 23, Washington DC: World Bank

ANSWERS
1) The principles behind participatory methodologies are:
• That it is possible, and desirable, to increase participation in development
by involving those immediately affected by a particular need;
• Involving people so affected enables activity designers and managers to
explore a range of real circumstances and systems rather than
concentrating on statistical samples;
• Issues can be investigated from different perspectives and using a range
of approaches, such as involving multidisciplinary teams;
• Informal approaches are often more appropriate and can be changed as
the work progresses.
2) Participatory methodologies can be used at any stage of the Activity Cycle:
• At the Design stage, by involving people in identifying problems during
the planning and designing stage, e.g. needs assessments, feasibility
studies;
• At the Implementation stage, through examination of a particular problem
or topic e.g. identifying priorities, or implementing new activities where
information
• needs to be collected;
• At the Monitoring and Evaluation stage, by enabling participants to
implement procedures to examine their own activities.
Check Your Progress -2
1) The participatory methods are now generically referred to as Participatory
Learning and Action (PLA). Participatory Learning and Action combines:

livelihoods analysis and now widely used in Natural Resources
41
Peoples Participation departments in development agencies. They have since been adapted
for use in other sectors including enterprise development.
• underlying principles of grassroots participation from human rights
activism which involve rethinking power relations and partnerships
between development agencies, experts and poor people. These are now
being developed further to facilitate negotiations between different
stakeholders in projects and policy dialogue.
2) Using participatory methods provides a useful way of:
• Rapidly identifying the range of potential impacts through exploring

the interlinkages between different dimensions of livelihoods and
poverty
• Prioritizing the different possible impact goals for assessment by
identifying which of the range of possible impacts are most important
for the primary stakeholders e.g. increased income versus decreased
leisure, levels of income and/or working conditions expected
• Identifying reliable measurable or qualitative indicators which can be
used in different contexts or for different target groups.
42
MDV-111
and Development
Block
5
EMPOWERMENT OF LOCAL BODIES
UNIT 1
Empowerment of Marginalized 5
UNIT 2
Capacity Building 20
UNIT 3
Leadership 38
UNIT 4
Resource Mobilization 54
Ahmedabad
Prof. Kumar B. Das

Prof. Preet Rustagi
Dr. Sadanand Sahoo Prof. P. P. Balan
IGNOU, New Delhi (Unit 1 ) Centre For Research in Industrial Development
(Content Editor)
Prof. G. Palanithurai
Gandhigram Rural Institute (Unit 2) Mr. Praveer Shukla (Language Editor)
Dr. Vanishree J. Prof. B.K. Pattanaik, IGNOU
Prof. B.K. Pattanaik
PRODUCTION TEAM
March, 2019
ISBN: 978-93-88980-34-0
BLOCK 5 EMPOWERMENT OF LOCAL
BODIES
Empowerment of Local Bodies increases the participation of people and more
particularly the poor, and it helps in the local capacity building and better
governance, participation and implementation of development programmes.
Empowerment of local bodies enables Capacity building, develops the local
leadership, helps in institutional development and human resources development
and strengthens the managerial systems, and develops a rationale understanding
of resource mobilization.
Unit 1, Empowerment of Marginalized, focuses on building our understanding

on the meaning and concepts of people’s participation in the local self governance
in development. It also discusses the importance of local self Governance, people’s
participation in development.
Unit 2, Capacity Building, unit discusses the meaning, concept and the need
for capacity building. It further tries to answer capacity for what, capacity for
whom and to build capacity.
Unit 3, Leadership, describes the role and importance of leadership and

development, and understands the meaning and characteristics of ‘leadership’
and its importance in the context of democracy and rural transformation. It also
analyses the theoretical nuances of leadership in a broader sense and their utility
at the grassroots.
Unit 4, Resource Mobilization, is one of the key challenges before the PRIs for
carrying out duties and responsibilities assigned to them under the 73 rd
constitutional amendment. Finance is essential to carry forward developmental
activities at the grassroots level. The various sources of income of the PRIs are
the grant from the central government and state government and the imposition
of taxes and collection of fees. Besides many village panchayats and also district
and intermediate panchayats in many states of India earn income by the effective
utilization of common property resources.
Empowerment of
UNIT 1 EMPOWERMENT OF Marginalized
MARGINALIZED
Structure
1.1 Introduction
1.2 The Meaning and Nature of Marginalization
1.3 The Types of Marginalization
1.4 The Causes of Marginalization
1.5 The Levels of Marginalization
1.6 Marginalized Groups
1.7 Let Us Sum Up
1.1 INTRODUCTION
Marginality is an experience that affects millions of people throughout the world.
People who are marginalized have relatively little control over their lives, and
the resources available to them. This results in making them handicapped in
making contribution to society. A vicious circle is set up whereby their lack of
positive and supportive relationships means that they are prevented from
participating in local life, which in turn leads to further isolation. This has a
tremendous impact on development of human beings, as well as on society at
large. As the objective of development is to create an enabling environment for
people to enjoy a productive, healthy, and creative life, it is important to address
the issue of marginalization. This unit deals, in detail, the various aspects of
marginalization.
After reading this unit, you will be able to:

• define marginalization
• explain how marginalization creates development deprivation
• delineate the nature and causes of marginalization
• discuss the various types of marginalization
• explain the effects of marginalization
1.2 THE MEANING AND NATURE OF

MARGINALIZATION
In general, the term ’marginalization’ describes the overt actions or tendencies
of human societies, where people who they perceive to undesirabile, or without
useful function are excluded, i.e., marginalized. The people who are marginalized
are outside the existing systems of protection and integration. This limits their
opportunities and means for survival. The term has been defined in the following
ways:
5
Empowerment of Local Bodies Peter Leonard defines marginality as, “…being outside the mainstream of
productive activity and/or social reproductive activity”.
The Encyclopedia of Public Health defines marginalization as, “To be

marginalized is to be placed in the margins, and thus excluded from the privilege
and power found at the center”.
Laitin observes that, “‘Marginality’ is so thoroughly demeaning, for economic

well-being, for human dignity, as well as for physical security. Marginal peoples
can always be identified by members of dominant society, and will face irrevocable
discrimination.”
Merriam-Webster’s online dictionary definition of the term, marginalize, is “to

relegate to an unimportant, or powerless position within a society or group”
Ghana G. Gurung and Michael Kollmair mention that the concept of marginality
is generally used to analyse socioeconomic, political, and cultural spheres, where
disadvantaged people struggle to gain access to resources and full participation
in social life. In other words, marginalized people might be socially, economically,
politically and legally ignored, excluded, or neglected, and, therefore vulnerable
to livelihood change.
According to Sommers et. al., “Socio-economic marginality is a condition of

socio-spatial structure and process in which components of society and space in
a territorial unit are observed to lag behind an expected level of performance in
economic, political and social well being, compared with average conditions in
the territory as a whole”
These definitions are mentioned in different contexts, and show that

marginalization is a slippery and multilayered concept. To further clarify the
meaning and concept let us discuss certain features of marginalization:
• Sometimes, whole societies can be marginalized at national and global levels,

while classes and communities can be marginalized from the dominant social
order within the local level. In some other contexts, the same community
can be marginalized in certain country (Jews in Germany or Russia) whereas
they are not marginalized in another country (Jews in the U.S.A.).
• Marginalization also increases or decreases at certain stages of life cycle.
For example, the marginalized status of children and youth may decrease as
they get older; the marginalized status of adults may increase as they become
older; the marginalized status of single mother may change as their children
grow up.
• Individuals or groups might enjoy high social status at some point of time,
but as social change takes place, they may lose this status and become
marginalized.
Thus, marginalization is a complex as well as shifting phenomenon linked to

social status.
Nature of marginalization
Marginalization is a multidimensional, multicausal, historical phenomenon. There
are no general laws to understand and comprehend the complex nature of
6
marginalization. The analytical tools that can be used in most cases include class, Empowerment of
Marginalized
in relation to specific social, cultural, economic and political conditions, as well
as ideological systems, social awareness, and human action. The nature of
marginalization varies in different settings. For example, the marginalization of
women in Iraq is not the same as in India, though they broadly share some features.
The religious, ideological system, patriarchy, political economy of a country,
and the overall social system have an impact on the marginalization of specific
groups or an individual.
The nature of marginalization also varies in relation to elderly people living in

different countries and cultures. In some societies, the elderly are given more
respect compared to other and, hence, are subject to less marginalization. The
strong and supportive traditional family system in some cultures often provides
better respect and care to elders than the public aided system available in others.
Similarly, the level of awareness among the marginalized groups plays very
important role, and the nature of marginalization varies accordingly. Organized
communities who are aware of their rights demand more justice than unorganized
communities. This also depends upon the political- economy of the country where
they live in. For example, physically challenged people form organizations in
the U.S. and Europe more effectively than in other countries, and demand justice
easily. This cannot always happen if the political-economic system is not
supportive. Usually, democratic institutions are favorable for most of the
disadvantaged groups. In this section, you have studied the meaning and nature
of marginalization. Now, answer the questions in Check Your Progress-1.
1) What is meant by marginalization?

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2) Write a note on the nature of marginalization.

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7
Empowerment of Local Bodies
1.3 THE TYPES OF MARGINALIZATION
In the previous section, you studied the meaning and nature of marginalization.
In this section, you will study the types of marginalization.
To be marginalized is to be distanced from power and resources that enable self

determination in economic, political and social settings. Though there are various
types of marginalization, we identify some broad types, such as social, economic,
and political marginalization.
i) Social Marginalization
Marginality is both ascribed and acquired in a social setting. The experience
of marginality arises in a number of ways. For some people, those severely
impaired from birth, or those born into marginal groupings (e.g., lower castes
in India, members of ethnic groups that suffer discrimination - the Romans
in Europe, indigenous people in Australasia, and on the American continent,
African Caribbean people in Britain), this marginality is typically life long
and greatly determines their lived experience. For others, marginality is
acquired by later disablement or by changes in the social and economic
system. As global capitalism extends its reach, bringing more and more
people into its system, more communities are dispossessed of lands,
livelihoods, or systems of social support.
People who are socially marginalized are largely deprived of social

opportunities. They may become stigmatised and are often at the receiving
end of negative public attitudes. Their opportunities to make social
contributions may be limited, and they may develop low self confidence
and self esteem. Social policies and practices may mean that they have
relatively limited access to valued social resources such as education and
health services, housing, income, leisure activities, and work. The impact
of marginalization, in terms of social exclusion, is similar, whatever the
origins and processes of marginalization, irrespective of whether these are
located in social attitudes (such as, towards impairment, sexuality, ethnicity,
and so on) or, social circumstance (such as closure of workplaces, absence
of affordable housing, and so on). Different people will react differently to
marginalization depending on the personal and social resources available to
them.
Another problem is that people born in a marginalized community lack the

required social and cultural capital to participate in mainstream development
processes. Their social networks are weak and vulnerable. Lack of social
capital deprives an individual of access to resources, such as, economic,
educational and cultural and other support systems. This creates social
isolation and limits their participation in the development process.
ii) Economic Marginalization

Economic marginalization as a process relates to economic structures, in
particular to the structure of markets and their integration. To the extent that
the markets that some individuals or groups engage in are segmented from
the economy in general, these individuals can be said to be marginalized
from the rest of the economy. Segmentation and exclusion may, however,
8
have non-economic and non-financial origins, for example in discrimination Empowerment of
Marginalized
by gender, caste, or ethnicity. Here, integration takes on a broader meaning.
People who are experiencing marginalization are likely to have tenuous
involvement in the economy. The sources of their income will vary. These
experiences affect men and women differently and vary with age. Poverty
and economic marginalization have both direct and indirect impacts on
people’s health and wellbeing.
iii) Political Marginalization

Political marginalization does not allow the group to participate
democratically in decision making, and, hence, they lose their right to every
social, economic, and political benefit. Political empowerment is one of the
most important tools for accessing other social and economic privileges.
In every society, lack of political empowerment affects large sections of

people, including women, ethnic minorities, migrants, disabled persons,
elderly, etc. So far as gender is concerned, we find that participation by
women is minimized across the globe. It is men who hold power and lead
politics around the world. This is true at all levels of power in politics,
whether it is party leadership, elected office, appointed offices, or at policy
making levels. This is a particularly acute problem in third world countries,
where women’s participation in political affairs is mostly linked with the
dominant, male-oriented social cultural and religious environment. This kind
of marginalization is also felt by ethnic minorities, migrants, disabled
persons, elderly, etc.
In this section, you studied various types of marginalization. Now, answer the
1) What are the different types of marginalization?

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2) What do you mean by political marginalization?

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1.4 THE CAUSES OF MARGINALIZATION
Frank Herbert remarked “All men are not created equal, and that is the root of
social evil” In this section we will discuss about the causes of marginalization.
Through marginalization, a majority of people are deprived across the globe. It
is a complex problem, and there are many factors that cause marginalization.
Some of the important factors that are responsible for marginalization discussed
below are: exclusion, globalization, displacement, disaster – natural, and
unnatural.
i) Exclusion
Marginalization is a process that denies opportunities and outcomes to those
‘living on the margins’, while enhancing the opportunities and outcomes
for those who are ‘at the centre’. Marginalization combines discrimination
and social exclusion. It offends human dignity, and it denies human rights,
especially, the right to live effectively, as equal citizens. Caste and class
prejudice, in many societies across the globe, exclude many groups and
communities, and hinder their productive participation in economic and
social development. For further discussion on exclusion please refer to the
unit titled, Inclusive Development.
ii) Globalization
Globalization is a controversial and much debated topic, and the responses
are both positive and negative, in the context of development. As far as
marginalization is concerned, globalization played a certain role. Increased
openness has promoted development at the cost of equity. It is viewed that
it has enhanced the gap between haves and have-nots and thus boosted
marginalization. Globalization in the post-1980 period has marginalized
much of the third world and low income, developing countries. Apart from
East and South Asia, all the world’s less developed regions grew faster during
the relatively less globalized era of the 1950s and 1960s. Yet, all regions
have expanded their exposure to international trade. While it is true that
some middle income developing countries, as well as the most populous
countries, India and China, are gaining out of globalization, yet the impact
is not equally universal for all nations of South Asia (Table 1).
Table 1 Human Development Index of SAARC Countries

Countries HDI Rank Categories
Bangladesh .509 138 Medium Human Development
Bhutan .536 134 Medium Human Development
India .595 127 Medium Human Development
Maldives .752 84 Medium Human Development
Nepal .540 140 Medium Human Development
Pakistan .497 142 Low Human Development
Srilanka .740 96 Medium Human Development
Source: Human Development Report – 2004, UNDP
10
The era of globalization is a cause of concern for many underdeveloped Empowerment of
Marginalized
countries. In the case of Africa, Latin America, and some parts of Asia, the
human development indicators have been declining. Simultaneously, the
gaps between the rich and poorer nations have been also increasing.
iii) Displacement
The forced population displacement is caused by development programmes
implemented by the government of various nation states. The government
of India admits that there are 15.5 million displaced persons when it drafted
the National Rehabilitation Policy in 1994. The increasing construction of
development projects consistently displaced a massive number of tribal,
poor, and weaker sections. This resulted in further marginalization of already
marginalized people. The ultimate gainer are the contractors, businessmen,
industrialists, politically and economically well ups and the real poor are
the underdog. As a consequence, we find social unrest, resistance, and
disharmony in many parts of the globe. More details about displacement
and its impact are discussed in the unit titled, “Inclusive Development”.
iv) Disaster- Natural and Unnatural

Disasters are global phenomena and a serious challenge to development
(Table 2). Vulnerability is linked to broader social issues, such as poverty,
and to social exclusion, conflict, and marginalization. There are three broad
classification of disaster and their combined impact on development is
staggering
• Natural: earthquake, volcanic eruption, hurricane, tornado, ice storm,
flood, flashflood, landslide, wildfire, insect infestation, and disease
outbreaks. These disasters may be further sub classified as meteorological,
oceanographic (tsunami or sea storm), hydrological, or biological
events.
• Technological: Associated with technological advances, i.e., explosives,
unexploded ordinance, toxic spills, emissions of radio-isotopes, and
transportation accidents. It also includes hazmat (hazardous materials)
incidents involving carcinogens, mutagens, or heavy metals; dangers
such as structural failure of devices and machines or installations, and
plants, such as bridges, dams, mines, power plants, pipelines, high rise
buildings, vehicles, and trains.
• Social: These include incidents primarily involving social unrest, such
as hijacking, riots, demonstrations, crowd rushes, and stampedes,
terrorist incidents, as well as bombings, shootings, and hostage taking.
Table 2 People affected by Disasters in Different Regions of the World
Types/Region Africa America Asia Europe Oceania
People killed by disaster 77852 9354 46353 3124 108
People affected by disaster 11894585 3803731 126092412 13161 1008274
People made homeless by 284534 330317 4139208 72076 14220
disaster
People injured by disaster 20937 10555 53964 3960 634
Source: World Disaster Report, 1998, Oxford University Press, 1998. 11

Empowerment of Local Bodies Throughout human history, these disasters have played a major role in retarding
the economic development and affecting survival of humanity. The extent of
damage caused by these disasters is clearly connected to a country’s
socioeconomic condition. The impact of both natural and unnatural disasters are
closely related to poverty, education, quality of health, gender related issues, and
changing policy scenarios in relation to global socioeconomic characteristics
and stakeholder partnerships. Poorer, illiterate, women are more vulnerable to
these disasters and their preparedness is weak during and after disasters where
they are pushed further into marginalization. In this section, you studied the
causes of marginalization> Now, answer the questions given in Check Your
Progress-3.
1) Which important factors are responsible for marginalization?

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2) How does disaster cause marginalization?

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1.5 THE LEVELS OF MARGINALIZATION

Marginalization happens simultaneously at the micro and macro levels. Often
they intersect each other in many ways. The following section will discuss how
marginalization occurs at different levels, i.e., individual, group, community,
and global.
i) Individual
Marginalization at the individual level results in an individual’s exclusion
from meaningful participation in society. An individual can face
discrimination across different social institutions, such as family, schools
and neighbourhood, at work places, or places of worship. Single parents,
persons with disability, homosexuals, the elderly, are marginalized
individually, as most of them have no association with communities (not in
an organized form).
12
Another example of individual marginalization is the exclusion of individuals Empowerment of
Marginalized
with disabilities from the labour force. Employers view individuals with
disabilities as people who potentially jeopardize productivity, increase the
rate of absenteeism, and create accidents in the workplace. Employers are
often concerned about what they consider the excessive cost of
accommodating people with disabilities. The marginalization of individuals
with disabilities is prevalent today across the globe despite legislative
protection, the Employment Equity Act, academic achievements, and skills
and training.
ii) Communities
Many communities experience marginalization. The example that we will
look at in this section is on aboriginal communities and women in many
countries of the world. The marginalization of aboriginal communities is a
product of colonization. As a result of colonialism, aboriginal communities
lost their land, were forced into destitute areas, lost their sources of income,
and were excluded from the labour market. Additionally, aboriginal
communities lost their culture and values through forced assimilation, and
lost their rights in society. Today various communities continue to be
marginalized from society due to the development of practices, policies and
programs that “met the needs of white people and not the needs of the
marginalized groups themselves”.
A second example is the marginalization of women. Moosa - Mitha discusses

the feminist movement as a direct reaction to the marginalization of white
women in society. Women were excluded from the labour force, and their
work in the home was not valued. Feminists argued that men and women
should equally participate in the labour force, in the public and private sector,
and in the home. They also focused on labour laws that increase access to
employment, as well as laws that recognize childrearing as a valuable form
of labour. Today, women are still marginalized from executive positions,
and continue to earn less then men in upper management positions. Once
Mahatma Gandhi said “women is described as man’s better half as long as
she has not the same rights in law as man; as long as the birth of the girl does
not receive the same welcome as that of a boy, so long, we should know that
India is suffering from partial analysis. Suppression of women is denial of
Ahimsa”
iii) Global
Earlier, we discussed the impact of globalization and the increasing gap
between rich and poor nations. Globalization (global capitalism),
immigration, social welfare, and policy are broader social structures that
have the potential to contribute negatively to the access to resources and
services. This results in marginalization of individuals and groups, as well
as nations. Globalization, or, the influx of capitalism, information technology,
company outsourcing / job insecurity, and the widening gap between the
rich and the poor, impacts the lives of individuals and groups in many
capacities. In this section, you studied the different levels of marginalization.
Now answer the questions given in Check Your Progress 4
13
Empowerment of Local Bodies Check Your Progress 4
1) Marginalization occurs at various levels. Discuss.

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2) How does globalization marginalize poorer nations?

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1.6 MARGINALIZED GROUPS

As mentioned earlier, marginalization can occur simultaneously at various levels,
i.e., at international, national, regions, groups, etc. In this section we will discuss
the most vulnerable marginalized groups in almost every society.
i) Women
Under different economic conditions, and under the influence of specific,
historical, cultural, legal and religious factors, marginalization is one of the
manifestations of gender inequality.
In other words, women may be excluded from certain jobs and occupations,
incorporated into certain others, and marginalized in others. In general they
are always marginalized relative to men, in every country and culture. Women
(or, men) don’t present a homogeneous category where members have
common interests, abilities, or practices. Women belonging to lower classes,
lower castes, illiterate, and the poorest region have different levels of
marginalization than their better off counterparts.
ii) People with disabilities
People with disabilities have had to battle against centuries of biased
assumptions, harmful stereotypes, and irrational fears. The stigmatization
of disability resulted in the social and economic marginalization of
generations with disabilities, and, like many other oppressed minorities,
this has left people with disabilities in a severe state of impoverishment for
14 centuries.
iii) Ethnic Minority Empowerment of
Marginalized
The term, ethnic minority, refers to marginalized people of the same race or
nationality who share a distinctive culture. A minority is a sociological group
that does not constitute a politically dominant voting majority of the total
population of a given society. A sociological minority is not necessarily a
numerical minority. It may include any group that is subnormal with respect
to a dominant group, in terms of social status, education, employment,
wealth, and political power.
Usually a minority group has the following characteristics
1) It suffers from discrimination and subordination.
2) They have physical and/or cultural traits that set them apart, and which
are disapproved of, by a dominant group.
3) They share a sense of collective identity and common burdens.,
4) They have shared social rules about who belongs, and who does not.
5) They have a tendency to marry within the group.
Every large society contains ethnic minorities. They may be migrant,
indigenous or landless nomadic communities. In some places, subordinate
ethnic groups may constitute a numerical majority, such as Blacks in South
Africa under Apartheid. International criminal law can protect the rights of
racial or ethnic minorities in a number of ways. The right to self determination
is a key issue.
Persons belonging to religious minorities have a different faith from the

majority. Most countries have religious minorities. It is now widely accepted
in the West that people should have the freedom to choose their own religion,
including not having any religion (atheism, or agnosticism), and that this
includes the right to convert from one religion to another. However, in many
countries, this freedom is constricted. For example in Egypt, a new system
of identity cards requires all citizens to state their religion, and the only
choices are Islam, Christianity, or Judaism (See Egyptian identification card
controversy).
iv) Elderly
Ageing is an inevitable and inexorable process in life. A notable aspect of
the global ageing process is the progressive demographic ageing of the older
population itself. For most nations, regardless of their geographic location
or developmental stage, the 80 year olds, or over-age group is growing faster
than any younger segment of the older population.
The UN Report (2002) on World Population Ageing 1950-2050 reveals that

people 80 or older currently constitute more than 3 per cent of the population
of Northern America, and almost 3 per cent of the population of Europe,
compared with less than 0.9 per cent in Asia, Latin America, and the
Caribbean, and less than 0.4 per cent in Africa. A regional difference is
projected to persist over the next 50 years. By 2050, about 1 in 10 individuals
will be aged 80 or older in the more developed regions, while the
corresponding ratio will be 1 in 30 in the less developed regions. In the least
developed countries, only 1 in 100 persons will be 80, or over. By 2050, 19
15
Empowerment of Local Bodies countries, mostly in Europe, are projected to have at least 10 per cent of
their population aged 80 years or over.
Source: UN World Population Ageing 1950-2050, Population Division, DESA, United Nations.
The demographic composition is changing in many countries, i.e., in Eastern

and Northern Europe, women currently outnumber men by more than 5 to 3
among the population aged 60 or over, thus adding not just elderly but also the
elderly women as the majority of marginalized groups among them.
In the modern world, it is seen that the elderly care the most neglected group of
population. Children of elderly in many families consider expenditure on care
for elderly such as on their health and nutrition as wasteful investment. The
stereo types, that the old age people are usually subject to such kind of illness,
add further to their neglect. Therefore, most of them are found dejected and
emotionally shaken and some even leave home when the act of neglect cross the
limit.
In this section, you studied different marginalized groups. Now answer the
questions given in Check Your Progress-5.
1) What are the major marginalized groups in India?

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16 ......................................................................................................................
2) How does marginalization affect women? Empowerment of
Marginalized
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1.7 LET US SUM UP

Development is always broadly conceived in terms of mass participation.
Marginalization deprives a large majority of people across the globe from
participating in the development. It is a complex problem, and there are many
factors that cause marginalization. This complex and serious problem need to be
addressed at the policy level.

Ghana S. Gurung, Michael Kollmair (2005) Marginality concepts and their
limitations. University of Zurich: Department of Geography.
Kanbur, Ravi. (2007) Conceptualizing Economic Marginalization, (Key-notes

for the Living at the Margins Conference Cape Town, March 26, 2007),
www.people.cornell.edu/pages/sk145
Nomani, Farhad and Sohrab Behdad (2002) The Nature of Marginalization of

Women’s Work Force in the Post-Revolutionary Iran.
Toye, Michael and Jennifer Infanti (2004) Social Inclusion and Community
Economic Development: Literature Review, Pan-Canadian Community
Development Learning Network Project Framework,

ANSWERS
1) What do you mean by marginalization?
Answer. In general, the term ’marginalization’ describes the overt actions or
tendencies of human societies, where people who they perceive to
undesirabile, or without useful function are excluded, i.e., marginalized.
The people who are marginalized are outside the existing systems of
protection and integration. In simple term it is the process of exclusion
from the privilege and power found at the centre or mainstream enjoyed by
the privileged section.
2) Write a note on the nature of marginalization?

Answer. Marginalization is a multidimensional, multicausal historical
phenomenon. There are no general laws to understand and comprehend the
17
Empowerment of Local Bodies complex nature of marginalization. The nature of marginalization varies in
different settings. For example, the marginalization of women in Iraq is not
same as in India, though, broadly, they share some features. The religious
ideological system, patriarchy, political-economy of a country, and the overall
social system have impact on the marginalization of a specific group or
individual.
1) What are the different types of marginalization?
Answer. The phenomenon of marginalization cannot be categorized into any
definitive types. There are numerous ways that marginalization can be
typified, and some broad categories include socioeconomic, political,
cultural, and geographical types. Marginalization is also both ascribed and
acquired in a social setting.
2) What do you mean by political marginalization?

Answer. Political marginalization does not allow a marginalized group to
participate democratically in decision-making, and thus, they lose their right
to social, economic and political benefits.
1) What are the important factors responsible for marginalization?
Answer. Marginalization is a process that systematically denies opportunities
and outcomes to those ‘living on the margins’, and enhances the opportunities
and outcomes of those who are ‘at the centre’. There are many factors that
cause marginalization. Some of the important factors that are responsible
for marginalization are exclusion, globalization, and displacement, disaster
- natural and unnatural.
2) How does disaster causes marginalization?

Answer. Disaster causes marginalization in multiple ways. Vulnerability is linked
to broader social issues, such as poverty, but also social exclusion, conflict
and marginalization. There are three broad classification of disaster and
their combined impact is on development is staggering. The classifications
are: (1) Natural: earthquake, flood, flashflood, landslide; (2) Technological:
associated with technological advances, i.e., explosives, unexploded
ordnance, toxic spills, emissions of radio-isotopes; (3) Social: incidents
primarily involving social unrest, hijacking, riots, demonstrations, crowd
rushes and stampedes, terrorist incidents as well as bombings, shootings,
and hostage taking. Throughout human history, these disasters have played
a major role in the economic development and survival of humanity.
1) Discuss how marginalization occurs at various levels.
Answer. Marginalization happens simultaneously at micro and macro levels.
The micro and macro levels often intersect each other in many ways.
Marginalization occurs at individual, group, community, and global levels.
Marginalization at the individual level results in an individual’s exclusion
18
from meaningful participation in society. Marginalization occurs at the Empowerment of
Marginalized
community level where a community experiences exclusion from the
mainstream as a result of the development of practices, policies, and
programs. And certain global forces directly contribute to marginalization.
Globalization (global capitalism), immigration, social welfare, and policy
are broader social structures that have the potential to contribute negatively
to one’s access to resources and services, and result in marginalization of
individuals and groups, as well as nations.
2) How does globalization marginalize poorer nations?

Answer. Globalization especially marginalized much of the third world and low
income, developing countries. Globalization (global capitalism),
immigration, social welfare, and policy are broader social structures that
have the potential to contribute negatively to one’s access to resources and
services, resulting in the marginalization of individuals and groups, as well
as nations. Globalization impacts the lives of individuals and groups in
many capacities with the influx of capitalism, information technology,
company outsourcing, job insecurity, and the widening gap between the
rich and the poor.
1) What are the major marginalized groups in India?
Answer. India being a poor country, it has a substantial number of marginalized
groups. Under different economic conditions, the influence of specific
historical, cultural, legal and religious factors, marginalization changes in
different countries for specific groups. Generally marginalized groups in
India include women, dalits, persons with disabilities, elderly, children, etc.
2) How does marginalization affect women?

Answer. Marginalization causes gender discrimination whereby women are
excluded from certain jobs and occupations, incorporated into certain others
and marginalized in others. In general women are always marginalized
relative to men, in every country and culture. The marginalization in case of
women belonging to lower class, lower castes, illiterate and poorest region
has a deeper impact in their life.
19
UNIT 2 CAPACITY BUILDING
Structure
2.1 Introduction
2.2 Capacity Building: Meaning and Concept
2.3 Need for Capacity Building
2.4 Key Considerations Pertaining to Capacity Development
2.5 Capacity for What?
2.6 Capacity for Whom?
2.7 How to Build Capacity?
2.8 Capacity Building for Women in Local Self Governance
2.9 Let Us Sum Up
2.10 Keywords
2.1 INTRODUCTION
In the history of Indian democracy, the passage of 73rd and 74th Constitutional
Amendment Acts is considered as the landmark for reviving the concept of local
self governance. Through these amendments transformation is expected in the
society from feudal to democratic mode and to alter the character of our democracy
from representative to participative. All these can happen only when people
effectively participate in the proceedings of the local self governance. The scope
of the local self governance under these amendments is much larger. The important
aspect to be noted is that people from different segments of the patriarchal,
hierarchical, feudalistic society are drawn into the fold of local self governance.
All are included in this process but the question is whether these people can
participate and deliberate their roles and responsibilities effectively as they are
deprived in the name of gender, caste and class. Moreover, the tasks which are to
be performed by them are profound. To function effectively and efficiently they
have to enhance their skills, capacity and capability. Therefore, capacity building
becomes imperative to operate the local self governance successfully.
In this unit we will discuss the meaning, concept and the need for capacity
building. This unit on capacity building will help you to answer capacity for
what, capacity for whom and to build capacity.
After studying this unit, you should be able to
• discuss the meaning, concept, the need and the principles of Capacity
Building.
• describe how to build capacity of people involved in local self governance.
• analyse the capacity building of elected representatives from the institutions
of local self governance.
20
Capacity Building
2.2 CAPACITY BUILDING: MEANING AND
CONCEPT
Oxford dictionary defines capacity as the ability or power to do something.
S.K.Singh defines capacity building as the development of an organization or
individual’s core knowledge, skills and capabilities in order to build and enhance
the organization’s effectiveness and sustainability. It is the process of assisting
an individual or group to identify and address issues and gain insights, knowledge
and experience needed to perform effectively. Capacity building can also include
the creation of an enabling environment with appropriate policy and legal
frameworks, institutional development and human resources development and
strengthening of managerial systems. Capacity building is facilitated through
the provision of technical support activities, training, specific technical assistance
and resource networking. Capacity building is recognized as being a long-term,
continuing process, in which all stakeholders participate.
In the context of local self governance, capacity building of the stakeholders in

local self governance should be considered more significant, because they have
varieties of services to be delivered. In order to discharge their duties they have
to follow certain code of development ethics enjoined with principles of equity,
responsiveness, transparency, accountability, participation etc. So, capacity
building for them is considered significant. The strategy of capacity building for
elected representatives and other people involved in local self governance should
consider the following.
i) Capacity building is not a one-time intervention, it is a continuous process
and it must be periodically repeated to sustain the inputs and skills developed.
It should not only focus on sharing information, rather it is a process of
exploration, discovery and growth.
ii) Capacity building exercise must have participatory approach thereby enhance
effectiveness. Thus the training design is embedded with the participation
of all members to give space for thinking and doing and arouse curiosity
and provoke creativity.
iii) The status of local governance is at variance across the states in terms of
devolution of powers, functions, finances and functionaries. Moreover, social
milieu, work culture, ethos etc. varies from state to state. Therefore, specific
training need of elected representatives will vary from state to state and it
can be best assessed at the state level. Thus modules have to be designed in
such a way to provide cushion for incorporating state specific requirements.
iv) However, without sacrificing the specificity of local requirements, there are
some conceptual issues, which promote all diversities and need to be
internalized by the functionaries across the state. These inputs will be
common for all.
2.3 NEED FOR CAPACITY BUILDING

Democratic decentralization through 73rd and 74th Constitutional amendment
Acts can truly happen when actors involved in local self governance perform
their roles and responsibilities as envisaged in the provision. To make this happen
21
Empowerment of Local Bodies interventions are required and focus should be on building, promoting and
empowering new leadership of women, SC/ST and other deprived and
marginalized sections of the society. In practice the actors involved in the local
self governance did not know how to work with the institution of local
development. Not only they, even the various indirect actors like voluntary
organizations, community based organizations etc did not know how to intervene.
The media did not know how to project issues in local governance. Policy makers
are also grappling with the issue of matching the provisions with field realities.
In order to overcome these problems capacity building becomes imperative. This
exercise should be carried out at all levels keeping the following as main
objectives.
i) To orient the local self governance functionaries about the role,
responsibilities and scope as soon they assume their office.
ii) To enhance their skill, capacity and capability in discharging their
responsibilities assigned to them.
iii) To sensitize and motivate the local self governance functionaries and elected
representatives to make them as an effective instruments of delivery for
rural development programmes and various other services provided by the
government at the grassroots level.
iv) To sensitize the elected representatives and the functionaries of the problems
of the poor and make local self governance more responsive to their needs.
v) Ensure that the participatory mode of development and deepening democratic
base of the country through effective functioning of gram sabha.
vi) To develop professional trainers, resource persons of the country for training
functionaries and elected representatives on a continuous and sustained basis.
vii) To sensitize media and other organizations on the potential of local self
governance.
The growth of local self governance in the country is varied and uneven. Some
states are better placed where as some remained static for several reasons. There
is also cynicism among certain sections that the local self governance has not
come up to the expected level. But the fact is that they have not been properly
oriented and trained. Therefore a proper training and capacity building strategy
is necessary.
2.4 KEY CONSIDERATIONS PERTAINING TO

CAPACITY DEVELOPMENT
Discussed earlier capacity building is an ongoing endogenous process that
involves attaining, strengthening, adapting and mainstreaming capacity overtime.
The need for building capacities often arises from (i) pressures for better
governance, (ii) new opportunities and (iii) social challenges. In this sense, the
task of building the capacity is a never ending process. Indeed, the development
of individual competency takes many years and societal transformation take
generations. UNDP’s practice note on capacity development has suggested key
considerations pertaining to capacity development. They are explained in the
following.
22
In order to better understand what constitutes capacity development and how to Capacity Building
support it, it is important to reflect on what drives and impacts it, and the contexts
in which it thrives or withers away. It is fundamentally an endogenous and
dynamic process that takes place in a context where capacity opportunities and
challenges ebb and flow over time. Capacity development is a function of political
economy, special interests and power relations. The use of capacity and its
development require adequate incentives to lead to performance that creates
opportunities and transformation. Finally, there are important implications for
the way in which external assistance is provided, including the importance of
aligning and harmonizing development cooperation around country processes.
Contextual, Endogenous Process and Opportune Timing

The development of a society’s capacity is an ongoing endogenous process that
involves attaining, strengthening, adapting and maintaining capacity over time,
in response to emerging opportunities and challenges. The need for developing
capacities often arises from (i) pressures for better government from the elite
and leaders at the top, as well as citizens and clients at the bottom; (ii) new
opportunities in the market place; or (iii) social challenges. In this sense, the task
of capacity development is never done. Moreover, the process cannot be rushed,
nor can it be expected to evolve in a controlled and linear fashion. A lag usually
exists between any investment in capacity development, the emergence of new
capacities and their translation into performance improvements. Indeed, the
development of individual competency takes many years, while societal
transformation may take generations.
Timing is everything. Windows of opportunity for change open and close with
changes in leadership, which could bring with it a new look at development
priorities, partnerships and resource availability. Sometimes, it is important to
secure “quick wins” at the outset to mobilise political support and commitment
to longer-term capacity investments. The ability of a country, an organisation or
a community to avail of opportunities to better their human development depends
on the capacity base it has built that enables adaptability and flexibility to manage
risks and changes. The challenges in investing in capacities are often about
managing trade-offs: making an investment that has an immediate return, or
investing in initiatives that have a 5-10 year or longer gestation period, for
example, investing in primary and secondary education for girls.
Political Economy
Addressing capacity needs by putting in place skills, systems and processes will
not hold the promise of sustainable results if the process does not take into account
the inherently political and complex realities in the environment. Political,
economic and social incentives relate to mindsets, norms and values. Sustainable
results require effective participation, public access to information that leads to
voice of the people (particularly women and disadvantaged sections of society),
civic engagement and accountability for capacity results. The change processes
related to capacity development come with changes in roles and responsibilities
that can be most unsettling to vested interests and established power structures.
External partners inevitably become part of this process and the political economy.
Incentives and Performance

Perceptions and concerns about development performance usually provide the
entry point for thinking about capacity issues. When a system or organization is 23
Empowerment of Local Bodies seen to be under-performing, attention is drawn to the inadequacy of capacity.
The opposite is also true. Good performance is usually associated with an
organization or system managing and using capacities effectively. Yet, capacity
does not automatically translate into improved performance and better
development results. To illustrate: a car engine may have all the components to
run smoothly, but it would still sit idle without fuel and a driver. By the same
token, capacities may be in place, but appropriate incentives need to be present
to put them in high gear and in motion toward the desired development destination.
Sound governance practice is a critical enabler in any environment. Countries

are more likely to develop and make use of available capacities when there is
strong political ownership and commitment at the highest levels, wide
participation, transparency and clear accountability. In turn, capacity development
processes can contribute to enhancing participation and accountability and thus
strengthen governance. An institution needs a supportive policy and legal
framework, access to resources and the goods and services of other institutions,
and the support of stakeholders in order to succeed. Similarly, a staff is motivated
to apply its skills when it is adequately compensated for its efforts and when
achievement is acknowledged and rewarded.
Quality of Engagement, Alignment and Harmonization

Development cooperation has the potential to facilitate and promote local
processes, but unless carefully applied, it can undermine ownership and local
capacity. For this reason, it is critical to pay careful attention to aid relationship
dynamics. Each side of the “partnership” comes to the table laden with its own
ideological and political baggage. Aid relationships are affected by and contribute
to shaping an influential political economy that has evolved in many countries
to become a quite unwieldy, complex architecture. This architecture consists of
stated objectives of a more or less shared nature but comprises equally
misperceptions, vested interests and power differentials that feed an often vicious
cycle of engagement. Breaking through the dynamics of engagement is not easy
as it tends to involve changes in the aid systems that are usually induced by
multiple competing parties. Changes and real transformation require genuine
cooperation and collective responsibility.6
Thinking and Acting in Terms of “Best Fit”

Rather than “best practice,” it is “best fit” that often contributes most to sustainable
change. These days, attention is focused on improving aid practices in ways that
are more responsive to the capacity development challenge. This agenda includes
harmonizing and aligning external support around country strategies, systems
and processes, finding ways to make the aid relationship more equitable,
transparent and participatory, and identifying roles, approaches and delivery
systems for external partners that add value to local capacity development
processes.
It is difficult to generalize about roles external partners may play, given that
what is needed is contingent on the task at hand. External partners may play
more facilitative roles related to the management of change processes, or more
interventionist roles including gap-filling. The focus might be on knowledge
enhancement, but equally it might require provision of financial resources, or
the procurement of equipment and particular expertise. “Process facilitation”—
24
an approach that is consistent with the idea of capacity development as an Capacity Building
endogenous process—can help avoid disempowering local actors by ensuring
that local partners remain in the driver’s seat while donors reinforces local
ownership and commitment.
2.4.1 Principles of Capacity Building

There are certain principles which are to be followed during capacity building
exercise. UNDP promotes ten default principles that inspire ownership, transfigure
leadership, and help to ensure progress in capacity building efforts. They are:
i) Don’t rush. Capacity development is a long-term process: It is not amenable

to delivery pressures, quick fixes and short-term results seeking. Engagement
for CD needs to have a long-term horizon and be reliable.
ii) Respect the value systems and foster self-esteem: The imposition of alien
values can undermine confidence. Capacity development requires respect.
Self-esteem is at the root of capacity and empowerment.
iii) Scan locally and globally; reinvent locally: There are no blueprints. Capacity
development means learning. Learning is a voluntary process that requires
genuine commitment and interest. Knowledge transfer is no longer seen as
the relevant modality. Knowledge needs to be acquired.
iv) Challenge mindsets and power differentials: Capacity development is not

power neutral and challenging vested interest is difficult. Frank dialogue
and moving from closed curtains to a collective culture of transparency is
essential to promote a positive dynamic for overcoming them.
v) Think and act in terms of sustainable capacity outcomes: Capacity is at the

core of development. Any course of action needs to promote this end.
Responsible leaders can inspire their institutions and societies to effectively
work toward capacity development.
vi) Establish positive incentives: Distortions in public sector employment are

major obstacles to CD. Ulterior motives and perverse incentives need to be
aligned with the objective of capacity development. Governance systems
respectful of fundamental rights are a powerful incentive.
vii) Integrate external inputs into national priorities, processes and systems:
External inputs need to correspond to real demand and need to be flexible
to respond effectively to national needs and possibilities. Where such systems
are not strong enough they need to be reformed and strengthened, not
bypassed.
viii) Build on existing capacities rather than creating new ones. This implies the
use of national expertise as prime option, resuscitation and strengthening of
national institutions, and protecting social and cultural capital.
ix) Stay engaged under difficult circumstances. The weaker the capacity, the
greater the need. Weak capacities are not an argument for withdrawal or for
driving external agendas. People should not be hostage to irresponsible
governance.
25
Empowerment of Local Bodies x) Remain accountable to ultimate beneficiaries. Even where national
governments are not responding to the needs of their people, external partners
need to be accountable to beneficiaries and contribute to ownership by
national authorities. Sensible approaches in concrete situations need to be
openly discussed and negotiated with national stakeholders.
2.5 CAPACITY FOR WHAT?

Capacity for what is the next question discussed in this unit. Capacity building
comprises of a variety of approaches and process such as, organizational
strengthening, institutional learning, exposure, horizontal sharing and solidarity
are some of the other illustrations of practical, hands-on and experiential learning
processes to capacity building. Viewed in this sense, capacity building is a long-
term process of strengthening a local body based on systematic learning of new
knowledge skills and attitudes. Like all learning, the actor herself must see the
value of and take responsibility for that learning. Preparation of local body to
identify its particular capacity needs and motivation to take responsibility for
learning those is a major part of capacity building. Capacity building effort should
address needs for enhancing capacity at the level of individual and organized
collectives.
At individual level, the capacity building should focus on leadership development.

Long term vision, institutional change and reform and procurement and
transparency are to be inculcated. Leadership development for local governance
focuses on advancing both the leadership training of individuals and the
institutional reform of organizations. It is the synergy between these two parallel
actions that most contributes to successful outcomes. Functional and technical
capacities of individuals should be enhanced. Functional capacities include
• To engage in multi-stakeholder dialogue
• To analyse a situation and create a vision
• To formulate policy and strategy
• To budget, manage and implement
• To monitor and evaluate
Technical capacities are associated with particular areas of professional expertise
or knowledge, such as fiscal management, agriculture, education etc.
At organized collectives capacity can be built for engaging with all relevant
stakeholders, supporting dialogue process and promoting inclusive processes
that involve relevant authorities. It pertains to all relevant public and societal
agents, as well as external partners. It includes the skills to perform the following:
• Identify, motivate and mobilize stakeholders
• Create partnerships and networks
• Raise awareness
• Develop an enabling environment that engages civil society and the private
sector
• Manage large group process and open dialogue
26 • Mediate divergent interests and establish collaborative mechanisms.
Check Your Progress 1 Capacity Building
1) Define the concept of capacity building and highlight its significance in

grassroot democracy.
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2) What are the principles are to be followed during capacity building?
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2.6 CAPACITY FOR WHOM?

Capacity building for rural local self governance has to be taken at different
levels. They are
• Capacity building of Gram Sabha member
• Capacity building of community based organizations
• Capacity building of Gram Panchayat members
• Exclusive Capacity building of women and dalit members
• Capacity building of panchayat union or Panchayat Samiti members and
District Panchayat or Zilla Parishad members.
• Capacity building of Government functionaries
• Capacity building of voluntary agencies.
Gram Sabha becomes a vital unit after the introduction of 73rd Constitutional
Amendment Act. Citizens who have attained the age of 18 are Gram Sabha
members. In order to become vibrant, support and monitor the functioning of
Gram Panchayat, the Capacity building exercise must start at the grassroots level
by capacitating the Gram Sabha members. Capacity building in general is not
only felt imperative after the introduction of the Constitutional Amendment Acts.
Training of Panchayati raj functionaries have a historical perspective and they
are briefly explained in the following.
27
Empowerment of Local Bodies 2.6.1 Historical Perspective
The subject of Panchayati Raj has been profusely studied, examined and reviewed
by various Committees constituted at the National and State level. These
Committees have also given emphasis on training of Panchayati Raj Functionaries.
Some observations of important committees are given below for better
appreciation of the subject.
The Balvantrai Mehta Committee (1957) has observed that, “no efforts so far
have been made either by the Governments or by public or political organizations
to impart any training in administrative matters to persons elected to local bodies.
Such training is essential if we are to make out local bodies effective and useful.
Rural administration (especially its developmental aspect) is an increasingly
complex process and its machinery is also growing more complex. They have
suggested various schemes for integration of the different parts of such machinery
but, even so, it will continue to be complicated. It has to be handled with care,
and that care can come either from a certain volume of initial knowledge or from
knowledge borne out of a series of mistakes. To provide the former and avoid
the latter, it is necessary that the persons elected to or aspiring to be elected to
such bodies should be equipped with a certain minimum knowledge of this
machinery. Organisation of ‘summer schools’ for this purpose will be seriously
considered both by the State Governments and responsible non-official
organizations like State associations of Panchayat Samitis.”
The Ashok Mehta Committee (1978) categorically suggested training for (a)
officials, (b) elected representatives and (c) interface courses for both officials
and elected representatives. On training aspect of Panchayat functionaries, the
Committee has given the following suggestions:
i) “the training programmes, covering officials as well as non-officials, would

be of staggering dimension. This would require not only the activation of
the existing institutions but also considerable augmentation of their numbers
and resources. Suitable remedial measures should also be taken to resuscitate
and revitalize the State-level training institutions.”
ii) “the National Institute of Rural Development should be the apex all-India
institution for training of trainers, field studies, developing consultancy
capabilities, research work and improvement in the level of training in the
States. Its faculty should be strengthened and upgraded for this purpose.
The Government of India has an important role to play in this regard.”
iii) “there should be an evaluation of the training programmes so that it will be

possible to make necessary modulations from time to time….Importance
should be attached to the programmes for adult education to develop the
latent civic consciousness in all the people and thus strengthen the faith in
the working of the Panchayati Raj Institutions which have a major role in
organizing such programmes.”
The L M Singhvi Committee (1986) recommended that every official in the

administration should be made to work in the Panchayati Raj and Rural
Development setting so as to sensitise our public administration to the problems
of rural India. The Committee suggested that substantial training, research and
public education inputs should be provided to strengthen the Panchayati Raj
28
Institutions and the performance capabilities of those who called upon to function Capacity Building
as voters, elected representatives, administrative officials, voluntary workers in
relation to PRIs. The views expressed by various National level Committees
clearly spells out that in order to enable the new dispensation Panchayats to
discharge their responsibilities effectively, it is essential that new local leadership
require skills in management of development programmes and knowledge of
development strategies. This essentially calls for an appropriate training regime
suitable to meet the needs and requirements so as to prepare them to take up
their assignment.
2.6.2 Capacity Building of Elected Representatives from

Institutions of Local Self Governance
The Seventy Third Constitutional Amendment Act made provision for three tier
structure. Gram Panchayat forms the first and direct representative body. At the
next level block panchayat or Panchayat Samiti is organized and finally at the
district level there exists District Panchayat. So Capacity Building has to be
conducted at all these levels. However, Gram Panchayat as a vehicle for exercising
representative leadership with transparency and accountability to Gram Sabha is
a distant ideal.
i) To understand the autonomous and basic democratic nature of Gram

Panchayat as a collective decision-making body, most significant
interventions have to be focused on preparing this collective identity. Such
interventions aim at developing a common perspective and intellectual
appreciation of the Gram Panchayat.
ii) The second set of intervention is essential at Gram Panchayat level to enhance
the institutional mechanism to function as transparent and accountable local
body. This includes mechanisms for conducting meetings, preparing minutes,
sharing information with Gram Sabha, securing participation and
contribution of Gram Sabha, developing participatory micro plans,
procedures and systems, effective implementation and monitoring of these
plans, securing and mobilizing resources and maintaining transparent systems
of financial management, etc.
iii) The capacity building intervention at this level also needs to address the
question of enhancing the resource base of Gram Panchayat to make them
financially autonomous and sustainable entities. Capacity enhancement
interventions in this area particularly focus on mobilizing local resources
from the village.
The most significant interventions in capacity enhancement at this level need to

focus on building individual leadership of each of the elected representatives.
This is particularly relevant for women, dalits and tribals. These newly elected
leaders are experiencing political participation in public space for the first time
in their life. Thus, enhancing their leadership roles requir capacity enhancement
in several ways:
i) Access to authentic information about the system of local governance, their

roles and responsibilities and financial resources available to them are the
first and foremost requirement. Capacity building for these literate and semi-
literate constituencies such as women, dalits and tribals, required
29
Empowerment of Local Bodies methodological innovations in audio-visuals, folk forms, etc. to be carried
out in different settings.
ii) Most of these elected women have not left their house or hamlet ever before.
Therefore, opportunities for homogenous groups of women, dalits and tribal
to share their experiences, express solidarity and provide mutual support
need to be created. It is in this context that exposure visits for groups of
elected representatives, joint camps and big Sammelan (Conferences) have
to be utilized as innovative approaches to building self-confidence for the
elected leadership.
iii) Exercising new leadership also requires learning new skills. These skills
include procedures for conducting a meeting, preparing minutes, village
plans, managing funds, etc. Learning these skills through training, practical
demonstration and hand-holding need to be promoted.
Therefore, capacity enhancement interventions aim at individual strengthening

and empowerment of new leaders has been a fundamental challenge in local
governance. Given different tiers of local bodies, vertical linkages across them
were also need to be strengthened.
One of the most significant areas to be strengthened is to enable horizontal

linkages between different tiers of local bodies and commensurate tiers of local
administration. These included primary school teachers, village level workers,
Aanganwadi (pre-school) workers, multi-purpose health workers, forest guards,
police hawaldars (constables), etc. According to constitutional provision, all the
above-mentioned government functionaries should be accountable to Gram
Panchayat. However, this is not a reality anywhere in India so far. Gram Panchayat
needs to learn how to assert their rights and supervision over the concerned
government functionaries and relevant government development programmes
and resources. Structured learning opportunities need to be created separately
for Gram Panchayat, as well as jointly with concerned government officials and
their supervisors. This would help for team building. Another area of horizontal
networking is building relationships and support mechanisms with other elected
representatives in neighbouring villages, blocks and districts. Support towards
building such horizontal networks as bottom-up pressure groups and mutual
support mechanisms are a major challenge of capacity building in local
governance.
2.6.3 Capacity Building of Government Officials

Orientation and attitudinal change for government functionaries at all levels has
been a major challenge in working with responsive and accountable bureaucracy.
A primary vehicle for bringing this about is through civil service training
institutions at the district, state and national levels. This may imply improving
pedagogy and quality of facilitators in such government civil service training
institutions.
The second area of capacity enhancement for government functionaries has to

do with specific skills that they may need to work with Panchayati Raj Institutions.
For example, in the system of top-down development interventions, lowest level
government officials have no skill in planning and monitoring since all of that
has been centralized. They need to learn various aspects of democratic
30
decentralization especially develop skills in promoting micro plans (including Capacity Building
budgeting) as well as social audit and community monitoring of implementation
of these plans.
2.6.4 Capacity Building Government of Other Actors

Sensitization and attitudinal changes are also a major arena of capacity
enhancement for political leadership at all levels. Barring a few individuals, the
political culture in most political parties and among active and elected politicians
is one of the disregard for the activities and motivations of ordinary people to
take responsibility for village level development.
Capacity enhancement interventions are most urgently needed to sensitize and

re-orient donors. Despite general discussions, concrete shifts in donor policies,
resources and programmes towards strengthening institutions of local governance
are yet to take place. Carefully selected communication strategies, meetings,
dialogues and workshops have to be utilized for such capacity enhancement
interventions.
2.7 HOW TO BUILD CAPACITY?

Capacity building covers a wide range of issues, including actions to strengthen
and further develop human resources, infrastructures or organizational
arrangements within a community or organization. It can also cover the
development of institutional, financial, political and other resources at different
levels and in different sectors of society. Successful capacity building lays a
solid basis for more effective and efficient services and activities. It strongly
supports the development of knowledge and understanding. In order to build the
capacity of the actors involved in local self governance Ministry of Panchayati
Raj, Government of India has developed a National Capability Building
Framework which is discussed hereunder.
2.7.1 National Capability Building Framework for Panchayati

Raj Elected Representatives and Functionaries
The devolution of functions to panchayats to a large extent depends on the
capability building of the elected representatives and officials of panchayats.
Taking this aspect into cognizance, the 7th Round Table of State Ministers of
Panchayati Raj in 2004 adopted several action points relating to the subject of
training and capacity building. These action points provide the underpinnings
for the design of the National Capability Building Framework.
With the overarching objective of making panchayats institutions of self

government, the NCBF is designed to train the elected representatives and officials
of panchayats, pressure groups within the Gram Sabha such as SHGs, CBOs,
and also officials of higher levels of government.
• It encompasses training, provision of adequate functionaries, technical

assistance and other support to Panchayats and provides for orientation to
key officials to help them serve effectively in facilitating the panchayats in
the performance of devolved functions.
31
Empowerment of Local Bodies • It aims at improving grassroots democracy by giving appropriate orientation
to the stakeholders to deliver better and imbibing good lessons from grass
root experiences.
• Training being an important element of the framework, it focuses on

information sharing, and the process of exploration, discovery and growth.
It emphasizes on the training of SCs, STs, and women.
Content of the Framework

The framework segregates the training content and phases the training programme
into three thematic parts. The thematic parts are: (i) Building the right mindset,
(ii) Basic skill building for planning and implementation, and (iii) Consolidation
through interaction and networking. The framework design prescribes activity
mapping, informs the stakeholders about the responsibilities of the governments
at all levels and advocates coordination between various stakeholders.
The training methodologies, as part of the framework, include a mechanism of

large-scale rollout through satellite or distance training and participatory training
to facilitate intensive local support. Interactive satellite based training prescribed
in the framework is a composite approach to effectively and rapidly cover a
large number of trainees. Combined satellite and face-to-face training and mixed
group training is also a part of the framework. The framework has provisions
such as training for ICT skills, strengthening and consolidating capability through
interaction and networking, campaigns at Gram Sabha level, Panchayati Raj TV
channel, community radio, national panchayati raj newsletter, formation of
networks of Panchayat elected representatives, extensive use of IT, one year
refresher course, visits to identified beacon Panchayats, etc.. The framework
also covers provision of infrastructure for satellite training and extension training
centres at the intermediate panchayat level.
Resource Persons for Implementing the Framework

The framework provides for the creation of a pool of resource persons through
three-step cascade training. The selection of the resource persons is to be done
by judging their right aptitude, mindset and commitment for imparting skills
concerning key development programs. The pool will comprise of satellite training
anchors and presentors, and national resource persons at the central level, and
state level master resource persons, district level resource persons, state level
master resource persons for IT, and district level resource persons at the state
level. At the national and state level, trainers are expected to train state level
master trainers, who have experience in training and implementation of
government schemes. The resource persons at the district level must be
stakeholders and participants in panchayati raj.
Development of Training Materials

Training materials preferably in local language and dialect should be presented
in pictorial forms. The training materials may comprise of folk resources, reference
handbook for Panchayats, charts, wallpapers and posters related to Panchayats.
Workshop discussions, individual interviews and dramatized plays should be
prepared in electronic form for a better understanding. In the preparation of the
training materials, Panchayat representatives, Resource Persons, NGOs should
be involved.
32
Programme Management, Evaluation, and Documentation Capacity Building
The framework prescribes for monitoring of the outcomes against the qualitative
parameters given in the training programme. The criterion for monitoring the
outcomes must be chosen so that they are clearly identifiable, observable,
verifiable and quantifiable. The framework indicates that training program
management needs to be decentralized and adapted to the local needs. As per the
framework, the NIRD will work closely with the Ministry of Panchayati Raj in a
joint management group that will oversee the implementation of the programme.
The state level Training Managing Committee will be responsible for giving
policy guidelines regarding training, and reviewing and implementation of the
Capability Building Framework.
2.7.2 Capacity Building Strategy and Approach

The training strategy has to be a multi-pronged approach to achieve the objectives.
In order to organize training for such large numbers institutional training and
Distance Education Mode, through satellite or video conferencing can be adopted.
For effective Capacity building following things should be kept in mind
i) Ensure ownership and leadership
ii) Ensure multi-stakeholder consultations and decision-making
iii) Base capacity building efforts in self-needs assessment
iv) Adopt a holistic approach to capacity building
v) Integrate capacity building in wider sustainable development efforts
vi) Promote partnerships
vii) Accommodate the dynamic nature of capacity building
viii) Adopt a learning-by-doing approach
Promote regional approaches
2.8 CAPACITY BUILDING FOR WOMEN IN

LOCAL SELF GOVERNANCE
Women can perform amazingly after assuming power if they are properly
capacitated to exhibit their skills. Based on several experience, Prof. G.
Palanithurai listed the following points which are vital and relevant in the Indian
context:
i) First, women will usher in a different approach to governance.

ii) Second, women perceive the concept of development comprehensively rather
than narrowly. They have a broad vision about development process.
iii) Third, elected women representatives play an important role in pushing the
women’s issues forward for public discussion and decision making.
iv) Fourth, elected women representatives ensure more participation of people
in the process of development and governance. Women leaders at the
grassroots in the Indian context always stand for simplicity, transparency
and accountability.
33
Empowerment of Local Bodies v) Fifth, elected women representatives have varied sets of skills and they have
enhanced the leadership qualities of others. Women have developed skills
to carryout works despite the limited resources and differences of opinion
with their family members.
vi) Sixth, elected women representatives are the path finders in solving social
problems.
vii) Seventh, elected women representatives tend to maintain secular values in
dealing matters of governance.
All these things can be made possible, if elected women representatives are trained
properly. Women leadership at local level is space for development and not a
space for politics. One can conclude that empowering women through such type
of capacity building exercise addresses the social issues and ensures socio-political
uplift of the whole country.
1) Discuss the major suggestions of the Ashok Mehta Committee (1978)

regarding capacity building for Panchayati Raj Institutions.
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2) Explain the major strategy and approach of capacity building.

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2.9 LET US SUM UP

Capacity building is prerequisite for the effective functioning of local bodies.
Conducting training programmes is not easy as it requires several facilities and a
well trained team of trainers. Further it requires a lot of information pertinent to
Local self governance. By imparting training, the skills and the capacity of the
grassroots leaders can be enhanced. The existing conditions and the way in which
Panchayats are being administered have been identified only through the training
programmes. Steps which are to be taken to put the Panchayats on the proper
track have to be amplified by inducting capacity building exercise.
34
Capacity Building
2.10 KEYWORDS
Capacity Building: Development of an organization or individual’s core
knowledge, skills and capabilities in order to build and enhance the organization’s
effectiveness and sustainability.
Capacity Development: Enhance and effectively utilize skills, abilities and
resources.
Empowerment: Process of enlarging people’s choices to participate in the
decision that shapes their life.
Decentralization: Process of transferring responsibilities to sub-national levels.
Local self Governance: Geographically defined administrative units, each with
its own separate set of tasks, sufficient own resources and democratically
legitimized representative bodies.

Dass, Purvi “Capacity Building for Strengthening of local Self Governance”, in
G.Palanithurai, Dynamics of New Panchayti raj system in India, Volume VI,
Ministry of Panchayati Raj (2008) The State of Panchayats 2007-2008, Volume
I, II & III, Government of India, New Delhi.
NIRD (2001), Panchayati Raj Report: Four Decades of Decentralized
Governance in Rural India, Hyderabad.
Palanithurai, G. (2008) “Capacity Building of Grassroots Leaders in Tamil Nadu”,
in Dynamics of New Panchayti raj system in India, Volume VI, Concept
Singh, S.K. (2008) “Capacity building of Elected Panchayat Functionries
Responding to the Challenges of Tomorrow” in G.Palanithurai, Dynamics of
New Panchayti raj system in India Vol.VI, Concept Publishing Company, New
Delhi.
Uma, G. and J. Vanishree, “Building Women Leadership at Grassroots in Tamil
Nadu”, in G.Palanithurai, Dynamics of New Panchayti raj system in India, Volume
VI, Concept Publishing Company, New Delhi.
Websites-
www.undp.org/cpr/iasc/content/docs/UNDP_Capacity_Development.pdf
undp.org/go/cms-service/download/asset/?asset_id=1634034.

ANSWERS
1) Define the concept of capacity building and highlight its significance in
grassroot democracy.
35
Empowerment of Local Bodies Answer. capacity building as the development of an organization or individual’s
core knowledge, skills and capabilities in order to build and enhance the
organization’s effectiveness and sustainability. It includes the creation of an
enabling environment with appropriate policy and legal frameworks,
institutional development and human resources development and
strengthening of managerial systems. In grassroot democracy, the role of
capacity building becomes very significant because the new elected members
must be trained and aware about their roles and power given to them. Not
only this, as a member of grassroot society he/she should be able solve the
local problems with collective participation.
2) What are the principles are to be followed during capacity building?
Answer. There are certain principles which are to be followed during capacity
building exercise. According to UNDP, there are ten principles that inspire
ownership, transfigure leadership, and help to ensure progress in capacity
building efforts. They are:
• Don’t rush. Capacity development is a long-term process.
• Respect the value systems and foster self-esteem.
• Scan locally and globally; reinvent locally.
• Challenge mindsets and power differentials.
• Think and act in terms of sustainable capacity outcomes.
• Establish positive incentives.
• Integrate external inputs into national priorities, processes and systems.
• Build on existing capacities rather than creating new ones.
• Stay engaged under difficult circumstances.
• Remain accountable to ultimate beneficiaries.
2) Discuss the major suggestions of the Ashok Mehta Committee (1978)
regarding capacity building for Panchayati Raj Institutions.
Answer. The Ashok Mehta Committee (1978) suggested training for (a) officials,
(b) elected representatives and (c) interface courses for both officials and
elected representatives. On training aspect of Panchayat functionaries, the
committee has given the three point suggestions:
• “the training programmes, covering officials as well as non-officials,
would be of staggering dimension. Suitable remedial measures should
also be taken to resuscitate and revitalize the State-level training
institutions.”
• “the National Institute of Rural Development should be the apex all-
India institution for training of trainers, field studies, developing
consultancy capabilities, research work and improvement in the level
of training in the States.”
• “there should be an evaluation of the training programmes so that it
will be possible to make necessary modulations from time to time…..”
36
2) Explain the major strategy and approach of capacity building. Capacity Building
Answer. The training strategy and approach is to achieve the given objectives.
In order to organize training for such large numbers institutional training
and Distance Education Mode, through satellite or video conferencing can
be adopted. For effective capacity building following things should be kept
in mind:
i) Ensure ownership and leadership
ii) Ensure multi-stakeholder consultations and decision-making
iii) Base capacity building efforts in self-needs assessment
iv) Adopt a holistic approach to capacity building
v) Integrate capacity building in wider sustainable development efforts
vi) Promote partnerships
vii) Accommodate the dynamic nature of capacity building
viii) Adopt a learning-by-doing approach
ix) Promote regional approaches
37
UNIT 3 LEADERSHIP
Structure
3.1 Introduction
3.2 Studies on Leadership
3.3 Meaning and Concept
3.4 Leadership at Grassroots
3.5 Emerging Leadership Pattern
3.6 Leadership Schools in Action
3.7 The Requirements
3.8 Ways to Improve the Qualities of Leadership
3.9 Keywords
3.1 INTRODUCTION
Decentralized governance introduced in rural India through the 73rd Amendment
to the Constitution of India, has brought in the system of governance at the
grassroots three million representatives drawn from different socio economic
strata of the society and more particularly Dalits and women. Never India had
such an opportunity to bring this massive number of elected representatives into
governance structure. No doubt it is a history by itself. In the whole of the world
no country has such massive leadership drive took place in a democratic polity
in the recent years. This strength is critical and crucial for rural transformation.
The assumption is that this critical strength which is called critical mass has to
perform critical action and for which they need skill, capacity and capability.
For the new institutions at the grassroots a set of new tasks has been assigned.
The tasks are difficult which had not been performed well by both the central
and state governments hitherto. The New Panchayati Raj Institutions have to
work for economic development and social justice by preparing micro plan with
the active participation of all segments of the rural society. The passive
beneficiaries and petitioners have to be transformed into active stakeholders to
participate in the process of governance and development. In such a way people
have to be mobilized and capacitated. Further democracy has to be deepened
through a process of mobilizing the people for participation in the process of
governance and development. To perform the above tasks leadership at the
grassroots is crucial. As per the theory, decentralization will deliver goods if
adequately powers are devolved, sufficiently middle class is present, literacy
rate is high, presence of strong civil society and land reforms are initiated in the
society. But now along with the above a new proposition is evolving that is
leadership matters much at the grassroots for achieving good governance and
equitable development.
After studying this unit you will be able to:
• understand the meaning and characteristics of ‘leadership’ and its importance

in the context of democracy and rural transformation;
38
• analyse the theoretical nuances of leadership in a broader sense and their Leadership
utility at the grassroots;
• compare between representatives of people and leaders of institutions;
• Importance of various forms of leadership- transformative leadership,
collective leadership, administrative leadership, and new emerging leadership
in the context of democratizing the society in a multi-caste society,
maintaining peace and harmony, to manage development programmes and
schemes.
3.2 STUDIES ON LEADERSHIP

For the past twenty years leadership studies gained much currency and the interest
shown on leadership has increased exponentially. This new interest is due to the
sudden change and transformation happened in economic and political realms in
the world. Market forces emerged and for which leaders were responsible and
for market expansion large numbers of leaders are needed. As a result large
number of leadership schools is created. Thus leadership studies gained
prominence. Leadership studies are of different types. They are general, simplistic
and understandable to all leadership. Yet other studies are more sophisticated.
One will find qualitative and quantitative studies in this area. Generally it is
accepted that leadership is a complex process having multiple dimensions.
Parallelly leadership for governance gained prominence. These leaders are trained
to make use of new opportunities to achieve prosperity, eradicate poverty and
govern the institutions very well with the active participation of people and more
particularly women and other marginalized groups. To cater to the needs of the
nations and the regions a large number of leadership schools are needed and
slowly they are being created in India. In developed countries leadership schools
have been created exclusively to train the elected representatives in the science
of governance and managing the institutions. A large number of academics have
involved in studying the process of capacity building exercises conducted for
elected representatives.
This unit will focus on the emergence of grassroots leaders through the process
of election in a competitive mode and they are trained, oriented and sensitized
on the roles to be performed and the responsibilities to be fulfilled in the local
body system that too in the rural areas. All are representatives elected by the
people for the specified task and they acquire skill, knowledge and orientation
through capacity building and they have to respond to the challenges in their
area of operation through their approach, skill capacity and capability. In this
process one has to evaluate to what extent leadership plays its role in the
democratic, transformative process of development through the grassroots
democratic institutions.
3.3 MEANING AND CONCEPT

Leadership has been defined in many ways. While defining leadership, it is being
viewed from the focus of group processes, personality perspective, behavioural
traits, power relationship, transformational process and skills perspective. Though
leadership is defined in various ways with different perspectives, the components
of leadership have certain common characteristics. They area; a. leadership is a
39
Empowerment of Local Bodies process; b. leadership involves influence; c. leadership occurs in a group context
and d. leadership involves goal attainment. Thus leadership is defined as a process
whereby an individual influences a group of individuals to achieve a common
goal.
It is a process not a trait or characteristics of the leaders but a transactional event

that takes place between the leader and the led. It affects both the leader and the
led in the process of interaction. It is not a one way event but it is an interactive
event. Leadership involves influence and it is concerned with the way the leader
affects his or her followers. Influence is the sine quo none of leadership. Without
the influence leadership does not exist. It takes place in groups. Leadership
involves in influencing the group to achieve the common goals. Understanding
of the leadership is always in the context of the level of the followers and their
relationship with the leaders. Both leaders and the followers are involved together
in the leadership process. The leaders are in the task of taking initiatives and by
which they link themselves with the stakeholders. While analyzing the concept
leadership in the backdrop of the above given definition and explanation issues
have to be seen from the perspective of both the leaders and the followers or the
stakeholders.
Though, we talk about leadership as a process one cannot ignore the argument
that leadership as a trait. The scholars who deal with leadership from the
perspective of traits argue that certain individuals have certain special, unique,
innate, inborn qualities that really make them leaders. These qualities differentiate
them from other ordinary persons or individuals.
Leadership by traits Leadership by

Leader process leader
Personal character & Interaction

Skills and capacities
Followers
Followers
Leadership defined by process suggests that leadership is a phenomenon that

exists in the context and makes leadership available to every one and it is to be
learned. There are other arguments concerned with leadership. Leadership
assigned is differentiated with leadership emergement. Some handle powers
because they are being positioned and whereas others they influence over their
group members not because of their positions but because of the personal traits
and characteristics.
For leadership, power is the key element and central concept which has got its
capability to influence others. Powers are of two types. They are personal and
positional. Personal power is the capacity of the leader to influence over others.
Positional power is the powers a person derives from a particular office
40
legitimately. Leadership is equated with management. Leadership handles, people, Leadership
institutions and works for achieving the targeted goals as management. Many of
the functions of leadership are similar to the functions of management.
Yet, for the present work, we consciously take the argument and definition of
leadership as process coupled with traits and assignment as the rural local body
leaders are elected to position with certain earmarked responsibilities to be
discharged by them. While discharging responsibilities, they have to be in constant
interaction with the people with an objective of involving them for collective
decision making. Yet the elected leaders have certain key characteristics and
traits which influence the whole process of development and democratic decision
making.
While seeing the concept leadership, it is necessary to understand the context

and situation in which it works. India being a society with hierarchical division
based on caste, and class, highly patriarchic in nature, agriculture being the primary
occupation of 60 percent of the population, the concept leadership has to be
viewed both from the perspective of the systems created for governance at
grassroots and the practices evolved over a period of time for maintaining social
relationship at the community level.
Leadership has been studied through different theories namely contingency theory,
path-goal theory and exchange theory with different approaches namely trait
approach, skill approach, style approach and situational approach. In the new
context, transformational leadership, team leadership, women leadership and
leadership ethics are so important. With the above stated approaches, theories
and styles leadership at the grassroots can be studied and seen.
3.3.1 Competency Building of Elected Representatives: A UN

Initiative
One of the most important initiatives of UN-Habitat is the capacity building
activity of local self-governments. For this they have developed a series of user-
learning tools to give practical training to the trainers and the trainees. With this
end in view, they have published Training for Elected Readership (TEL) series
in 1994. This has been translated into twenty-five languages and used in many
parts of the world by hundreds to trainers of the local self-government
functionaries. The handbooks have been used by various institutes, NGOs, and
community based organizations to develop competencies and leadership skills
of elected representatives.
Theoretical Concept in the UN-Habitat Series

Based on the success of the original series and considering changing nature of
local governance, UN-Habitat has revised and updated TEL series to meet the
training needs of the new generation of local elected leaders. Issues of equity,
inclusion, subsidiary, accountability and transparency have gained new
significance. So, several key changes have been incorporated in the series that is
known as Local Elected Leadership (LEL). The revised version recognizes
representation and leadership as the core roles and responsibilities, the elected
members. In order to carry out these core roles and enabling, negotiating, finance
management, overseeing and institution-building. These competencies are to be
exercised with in the principles of good governance. It also highlights the central
41
Empowerment of Local Bodies role of the trainer. The initial TEL series has been organized around the various
roles and responsibilities of elected representatives and the new series has been
developed in terms of competencies of an elected representative. Competency
means the combination of knowledge, skills understanding and attitudes
associated with a particular leadership performance. Examples are policy-making
or institution-building. The competency does not translate into elected leadership
until it is used effectively and consistently in one’s role as an elected representative.
These competencies are widely accepted as principles of good governance.
Institutions may have different views on good governance but UN-Habitat has a
clear vision. It puts forth sustainability in all dimensions of local development,
subsidiary of authority and cost effective delivery of services, transparency and
accountability of decision-makers and all stakeholders, civic engagement and
citizenship will all man and woman, and social security. To these challenges
LEL series adds two more-diversity and trust. Diversity of gender, race, ethnicity,
age, and other community characteristics have to figure prominently in the local
government policies and decisions. Trust defines the quality and integrity of
relationship between the elected representative as a member of governing body
and the citizens.
Among the twelve competencies covered in the LEL series, special emphasis
has been given to representation and leadership. Representation is the legal
mandate of the office one has been elected to serve and leadership is the sum
total of contribution of an elected representative. In between representation and
leadership roles there are ten supporting competencies for an elected member to
fulfill. Among these communicating and facilitation competencies are more
personal. Policy-making, decision-making and enabling competencies are related
directly to the collective action of an elected member. The overseeing, financing
and institution-building competencies are associated with their responsibility.
Using power and negotiating are both personal as well as collective governing
competencies and the representation and leadership roles and competencies fit
into all these categories.
Representation
Representation is the key responsibility of any elected member. The elected
representatives are mainly responsible for representing the rights and needs of
all citizens with in the local government jurisdiction. This involves the
development and enforcement of policies, assisting the people to be nearer to
the local government, keeping in touch with all the citizens and taking up their
issues and solving the problems also developing partnership with various
stakeholders. Representation also means adherence to the principles of good
governance.
Communicating
Effective communication is critical to good governance, principles of openness,
transparency and accountability. The communicating competency involves giving
and receiving information, ideas and feeling, with accuracy and understanding.
Active listening and asking the right kind of questions are the elected
representative’s best communicating tools. The process of trainers and
participants in a common inter-learning situation. Here, trainers are objective
and non-judgmental in outlook and evoke and stimulate thinking. By various
devices the trainees are made knowledge for effective communication. This is
42
essential when one chairs gram sabha or participates in committee meetings. Leadership
Elected members, with effective communication skills, can ensure people’s
participation and make the planning process more meaningful. The
communicating competency will help one become a better listener and ask more
incisive questions.
Facilitating
Facilitating is a process where a substantively neutral person without decision-
making authority and acceptable to all intervenes to help to solve problems. It
also means mediating disputes, making meetings more effective, building active
teams, and managing interpersonal and inter-group conflicts. Through facilitating
one can effectively organize meetings and discuss and solve disputes are
introduced this skill in the trainees, case studies on local disputes are introduced
and they are encouraged to individually involve and solve such problems.
Using Power
Using power for the sake of good governance is a matter to be discussed with
care. The foremost thing is that representative should know about her/his rights
and duties, then comes exercising the power, entrusted responsibly as a public
figure. Unfortunately, the discussion of power, particularly when associated with
the actions of elected members, makes a lot of people uncomfortable. There is
the issue of sharing of power and giving it away. There is the natural tendency
not to part with power. Devolution of powers up to the level of the individual
concerned is the accepted dictum. This attitude is to be changed.
Decision-making
Decision-making competency helps to identify and analyze problems and provides
opportunities to explore options before a final decision is made. The elected
representatives can take a quick decision, delegate it to someone, delay it and
support the decision taken by someone else. There is also the option of veto and
cancellation. Decision is judged by its quality and acceptance by those who have
to live by its consequences. The appropriate decision at the appropriate time is
the right thing. Decisions at the most should be impartial.
Policy-making
The policy making competency helps to generate new laws for better governance.
An elected representative should be able to understand the pulse of the people.
In a decentralized system there are various public forums such as gram sabhas
and various committees to air the grievances of the people. The officials also
face problems. They can be better understood through a cordial interaction with
them. Their problems must also be taken into account. The suggestions of the
expert of the locality also must be heard before any policy making decision.
Gender analysis needs to be an integral part of such process. Elected representative
should adhere to the norm that any policy making is for the sake of the general
public. Usually, in the decentralized democratic system, the local elected
representative gives forth suggestions to the government for a policy change.
For that one must always be in touch with general public.
Enabling
The enabling competency involves a wide range of options like forming
partnership with private and public firms, NGOs, beneficiary committees, 43
Empowerment of Local Bodies neighborhood organizations and women self-help groups. This partnership
initiative can include advocacy, providing services, awareness generation,
community interface, monitoring and evaluation and project formulation and
implementation. Enabling providers the means for others to get thing done. It
definers local governance largely in terms of what others can do to provide
programmers and services for the community and citizens and not what the local
self-governments should do. This public panchayat private partnership can
contribute much for local economic development.
Negotiating
Negotiation is an integral part of the governing process. This competency will
help an elected representative to take the best decision form the perspective of
all those parties involved. Negotitation involves interaction by two or more
parties representing divergent interests and positions seeking to do better than
they could other wise through jointly agreed actions. Negotiations take the process
from competition to collaboration. The present decentralized system provides
wide opportunities for negotiation. An elected member must be competent enough
to enter into such negotiations when implementing projects that require
negotiation.
Financing
Financing competency of an elected member helps to raise allocate and spend
funds according to the budget provisions. A better understanding of budgeting
process from different perspectives, including gender budgeting is very essential
in the functioning of local self government. As transparency and accountability
are the two most important aspects of democratic decentralization, proper financial
management needs special attention. Apart from the government funds, the local
self governments are raising their own resources. The micro-level planning should
suit the budget allocation. There is a tendency for misuse of funds and
extravagance, which needs special attention.
Overseeing
Overseeing involves the evaluation and periodic monitoring of all local self-
government programmes. This competency helps for a lawful, effective and
efficient administration. This also helps to put in place various safeguards against
corruption and malpractices. The elected member can undertake participatory
evaluation to find out the pitfalls at the implementation stage. The success of
democratic decentralization largely depends upon an effective monitoring system.
Conducting surveys using citizen cards for collecting information on services
given by the local self-government is another corrective measure.
Institution-building
Institution-building ensure the local governments becoming real self-governing
institutions. It is important to note that governance is not government and
organizations are not institutions. An organization becomes an institution when
it succeeds in being valued by others as important and significant. Through
institution-building competency, an elected representative can make the local
self-government function according to the will of the community.
44
Towards Effective and Efficient Leadership Leadership
Leadership quality is the sum total of all the competencies described above.
Elected leadership should be able to manage the paradoxes within the principle
of good governance. One should be able to solve the complex community
problems with governing principles. The leadership competency includes good
development vision; clarify to governance, integrity, teamwork, will and trust.
These are the essential ingredients of good governance. There is no doubt that
the success of local governance largely depends upon the efficient leadership of
the elected representatives.
With out strong local self-government institutions decentralization will not deliver
the desired results. Training and capacity building are therefore a wise investment
into the future sustainability of local self-governments. The roles and
responsibilities of local self-governments continue to change according to a
change in the socio-economic and environmental problems. The increasing
emphasis on decentralization also puts a heavy burden on the elected
representatives. So, it is essential to develop new skills and attitudes in response
to the changing nature of their role. Considering these challenges, the need to
provide creative and productive training and development opportunities for local
self-governments elected representatives has become inevitable.
3.4 LEADERSHIP AT GRASSROOTS

In the present context the elected representatives of the rural local bodies have to
plan for economic development and social justice with the active participation
of all segments of the society. The elected representatives have to mobilize the
people for the process of democracy and development. The elected representatives
are drawn from different segments of the society especially from the marginalised
sections namely the women, Dalits and tribals. The governance system created
at the grassroots has to interact with the social system to achieve the earmarked
target of transforming the rural society to achieve prosperity and equity. To perform
the above task the elected representatives have to equip themselves to handle the
institutions, manage the people and to achieve the target. It requires understanding
skill, managerial ability, and crowd management skill, target achieving approach
and handling information effectively.
3.4.1 Leadership for Representation

The Elected Representatives are representing their respective constituencies
wherefrom they are elected and at the same time they are members of a body.
They have to perform both roles (representatives and members of a body) with a
sense of responsibility and understanding with clarity of roles. Interest aggregation
and interest articulation are the two functions they have to perform as
representatives. They have to collect the demands of the people of their
constituencies and put them in the form of arguments in the body for taking
decisions and allocation of resources. While participating in the deliberations of
the body, they have to keep it in their mind that they are not only representatives
of the respective constituencies but also members of a body. So the decision has
to be taken on a consensus basis to benefit the overall area and at the same time
meeting the needs of the constituencies. Equity and justice should be the basis of
45
Empowerment of Local Bodies such decisions and resource allocations. In such a way they have to orient
themselves as representatives of the respective constituencies and member of
the bodies. It requires understanding and clarity on the roles to be performed.
3.4.2 Leadership for Transformation

The rural local body leaders have to transform the society to achieve economic
development and social justice. Attitude and behaviour of the rustic folk have to
be changed and transformed. Basic awareness about sanitation, livelihood,
creation of decent and healthy human habitat has to be created among the people.
Our institutional democracy has to be converted in to behavioural democracy.
Democracy has to evolve as culture. Now it represents only institutions.
Institutions have to reflect the culture. Basically democracy means fairness, justice,
respecting each other, valuing the views of others. It is a culture of valuing human
being. Such a kind of culture has to be created. From the present state of petitioner
and beneficiary, people have to be transformed as citizens with a sense of
responsibility. In such a way transformation has to be achieved and for which
leaders with transformative character have to be drawn and elected and they are
to be oriented to achieve such a kind of transformation at the grassroots.
3.4.3 Leadership for Management

The Elected Representatives of Rural Local Bodies have to manage the institutions
to deliver deliverables to the people effectively and efficiently with an objective
of satisfying their needs. It requires managerial skills. Management establishes
order and consistency. But leadership produces change and movement.
Management was created as a way to reduce chaos in organisation and to make
them run more effectively and efficiently. The primary functions of management
are planning, organizing, staffing and controlling. Though leadership and
management appear to be similar both are not the same. Yet the leaders have to
perform the functions of management. All the activities envisaged are to be
institutionalized. Whether it is Gram Sabha meeting, or a five year plan
preparation, organizing development seminar, conducting committee meetings
of the panchayats, they are to be regularized and institutionalized.
3.4.4 Leadership for Collective Decision Making

Democracy is a powerful instrument for consensus decision making. By making
use of this instrument society gets maturity. The whole process of dialogue and
discourse will enhance the understanding capacity of the people. But in a feudal,
hierarchical and patriarchal society practicing of democracy as culture is
problematic. Because the prevailing social and economic conditions are
antithetical to democracy, hence democracy is functioning in an authoritarian
mode. Whether it is political party or political regime, in terms of structure it is
collective decision making but in reality it is always the domination of a leader.
In the name of democracy the concept of rulership is being practiced and it is
antithetical to democracy. Democracy needs leadership. Leader has to lead the
people by providing objective information and perspective. But in reality it does
not happen. In order to overcome this problem, collective leadership is involved
in decision making. Whether it is panchayat council meeting or Gram Sabha
meeting, the leader of the council should evolve consensus in the meeting after
due deliberations. Collective decision making has to evolve itself as a culture.
46
Check Your Progress 2 Leadership

1) Why leadership studies are so important at grassroots at present?

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2) How transformational leadership is more relevant for analyzing the

leadership at the grassroots.
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3.5 EMERGING LEADERSHIP PATTERNS AT THE

GRASSROOTS
Though studies are very limited on leadership at grassroots, the available studies
captured the emerging trend at the grassroots. It is true that wherever community
control is strong in the society the community leadership has been established in
the formal system. The space is occupied by the community elites. Thus it
facilitated for the elite capture. Wherever strong political mobilization had been
done, society is transformed and leadership emerges politically with party
orientation. Out and out the space is made political. In the same way the Women
Elected Representatives are drawn towards this space by various forces. Women
are driven and drawn towards the institutions through the process of election.
But the driving and drawn forces are the family, community, peer group, political
parties, and on their own aspirations. The whole process of induction takes place
through two structures. They are community structures and political structures.
The leaders emerging through community structures for Local Body position are
confronting with the modern political forces for transformation. Equally the
leaders emerging through political structures for Local Body positions are
confronting with other political forces as opposition parties in the decision making
domain. The Elected Representatives by their capacity, skill and capability tackle
the problem as competition for getting share in public resource has been increasing
exponentially. In the whole process of managing the institutions, the leaders of
the Local Body system have increased their capacity and emerge as leaders with
47
Empowerment of Local Bodies broader power through their party or parties. It has been demonstrated that there
is a capacity building for democratic political leaders in the local bodies. Of the
three tiers rural local bodies the lowest tier local body is in the grip of communities.
The other two tiers are under the influence of the political parties.
3.6 LEADERSHIP SCHOOLS IN ACTION

Throughout the world leadership schools are prominent and popular among the
people. Academic discipline has been developed in the university system. The
leadership schools are different types. Management schools have opened a sub
discipline for managers of the companies. At the same time there are schools for
political leaders. Both are being run professionally. In India there is no strong
and vibrant leadership school to prepare leaders for political system except the
political parties’ training institutions. There is no vibrant training institution to
train our members of parliament and Members of State Legislature. (Bureau of
Parliamentary studies and training in New Delhi is not as effective as expectation
in training the members of parliament). There is no training institution to train
our members of legislative assemblies of states in the quality of legislative debates
and governance. At least for training the Rural Local Body Leaders, there are
training institutions. For each state there is one training institution namely State
Institute of Rural Development meant for imparting training to the officials and
elected representatives of the local bodies. Under the State Institute of Rural
Development there are Regional Institutes of Rural Development in different
regions of the same state. At the national level, there is a National Institute of
Rural Development. These institutions are poor both in terms of quantity and
quality. They are not adequate to meet the requirements. Yet these institutions
are not comparable to the level of the Business leadership schools in terms of the
capacity and capability. Barring a few, all the training institutions are not well
equipped to handle the programmes of training very effectively for Local Bodies
leaders. Of course in India there are a large number of non governmental
organizations, with the financial support of bilateral and multilateral agencies
have conducted the capacity building programmes. Even specific Academies
have been created to run such leadership programmes with the support of donor
agencies. Yet the coverage of training has been very limited.
The grey areas in training of Rural Local Body leaders had been captured only
when the Ministry of Panchayati Raj, Government of India organized Seventh
Round Table Conference in Jaipur for Capacity Building. The training
programmes conducted in the training institutions of the State Government barring
a few exceptions are stereo type without any sense of relevance, commitment
and effectiveness. The trainings are mostly of do’s and don’ts and not what could
be done. This scenario is due to absence of training policy at the National level,
and state level and there is no regular resource allocation through budget for
training. Suggestions have been given for a long to convert all the training
institutions into leadership schools managed by independent agencies. The
leadership schools for business are working very well in competitive mode. For
governance there is no much enthusiasm in setting up leadership schools. There
are certain leadership schools organized by the civil society organizations and
academic institutions.
48
Leadership
Leadership School – I
Aagaz Academy has conducted a leadership programme for the Elected
Women Representatives in Bhopal for the past four years with the support of
the Hunger Project, New Delhi. This Academy is specifically working for
developing ‘Transformatory Leadership” among the Elected Women
Representatives. This Academy has evolved this programme with an objective
of evolving leaders who are not only an agent of social transformation but
also a catalyst to work for such transformation even after the expiry of their
tenure. The trained manpower in the act of governance is really an asset at
the grassroots. Because the future training programmes can be conducted
with the help of these leaders trained in leadership schools. The Elected
Women Representatives are in a learning mode and they will be relieved
from the problems and barriers of the family, community, political parties
and panchayats by developing skill and ability through a process by adopting
series of strategies. The strategy of learning by doing has yielded good results.
It attracts the existing approach and makes them as leaders to lead the
community through the system of local body. It is a collective learning process
and co-learning survey. The support structure is inbuilt in this process.
Leadership School II
Rajiv Gandhi Chair for Panchayati Raj Studies of Gandhigram Rural Institute
has evolved training modules for conducting capacity building exercise for
Elected Local Body Leaders and this exercise will be conducted separately
for women and Dalit Leaders. To extend support to the women and Dalit
leaders, a support structure has been created with a team of experts. In order
to bring to light the success and struggles of the elected women and Dalit
leaders, media has been sensitized and they have been facilitated to write
stories about Local Governance. Interface has been arranged for panchayat
leaders through exchange programmes with panchayat leaders of neighboring
states. For information dissemination electronic media has been made us
partners and carried out programmes for years. Elected Women
Representatives have been facilitated to form a Federation to represent their
grievances. Seeing the outcome, Dalit representatives have also been federated
to air their grievances. Periodically organizes leaders meet and share their
experiences. Based on all the above experience sharing policy advocacy in
being done by the chair. The chair has developed training modules to train
panchayat leaders on disaster preparedness and disaster management. In the
same way training module has been developed to train panchayat leaders on
globalization. It facilitated Gram panchayats to develop micro plan at gram
panchayat level. In such a way Rajiv Gandhi Chair for Panchayat Raj Studies
emerges a new school of leadership.
Leadership School III

Kerala Institute of Local Administration (KILA), the nodal agency for training,
research and consultancy for decentralization in Kerala has introduced a long-
term training programme for elected representatives, namely ‘Certificate
Course in Local Governance’. Usually KILA offers short-term training
49
programmes, which fall far short meeting the needs of the participants. It is
now being increasingly realized that the creation of a panel of resource persons
capable enough in developing long-term perspective is inevitable to translate
the mandate of strengthening democratic decentralization into a reality.
This ten months course is organized on the basis of contact-cum-distance learning;

five days of contact classes in every spell, followed by assignments for self-
learning. Reading materials based on the syllabus, together with activity-based
assignments are given to the participants. The focus of the course is more on
attitude and behavioural change by ‘learning through problem-solving’. It
provides opportunity for self-learning through activities. Peer sharing of
experience is also given to make the learning more effective. The principles of
adult learning are considered for deciding the mode of delivery. The methodology
of instruction is more learner-centred. All the participants have to undertake one
action-oriented research on any topic on development and governance within
their respective local self-governments. Within a short span of six months they
have to conduct the study and present the dissertation before a group of experts
for validation. Later, based on the study, they have to carry out the follow-up
activities. After the completion of the course these elected representatives will
work as the master trainers and members of Technical Advisory Committee.
3.7 THE REQUIREMENT

The crisis in India is leadership. It is so acute at the grassroots level. Institutions
at the grassroots level are lacking professionalism. Leadership and professionalism
are the most essential requirements for grassroots governance. We have three
million elected representatives are in position for governance. Of them one million
are women. These elected representatives have to be transformed as transformative
leaders. Some of them have already leadership traits and many of them may not
have such traits. But to perform the assigned tasks, they require new skills, capacity
and capability. In order to achieve the same, we need to have a perspective policy
both at the National and Regional (State) levels. Equally proper resource allocation
for such exercises to be done continuously. While doing the above, the training
institutions have to be transformed to the level of leadership schools for business.
It can be done through a new partnership with civil society organizations and
universities. The training institutions have to be revamped and so that they can
equip themselves to cater to the needs of the elected representatives. By doing
so, a new genre of leaders will emerge and they will be alternative leaders to the
members of parliament and member of legislatures. A linkage has to be established
between the training institutions and the university departments to do research
on leadership issues which in turn help the policy makers to take decisions on
the policies of training and resource allocation for training and fine turning the
whole process of training and capacity building exercises.
1) How women leadership is different form men leadership?
......................................................................................................................
50
...................................................................................................................... Leadership
......................................................................................................................
......................................................................................................................
2) Suggest ways and means to build leadership qualities among the elected
representatives of rural local bodies.
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
3.8 WAYS TO IMPROVE THE QUALITIES OF

LEADERSHIP
• Creating leadership schools in the colleges where social sciences are being
taught
• Conducting Capacity Building exercises for the grassroots leaders.
• Organizing periodical Leadership meet for interaction
• Organizing capacity building exercise for Women Elected Representatives
• Organizing Capacity Building Exercises for Dalit Elected Representatives
• Conducting periodical studies on the emerging leadership at the grassroots
institutions
• Conducting studies on the impact of leadership at the grassroots
3.9 KEYWORDS
Leadership : It is a process whereby an individual influences a
group of individuals to achieve a common goal.
Trait Approach : It is an approach of analyzing the leaders by
identifying the innate qualities and characteristics
of the great social, political and military leaders.
Skill Approach : This approach analyses the leaders from the
perspective of skill, knowledge, capacity and
capabilities needed for leadership.
Style Approach : The style approach essentially visualizes the leaders
from the angle of what they do and how they do? It
essentially brings an assumption leaders are not alike
and they are distinct in their styles.
Situational Approach : This approach analyses the leaders from the
perspective of the context and situation as they vary.
51
Empowerment of Local Bodies The key assumption is that for every situation, new
leadership is needed. How leaders are responding to
situation is the basic unit of analysis.

Aagaz Academy (2009), Learning to Lead: Exploring Leadership Education,
Bhopal: Aagas Academy.
Chakraborty, S.K. and Pradip Bhattacharya (eds.) (2001), Leadership and Power:
Ethical Explorations, New Delhi; Oxford University Press.
Chaudhary, S.N. (2004), Dalit and Tribal Leadership in Panchayats, New Delhi:
Concept Publishing Company.
Ministry of Panchayati Raj (2008), Study on Elected Women Representatives in

Panchayati Raj Institutions, New Delhi: Government of India.
Kumar, Narender and Manoj Rai (2006), Leadership in Panchayats, New Delhi;
Rawat Publications.
Peter G. Northouse (2007), Leadership: Theory and Practice, New Delhi: Sage
Publications, India Pvt Ltd.
Palanithurai, G. M.A.Thirunavukkarasu and G. Uma (2008), Change makers at

Grassroots: Local Governance in Action, New Delhi: Concept Publishing
Company.
The Hunger Project (2006 to 2009), Spoke the Press: Select Articles on Elected
Women Leadrs in Village Panchayats, New Delhi: The Hunger Project.

ANSWERS
1) Why leadership studies are so important at grassroots at present?
Answer. Leadership at grassroot level is a recent initiative and we have less

empirical information. Secondly grassroot leadership varies context. The
emergence of grassroots leaders through the process of election in a
competitive mode and they are trained, oriented and sensitized on the roles
to be performed and the responsibilities to be fulfilled in the local body
system that too in the rural areas. The challenges faced by them in their area
of operation are diverse which needs to be share largely through empirical
studies. Though studies are very limited on leadership at grassroots, the
available studies captured the emerging trend at the grassroots.
2) How transformational leadership is more relevant for analyzing the leadership

at the grassroots?
Answer. Transforming leadership characterizes with collective concern of

working towards for the benefit of the team, organization and/or community.
52
In 1978, James MacGregor Burns coined the concept of transforming Leadership
leadership referred as ‘leaders and followers help each other to advance to a
higher level of morale and motivation’. The rural local body leaders have to
transform the society to achieve economic development and social justice.
Attitude and behaviour of the rustic folk have to be changed and transformed.
For this, there is urgent need of basic awareness about sanitation, livelihood,
creation of decent and healthy human habitat has to be created among the
people. Democracy has to evolve as culture. It is a culture of valuing human
being. Such a kind of culture has to be created. In such a way transformation
has to be achieved and for which leaders with transformative character have
to be drawn and elected and they are to be oriented to achieve such a kind of
transformation at the grassroots.
3) How women leadership is different form men leadership?
Answer Leadership is a phenomenon that exists in the context; particularly in

patriarchal social conditions differences of gender concerning role conflicts
also exist. Here, power is the key element and central concept which has
got its capability to influence others. In the new context, transformational
leadership, team leadership, women leadership and leadership ethics are so
important at the grassroots which yet to be examined. In the same way, the
women elected representatives are drawn towards this space by various
forces. Women are driven and drawn towards the institutions through the
process of election. But the driving and drawn forces are the family,
community, peer group, political parties, and on their own aspirations.
4) Suggest ways and means to build leadership qualities among the elected
representatives of Rural Local Bodies.
Answer. The following are the suggestion for effective leadership at grassroot
level in rural local bodies.
• Creating leadership schools in the colleges where social sciences are
being taught
• Conducting Capacity Building exercises for the grassroots leaders.
• Organizing periodical Leadership meet for interaction
• Organizing capacity building exercise for Women Elected
Representatives
• Organizing Capacity Building Exercises for Dalit Elected
Representatives
• Conducting periodical studies on the emerging leadership at the
grassroots institutions
• Conducting studies on the impact of leadership at the grassroots
53
UNIT 4 RESOURCE MOBILIZATION
Structure
4.1 Introduction
4.2 Mobilization of Resources by the PIRs: Evolution of Financial
Empowerment
4.3 Sources of Revenues of the PRIs in India
4.4 Criteria for Financial Devolution
4.5 Reasons for Poor Mobilization of Financial Resources
4.6 Measures to Strengthen Fiscal Resources Mobilization
4.7 Let Us Sum Up
4.9 Check Your Progress- Possible Answer
4.1 INTRODUCTION
Availability of finance is one of the essential pre-requisite for the effective
functioning of the local self government institutions both in rural as well as
urban areas. The 73rd constitutional amendment has assigned 29 duties and
responsibilities to the PRIs. In order to perform these duties and responsibilities
these institutions require financial resources. Surat Singh has rightly remarked
that nowhere in the world can local bodies function without substantial assistance
from the Government. U K Hicks has rightly observed that “if local bodies are to
play any significant role in economic and social development, they must clearly
have access to adequate finance.” Muthayya (1972) found that the main function
of the Panchayat is to mobilize local resources and degree of success is depending
upon the local support. The study done by Singh (1986) reveals that of all the
problems of the Panchayats, the most crucial is the paucity of funds. State
Governments have not made adequate transfer of resources to these units and
the grants are not sufficient to commensurate the functions assigned.
After reading this unit you would be able to:

• Narrate the evolution of mobilization of financial resources by the PIRs.
• Explain about the main sources of revenues of the PRIs.
• Describe criteria for fiscal devolution.
• Measures to strengthen fiscal resources mobilization.
4.2 MOBILIZATION OF RESOURCES BY THE

PRIS: EVLOUTION OF FINANCIAL
EMPOWERMENT
Several committees were constituted by the Government of India to deal with
the various issues involving in the effective financial empowerment of the PRIs.
One such committee was the ‘Local Finance Enquiry Committee’, appointed in
54
the year 1951 under the chairmanship of P.K. Wattal. After reviewing the financial Resource Mobilization
resources of village panchayats, the committee found that the panchayats rely
mainly on two sources of income: (i) income which they raise themselves; and
(ii) funds placed at their disposal by government. The committee recommended
for the unconditional assignment of 15 percent of land revenue raised in the
panchayat areas and the proceeds of the surcharge levied on the transfer of
immovable property to the panchayats. The committee also suggested that the
Panchayats should also be empowered to raise their own resources of revenue
by levying certain taxes in their territories.
However, later on, the Taxation Enquiry Committee, constituted under the
chairmanship of John Mathai, in its report in 1953-54 called for a cautious policy
regarding allocation of funds. The committee also recommended for reserving
certain taxes such as tax on land and building, duty on transfer of property, house
tax, and service tax for rural local bodies. The team for the study of Community
Project and National Extension Service pondered over the importance of
panchayat finances in its report in 1957. It recommended certain measures for
augmenting the resources of panchayats. It also made some recommendations
with regard to the administrative and other expenditures of panchayats.
The Santhanam Committee constituted in the year 1963, examined the issues
relating to the finances of panchayats. It has made several recommendations for
raising revenue of panchayats from their own resources. It suggested the principle
of devolution of various grants to the panchayati raj bodies by the State
governments. It recommended for setting up the Panchayati Raj Finance
Corporations. Its responsibility is the mobilizing all grants and subventions at
the State level and sending these in a consolidated form to panchayati raj
institutions. It also recommended that in all States, Panchayats should have power
to levy special tax, based on land revenue, house tax. etc.
The Study Team on District Administration 1967 of the Administrative Reforms

Commission, chaired by Takhatmal Jain made a number of suggestions regarding
the taxes which could be raised by the panchayats. The report envisaged different
assigned revenues and grants which could be transferred to them by the State
government. Another committee which emphasized on the financial health of
the panchayats is the Ashok Mehta Committee. The Ashok Mehta Committee in
the year 1978 recommended that besides government support, panchayats should
mobilize enough resources of their own. It viewed that no democratic institutions
can continue to maintain its operational vitality by depending upon external
resources. The committee had recommended for the setting up of State Finance
Commission for strengthening the financial position of the Panchayats.
The G.V.K. Rao Committee, 1985 examined in detail the functions and revenue
resources of PRIs and recommended that there should be a committee on finance
studies at the district level to look after framing of budgets, considering proposal
for augmenting the revenue resources consideration of other such proposals
affecting financial position of local bodes etc.
The L.M. Singhvi Committee of 1986 suggested a pattern of compulsory and

optional levies a list of subjects of which power to levy tax and fees may be
55
Empowerment of Local Bodies entrusted to the PRIs. It also suggested that the State government should levy
and collect taxes on behalf of panchavati raj institutions and disburse them on
recommendations of the Finance Commission in each State.
The 73rd constitutional amendment has made constitutional provisions for the
financial empowerment of PRIs. These are as follows:
i) 243-H-Powers to impose taxes by, and Funds of the Panchayats, the

Legislature of a State may, by law, - a) authorize a Panchayat to levy, collect
and appropriate such taxes, duties, tolls and fees in accordance with such
procedure and subject to such limits; b) assign to a Panchayat such taxes,
duties, tolls and fees levied and collected by the State Government for such
purposes and subject to such conditions and limits; c) provide for making
such grants-in-aid to the Panchayats from the Consolidated Fund of the
State; and d) Provide for constitution of such funds for crediting all moneys
received, respectively, by or on behalf of the Panchayats and also for the
withdrawal of such moneys there from as may be specified in the law.
ii) 243-I-Constitution of Finance Commission to review financial position.(1)

The Governor of a State shall, as soon as may be within one year from the
commencement of the Constitution (Seventy-third Amendment) Act, 1992,
and thereafter at the expiration of every fifth year, constitute a Finance
Commission to review the financial position of the Panchayats and to make
recommendations to the Governor as to - (a) the principles which should
govern - (i) the distribution between the State and the Panchayats of the net
proceeds of the taxes, duties, tolls and fees leviable by the State, which may
be divided between them under this Part and the allocation between the
Panchayats at all levels of their respective shares of such proceeds; (ii) the
determination of the taxes, duties, tolls and fees which may be assigned to,
or appropriated by, the Panchayats;
The Eleventh Finance Commission is the watershed in the financial empowerment

of local bodies in India. It has made several recommendations for financial
empowerment of the local bodies. The EFC adopted population as the sole
criterion for allocation of adhoc grants. The EFC observes that, ‘population’
should not be the sole basis for State-wise allocation as it has the effect of
perpetuating status quo. The distribution will be done through the following
criteria:
i) Population 40 per cent;
ii) Index of Decentralization 20 per cent;
iii) Distance from highest 20 per cent per capita income;
iv) Revenue effort 10 per cent; and
v) Geographical area 10 per cent.
The formula recommended by the 11th Central Finance Commission for the
inter se share of the states in tax devolution is given in Table-1.
56
Table-1: Criteria and Relative weights for determining inter se shares of Resource Mobilization
states
S.No. Criterion Relative weight (percent)
1 Population 10.0
2 Income 62.5
3 Area 7.5
4 Index & Infrastructure 7.5
5 Tax effort 5.0
6 Fiscal discipline 7.5
The percent share of different sates according to the formula is given in Table-2
Table-2 Inter se share of states

States Share (percent)
Andhra Pradesh 7.701
Bihar 14.59
Gujarat 2.82
Haryana 0.94
Jammu & Kashmir 1.29
Karnataka 4.93
Kerala 3.05
Madhya Pradesh 8.83
Maharashtra 4.63
Orissa 5.05
Punjab 1.14
Rajasthan 5.4
Tamil Nadu 5.38
Uttar Pradesh 19.79
West Bengal 8.11
The Eleventh Finance Commission has listed out three major areas of concerns.
i) First, maintenance of civic services, including provision of primary
education, primary health care, safe drinking water, street lighting, sanitation,
public convenience and other common property resources. The capital cost
of the civic services has to be met by budgetary heads of the State and the
cost of operations and maintenance of these services should be met by raising
tax revenues and user charges, and by devolution of funds from the State.
57
Empowerment of Local Bodies ii) Second, the Comptroller and Auditor General should be entrusted with the
responsibility of exercising control and supervision over the proper
maintenance and audit of accounts for all tiers of panchayats and urban
local bodies. Panchayats at village and intermediate levels should be provided
exclusive staff for upkeep of accounts. The EFC has suggested Rs. 4000 per
panchayats per annum, an average, to meet the expenditure on maintenance
of accounts on contract basis, if staff/ facilities are not available within the
panchayat and this amount be paid to states from the recommended grants
of Rs. 1600 crore.
iii) Third, the EFC has found that there is no mechanism for collection of data
on the revenue and expenditure of local bodies. The database on finance of
these bodies needs to be developed at the district. State and Central
government levels and be easily accessible by computerizing it and linking
it through V-SAT.
The Central Finance Commission has envisaged for the financial empowerment
of the PRIs through followings:
i) Major Tax Powers

• House tax
• Vehicle tax
• Water, drainage and sanitation taxes
• Pilgrim tax
• Tax on profession, trade, and callings
• Tax on fairs and other entertainments
• Tax on advertisement
• Octroi on animals or goofs or both brought for sale
• Lumpsum levy of factories in lieu of taxes
• Special tax for construction and maintenance of public works
ii) Fees and Charges levied for provision of public facilities:
• Water rate
• Lighting fee
• Street cleaning fee
• Conservancy fee
• Drainage fee
• Sanitary fee for public latrines; and pilgrimage fee
iii) Fee for use of common resources
• Fee for the use of panchayat shelter
• User charges for hospitals and schools
• Fee for use of common resources like grazing land, etc.
• Fee on markets and weekly bazaars
• Fee on animals sold etc.
58
iv) New powers recommended by the State Finance Commission Resource Mobilization
• House tax
• Tax on pumps and tractors
• Tax on highway services
• Tax on village produce sold in regulated markets
• Tax on telephones and cable T.V.
• (Non-Agricultural) profession tax
4.3 SOURCES OF REVENUES OF PANCHAYATI

RAJ INSTITUTIONS IN INDIA
Panchayati Raj Institutions (PRIs) receives revenues from various sources. The
important sources of revenue of the PRIs in India are as follows:
i) Revenue from the Central Government: As a provision every state

government gets revenue from the Central Government as per the
recommendations of the Central Finance Commission. This is based on the
criteria fixed by the Central Finance Commission. Besides, some portion of
the finance is allotted to the PRIs by the state governments form the grants
which they receive from the National Planning Commission.
ii) Revenue from the State Government: The two main sources of revenue
of the PRIs which they receive from the state government are:
a) Allocation as per the recommendation of the State Finance Commission;
b) Scheme specific grant from the State Planning commission.
iii) Internal resources Mobilization by the PRIs: The PRIs in different state
applies various mechanisms for internal resources mobilization. The
important sources are:
a) Taxable income and fees
b) Non-taxable income like income from the common property resources,
sales of goods and services, borrowings, income from live stocks, etc.
The revenue sources of Panchayati Raj Institutions is given in the form of a
diagram below
Revenue of PRIs Revenue from

Central Grant
Sources of
Revenue
of PRIs
Internal Revenue from

Resources State
Mobilization Government
Sources:MEDS-043, Dynamics of Urban Planning and Development, IGNOU, 2016. 59

Empowerment of Local Bodies The PRIs in Kerala, Karnataka and Madhya Pradesh enjoy greater financial
autonomy. In Kerala, 40 per cent of plan funds go directly to panchayats. In
Karnataka, each panchayat get Rs.3,00,000 annually directly from the state
government and in Madhya Pradesh each panchayat gets a grant of rupees
Rs.1,00,000 every year from the state government. These are untied funds to be
spent according to the need and requirement of each panchayat.
For example, the sources of income of village panchayats in Karnataka include:

i) Statutory grant (Rs 5 lakhs) from the state government
ii) Property tax, water tax, professional tax, fair and exhibition tax and
professional tax. These taxes constitute nearly 17 per cent of the total revenue
and
iii) Grants from the Central Finance Commission and Central Plan.
In Kerala, a village panchayat levies and collects taxes from the local people.
Taxes levied by the village panchayats are property tax, profession tax,
entertainment tax, advertisement tax, service tax, show tax including surcharge,
cess on conversion of land use and surcharges. The government devolves 40 per
cent of plan budget directly to village panchayats in Kerala.
In Madhya Pradesh, in order to make village self-reliant (gram swaraj) a provision

has been made that every village needs to have a gram kosh (village fund). The
fund comprises funds collected in the form of taxes, Central and State Government
grants and funds given by the district panchayat. Any other income of the village
panchayat shall also be deposited in the gram kosh. The gram kosh shall have
four components such as:
• Food Kosh
• Commodity Kosh
• Labour Kosh; and
• Cash Kosh.
The sources of income of the village panchayat in Madhya Pradesh are:
• Taxes: house tax, sanitation tax, lighting tax, business tax
• Income from minerals
• Income from fishery
• Grant-in-aids from Central and State government
• Income from common property
• Income from livestock
According to Burney (1967) house tax continues to be the principal source of
revenue of the Gram Panchayats in many States. Narasihma Sarma (1991) on
“Resource Mobilization for Self Sufficiency of Gram Panchayats -A Case Study
of Andhra Pradesh” throws light on various revenue items and their contribution
to Gram Panchayat revenue in the wake of 73rd Amendment. The study identify
various new sources of revenue as well as the ways and means to tap the sources
efficiently and suggested that water tax and righting tax and public health tax
should be enlisted as obligatory taxes instead of surcharges on house tax.
60
In these sessions you read about the mobilization of resources, sources of income Resource Mobilization
of PRI and now answer the questions given in Check Your Progress-1
1) Write various criteria for distribution of finance for local bodies among the
state as per Eleventh Finance Commission recommendation.
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
4.4 CRITERIA FOR FINANCIAL DEVOLUTION

The following criteria may be suggested for the effective transfer of resources to
the local self governments by the central government.
i) Autonomy: The essence of decentralization is self-rule and autonomy. The

transfer mechanism should not create a dependency syndrome. Fiscal
discipline and generation and mobilization of own resource of revenue is
the key to autonomy. Therefore, the local self government institutions need
to be given autonomy in creativity in mobilization of resources. This must
be encouraged by the state governments.
ii) Equity: The well-known dictum of equity, namely, ‘from each according to
one’s ability and to each according to one’s needs’ is relevant in considering
resource mobilization and intergovernmental resource transfers as well. It
should be noted that Panchayats at all levels are very unequal in size,
resources and development attainments. Given the extreme regional
disparities, decentralization in such conditions can produce the desirable
results.
iii) Predictability: The predictability of revenue will enhance the decision

making capacity of the PRIs. The PRIs should know the amount and timing
of the transfers to make provision for planning, budgeting and
implementation of their activities. Irregular payments are not conducive to
efficiency. Quite often it happens that allocations may not even be paid,
resulting in overdue, which eventually may be permanently lost to them.
iv) Efficiency: The efficiency of the PRIs has to be enhanced in terms of their
capability in the collection of local revue. The resource transfer should be
so designed as to facilitate efficient management and discourage inefficient
and uneconomic practices. The transfer mechanism should not be a “gap-
filling” approach.
61
Empowerment of Local Bodies v) Absorptive Capacity: The resource transfer should be in the tune with the
utilization ability of the PRIs. In other words, principle should be each
according to its need. The allocation of fund to the panchayat and municipal
ward must be free from bias.
vi) Simplicity: The formula for transfer the inter-governmental resources should
be simple and transparent. Besides formula formulated by the Central Finance
Commission, the state government must device its own formula based on
it’s socio-economic, geographical and population composition for allocation
of resources to panchayat and municipalities and also among the different
levels of panchayat and urban local bodies. Besides, the taxes imposed by
the PRIs for the collection of revenues at the local level must be very simple.
It will create faith in the mind of the people for the payment of taxes.
vii) Promotion of Incentives: There should be adequate built-in arrangements
for encouraging resource mobilization by the PRIs. In the same vein there
should be provision for penalizing wasteful and uneconomic practices. The
panchayat which mobilize and generate their own local resources must be
given additional matching grant, which will create competitiveness among
the local self government institutions.
viii) Reduction of Disparities: The main aim of the revenue collection is the
reduction of disparities at the PRIs level with regard to access to revenue.
Both the levying of taxes and also allocation of revenue to the PRIs should
be such that it does not create any economic disparities among the PRIs.
This must be a basis for the allocation of revenue among various local self
government institutions.
4.5 REASONS FOR POOR MOBILIZAITON OF

RESOUCES BY PRIS
Mandakini Das (2001) in his study found that the present financial position of
the rural local bodies is far from satisfactory and is nowhere near even the
minimum standards expected of them. Some of the reasons for poor mobilization
of resources by the PRIs are as follows:
i) The PRIs have been assigned to collect those taxes which are very difficult
to collect depending on their nature and process of collection. It is remarked
that taxes given to the Gram Panchayats are generally inelastic in character
and they can never bring in adequate revenues to meet the expanding
activities of the Panchayats (Narasimham, 1962). The tax base available to
a large number of Panchayats is rather very narrow, particularly due to their
small size in terms of population and area( Singh, 1986).
ii) There is lack of people cooperation in the mobilization of resources by the
village panchayats. As the elected representatives of the village panchayats
are closer to the people therefore, they are reluctant to impose any tax on
the people. Their reluctance and inability to levy new taxes, or increase the
tax rate corresponding to the increasing revenue needs, non-assessment or
under assessment of taxable units, poor tax collections have, basically,
contributed to their meager tax revenue(Singh, 1986). Mallick (2001) argued
that Gram Panchayats are unable to collect few taxes and fees assigned to
them simply because there is resistance to such collections.
62
iii) There is lack of officials available with the village panchayats to collect tax Resource Mobilization
and also to keep proper record of the taxes. People even do not have faith
on the official and even elected representatives regarding tax collection and
utilization for the benefit of the village. Niranja Pant (1980) observed that
the Panchayati Raj System in India is to become an arena of conflict to the
officials and non officials. The officials are always dominating the non
officials and there is a tendency of doubting each other.
iv) It is seen that the common property resources are not been properly utilized
and even influential people of the village have grasped those properties
making difficult on the part of the village panchayats to make their effective
utilization. Singh (2001) observed that Panchayats in a number of cases had
given ‘shamlat lands’ on defective leases either without putting the land to
auction or without observing the prescribed rules. The income from such
leases is much less than normally expected.
v) There is imbalance in resources generation among the three tier PRIs. In
some areas, village panchayats are more empowered while the other two
are less empowered. This lead to infighting among the PRIs regarding their
power to levy taxes and also respective areas. Shakun Palharya (2003) found
that the functioning of Panchayat Raj Institutions has been severely hampered
by financial constraints and inadequate resource mobilization after
implementation of the 73rd Amendment to the Constitution. Taxes assigned
to them are by and large not very productive of revenue. These Institutions
should be enabled to levy local taxes on their own and mechanisms should
be set up to ensure periodic revaluation of taxable properties.
4.6 MEASURES FOR STRENGTHENING

RESOURCE MOBILIZATION
Singh (2004) study concluded that at the Gram Panchayat level, the contribution
of tax revenue is not significant, as it is maximum 2.99 per cent to the total
receipts and the per capita income tax is about one rupee. Fiscal decentralization
can be strengthened by various ways:
i) Deciding institutional system to strengthen inter-governmental economic
relations. The economic relation among the centre, state and local
governments must be cordial and healthy. Besides, the basis of financial
devolution among the different tiers of local self government must be clearly
defined, this will lead to fiscal collaboration rather confrontation. It is seen
that in India, in Kerala, the taxation power and the local revenue of the
village panchayat is more as compared to the sources of taxable and non-
taxable revenues of the intermediate and district panchayats. On the contrary,
the source of revenue of the district panchayat that is Zilla Parishad is much
higher as compared to the village and intermediate panchayats.
ii) Planning fiscal transfers to assure regional fiscal equality and to build an
effective environment for advanced and competitive service delivery. The
Eleventh Finance Commission has set the criteria for the division of revenue
between the centre and the state and also the local bodies. The state
government has to follow the criteria and also need to allocate sufficient
revenue to the village panchayats of the backward districts and blocks so
that these districts and blocks are developed appropriately. 63
Empowerment of Local Bodies iii) Restructure tax responsibility to allow local revenue autonomy, efficiency
and accountability. Delegation of responsibility to the local government to
collect and spend their taxes according to the local needs will strengthen
the fiscal decentralization.
iv) Determining the functionary funds of different levels of government on the
criteria of equality and efficiency.
v) Providing sub-national government an access to responsible credit market.
However, with the globalization, the local self government institutions must
have access to capital market.
vi) According to Bahl, a measure of fiscal decentralization should reflect the
key characterizes of a fiscally decentralized system, such as existence of
elected local council, approved budget, local government to collect taxes.
vii) Institutional reforms that minimize adverse incentives and promote
transparency, accountability and predictably should be executed to have an
effective fiscal decentralization.
viii) The PRIs have to be properly oriented regarding the financial aspects of the
various panchayati raj institutions. They have to also to be told to generate
local revenue through the effective utilization of common property resources
and also by charging different fees for meeting the development expenses
of the local self government institutions.
Mahi Pal (2003) in his study examined the existing and potential income of the
Gram Panchayats. It is found that the sample Gram Panchayats have not levied
the house tax, which is an important source of income to Panchayats. Similarly,
income from ponds, agricultural farm and other sources has also not been explored
by Panchayats. The study suggested that Panchayats should put in practice the
powers of raising financial resources given in the Gram Panchayat Act.
Panigrahy (2007) observed that mobilization and proper utilization of financial

resources are the major problems of Gram Panchayat, where resources are limited
in quantum because of poor taxation and poor realization of tax. These institutions
largely depend on government grants. It is suggested that the objectives of Gram
Panchayats can be realized if more financial powers are given to Gram Panchayats.
Gram Panchayats must be very clear about their own needs, their existing
resources, additional resources they can tap with and without state assistance,
grants as also their own investment programmes.
In these sessions you read about the reasons for poor mobilization of resources
by the PRIs and how to improve the sources of revenue of PRIs now answer the
1) Give five important reasons for poor mobilization of resources by the PRIs
......................................................................................................................
64 ......................................................................................................................
...................................................................................................................... Resource Mobilization
......................................................................................................................
......................................................................................................................
......................................................................................................................
4.7 LET US SUM UP

The mobilization of resources is one of the key challenges before the PRIs for
carrying out duties and responsibilities assigned to them under the 73rd
constitutional amendment. Finance is essential to carry forward developmental
activities at the grassroots level. The various sources of income of the PRIs are
the grant from the central government and state government and the imposition
of taxes and collection of fees. Besides many village panchayats and also district
and intermediate panchayats in many states of India earn income by the effective
utilization of common property resources. However, being closer to the people
PRIs in many states do not impose any taxes for which their sources of income
become low. However, the financial empowerment of PRIs is sine qua non for
the development of rural areas.

WEBSITE: (i) http://shodhganga.inflibnet.ac.in/bitstream/10603/113071/9/
09_chapter%205.pdf
(ii) See MEDS-043, Dynamics of Urban Planning and Development, IGNOU,

2016.
Narasimham, N.V.A., (1962): “Finance for Panchayats”, Kurukshetra, Vol.ll, No.l,

October, pp.55-57. 4 Burney, S.M.H., (1967), “Panchayati Raj and Resource
Mobilization”, Kurukshetra, Vol.16, No.l, October, pp.35-40, 43.
Muthayya, B.C. (1972): “Panchayati Taxes - factors influencing their

mobilization”, National Institute of Community Development, Hyderabad.
Nimanjan Pant (1980): Politics of Panchayat Raj Administration (A Study of

Official and Non Official Relation), Concept Publishing House, New Delhi.
Singh, S.K., (1986): “Panchayati Raj: Stumbling blocks in its path”, Kurukshetra,
Vol-XXXIV, No.6, April, pp.9-11 and 23.
Narasimha Sarma M.V. (1991): “Finances of Gram Panchayat in Andhra Pradesh

- An Empirical Evolution”, Unpublished Ph.D. Thesis, Acharya Nagaijuna
University, Andhra Pradesh, India.
Surat Singh (2001): “Problems and Prospects of Panchayat Finances - A Study

of Common Land”, Mittal Publications, New Delhi.
Mallick (2001): “Functions and Finances of Panchayats in Orissa’, in eds.,

Bijoyini Mohanty, “Financing the grassroots government”, APH Publishing
Corporation, New Delhi, pp.35-48.
65
Empowerment of Local Bodies Mandakini Das (2001): “Finance of Rural Local Bodies of Orissa: A Study”, in
eds., Bijoyini Mohanty, “Financing the grassroots government”, APH Publishing
Corporation, New Delhi, pp.57-64.
Mahi Pal (2003): Gap between Needs and Resources of Panchayats in India: A
Study of Saharanpur District (UP), Mittal Publications, New Delhi.
Shakun Palharya (2003): “Decentralised Governance Hampered by Financial

Constraint”, Economic and Political Weekly, Vol. 38, No. 11, March, pp. 1024-
1028.
Singh S K (2004): Panchayat Raj Finances in Madhya Pradesh, Concept

Panigraphy Rajib Lochan (2007): Panchayat Raj Institutions: Issues and

Challenges, Discovery Publishing House, New Delhi.
4.9 CHECK YOUR PROGRESS - POSSIBEL

ANSWERS
1) Write various criteria for distribution of finance for local bodies among
the state as per Eleventh Finance Commission recommendation.
Answer: According to Eleventh Finance Commission the various criteria for

distribution of finance among the state are:
i) Population 40 per cent;
ii) Index of Decentralization 20 per cent;
iii) Distance from highest 20 per cent per capita income;
iv) Revenue effort 10 per cent; and
v) Geographical area 10 per cent.
1) Give five important reasons for poor mobilization of resources by the PRIs.
Answer: The five important reasons for poor mobilization of resources by the
PRIs are: (i) reluctant of PRIs to impose tax on the people because of their
closeness to the people; (ii) lack of adequate manpower to handle the income tax
collection affairs of the PRIs; (iii) there is poor devolution of funds from the
central and state government to the PRIs; (iv) PRIs have poor access to credit
market; (v) lack of orientation to PRIs about the financial empowerment.
66

Local Self Governance & Development

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Local Self Governance & Development

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MDV-111

Local Self Governance

REVISED PROGRAMME DESIGN COMMITTEE

Block 1, Democratic Decentralization, deals with the basics of democratic

Block 3 ‘Communication in Extension and Development’ with three units

Block 5 ‘Diffusion of Innovations for Development’ with two units gives an

Block 6 ‘Innovation, Innovativeness and Adopter Categories’ with four units

At present enormous amount of literature has been prepared on decentralization

Unit 1, Decentralization: An Overview, focuses on building our understanding

Unit 2, Local Self Government and Panchayati Raj Institutions, describes

Unit 3, Local Governance and Marginalized Sections, unit discusses the

1.2 DECENTRALISATION: MEANING AND

1.3 TYPES OF DECENTRALIZATION

1.3.1 Democratic Decentralisation

Creating Bodies for

Adopting public Devolution of Autonomy to

Fig.1.1: Democratic Decentralisation

1.3.2 Administrative Decentralisation

Delivery of public Transferring decision – Execution on

Fig.1.2: Administrative Decentralization

De-concentration is a process in public administration in which a field office or

Divestment takes place when planning and administrative responsibility or other

1.3.3 Fiscal Decentralization

Central government Resources for Local Allocation of various

Fiscal transfer system

Fig.1.3: Fiscal Decentralisation

There are five major forms of fiscal decentralisation:

ii) Ensuring People’s Participation

iii) Using Local Skills and Knowledge

iv) Using Informal Local Mechanism

v) Promoting Partnership between State and Society

vi) Ownership of Development

vii) Enhancing Associational Activities

viii) Alliance Building for Development

ix) Enhancing Accountability

xi) Enhancing Transparency

xii) Easing Frustrations

xiii) Increasing Negotiating and Bargaining Skills

xiv) Increased Collective Action Potential

xv) Planning from Below

xvi) Undermining the Authoritarian Enclave

xvii)Building the Capacity of People

xviii) Local Dimension of Development

xix) Recognizing the Potentials of Local Government

xx) Improving Efficiency in Service Delivery

xxi) Responding to Democratization

xxv)Empowering Women and other Marginalized

1.5 LIMITATIONS OF DECENTRALISATION

ii) Enabling Elites to Capture Power

iii) Shifting the tasks

v) Local Resources can be used for Partisan Advantage

vi) Strengthening the Central Government

vii) Pleasing the Donor Agencies

viii) Party Building at the Grassroots

ix) Decentralisation of Corruption

x) Increasing Cost of Governance

xi) Poor Capacity of the Leaders and Officials

xii) Conflict at Grassroots

1.6 NEW WAVE OF DECENTRALISATION

This decentralisation is part of democratization, and it devolves powers resources

The wave of decentralization is gradually spreading from country to country. Its

New wave of Decentralisation

Decentralisation and Accountability and Regional Planning