PANCHAYATS AND ECONOMIC DEVELOPMENT

Balveer Singh Gothwal Bikram Singh Jantwal Dev Raj Dharm Pal Yadav E. Sonia Himanshu Behl

Issues to be covered
Decentralization as a strategy for inclusive development of the country

How policy and institutional reforms can be designed and implemented to make the panchayats effective catalysts in the developmental process in rural areas

Scope
1. Introduction 2. Decentralization 3. International Examples & PEAIS 4. Relationship between Decentralizaion and Economic Development 5. Success Stories: Case Study 6. Shortcomings and Reform Issues

Mahatma Gandhi Independence must begin at the bottom. Thus, every village will be a republic or Panchayat having full powers.

Rabindranath Tagore Our aims must be restore to the villages the power to meet their own requirement.

Economic Development
Economic Development is a wider term than Economic growth Economic Growth- Sustained increase in a country's output of goods and service (GDP) Economic Development- Progressive changes in the socio-economic structure of a country. (Technology intensive, high industrialization, high standard of living)

Decentralization Meaning First Generation Theories vs Second Generation Theories Arguments against decentralization .

18 % SC. 11 % ST) At the Village Panchayat level. (43 % women. 13 % ST) 37 District Panchayats.PRESENT STATUS OF PANCHAYATS 2. . 20. 16% SC and 11% ST) 6097 Intermediate Panchayats.676 Village Panchayats.73.715 elected representatives.10. (40 % women. 11.070 elected representatives.34.825 elected representatives. (70 families) making India the largest and most intensely democratic country in the world. (41 % women. 1. 22 % SC. each elected representative s constituency comprises of a out 340 people.

Decentralization .

Phases of Decentralization (Through Panchayati Raj) in India Phase 1: From 1959-1992 Phase 2:From :1992 onward .

INTERFERANCE LACK OF CONTINUITY IN WORKING OF PRI LACK OF INTERST OF RURAL PEOPLE .Phase 1 DIFFERENT STAES ASSINGNED DEVLOPEMENT FUNCTIONS TO DIFFERENT PRI RURAL ILLETRECY LACK OF FUND POVERTY INEXPERIENCED REPRESNTATIVE GOVT.

Makes people participate in decision making and reflects their needs and preferences. Increase sections capabilities of vulnerable . participation and monitoring.Decentralization: Political Reasoning Government closer to people. Accountable governance through voter information.

Decentralization: Economic Reasoning Efficiency gains from public service delivery: Wastages and leakages minimized Wider choice and better matching of public service with preference of people Resulting efficient allocation of resources increases welfare .

Phase II FROM : 1992 onwards (REFORM OF PANCHAYTI RAJ 73rd AMENDMENT ACT 1992) .

Salient Feat res of the 73rd Constit tion mendment ct Panchayats will be instit tions of self-government . Basic Units of Democratic System .Gram Sabhas (villages) comprising all the ad lt members registered as voters. Three-tier system of panchayats at village. Smaller states with pop lation below 2 million only two tiers . intermediate bloc /tal /mandal and district levels.

direction and control of the electoral rolls.Salient Feat res of the 73rd Constit tion mendment ct cont Seats reserved for Sched led Castes (SCs) and Sched led Tribes (STs) and women. In each State a Finance Commission to determine the principles on the basis of which adeq ate financial reso rces wo ld be ens red for panchayats. . Independent Election Commission in each state for s perintendence.

Grants from the Central Government . 3. Grants from the State Government.Structure of financial administration 1. Own Income (a) Tax revenues and (b) Non-tax Revenues 2.

International Examples & Panchayat Empowerment and Accountability Incentive Scheme .

decentralisation significantly changed national public investment patterns.³«. and urban development after 1994 reform.Some International Examples Oates (1972) was not clear whether decentralisation is a cause or a result of economic growth. Faguet (2004). water and sanitation. Investment changed unambiguously in education. water management. . Martinez-Vazquez and MacNab (2002)-fail to find a statistically significant and robust relationship between fiscal decentralisation and economic growth for developing countries. agriculture.

In Brazil. .Conti Faguet (2005) showed that decentralisation led to fivefold increase in municipal investments without increasing the running costs. Public services showed a substantial increase since the late 1980s and the disparity in services between regions substantially decreased. Baiocchi (2007) :1988 constitution devolved greater political and fiscal autonomy to the local governments and the share of tax revenues of local governments increased from 11 to 13 per cent between 1987 and 1991.

. they found that there were significant improvements in local service delivery and satisfactory ratings for local civil services.Conti Hofman and Kaiser ( 2007): The big bang decentralisation in Indonesia initiated after the fall of the Suharto regime in 1988 devolved responsibility for delivering health. infrastructure and environmental services to local governments. Based on their survey. education.

Panchayat Empowerment and cco ntability Incentive Scheme (PE IS) Implemented since 2005-06 Objectives: Incentivizing states to empower panchayats through devolution of Funds. Functions and Functionaries Incentivizing PRIs for Accountability System Performance of states measured through DI .

Evaluation Frame work First Stage (Framework Criteria) State Election Commission Elections of PRIs State Finance Commission District Planning Committees (DPCs) Second Stage (3Fs) Funds Functions Functionaries .

89 53.45 52.23 Kerala Karanta a West Bengal Rajasthan Maharshtra Tamil nad P d cherry Uttra hand Bihar Goa Jhar hand 62.65 20.69 47.31 39.31 19.39 59.Performance of States and UTs (as per Devolution Index 2010-11) Over all Ran 1 2 3 4 5 6 7 8 9 10 11 12 13 14 State/UTs Devol tion Index 70.70 42.56 53.70 North East States 1 2 3 4 5 Si Madhya Pradesh G jarat Andhra Pradesh Chhattish Garh Haryana Himachal Pradash Orissa Uttar Pradesh im 60.38 Trip ra Manip r Assam Ar nachal Pradesh National Average: £ £ £ £ ¢ ¢ £ £ ¢ £ £ ¢¢ ¢¢ £ £ ¢ ¢ ¡ ¡ ¡ ¡     ¡ ¡     .60 13.03 28.78 47.58 53.74 47.49 40.01 Over all Ran 15 16 17 18 19 State/Uts State/Uts Devol tion Index 30.22 45.03 31.21 25.22 11.83 40.66 44.

0 .0 1.INCENTIVE AWARDS FOR CUMULATIVE ACHIEVMENT (Based on Devolution Index) Prize 1 2 3 4 State Kerala Karnataka Sikkim West Bengal Amount (Rs in Crores) 3.0 2.0 1.

RELATIONSHIP BETWEEN DECENTRALIZATION AND ECONOMIC DEVELOPMENT .

5 60.6 46.9 Gujarat Uttarakhand Sikkim Haryana Tripura Chhattish garh Andhra Pr Arunachal Pr.5 26.0 71.4 59.3 59.3 69.0 58.3 51.8 62.9 54.1 79.9 43.STATE WISE RANKING ACCORDING TO PER CAPITA INCOME & GROWTH Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 State/UT (Rupee) % Growth 81.8 75.5 41.6 53.6 49.9 62.4 76.6 65.3 63.0 36.8 77. Goa Karnataka Himachal Pr.6 32. Meghalaya West Bengal Kerala Maharashtra Tamil Nadu Manipur Assam Jharkhand A & N islands Punjab Uttar Pradesh Bihar Rajasthan Madhya Pr All India 1999-2000 18864 13672 14890 21966 14119 11761 15507 14107 42296 16758 20806 14611 15826 19294 23340 19378 13260 12269 12747 23728 25611 9405 5766 13477 12384 15839 2005-2006 34157 24585 26412 38832 24706 20151 26211 23788 70112 27291 33805 23420 25223 30668 37081 29958 20326 18598 19066 34853 36759 13262 7875 17863 15647 25956 .0 68.

State-wise per capita income 80000 70000 60000 50000 40000 30000 20000 10000 0 (Rupee) 1999-2000 (Rupee) 2005-2006 .

Percentage of Rural Population Below Poverty Line by States & UTs (2004-05) .

31 11.83 16.62 13. State/Uts State/Uts Average Growth(2004Growth(2004-05 to 2009-10) 200916. S.53 15.34 .90 14. State/Uts State/Uts Average Growth(2004Growth(2004-05 to 2009-10) 200917.64 14.No. S.68 11.83 16.Average Growth rate-GSDP% (Current Prices) S.43 13.22 18.98 8.No.10 15.83 17.00 17.54 21.10 15.84 17.96 17.No.36 13.66 14.02 S.No.84 17.07 11.83 20.02 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Andhra Pradesh Ar nachal Pradesh Assam Bihar Chhattish Garh Goa G jarat Haryana Himachal Pradesh Jamm and Kashmir Jhar hand Karnata a Kerala Madhya Pradesh 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Maharshtra Manip r Meghalaya Mizoram Nagaland Orissa P njab Rajsathan Si im Tamil Nad Trip ra Uttar Pradesh Uttra hand West Bengal ¤ ¤ ¤ ¤ ¥ ¥ ¤ ¤ ¥¥ ¥¥ ¤ ¤ ¥ ¥ ¤ ¤ ¥ ¤ ¤ ¤ ¤ 17.29 19.24 14.

.63 79.Ranking by literacy rate in 2011 Ran k 1 2 3 4 5 6 7 8 9 10 11 12 13 14 State Kerala Mizoram Tripura Goa Himachal Pradesh Maharshtra Sikkim Tamil Nadu Nagaland Manipur Uttrakhand Gujarat West Bengal Punjab Literacy rate 93.08 76.91 91.63 67.37 77.06 66.58 87.45 73.74 67.82 .66 67.78 82.40 83.33 80.63 69.72 68.18 71.11 79.04 70.68 Rank 15 16 17 18 19 20 21 22 23 24 25 26 27 28 State Haryana Karnatka Meghalaya Orissa Assam Chhattish Garh Madhya Pradesh Uttar Pradesh J&K Andhra Pradesh Jharkhand Rajasthan Arunachal Pradesh Bihar Literacy rate 76.60 75.91 82.75 87.85 79.95 63.48 73.64 75.20 80.

94 1.67 S.22 1.68 1.07 1.56 1.34 1.66 -0.51 2.Growth rate of Rural Employment (1993-94 to 2004-2005) S.No .75 2.65 .08 1.08 3.54 1.76 1. 1 2 3 4 5 6 7 8 9 10 State/Uts State/Uts Andhra Pradesh Assam Bihar G jrat Haryana Himachal Pradesh Jamm and Kashmir Karnata a Kerala Madhya Pradesh Growth 0.16 All India 1. 11 12 13 14 16 17 18 State/Uts State/Uts Maharshtra Orissa P njab Rajasathan Tamil Nad Uttar Pradesh West Bengal Growth 1.N o.74 1.50 2.

RELATIONSHIP BETWEEN DECENTRALIZATION AND ECONOMIC DEVELOPMENT RANK PER CAPITA INCOME GROWTH RURAL POPULATION BPL GROSS STATE DOMESTIC AVERAGE GROWTH LITERACY RATE RURAL EMPLOYMENT GROWTH DEVOLUTION INDEX RANKING 1 GUJARAT J&K ARUNACHAL PRADESH KERALA HARYANA KERALA 2 UTTARAKHAND DAMAN &DIU AND GOA PUNJAB UTTARAKHAND MIJORAM ASSAM KARNATAKA 3 SIKKIM MADHYA PRADESH GOA TRIPURA PUNJAB SIKKIM 4 HARYANA HIMACHAL PRADESH ANDHRA PRADESH GOA GUJARAT WEST BENGAL 5 TRIPURA ORISSA HIMACHAL PRADESH UTTAR PRADESH RAJASTHAN .

Effectiveness of decentralization as a development catalyst is context and design specific .Decentralization and inclusive development No clear causal linkage between decentralization and economic growth: Neither the theoretical studies nor empirical analyses show clear evidence that decentralisation leads to development.

Success Stories .

village panchayats formulate their plans. 33 per cent of the states plan budget is devolved for spending on development projects formulated by the PRIs.Case: People s Planning Process in Kerala  The most important innovation in a decentralised development strategy is the People s Planning Campaign (Janakeeya Aasoothranam) of Kerala. Based on people s preferences articulated by the gram sabhas . which are coordinated at block level and approved at the district level   .

More than 200 local governments responded with the stories of local development. . The Green Kerala Express .Case: The Green Kerala Express Social Reality Show The Kerala state government has employed a novel method to activate competition among the panchayats and showcasing the best performing panchayats through a social reality show called. The competition first invited all Local Governments in the state to provide a short video showcasing their sustainable development projects . covering different developmental aspects.

The jury visited the 15 LGs shortlisted for the second round along with the video team and evaluated their performance on the ground. ‡ Elappully (Palakkad district): First Prize. ‡ Akathethara (Palakkad district): Second Prize. the best three panchayats were selected with audience participation in the selection. ‡ Adatt (Thrissur district) : Third Prize . Based on a final jury interaction onscreen.

such as fodder cultivation on 50 acres of land and setting up a model veterinary hospital. . The panchayat provided direct support to women to set up more than 600 diary units.400 litres a day to 12000 litres.5 crore in 2009-10. Paddy farmers adopt dairying as a second livelihood option. It also provided support services. the milk production increased from 2. 7. the NREGA programme was put on hold during paddy cultivation season.Elapully Panchayat: First prize winner Over two years(2008-2010). increasing incomes by Rs. To ensure that NREGA activities did not create a shortage of farm labour.

425. . the Maharashtra state amended the rules under the Panchayat Act to enable the gram panchayats to adopt the area based system. Looking at the successful transition and improvement in revenue productivity. 147.93 crore in 2003-04. Substantial increase in revenue from property tax by almost threefold from Rs.Case: Revenue Mobilisation P ne and Satara districts in Maharashtra present an interesting example of how it is it is possible to significantly enhance the reven e from property taxes by introd cing a simple area based tax system at the panchayat level.56 crore in 1999-2000 to Rs.

70000 from the villagers . which is to a 50. According to the guidelines. The panchayat raised the required amount of Rs.Case: Efficient Provision of Water Supply in Karnataka In G tta aad Panchayat. the village community had to contribute in advance 10 per cent of the capital cost. construction of the system was taken up under the Rajiv Gandhi Rural Water and sanitation Scheme System has a bore-well as the source of water.000 litre capacity overhead tank.7 lakh . There are nearly 100 individual household connections and the total cost of the system was about Rs.

50+Rs.SELF-SUSTAINING WATER SUPPLY SYSTEMS They initially collected a onetime flat rate charge of Rs. as follows:For pto the first 10. 150+Rs. 50 flat rate Rs.000 litres For the next 10. and the willingness of the people to pay for a service. .20 per additional kilolitre Experience reflects the foresight of the leaders to make the water supply system economically viable. their sagacity. Thereafter.000 litres For the next 10.000 litres Rs.10 per additional kilolitre Rs. 1000 for each household connection.

.Case: Effective use of technology Piplantri village of Rajasthan has made effective use of simple technology to provide a solution for water scarcity in the village.

Shortcomings and Reform Issues .

. Putting together a compendium of successful experiences . can inspire other panchayats to embark on developmental initiatives. and if the system is designed properly. panchayats can be effective catalysts in development. Under favourable conditions. Horizontal learning through effective dissemination of successful experiences and creation of systems to share the experiences can be a great source of inspiration.Summary of the Experiences The examples of successful experiences of panchayats provide a number of lessons.

Some Glaring Shortcomings Top down approach of planning. Less scope of revenue generation in PRIs Lack of awareness and information among the elected representatives of panchayats. Panchayats don t have any right over natural resources .Centrally sponsored schemes Tax system heavily skewed in favour of the Centre.

Catalysing Panchayats for Development: Reform Issues Delivery of services is better in case of even distribution of assets and land reforms. The analysis of the performance of panchayats in different states and regions in India shows that panchayats have been relatively more successful in contributing to development in places where the literacy rate and education standards were higher Reservation of seats for women in the panchayats : Studies show that gender of village president significantly alters expenditure composition. This ensures even distribution of power and prevents elite capture of public services. . Eg. West Bengal Human development and harnessing the pool of educated manpower.

visionary and committed leadership : feature of successful panchayats Proper information system: Precondition for grass root planning There should be direct linkage between tax payments and benefits received. .Strong.

. Empowerment of the panchayats in appointment.Creating institutions and systems to share experiences: Inter-panchayat cooperation and coordination.Significant improvement in education (Bihar).

Thank You .