A big reform India needs: Empowerment of local bodies

India’s progress in growth and reforms, but one key area remains neglected

India has made significant progress in economic growth, infrastructure, and governance reforms over the decades, not counting the misses.

However, one critical area remains neglected: the local self-governments are powerless and so their ability to deliver services is far from acceptable levels due to lack of resources.

While the 73rd and 74th Constitutional Amendments provided a framework for Panchayati Raj institutions (PRIs) and urban local bodies (ULBs), their implementation remains weak.

While state governments speak eloquently about the need for increased devolution of powers by the Centre to the states, they are far worse when it comes to devolution of powers to local bodies. This is because they fear loss of control and, more importantly, a loss of opportunities for corruption.

The issues that impact people most are local issues first, then the state-level issues, and then the national-level issues.

Once local issues are resolved, we’ll be surprised to find that there are very few important state-level issues, and so the national-level issues will become more important to the people than state-level issues. I’ll call it the thinning middle. You can see the analogous situation of thinning middle everywhere, including at the office, home, or wherever.

I’m not suggesting that we should dispense with the state governments. All that I’m saying is that, in an ideal situation, the states should have far less powers than at present for the people to benefit best.

The time has come for the central government to take decisive action to correct the excessive dependence of the local bodies on their states and bring governance closer to the people.

Why devolution is critical

Local governance is the foundation of democracy. Empowering local bodies ensures faster decision-making, more efficient use of resources, and better accountability. Here are some key reasons why devolution is critical for India:

1. Better public services: Local governments understand local needs better than distant state capitals. Issues like water supply, sanitation, primary healthcare, and education can be handled more efficiently at the grassroots level.
2. Increased accountability: When governance is localized, people can hold their representatives accountable more effectively.
3. Faster execution of development projects: Large, centralized projects often suffer from delays and cost overruns. Local bodies can implement their own, more-needed smaller projects with greater efficiency and lesser bureaucracy.
4. Rural and urban economic growth: Strengthening local governance can unlock economic potential in rural and semi-urban areas, reducing migration pressure on large cities.
5. Democratic empowerment: True democracy exists when power is decentralized. Strengthening local governments can reinvigorate citizen participation in governance.
6. Job creation: Centralized projects generate fewer jobs with poorer outcomes. Local governments will generate more efficient and widespread jobs.

Why state governments resist devolution

Despite the clear benefits, most state governments resist genuine devolution of power to local self-governments. Their opposition is driven by several factors:

1. Loss of political control: Many state governments fear that empowered local leaders will challenge their authority, creating an alternative power center.
2. Corruption and fund misuse: Large, centrally managed projects provide opportunities for higher levels of corruption at the state level. If local bodies gain control, the ability to manipulate contracts and siphon off funds diminishes.
3. Bureaucratic resistance: State-level bureaucrats often resist devolution because it reduces their influence over decision-making and financial allocations.
4. Fund diversion: Even when the Union Finance Commission allocates funds for local bodies, state governments usually delay or divert these funds for other purposes.
5. Weak political will: Many states fail to implement the recommendations of their own State Finance Commissions (SFCs), keeping local bodies weak and dependent.

How the Central government can force devolution

While state governments may resist, the central government has several powerful tools to push forward local governance reforms. For example:

Financial incentives and direct funding

• Performance-Based Grants: Tie a portion of central funds to states’ adherence to devolution norms.
• Direct Transfers: Increase direct transfers to Panchayats and ULBs, bypassing state governments where possible.
• Tax Devolution: Consider allocating a share of GST or other central taxes directly to local bodies, reducing dependence on state governments.

Legal and constitutional measures

• Strengthen the 73rd and 74th Amendments: Introduce constitutional amendments mandating devolution of key subjects such as health, education, and local infrastructure.
• National Framework Law: Create a national framework law that defines minimum standards for devolution and penalizes states that fail to comply.
• Mandate CAG Audits: Enforce regular CAG audits of state compliance with local governance laws and make reports public to create pressure.

Political and structural reforms

• Independent State Finance Commissions (SFCs): Ensure that states constitute and implement SFC recommendations in a time-bound manner.
• Empower Local Leaders: Push for direct election of mayors and panchayat heads with real executive power.
• Citizen Engagement: Encourage civil society and media to highlight non-compliance by states and demand better devolution practices.

Technology-driven governance

• Fund Tracking Systems: Use digital platforms to ensure that funds allocated to local bodies are not diverted by state governments.
• Citizen Reporting Apps: Enable citizens to report governance failures and inefficiencies at the local level.

Public awareness and political mobilization

• Mass Awareness Campaigns: Educate people on how devolution benefits them and expose states that resist it.
• Encouraging Local Political Movements: Support local leaders who advocate devolution and expose those who resist it for vested interests.

Benefits India will gain from successful devolution

If devolution of power to local self-governments is implemented successfully, the people stand to gain enormous benefits:

1. Efficient Service Delivery And Outcomes: Improved local governance will lead to better sanitation, healthcare, and education services.
2. Stronger Local Economies: Rural and semi-urban economies will flourish as local businesses and infrastructure receive direct attention.
3. Reduced Corruption: With funds being spent at the local level under public scrutiny, corruption will significantly decrease.
4. Faster Disaster Response: Decentralized governance will enable quicker response to natural disasters, pandemics, and emergencies.
5. Better Urban & Rural Planning: Cities and towns will be able to develop with greater efficiency, reducing congestion and improving infrastructure.
6. Greater Social Equity: Marginalized communities will have a stronger voice in governance, ensuring more inclusive development.
7. Enhanced National Growth: When every village and town is governed effectively, the entire nation prospers.

Overcoming state opposition

States resisting devolution will argue that these measures infringe on their rights. However, the center can strategically bypass this opposition through:

• Public Pressure: Exposing non-performing states and highlighting best practices to create political pressure.
• Strategic Fiscal Leverage: Tying central funds to measurable devolution benchmarks.
• Political Consensus: Working with regional parties and progressive state governments to show successful devolution models.
• Digital Bypass Mechanisms: Using technology to track financial flows and governance performance at the local level.

The time for reform is now

India’s future growth and governance efficiency depend on empowering its grassroots institutions.

State governments that resist devolution do so not for the benefit of the people but to maintain their control over resources and decision-making.

The Central government must act decisively to ensure that local self-governments are truly empowered.

The time has come for India to embrace the next big governance reform, one that ensures power truly rests with the people.

The Central government must use every tool at its disposal to make this a reality. The longer we delay, the more we weaken the foundation of our democracy and the efficiency of our governance.

Let the change begin now.

Note:
1. Text in Blue points to additional data on the topic.
2. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.

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