Governance |  Mani Shankar Aiyar

For inclusive growth, we need to hitch the horse of accelerated growth to the wagon of participative development - that is, grassroots development through democracy, says Mani Shankar Aiyar

Inclusive Growth Through Inclusive Governance

There can be no two views that  the acceleration of growth on a sustained basis in India, combined with major tax  reforms, has resulted in a miraculous augmentation of Government revenues, particularly over the last five years. Buoyant revenues have resulted in buoyant spending on the social sector. There is a four-fold increase in expenditure on poverty alleviation and rural development comes on top of an increase in such spending between 1993-94 and 2003-04, in nominal terms, from about Rs 76 billion to about Rs 340 billion. The 2009-10 provision is about Rs 1,250 billion. 

Why then is there such a mismatch between growth in the booming sectors of our economy and the income of the entrepreneurial classes in contrast to the halting, uncertain, sporadic and un-sustained amelioration in the condition of the vast majority of Indians? Why is India prospering when most Indians are not?

Inclusive growth must surely mean an India of which we are proud less because we just overtook Japan in the number of our dollar millionaires and the fact of the combined assets of our dollar billionaires being second only to those of the billionaires of America than because accelerated growth is leading to a palpable improvement in the living conditions of the vast majority of our countrymen and women. That there has been some improvement is undeniable. The poor have not got poorer. But the rich have got infinitely richer. What Nobel laureate Prof. Amartya Sen, described as the "extremely asymmetric development of the global economy" is also reflected in the extremely asymmetric development of the Indian economy. Our widening Gini coefficient is a matter of deep concern, as much to our consciences as to the stability and sustainability of our political system.

An economic policy for a democratic polity cannot in the short or even medium term be based on any very sensible increase in the per capita incomes of the 836 million poor and vulnerable Indians (including 80 per cent OBCs, 85 per cent Muslims and 88 per cent SC/ST, according to the Sengupta Committee) who subsist on less than Rs. 20 a day. Necessarily, the incomes of the poor and vulnerable will move ahead at a fraction of the augmentation in income of the successful Indian.

But an increase in general public welfare can be achieved overnight, or almost overnight, by a sensible increase in the access of the general public, especially "the poor and the vulnerable", to their entitlements of public goods and services. I stress the word "entitlements" because the public are entitled by Government pronouncement to these public goods and services. Yet, they are substantially deprived of substantive and efficient access to their entitlements by the behemoth of a bureaucratic delivery system that spends so much on the delivery system that only a fraction is left for the beneficiaries. Over the years, the bureaucratic delivery system has hardly changed notwithstanding the 73rd and 74th amendments to the Constitution passed 15 years ago, the very rationale of which was to progressively shift the weight of the delivery system from a distant bureaucracy to an elected neighbourhood body which being representative of the people is therefore responsible to the neighbourhood and thus responsive to the people's needs.  

The key areas in which the general public, and more particularly the 836 million who are poor and vulnerable, desperately need efficient and rightful access to public goods and services are precisely the 29 areas set out illustratively in the Eleventh Schedule to the Constitution for the devolution of powers - Functions, Finances and Functionaries - to the elected local bodies. These cover primary and secondary education; dispensaries and primary health care centres; drinking water; sanitation; rural housing; women and child development; public distribution outlets; rural infrastructure, including roads, bridges and culverts and other elements of rural connectivity; veterinary centres; the maintenance of community assets; rural industrialisation; and, of course, everything to do with agriculture and irrigation, above all, agricultural extension.  

The evidence would appear to indicate that the answer emphatically does not lie in dramatic increases in financial outlays, for if that were the case the huge increase in outlays over the last 15 years, and more particularly the humongous increase in outlays in the last five years, should have translated into commensurate outcomes at the grassroots level. They have not. This is primarily because we continue to rely heavily on a creaking bureaucratic delivery system, fashioned into administrative silos insulated one from the other, that has proved over six decades to be quite unequal to the task of delivering development.

Not bureaucratic development but participative development - that is, grassroots development through grassroots democracy - is our imperative need. The path to such development was charted through the 73rd and 74th amendments to the Constitution, which resulted in the present Part IX ('The Panchayats') and Part IXA ('The Municipalities'). In these two Parts of the Constitution we have the key to Inclusive Growth through Inclusive Governance. For Inclusive Growth, we need to hitch the horse of accelerated growth to the wagon of participative development.

To appreciate the political framework in which the need for participative development, as distinct from delivered development, is required, let us first place in perspective the nature of what, in many ways, is our unique democracy.

"This is inevitable given that the very Constitution which confers Constitutional status on Panchayati Raj also leaves it exclusively within the jurisdiction of the State to determine the nature, direction and pace of devolution."

While all developed democracies started out with democracy at the local level and slowly evolved - often over centuries (and, in the case of Britain, over an entire millennium from the Magna Carta to the 20th century!) - to full-fledged democracy based on universal adult franchise at the provincial and federal levels, we became a full-fledged democracy on the day we became Independent. It is our single biggest national achievement. But because our democracy flowered at the highest branches, unlike the developed democracies where democracy was nurtured at the roots, our democracy has followed not the path of evolution from the grassroots but devolution to the grassroots.

This is proving quite as tortured and time-consuming a task as evolution in the other direction did in the developed democracies. Yet, the successes are impressive. Local level elected self-government, backed by the world's only surviving example of Athenian democracy - the Gram Sabha (without, however, the disenfranchised slaves!) - has been made, over the last 15 years since the Constitution was amended, ineluctable, irreversible and irremovable. We have nearly 2,50,000 elected local bodies to which we have democratically elected some 3.2 million representatives, about 1.2 million of whom are women. There are more elected women in India alone than in the rest of the world put together! So reassuring has been the performance of women in our panchayats that Bihar, followed by Chhattisgarh, Madhya Pradesh, Rajasthan and Himachal, have increased the reserved share for women in our panchayats to 50 per cent. Sikkim has raised it to 40 per cent.  The second UPA government elected in early 2009 proposes to introduce legislation to uniformly 50% all over the country.   On their own, there is a substantially larger share of women elected to local bodies than the reserved quota. Moreover, the Scheduled Castes and Scheduled Tribes are assured election in proportion to their population at every tier of the Panchayati Raj system. In the Fifth Schedule areas where there is a substantial tribal presence, the Scheduled Tribes have the further warranty of the Provisions of the Panchayats (Extension to Scheduled Areas) Act of 1996. The enabling clause in the Constitution has also resulted in reservations for the OBCs in several States. This is social and political empowerment without precedent in history or parallel in the world. Next only to the proclamation of a Constitution that has endured is the deepening and widening of democracy through devolution. We have entered the 21st century not only as the world's largest democracy but also the world's most representative democracy.

But while the institutions of local self-government are in place, the empowerment of these institutions, in terms of functions, finances and functionaries, has been uneven, fitful and subject to reversal. This is inevitable given that the very Constitution which confers Constitutional status on Panchayati Raj also leaves it exclusively within the jurisdiction of the State to determine the nature, direction and pace of devolution.

Over the last five years since the establishment of the Ministry of Panchayati Raj, considerable progress has been made towards evolving a national consensus on the nature, direction and pace of devolution. A series of seven Round Tables in 2004 involving the Central and State Ministers of Panchayati Raj resulted in a Roadmap, adopted by consensus, on approximately 150 action points covering 18 identified dimensions of Panchayati Raj.  This was reinforced by a series of state-specific MOUs between 22 Chief Ministers and the Union Minister to take matters forward. The critical requirement of Activity Mapping to place the devolution of functions, finances and functionaries among the three tiers of the Panchayati Raj systems on a scientific footing has gone substantially forward in many, indeed most States and Union Territories.  District Planning Committees have been established in conformity with the Constitutional provisions in all but one or two States. An Expert Group has expanded the ambit of participative district planning to Sixth Schedule areas and other areas exempted from the application of Parts IX and IXA of the Constitution.

Another Expert Group has made proposals for a grant of Rs 80 billion over a four-year period to bring e-governance to every Panchayat Ghar in the country via cyber connectivity and satellite. The special problems of backward regions, a little under one-third of the districts, are being addressed through the Backward Regions Grant Fund, the sine qua non of which is participative planning.

While the Constitution leaves it, of course, to the States to determine the nature, direction and pace of devolution, the Centre could greatly accelerate and rationalise this process by adapting the guidelines of Central Sector and Centrally Sponsored Schemes, the principal source of funding for PRIs, to ensure the centrality of PRIs in the planning and implementation of these schemes in conformity with the letter and spirit of Parts IX and IXA of the Constitution.

A second crying need is to incentivise the States to further empower their PRIs, as also to incentivise PRIs to be transparent and accountable, besides steadily contributing an increased share of their expenditure from resources that they themselves mobilise.

Third, is the imperative need to make available untied block grants to the PRIs so that they have an adequate reservoir of financial resources which they themselves, without let or hindrance from outside, can plan and implement for neighbourhood economic development and social justice.

I speak for the inconsequential Indian, the unsuccessful Indian, but also for the Indian who crucially determines the outcome of the democratic process. If governance reform at the grassroots does indeed become the handmaiden of economic reforms, as hinted at in sections of the Eleventh Plan, we might hope to preserve the stability and sustainability of the democratic process. That is a political imperative. It is also, I trust, an ethical imperative that we will respect.

Mani Shankar Aiyar is AICC Convenor
Rajiv Gandhi Panchayat Raj Sangathan
(Based on speech for Stanford University in June 2008 and  subsequently slightly updated)