Karnataka’s unfulfilled promise

In 2000, shortly after the S M Krishna-led Congress government assumed office, the then Rural Development Minister M Y Ghorpade organised a Round Table to take stock of Karnataka’s achievements in democratic decentralisation. There, a discussion paper authored by a World Bank researcher, Keith Maclean, titled Overview of Rural Decentralisation in India concluded that in Karnataka, despite several governmental and civil society attempts, Panchayats had not emerged as people’s institutions. Instead, distortions of higher-level political systems had been replicated at decentralised levels and new elites and power centres had emerged within the Panchayati system.

Maclean observed that decisions were not transparent and decision-making criteria were unclear, especially with respect to officials’ transfers and postings and entrustment of works for implementation. Despite Karnataka’s claim to have achieved ‘big bang’ decentralisation, the report said that power relations among Panchayats, the bureaucracy, MLAs and MPs had remained unchanged. There was poor definition and considerable overlap in the roles of Panchayat levels and Gram Sabhas had failed to ensure accountability to the people. There was a universal tendency to divide funds equally among elected representatives for their constituencies, which limited the size, scale, reach and effectiveness of projects. Finally, it stated that over 428 schemes were implemented through Panchayats with virtually no local discretion.

Though Maclean’s paper annoyed those extolling the Karnataka model, Ghorpade took it seriously and commenced low-profile reforms, braving scepticism and opposition from his party colleagues. Landmark amendments, including constituting a two-tier system of peoples’ participation through Ward and Gram Sabhas, were undertaken. The gradual centralisation of departmental schemes back from the Zilla Panchayats to Bengaluru-based line departments was reversed by Siddaramaiah, then Finance Minister in the Dharam Singh government.

Karnataka’s reform efforts have since continued, despite a spate of coalition governments and burgeoning corruption. Despite strong political polarisation, enduring decentralisation champions from every political party have collaborated to push Karnataka’s agenda forward. Amendments piloted by H K Patil, the Rural Development Minister in the earlier Siddaramaiah government, have made Karnataka’s Gram Swaraj Act, 2016, express arguably the strongest mandate for Panchayati Raj in the country by embedding provisions for strong Gram Sabhas, local approval of beneficiary identification and prioritisation, oversight of Gram Panchayat-level works, and reformed local tax provisions.

Paradoxically, these progressive developments do not erase the relevance of Maclean’s two-decade-old trenchant observations. Karnataka still faces the challenge of improving the quality of practice of its strong legal mandate for democratic decentralisation. It has the law; it has to walk the talk on implementation.

That is easier said than done.

Fiscal decentralisation the key

Ramakrishna Hegde and Nazeer Saab’s stellar reforms of 1987 comprised of constituting a two-tier system comprising of strong Zilla Parishads and aggregating the 22,000 tiny Gram Panchayats into 3,300 Mandal Panchayats, which were scaleable levels for service delivery. This institutional rejig was backed by effective fiscal decentralisation, achieved by cleaving out a District Sector from the state budget comprising of departmental schemes and programmes that were devolved for planning and implementation to the Zilla Parishads.

This meaningful exercise in devolution was disliked by bureaucrats who perceived a loss of command and control. Over the years, devolved programmes were spirited back into departmental coffers. A research study of the Centre for Policy Research – the Paisa for Panchayats -- report revealed that the extent of re-centralisation was so significant that the District and Taluk Panchayats had become, from a financial perspective, mere junction boxes for salary funds; ATMs dispensing salary to departmental staff deputed to them nominally, without any control over meaningful schemes and programmes.

Ironically, the passage of salary funds through the Zilla and Taluk Panchayats enables the state to boast that they devolve considerable sums of money to the Panchayats, even though such salary transfers are meaningless without autonomous control over how schemes and programmes are implemented.

The result of these fiscal distortions showed that while at the grassroots level, considerable funds were spent by the government, only an eighth of it was within the knowledge of Gram Panchayats; the remainder was spent by departments without any consultation with the panchayats and no oversight by the Grama Sabhas, who were thus ineffective despite their strong legal mandate for oversight. The Centre for Policy Research’s 2021 report, Paisa for Municipalities, revealed the same malaise in municipalities.

Simply put, there is no way that a Karnataka resident can find out how much money is being spent by the government in his or her Panchayat, ward or municipality, or sector of interest, given the multiplicity of institutions crowding out each other and spending money for the same things from different accounting sources. We have in place a classic recipe for corruption and leakage, in the name of decentralisation.

The Karnataka government organised this week a two-day Round Table of experts and leaders cutting across party lines to discuss how democratic decentralisation can be re-energised and given a new direction. In parallel, the Fifth Finance Commission of the state is being constituted to make recommendations on how the divisible pool of finances may be divided between the state and local governments.

Will the magic happen again, of a group of committed politicians and bureaucrats implementing the powerful law, keeping in mind the larger interest of the state’s people? Or will the Round Table deteriorate into another repetition of the same old self-praise that has been the bane of Karnataka’s discourse on democratic decentralisation?

One waits and watches. One lives on hope.

(The writer is a former Secretary, Rural Development, Govt of Karnataka, and Trustee, CIVIC)