Decentralisation, fiscal autonomy can do wonders

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Decentralisation, fiscal autonomy can do wonders

Saturday, 25 April 2020 | S JYOTIRANJAN

Just before the Panchayati Raj Diwas on April 24, the Odisha Government in an exemplary policy decision, and extraordinary step towards a meaningful act of  democratic decentralisation,  has delegated the Sarpanches with the power of district Collectors within their jurisdictions in accordance with the provisions of the Disaster Management Act,2005, read with the Epidemic Diseases Act 1897 and the Odisha Covid-19 regulation.

The entire exercise is done to effectively take policy decisions at gram panchayat level so as to contain corona infection and efficiently carry out the registration and quarantine exercises.

Surprisingly, so far Odisha remains the only State to do this. This is being said here to not only to highlight the democratic decentralisation of power in attaining effective and practical governance only at the level of Panchayati Raj Institutions as envisaged in the 73rd and 74th Constitutional Amendments, but to show, the essence of optimum democratic decentralisation across the federal structure in attaining good governance.

Over the last many weeks, as we have faced the worst humanitarian crisis of our times,  one thing that has come to the forefront is the governance model and leadership in governance shown by the  Chief Ministers of different States and the proactive role played by the bureaucracy across the country in policy designing and implementation, to contain the spread of the virus.

Some States have empowered the district administrations to take autonomous and independent decisions at their levels after understanding the ground realities. This is not only prudent but also pragmatic. With the citizens remaining indoors, the steps taken by the respective State Governments and the State machinery have indeed shown us that, ‘minimum Government and maximum Governance’ is not actually impossible. But it seems that, the crux lies in a pragmatic, effective democratic decentralisation of power at all levels.

In fact, much before the Union Government, the State Governments have taken crucial steps in containing, preventing and combating Covid-19 infection and its spread, both by significant policy designs and decisions and use of legal means such as invocation of Disaster Management Act, 2005 and Epidemic Diseases Act, 1897. The Governments of Odisha, Rajasthan, Tamil Nadu, Kerala, Karnataka have not only been doing pretty well in designing their policies to cater to the situation, but have effectively established communication with the public in conveying their decisions with clarity.

Man is to err, so it is obvious that, there have been instances of flaws in implementing the decisions but even then, the tailoring of the policies have been broadly welcome and have specifically addressed the local concerns, be it Bhilwara in Rajasthan or the Odisha story of effective containment, and many standalone Covid-19 hospitals within a short period of time. Any way, they have become the laboratories of policies and governance. May be, it is that face of the bureaucracy and political leadership which we have least seen before, as the role they are playing now as ‘founts of reasoned authority’.

However, even though the State Governments have shown extraordinary leadership but there has always been a boundary imposed by the federal arrangement. According to experts, under such a federal arrangement there has always been firstly, a hindrance before the State Governments to have access to funds and therefore are often forced to design their own welfare packages; secondly, the criticalities of public finance management system which pose a bottleneck in procuring medical equipment and other essential  healthcare products and thirdly, access to essential goods and services where it is supposed to reach them through a pan India process of production, transportation and supply chain.  So, it is time to do away with such limitations, and the State Governments and local bodies are empowered to take much of such managerial exercises and the Union Government is to simply monitor the broad network of such activities.

Indian federalism as understood from the premises of the Indian Constitution has always been about equal partnership between the Centre and the States. The seventh Schedule has clearly demarcated the domains of action as regards legislation and consequent implementation and administration between the State and the Central Governments, while matters of national importance have remained with the Central Government. Subjects like agriculture, law and order, public health and sanitation have remained with the States and they have been absolutely vested with State ’s domain of activity.

The intent behind such provisions have been even farther than what is imagined of, being equal players in policy, legislation and administration to fiscal autonomy of the States in order to structure and implement policies according to the necessities at the ground level of the particular demographic setup.  However, in practice,  things have been quite different from the theory envisaged in the Constitution, as truly said by the Supreme Court in SR Bommai v. Union of India, that is, the Centre has always treated States as mere “appendages of the Centre”.

But the current crisis that we are facing now has made us go decentralised. The repeated conversation through video conferencing between the Prime Minister and the Chief Ministers, most importantly the address by the Prime Minister to Sarpanches across India, are nothing but the growing realisation by those in the helm of the affairs that, it is wiser, effective and practical to decentralise power in the sake of better and optimum governance.

Having said so, it is also important to understand that, the States apart from greater administrative autonomy should have increased share in total tax revenues to handle such situations, with the strength and vigour which is essentially rooted in financial strength. As recommended by the 14th Finance Commission the States should get an increased share out of the total tax revenues from 32 percent to 42 percent.  However, on the contrary, what we have seen in the recent past is the increase in States contribution in various Centrally Sponsored Schemes.

It is not difficult to understand now that, democratic decentralisation of power, transparency and financial autonomy at all levels of governance can better our prospects not only in the current moment of corona crisis but in the long run as an efficient and vibrant democracy and economy.

(The writer is a lawyer and public policy expert. He can be reached at

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