Author : Niranjan Sahoo

Expert Speak India Matters
Published on Mar 07, 2016
Budget 2016: A giant push for India’s decentralisation story The Union Budget 2016 has got something for everyone. While the poor have been peppered with welfare schemes, low cost houses and a wide variety of sops, the corporate class has been lulled by the lowering of corporate tax and duty cuts apart from the promise to reduce time and costs in litigation. Of course, Budget’s increased public spending on infrastructure, social sector, health and education would benefit the middle class. More than all these, the National Democratic Alliance (NDA)’s third budget distinguishes itself from the previous budgets in two ways. One, with its pro-farmers thrust, it is a milestone budget for the rural India. Two, it is a game changing budget for country’s 250,000 panchayats. A pro-Bharat budget While everyone seems to have got his pound of flesh from the budget, it is undeniably a fulsome budget for the rural India or Bharat. Statistics would explain the above claim. Take for instance the allocations for rural development. A massive Rs 87,765 crore has been allocated (as against Rs 79,526 crore last year) for this vital segment, representing two-third of India’s population. Similarly, allocation for the Department of Agriculture, Cooperation and Farmers’ Welfare (DoA) has been hiked from Rs 15,809 crore in 2014-15 to Rs 35,984 crore for the year 2016-17, a whopping 127 per cent increase from the previous year. Importantly, the budget has allocated Rs. 5,500 crore for the Pradhan Mantri Fasal Bima Yojana, a crop insurance policy to aid the farmers in distress. Another noteworthy scheme for the farmers is the big investment plan for speeding up irrigation facilities. With frequent monsoon failures and two back to back droughts pushing a lot of farmers to the margins and raising the spectre of suicides, the government has come out with the Pradhan Mantri Krishi Sinchai Yojana with an impressive allocation of Rs. 85,500 crore for a five-year period. The best part is that the entire irrigation mission has to be vetted and overseen by NABARD, country’s apex agriculture bank. Thus, some critical thinking has gone into its execution. Similarly, rural electrification has received the much needed boost. The allocation of Rs. 8,500 crore on this front would push electrification to the hinterland and inaccessible areas of countryside much faster. Importantly, the allocation for MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act), a critical rural job scheme, has seen a modest jump (Rs 38,500 crore). The best thing about such allocation is the overt orientation to utilise the money for water and soil conservation, enhancing irrigation facilities in rural India. The budget’s focus on incentivising agro-processing industry would be a great boon for farmers and enterprises promoting such missions. However, the game changer for rural India is the large dollops of funds for infrastructure related activities. Country’s railways and roads together stand to benefit Rs 2.18 lakh crore. Road sector alone would receive Rs 0.97 lakh crore, fostering rural connectivity and productivity. Thus, in every sense, 2016 budget is a pro-Bharat budget. Big push for decentralisation While everyone is talking about the budget’s pro-rural tilt, they are paying little or no attention to its transformational side. If anything, the 2016 budget will be remembered for providing a giant push to the country’s third tier democracy (the rural local self governance institutions or panchayats). Following the recommendations of the 14th Finance Commission, the budget 2016 has allocated a massive three trillion rupees to panchayats. At one stroke, some 250,000 gram panchayats would now receive a mammoth one crore rupees every year. It must be reiterated that despite routine noise about the transformative potentials of the 73rd Amendment of the Constitution in 1993, the decentralisation story has remained at best patchy, inconsistent and riddled with usual stories of systemic and institutional bottlenecks. Although majority of Indian States have met the necessary conditions, such as enactment of the State Panchayat Act, setting up of the State Finance Commission and constitution of the District Planning Committee, a great majority of them have not devolved funds and functions to these local bodies. While a handful of States like Kerala, Karnataka and West Bengal have transferred as many as 26 departments to panchayats, many States have devolved only few functions, even as low as 4 departments. Therefore, Article 243G of the Indian Constitution, which requires the State governments to devolve distinct functional items to Panchayats, remain a constitutional promise even after more than two decades. More, the worrysome trend is the availability of adequate financial resources with panchayats to deliver basic functions. The recent report of the "Expert Committee on Leveraging Panchayat Raj Institutions for more Efficient Delivery of Public Goods and Services" found that except for MGNREGA and the Backward Regions Grant Fund (BRGF), no other centrally sponsored schemes have provided a role for the panchayats. Funds meant for panchayats in central schemes are still being managed by line departments of respective States. In short, without adequate financial resources, these self governing institutions have remained at the mercy of State leadership (whose antipathy for third tier government is well known). In this context, devolution of a whopping 15% of the Union budget to panchayats would have telling effect on the performance of these critical bodies. Given that these local bodies deliver numerous basic services such as village roads, street lights, drainage, drinking water facilities, cleanness, etc, the budgetary allocations would have some dramatic effect on the state of service delivery in the rural India. Needless to say, the local governments are better placed to plan and execute local area programmes. Of course, there would be other unintended benefits as well. A gush of huge amount of money to local bodies would certainly create new interest among various stakeholders. One would expect more competent candidates to begin their political journey from the panchayats. With greater competition and the possibility of better candidates entering the fray, the end result would be improvement in accountability and responsiveness at the lower level of democracy. Of course, one has to wait and watch how State governments are able to channelise such a huge opportunity and further empower their local bodies providing vital services. But looking ahead, one sees brighter prospects for the rural India, particularly its governance transformation.
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Niranjan Sahoo

Niranjan Sahoo

Niranjan Sahoo, PhD, is a Senior Fellow with ORF’s Governance and Politics Initiative. With years of expertise in governance and public policy, he now anchors ...

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