World Bank working paper advocates increased devolution for Panchayats

A recent World Bank working paper has called for granting greater authority to Panchayats while strengthening local fiscal capacity to offset what it identified as “recentralisation” resulting from the widespread adoption of online payment systems, MIS-based beneficiary selection, and digital beneficiary tracking.

“Delegating more authority to Panchayats, rather than stripping them of power, is crucial in ensuring effective local governance,” the working paper titled ‘Two Hundred and Fifty-Thousand Democracies: A Review of Village Government in India’ authored by Siddharth George, Vijayendra Rao and MR Sharan says.

The working paper highlighted “inefficiencies”, saying Gram Panchayat (GP) council members spend excessive time at Block Development offices and District Collectorates, acting as intermediaries rather than empowered decision-makers. 

Enhanced fiscal capacity and broader decision-making authority are deemed essential for improving governance.

“More devolution to GPs comes with an additional benefit: it reduces the burden on BDOs and higher-level bureaucrats, who are already considerably over-burdened,” it notes.

Empowering ward members (WMs) within village councils, who currently lack financial resources and act merely as rubber stamps, is another recommendation.

“Empowering WMs -- by financially allocating resources to them-- could help panchayats function better,” the working paper says, adding that smaller polity sizes improve development outcomes.
 

Building local tax capacity is highlighted as vital for panchayat autonomy.

The working paper suggests that improved tax collection can be achieved through filling bill collector vacancies, digitizing property records, and granting GPs more freedom to levy their own taxes and cesses.

“When Panchayats are seen to be responsible for a wider range of tasks, their legitimacy improves in the eyes of the citizens, which could translate to greater local revenues,” the working paper explains.

Strengthening Gram Sabhas by increasing their frequency and expanding their powers in village planning and beneficiary selection is also recommended.

The working paper emphasizes the importance of listening to citizens, stating, “Utilising Gram Sabhas as platforms to actively listen to citizens is essential.”

Improving administrative data quality and ensuring its public availability in accessible formats is another key recommendation.

The working paper advocates for the use of effective visualizations, maps, and interactive dashboards to facilitate comprehensive understanding and analysis by all community members.

The working paper also calls for developing an independent and credible system for scoring GP performance.

It suggested “incentivising the performance of Panchayat elected officials and staff by rewarding them with certificates of achievement, more finances for the village, and possibly cash rewards and higher salaries, but in a way that is credible and unquestionably fair.”

Establishing effective grievance redressal systems is crucial for holding Panchayats accountable, the working paper recommends.

“Setting up formal and effective grievance redressal systems could allow individual citizens to report problems to the concerned higher authorities.”

Integrating women’s self-help groups (SHGs) with Panchayats is highlighted as a significant measure for improving village governance.

The working paper said, “Creating more scope for SHG-Panchayat coordination would not only improve the functioning of SHGs but also balance Panchayat decisions more towards the needs of women.”

Finally, the working paper suggests applying lessons from the 73rd Amendment of the Constitution to urban governance. The 73rd amendment aims to decentralise power and decision-making from the central and state governments to the local Panchayats.

The working paper also advocates for reducing the power of unelected bureaucrats, reducing ward sizes, and introducing ward sabhas for direct citizen engagement.