Devolution for development

There have been three key evidence-based lessons for an inclusive India in recent studies and reports. The Reserve Bank of India’s 2023 Report on the Role of Panchayats in Economic Development concludes, on the basis of the Devolution Index, that states with higher Devolution Index scores (Kerala, Karnataka, Tamil Nadu, Maharashtra) are found to have better quality of socio-economic development. It illustrates this by comparing under-5 Mortality and Higher Secondary Transition Rates with greater devolution. The Ministry of Panchayati Raj’s Devolution Index of States (2015-16), meticulously constructed, provides evidence across the human development sector of such a correlation.

The United Nations Development Programme’s 2022 and Niti Aayog’s Multi-Dimensional Poverty Report 2022, based on the National Family Health Survey-5 (2019-21) data, also brings out how states like Kerala, Tamil Nadu, Karnataka report much lower incidence of multi-dimensional poverty. A comparison with Gross National Income per capita for 2021-22 for states also shows that while incomes are important in reducing poverty, Kerala has only 0.55 per cent multi-dimensionally poor persons in spite of being eleventh in per capita income. The recently published Monthly Per Capita Consumption (MPCE) 2022-23 also finds Kerala and Tamil Nadu in the top bracket of consumption expenditure. The Mission Antyodaya annual ranking of Gram Panchayats on 206 Sustainable Development Goal (SDG) parameters, by Panchayats themselves validated by women’s self-help groups as well, throws up a similar picture of devolution contributing to better performance of Panchayats.

The contribution of six factors to a faster decline of poverty in southern Indian states has been documented in my recent book – ‘The Last Mile – Turning Public Policy Upside Down (Routledge 2024). The six key factors are – adolescent girls in higher education, decline in fertility rates, improved primary health care, formation of women’s self-help groups, women’s participation in skill and vocational courses, and access to collateral-free lending for women self-help groups. Performance in female literacy and access to credit to SHGs is also linked to the devolution index, making a women-led, decentralized social development thrust the most inclusive approach to creating a developed India.

There is evidence to show that outcomes in human development (education, health, nutrition, skills, livelihoods) do not lend themselves to narrow departmentalism as there are interconnected needs and a large number of wider determinants for outcomes. Community ownership, use of technology as a means, professionals to supplement the institutional arrangements for planning and implementation, a local government-led initiative leaving no one behind, is the only way forward for a more equal society. Allocations for human development have to be as per national norms, and clearly states with greater deficits will need more resources. For everything else, allocation can be on absolutely transparent and equitable principles. Human development is integral to a common minimum level of well-being.

India is at a point in history where a seven per cent annual rate of economic growth has been a reality for over three decades. Social indicators have improved faster since 2005, but there is still a long way to go for everyone to move upwards on the skilling and productivity ladder. Fifty million households reporting for work as unskilled labour under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) is a sign of development failure. MGNREGS, as the 2024 International Labour Organization (ILO) Study points out, served a very important role in reducing the gender wage gap in rural India. When more hands are available for work than the employment opportunities in the market, wages dip lower than what is required for a life of dignity. MGNREGS has helped in defining the floor rates, though it can do with hikes to make MGNREGS wages closer to market wages for the creation of meaningful rural infrastructure. Unfortunately, there is no infrastructure pipeline for developing urban-like amenities in a planned manner for rural areas. The Rurban Mission, that was trying to do this in selected 300 growth hubs, has unfortunately been discontinued.

The Constitutional mandate, reflected in the 29 transferred sectors in rural areas in the Eleventh Schedule and eighteen sectors in the Twelfth Schedule for urban areas, needs to be implemented on a priority. The State Legislatures have been mandated by the Constitution to bring about the devolution to local governments. No one wishes to lose authority over financial resources, whether Central or State. It is time for the Sixteenth Finance Commission not only to settle the vertical and horizontal distribution of taxes; it must mandate central and state governments to ensure complete devolution in the sectors assigned to them, as a precondition for receiving some of the grants. Adopting the Sumit Bose Committee (2018) recommendations on human resources for local governments in rural areas will facilitate the availability of professionals as per needs. By integrating the women’s collectives under the Rural Livelihood Mission with Gram Panchayats, the cadre of Community Resource Persons could become a powerful weapon for accountability and outcomes in Panchayats.

Urban devolution will need a major reform to provide for elected Basti level leaders in the Urban Local Bodies. The current Ward size is huge in many large Municipal Corporations (30,000 – 300,000), making muscle power overtake community organizations and connect. It is time we built strong and resilient community organizations from the Basti upwards in urban areas. Like the Rural Livelihood Mission, there is a very strong case to create social capital for human development outcomes in urban areas.

Local government-led human development also determines private sector investments in manufacturing and services, as human capital is at the core of enterprise development. Tamil Nadu, Maharashtra, Delhi, Hyderabad, Bangalore get most of the private sector investments, as that is where human capital is. Gujarat, besides its own human capital, is able to attract human capital for its private sector growth from other states in large numbers. Migration is inevitable, but critical local skill availability does influence investment decisions.

It is time for learning outcomes in schools, employable skills in courses and colleges, quality of services in health, drastic reduction in stunting and wasting through a convergent community-led action, to become the topmost priority. Crafting credible public systems should be the focus for public goods. Untied funds in proportion to the gap, with local governments and under community oversight, can get us outcomes. Recruitments must be professional by Public Service Commissions, without any compromise in standards. The accountability framework, however, must be local and multi-pronged – real-time database, IT/DBT, financial internal and social audit, research studies, etc. There is no substitute for triangulation. Developed India needs local government-led human development to truly become an Inclusive India.

Amarjeet Sinha is a retired civil servant. The views are personal.