Chapter 9: Footnote 4

Much as I would like to dilate on the history of Panchayati Raj since Independence, I am constrained to merely refer interested readers to my article ‘Inclusive Governance for Inclusive Development: The History, Politics and Economics of Panchayati Raj’, in Faguet and Poschl (ed.), Is Decentralization Good for Development?, Oxford University Press, UK, 2015. See also: the opening introductory chapter, paras. 1.1 to 1.8, at pp. 1–6 (and, in greater detail, Annexe 1 to Vol. I) of the ‘Twentieth Anniversary Report of the Expert Committee on Leveraging Panchayats for the Efficient Delivery of Public Goods and Services’, 2013, chaired by me. Copies of this five-volume report can be made available by emailing me at: 1941msa@gmail. com

This chapter assesses local self-governance (Panchayati Raj) in India. It provides an overview of the competing visions and philosophies on (local) democracy between leading figures like Gandhi, Nehru and Ambedkar as well as the narrow interests of power-holders that have led to conflicting approaches in the development of Panchayati Raj institutions since India’s independence. It asks why rapid growth has not led to more inclusive growth --why India is prospering but Indians are not-- and in how far the Panchayati Raj institution may remedy the problems of highly concentrated wealth and a wasteful bureaucracy. It argues that Panchayati Raj must be improved and strengthened in order to genuinely permit governance from below for more effective programs and services that match local needs, for an economic model of inclusive governance for inclusive growth, and for wealth to truly trickle to all Indians in a full-fledged democracy.

“I shall work for an India in which the poorest shall feel that it is their country, in whose making they have an effective voice”- Mahatma Gandhi

I. Introduction[1]

From the time Mahatma Gandhi led the struggle for independence to the present day, there has been extensive recognition in India that Panchayat Raj[2] (local self-government) is imperative for both deepening India’s democracy and making its development processes “inclusive”; that is, ensuring that the people at large, and especially the poor, tangibly benefit from the growth process. The aim was to involve the people in the running of their own affairs in their respective neighbourhood communities. “Institutions of local self-government” comprising their own elected representatives, responsible to their own community electorate, would be more likely to respond to the felt and articulated needs and demands of the neighbourhood communities than a distant bureaucracy.

However, the actual progress in securing this goal has been fitful, uncertain and not sustained. There are now nearly 300,000 institutions of democratically constituted units of local self-government, to which some 3.2 million representatives have been elected, 1.2 million of whom are women. However, instead of empowering an army of democratically elected community and neighbourhood leaders to deliver public goods and services to the intended beneficiaries, State governments and Union Territory (UT) administrations continue relying on the bureaucracy and their partners in civil society to do so. In consequence, as this paper attempts to show, outcomes are nowhere near commensurate with outlays.

There are two main reasons for this. First, there is insufficient clarity and conviction regarding the indispensability of Panchayat Raj for inclusive development. Second, there is considerable resistance to the systemic revolution entailed in effective Panchayat Raj on the part of the polity and the bureaucracy who stand to lose their powers of patronage and influence if there is indeed a genuine overhaul of the development process.

In the meantime, while GDP has grown at over 8% per annum on average from 2006-2011, poverty alleviation has languished at under 0.8% per annum (Planning Comission, 2011). Four hundred and sixty-four police station jurisdictions spread across 95 districts in 11 States are in the grip of the Maoist/Naxalite insurgency. Moreover, the lower-to-middle ‘middle class’, who are often proudly presented as the principal beneficiaries of accelerated growth, are expressing their profound resentment at the glass ceiling they have hit as they peer through it at soaring income and wealth inequalities, which are the inescapable concomitant of the growth pattern that has been adopted. This paper apprehends that in view of the patent failure to secure inclusive growth, both democracy and development – the twin key achievements of independent India – are being seriously endangered in 21st century India. When a fair share of economic growth is denied to a substantial majority of the population in the short-term, and when development leads to deprivation rather than immediate benefit, as in tribal India, development is considered not desirable but disruptive, and democracy itself is discredited.

This paper argues that it is the incentivization of effective devolution through Panchayat Raj Institutions across the length and breadth of the country that alone can end the paradox that India is prospering but Indians are not. It also argues that inclusive governance in tribal areas, as provided for in The Provisions of The Panchayats (Extension to Scheduled Areas) Act (PESA, 1996) , holds the key to preventing democracy from being destabilised and development from being disrupted by Maoist or Naxalite violence.

Panjayati Raj is crucial to bringing free or affordable public goods and services to the doorstep of the poor and the vulnerable. At present, the delivery of these public goods and services is through well over a hundred Centrally Sponsored Schemes (CSS) directed at the same set of beneficiaries – the poor and the vulnerable – by an equal number of mutually insulated administrative silos. These silos not only absorb a disturbingly high proportion of total outlays on administrative expenses but also stand in the way of effective convergence at the receiving end. In consequence, notwithstanding an 18-fold increase in central budgetary expenditure on social sector and poverty alleviation schemes over the past 18 years (1994-2012), India’s relative position on the United Nations human development index stagnates at the same position it held in 1994 (UN HDI 2009, 2010).

If the delivery of these schemes is converted into self-delivery through PRIs rather than bureaucratic delivery – which was the central purpose of the constitutional amendments – then rural India, accounting for nearly two-thirds of our population, would experience such an increase in welfare and growth benefits as to more than offset the adverse impact on democracy and development of income and wealth inequality. (Analogous steps need to be taken for urban India – but that is beyond the scope of the present paper).

The rest of this chapter is structured as follows. Section II provides an overview of the history, philosophy and politics of Panjayat Raj. It introduces the intellectual debate between the Ghandians and “Ambedkarians”, and their competing views on (local) democracy in India. It describes the political compromises that brought about apparent but not true decentralization in India. Section III shows how recent growth has not translated into inclusive growth. Section IV then specifies the problems that need to be addressed and suggests a series of solutions.

II. The History, Philosophy and Politics of Panchayat Raj

Under the leadership of Mahatma Gandhi, India’s liberation movement was never limited to independence for the country. It extended to freedom for her people. While, therefore, the commitment to democracy was woven into the warp and the woof of the century of struggle that climaxed with independence on 15 August 1947, there never was consensus in the run-up to freedom on whether such democracy was limited to Westminster-type institutions in New Delhi and US-type state assemblies in state capitals,[3] or extended down to the grassroots – to institutions of local self-government.

The boldest initiative to make Panchayat Raj the very foundation of the constitution was the framework for an Indian constitution written in 1946 on the eve of independence, with Mahatma Gandhi’s approval and endorsement. Gandhi was concerned with involving the mass of the people, and not just the higher echelons of society, in governance. He therefore pressed for village development as the priority and progressively moved beyond stressing village sanitation and village industries to pressing for democracy at the grassroots.

He had in mind a modernized democratic version of the traditional 5000-year old Indian institution of “panchayats”, which had weathered, over centuries, all kinds of central governments as well as the trauma of military conquest, political turbulence and economic disruption that have pockmarked the millennial history of the country. However, as against the traditional practice of five elders constituting the panchayat (which literally means “The council of five”), Gandhi’s idea was that the village council (or panchayat) would be constituted by democratically elected leaders on the basis of universal adult franchise and the one person–one vote principle.

His conception of Panchayat Raj rested on virtually self-sufficient “village republics” which would be autonomous in everything they did, including meeting the community’s economic needs – but restricting these needs to a frugal standard of living (Tendulkar 1953(1990: 405)). Although Gandhi’s use of the expression “village republics” did cause considerable alarm, presaging the disintegration of one India into 700,000 self-governing units just as the country was preparing itself for the trauma of Partition (which led to the secession of Pakistan), Gandhi, far from seeking the balkanisation of India, was actually articulating the governance principle now called “subsidiarity” as the basis for participative governance.

However, these ideas brought an angry reaction from Dr. B.R. Ambedkar, the leader of the scheduled castes (or ‘untouchables’, as they were called at the time, a term since rendered illegal, indeed criminal, by the law of the land in independent India). Dr. Ambedkar, a renowned jurist and a known political opponent of Mahatma Ghandi , was named the Law Minister in India’s first cabinet, and in 1947 was entrusted with chairing the drafting of a constitution.

In his draft, Dr. Ambedkar deliberately excluded panchayats. Drawing sharply negative comments from the Gandhians in the constituent assembly, Ambedkar famously – or notoriously, depending on one’s point-of view – retorted that her villages were “the ruination of India,” dismissing them as nothing “but a sink of localism, a den of ignorance and communalism” (Constituent Assembly Debates, 1948). While Gandhi visualized village panchayats as the very foundation of an effective and participatory democracy, Ambedkar saw what in today’s idiom would be characterized as “elite capture” in a society where discrimination against the lower castes was entrenched in a scripturally sanctioned social system that had survived for millennia and justified itself in terms of the ancient jurisprudential system known as the Laws of Manu, India’s Hamurabi.

Ambedkar dismissed village self-governance as romanticism bereft of the recognition of the deeply embedded social inequalities in village India:

“The existing village system has the effect of making the Scheduled Castes in the village slaves of the caste Hindus…Under the village system the Scheduled Castes are not allowed to live inside the village. They have to live on the outskirts… They have no independent means of livelihood. They own no land…They have to do forced labour day in and day out on pain of being driven away from their quarters by the Hindu landlords… They have to live a life of degradation, dishonour and ignominy from generation to generation. It is a state of eternal perdition” (Thora and Kumar, 2008: 270-272).

The Ambedkarite skepticism caused a major divide that has haunted local self-government in India ever since.

Gandhi on the other hand expressed concern at there being “no mention or direction about village panchayats or decentralisation” in the Ambedkar draft. He considered it an omission “calling for immediate attention if our democracy is to reflect the people’s voice”. He had added: “The greater the power of the Panchayats, the better for the people” (Harijan, 1947).

Prime Minister Jawaharlal Nehru’s views on the need for participatory democracy at the village level had been stated in his defining work, The Discovery of India, published on the eve of Indian independence:

“The village can no longer be a self-contained economic unit ... but it can very well be a governmental and electoral unit, each unit functioning as a self-governing community within the larger political framework and looking after the essential needs of the village” (Signet Press 1946 (1989: 523)).

For the Nehruvian modernists, an India emerging out of the trauma of Partition and the problems over the integration of the Princely States, the key imperative was a strong centre to combat the fissiparous forces of balkanisation that independent India had to overcome. At the same time, a commitment to village self-government as a principle of good governance was accepted but with implementation left to the States. Perhaps the strongest factor affecting Nehru’s outlook was his conviction that a civil service for independent India modeled on the colonial ICS (Indian Civil Service) would be as effective in delivering development as it had proved for land revenue collection and law and order for the British Raj. There was therefore no disagreement between the Gandhians and Nehruvians about the need for grassroots democracy; the difference was limited to emphasis and priority.

Nehru, however, kept out of the Ambedkar-Gandhians arguments in Parliament and in public. It might well be that Nehru thought this was a subject for the States to handle and since his party was in power in all states there should be no difficulty in getting panchayat raj through the state route instead of being embroiled in doctrinal disputes on the subject in the constituent assembly. Certainly, he did not share Gandhi’s somewhat romanticised view of the village although he also did not go as far as Ambedkar in viscerally condemning rural India or regarding the discriminatory Hindu order as immutable.

Following considerable public debate and discussion in the Constituent Assembly in November 1948, a compromise was found between Dr. Ambedkar and the Gandhians. The principle of panchayat raj finally did find passing mention in the constitution, but the responsibility for this was vested entirely in State legislatures and governments:

“Article 40. The State shall take steps to organize village panchayats and endow them with such powers and authority as may be necessary to enable them to function as units of self-government.”

While the “shall” gave the impression that the constitution and empowerment of village panchayats was ineluctable, the incorporation of article 40 in the directive principles, instead of in the mandatory provisions of the constitution as in the case of democratic institutions at the centre and state levels, rendered enforcement of “village panchayats” null and void. Further, the responsibility for Panchayat Raj passed exclusively to the jurisdiction of the States without any mechanism for ensuring that they would in fact live up to the letter and spirit of Article 40.

At first there was no controversy about this because it seemed self-evident that village panchayats were indispensable to good governance. But as feudalism was progressively dismantled with the integration into the Union of India of nearly 600 “Princely States”, combined with substantial land reform and tenurial reform, republican democracy created and empowered a whole new class, principally of career politicians (most of them former freedom-fighters), professionals (particularly lawyers and teachers) and small businessmen who filled with enthusiasm the power vacuum caused by the political eclipse of the feudal class who till then had held sway in the colonial political dispensation. This newly empowered class slowly realized that the concentration of political patronage and governmental power in their hands was threatened by empowering institutions at sub-State level “with powers and authority to function as units of self-government” as provided for in Article 40 of the constitution. Self-interest prevailed over good sense. Thus, a withering away of panchayats characterized grassroots governance through the first decade of Independence (1947-57).

This, however, was not, emphatically not, to the neglect of grassroots development. Indeed, it was the defining decade of experimentation in a novel post-colonial form of district and sub-district administration. In the colonial period, such administration was concentrated on the twin tasks of revenue collection and the maintenance of “public order” and “law and order” through the “steel frame” of the Indian Civil Service, initially a virtually exclusive preserve of officers recruited in and from the mother-country, Britain, but increasingly “Indianized” as empire gave way to independence. While many argued that independent India should dismantle the colonial administrative structure, Nehru himself seems to have felt the need to retain the steel frame but re-orient it towards a wholly new set of duties aimed at prioritizing rural development (Brecher, 1959: 40).

This was called “community development”. At the bureaucratic level, the major innovation was that the colonial (indeed, pre-colonial) revenue unit of the Tehsil or Taluqa was complemented by the establishment of development blocks, the key administrative officer being the block development officer. His duties included listening to the voice of the grassroots and to deliver development to the people through his large panoply of staff stretching into every village. The head of the administration remained the ”collector”[4] who retained his revenue collection, law and order and magisterial duties but was also generally in charge of rural development. Thus a regiment of the “best and the brightest” were put in place to mobilize the development process at the village community level as part and parcel of “planned development”. Such planned development was envisaged as the means of not only raising the rate of GDP growth from the miserable colonial figure of around one per cent per annum but also ensuring the equitable distribution of the fruits of growth to the village level through a well-organized bureaucratic system of public goods and services delivery.

The community development programme was community-based but essentially promoted by the bureaucracy and, therefore, left the people as beneficiaries rather than participants in their own progress and development. Accordingly, a Study Group under the renowned Gandhian, Shri Balwantrai Mehta (and later chief minister of Gujarat), was constituted to examine Panchayat Raj.

The Balwantrai Mehta Study Group Report was published in 1957 and saw Nehru moving decisively towards participatory, as distinct from bureaucratically-delivered, development. The Community Development programme was to be subsumed under a three-tier democratic system of elected rural representatives, at district, block and village level, under whose general aegis and supervision the new development block-based bureaucracy would work for the people in their immediate neighbourhood, a synthesis of the pre-colonial steel frame and the post-colonial democratic ethos.

Nehru formally inaugurated the modernized system of Panchayat Raj on 2 October 1959. He was by then a colossus – albeit a “Gentle Colossus” as Hiren Mukherjee, one of his communist opponents in parliament, described him (Mukherjee, 1964). Not only did his Congress Party have an overwhelming majority at the centre; all states (with the notable exception of Kerala, which had voted Communist), were not only under the firm grip of the Congress but alert to respond to priorities indicated from New Delhi. It was therefore by simple fiat emanating from the Prime Minister himself that all state governments fell smartly into line with the directive that they make the appropriate legal provisions for Panchayat Raj. Without altering a comma in the constitution, Panchayat Raj was thus decreed all over the country and evolved, even flourished, through the remaining years of Prime Minister Jawaharlal Nehru and into the initial years of the successor regimes.

The general elections in early 1967 saw a dramatic transformation in the national polity with the emergence of non-Congress governments in large measure. These reverses also marked great instability within the leadership of the Indian National Congress under Prime Minister Indira Ghandi. Faced with centrifugal challenges both within the party and within the government, the prime minister consolidated her position within her party and the country at large by a process of concentration of political and administrative power that inevitably meant more centralization than decentralization.

Hence, over the next two decades, Panchayat Raj in rural India went through a phase of desuetude. It was a phase I would describe as “whimsical Panchayat Raj”, elections taking place or not taking place, elected local self-government institutions not being allowed to take office or dismissed soon after they did so or indefinitely extended, as suited the political compulsions or biases or preferences of the State government concerned. Similarly, powers were endowed, withdrawn or ignored, as best suited the higher political echelon.

Not until Rajiv Gandhi became prime minister in 1984 was there a revival of interest in panjayat raj. During the numerous tours that Rajiv Gandhi undertook to the remotest corners of rural and tribal India, he discovered that a systemic solution was required to secure a “responsive administration”. Rajiv Gandhi promptly started his quest for a “responsive administration” through “representative” and, therefore, “responsible” institutions of local self-government. (Gandhi, R., 1988: 156, 161).[5]

The essential innovation by Rajiv Gandhi, was to make detailed provision for the third tier of governance not through municipal law, as in Nehru’s time, but by providing constitutional sanction, sanctity and safeguards to Panchayat Raj with a view to making it ineluctable, irremovable and irreversible.

At noon on 15 May 1989, the historic 64th amendment was tabled in the Lok Sabha, the lower House of Parliament, by Prime Minister Rajiv Gandhi. The rationale he set out for Constitutionally-mandated Panchayat Raj might be summed up as follows (Ghandi, R. 1989):

· guaranteed regular, timely elections to the panchayats at all levels

· ending arbitrary suspensions and dissolutions of local bodies by State governments

· increasing the number of elected representatives relative to the size of the electorate with a view to bridging the gap between the elected and the electors now being filled by power brokers and vested interests

· widening opportunities for the deployment of India’s vast human resources in governance at the grassroots

· securing reservations for scheduled castes and tribes to meet Ambedkarite apprehensions about elite capture of PRIs

· securing reservations for women so as to fully involve them in the management of community affairs

· ensuring planning from below

· linking economic development to social justice, particularly with a view to meeting concerns of elite capture of PRIs in the interests of the better-off, upper-caste segments of the rural population

· detailing the responsibilities of PRIs

· setting an example with the first rural employment programme to be entrusted to the PRIs, namely, the Jawahar Rozgar Yojana launched in 1989 soon after the 64th amendment bill was tabled

· demonstration of faith in the people to manage their own affairs

Although Rajiv Gandhi failed by five votes to muster in the required two-thirds majority to amend the Constitution, his draft[6] remained on the anvil and, with a few changes (three of which were particularly significant), was eventually passed virtually unanimously by parliament (but, alas, after his assassination) in December 1992.

The three most significant alterations were the following.

· First, it established Gram Sabhas (village assemblies), comprising the entire adult population of the panchayat entitled to vote, to whom the elected panchayat would be responsible[7];

· Second, it provided that parliament, rather than the governor of a state, would legislate the law on Panchayat Raj[8]. This led to the establishment of the Dilip Bhuria Committee whose report constituted the basis of The Panchayats (Extension to Scheduled Areas) Act, 1996, [PESA][9] - the principal legal instrument available to Government to counter Naxalite violence born of tribal discontent with their exclusion from the development process;

· Third, instead of the district planning committee, a key component of the panchayat raj structure, being elected by all the urban municipalities and the rural panchayats, with the district panchayat president as the ex-officio chairperson, the district planning committee was to be elected by and from among only the elected members of the district panchayats and municipalities and it would be left to the State legislatures to determine the mode of electing or nominating the chairperson.

In the view of this writer, while the first two significant changes detailed above were progressive improvements on the Rajiv Gandhi draft, the third was retrograde and has not contributed to making the planning process as inclusive as it might have been. At the same time, it must be recognised that there was such determined opposition to the district planning committee in both joint parliamentary committees constituted in 1991 that without these changes, the concept itself was likely to have been dropped.

While the mandatory elements, relating essentially to the election of the Panchayat Raj Institutions (PRIs) and their urban counterparts, have been universally complied with[10], the operational aims and objectives have been left to state legislatures and state governments (and the union home ministry in respect of the union yerritories) to decide on. It is this that has resulted in such great variation in the practice of Panchayat Raj in different parts of the country and over time.

The 64th amendment provides the basis on which Panchayat Raj has been made ineluctable, irremovable and irreversible. At the same time, however, the uneven performance in empowerment has been written into the system because the principal responsibility for effective devolution vests in state legislatures and governments: (Alok and Chaubey, 2010: 219)

“..it would be for State Legislatures to lay down the legislative parameters of devolution and for the State Governments to give practical effect to these parameters. We recognise that the precise pattern of devolution might vary from State to State.”

Nearly two decades have passed since the constitution was amended. Panchayat Raj Institutions have now been established countrywide. Their establishment has coincided in time with the era of economic reforms. GDP growth rates have been driven up to unprecedented levels, but the self-delivery of public goods and services through PRIs, which was the very purpose of the constitutional amendments, remains most uneven and a distant prospect, even in States like Kerala and Karnataka most inclined towards effective Panchayat Raj. This has had the most deleterious consequences for inclusive growth.

Those currently in authority see it as a major stumbling block that the constitution leaves the processes of devolution to state legislatures/governments (and the union ministry of home affairs in regard to the union territories) (Planning Commission, 2010). Faced with this constitutional imperative, the centre pleads that there is little it can do beyond urging state governments to do more to promote the larger aims and objectives of panchayat raj or the fulfillment in spirit (although there is substantial compliance with the letter) of the constitutional amendments in this direction.

The central argument of this paper is that the current approach is not in accord with constitutional compulsions or political realities or the history of the evolution of panchayat raj in the country. Therefore, if a determined political will were evinced to make inclusive governance through PRIs the centerpiece of the endeavours towards inclusive growth, both the economic model of accelerated growth and the political model of full-fledged democracy might yet be saved. It is in these terms that the future of panchayat raj needs to be viewed.

III

Explosive Growth with Little Poverty Reduction

The basic questions we will be examining in this section is, first, why India is prospering, but Indians are not and second, whether through panchayat raj India can promote inclusive growth. We go on to argue that even if it is not possible to significantly raise percentile incomes in any reasonably short period of time for the vast majority of Indians, particularly those who are poor and vulnerable, it should be possible through inclusive governance, that is, through panchayat raj, to dramatically improve their standards of living by providing access to their basic entitlements of public goods and services, thereby ensuring inclusive development in the very near future (Rodriguez-Pose and Gill, 2003).

GDP Growth and consequent growth in Government revenues and spending:

Over this first millennial decade, India has soared from an annual average GDP growth rate of just under 6% in the first decade of reform (1992-93 to 2001-2002), which was only a whisker above the previous decadal growth rate, to one over the next five years (2003-2008) of approximately 9%. Although India weathered the global economic downturn rather more effectively than the developed world or even her more prosperous neighbours in South-East Asia, there was an estimated dip to 6.8% in anno horribilis 2008-09, but growth rates in 2009-10 and 2010-11 have risen to an estimated 8% and 8.6% respectively (Ministry of Finance, 2011:2).

Moreover, high growth combined with fiscal reforms have doubled treasury revenue receipts from Rs. 350 billion[11] in 2005-06 to an estimated Rs. 680 billion in 2010-11 and capital receipts by nearly three times from Rs. 1.58 trillion to an estimated Rs.4.26 trillion in 2010-11, allowing total central government expenditure to soar from Rs.5.06 trillion in 2005-06 to an estimated Rs. 11.09 trillion in 2010-11 (Ministry of Finance, 2011:45).

This, in turn, has facilitated the very impressive rise in Central budgetary outlays on social sector spending (including programmes targeted at a direct assault on extreme poverty) from about Rs.75 billion in 1994-95 to about Rs. 1.85 trillion provided for in fiscal 2011-12. This places India among the fastest growing spenders on programmes designed to target multi-dimensional poverty.

Notwithstanding this impressive fiscal performance both on the revenue and expenditure side of the Budget and, specifically, the exponential increase in social sector and anti-poverty spending, the downside has been a disturbing increase in inequalities of income and wealth, on the one hand, and unsatisfactory performance on human development indicators, on the other.

Income Inequality:

The National Council of Applied Economic Research (NCAER) has estimated that if India’s economy grows at an average of 8.75% per annum over the years 2010-2015 (Shukla 2010), as projected by the planning commission, then by the terminal year of the millennium development goals, 2015, the top 20% will increase their share of the country’s national income from 51% to 55% while the share of the bottom 20% will shrink from 6.1% to 5.5%. In absolute terms, the bottom 20% of India’s population would have added about Rs. 2000 per year to their annual income while the top 20% in urban India would have added as much as Rs. 75,000 – 37 times more than the poorest 20%— to their annual income.

The other deeply disturbing NCAER finding is that the poorer an Indian is, the more entrapped in personal debt he is likely to be. Thus, the poorest 5%, earning less than Rs.8 a day, consume Rs. 3590 a year against an income of Rs. 2145 a year: their share of expenditure is 167% of income. As one goes up the income scale, the share remains high and does not significantly taper off until we have reached three-quarters of the population. It is only the richest 5% whose percentile savings at 37% mimic the national net savings. It is this high level of personal indebtedness of the poor, combined with easy access to corporate debt for the rich, that necessitates our regarding not only the utterly destitute as poor but also the vulnerable as poor.

Recalling the Banerjee-Piketty study of 2001 based on income tax returns which estimated that over the 1990s, “real incomes of the top 1% of income earners increased by roughly 50%” and that “among this one per cent, the richest one per cent increased their real incomes by more than three times”, Rajesh Shukla and Ishan Bakshi of NCAER have concluded through comparing both the Theil Index and the Gini co-efficient that, “the all-India figures clearly show that income inequality has increased at both the rural as well as the urban levels,” and go on to say:

“The problem is not that the rich have got richer but that those at the bottom have not been provided the wherewithal to improve their earning capability…over time, the benefits of near double digit growth should have percolated to the economically disadvantaged sections of society, which has not happened” (Financial Express, 2011).

That there has been some improvement is undeniable. The poor have not become poorer. But the rich have become infinitely richer. What Nobel laureate Prof. Amartya Sen has described as the “extremely asymmetric development of the global economy” is also reflected in the extremely asymmetric development of the Indian economy. India’s widening Gini coefficient is a matter of deep concern, as much to our consciences as to the stability and sustainability of our political system.

Under the national poverty line, only 26% are considered “poor” although Prof. Suresh Tendulkar, chairman of the prime minister’s Economic Advisory Council, has done his bit to ask for the national poverty line to be redefined to bring 37% under that line. Most recently, the planning commission, in an affidavit filed in the supreme court of India on 20 September 2011, defined the rural poverty line as consumption in the amount of Rs.781 per capita per month and the urban poverty line at Rs. 965. This would work out to a below poverty line population of 407 million. There is widespread rejection of this “under-estimate.”

Indeed, even the concept of a single national poverty line is ethically, politically and economically flawed. It does not recognise the various components of multiple, multidimensional deprivation – ranging from the sectoral to the geographic to the social to the intergenerational, or its ‘drivers’, ‘maintainers’ and ‘interrupters’. Nor does it recognise the various categories of poverty, ranging from the “chronic poor” to the “severely poor” to the “moderately poor” to the “dynamic of poverty – movement into or out of poverty, or staying in it” (Mehta and Shepherd, 2006). To these categories of poverty, I would add the “transient poor” (as distinct from the “perennial poor”) by which I mean those thrown out of employment after years of holding a steady job who tend to become, as in Gujarat 2002, the vanguard of the ‘angry proletariat’ mobilized against a demonised minority. That is why a nuanced, graded and multi-deprivational definition of “poverty” should be the starting point of any serious frontal assault on poverty (Alkire and Santos, 2010).

In India, the National Commission (2007) for Enterprises in the Unorganised Sector had in its August 2007 Report on Conditions of Work and Promotion of Livelihoods in the Unorganised Sector identified the following categories of “poor”, each of which requires an individually tailored strategy for poverty alleviation and eventual eradication: “extremely poor”; “poor”; “marginally poor”; and “vulnerable”. While the report estimated that the number of “extremely poor” and “poor” had decreased during the first decade of post-1991 economic reforms, in 2004-05 they still comprised 237 million people; meanwhile the number of poor and vulnerable together numbered 836 million, or 77% of the population. Notwithstanding the rise in middle and high income persons to a significant 253 million, those crying out for help constitute three to four times the number who have succeeded in standing on their own feet (National Commission, 2007:6).

Instead of comprehending these complexities of multiple, multidimensional poverty, the national poverty line divides the entire population into two comfortable categories – BPL (Below Poverty Line) and Above Poverty Line (APL). This is “comfortable” for two reasons. First, poverty alleviation can then be reduced to the entirely feasible proposition of shifting some top-of-the-line BPL over the line into the APL category and calling it “poverty alleviation”. Second, it eliminates the distinction between the marginal survivor and the obscenely rich: all are APL and all, therefore, beneficiaries, in some aggregated manner, of the growth process.

Fortunately, recent academic and even policy-making interest in multi-dimensional poverty, notably the Oxford Initiative on Multidimensional Poverty, which has informed recent UN human development indices, have emphasised that poverty manifests itself in several inter-related dimensions.

Does the answer lie in exponentially increasing budgetary allocations for social sectors and anti-poverty programmes, as India has in fact done over the period of economic reforms? Could a frontal assault on poverty, ranging across the many dimensions of poverty result in the convergence of inter-linkages causing a multiplier spin-off effect on multi-dimensional poverty alleviation? Can we trace a broad causal connection between outlays and outcomes?

The Indian experience appears to indicate that while financial resources constitute an essential component of poverty alleviation, financial resources alone without effective community participation result in outcomes not being anywhere near commensurate with outlays. As noted earlier, India’s record on central budgetary outlays on socials sector spending (including programmes targeted at a direct assault on extreme poverty) has been most impressive, rising from about Rs.75 billion in 1994-95 to over Rs. 1.85 trillion provided for in fiscal year 2011-12. This makes India among the fastest growing spenders on programmes designed to target multi-dimensional poverty.

Yet, the UN human development index placed India at position 134 in the league ranking when it was first published in 1994 and the comparable 2009 index placed India at the exact same position: 134 (UN HDI, 2010: 138).

The World Food Programme tells us that half the world’s hungry live in India and the International Food Policy Research Institute’s most recent report classifies India’s food security index as “alarming” (Times of India, 2011:11). Notwithstanding India’s extraordinarily high growth rate, India remains a low-income, food deficit country in which as much as 35% of the population consumes less than 80% of its minimum human energy requirements, 9 out of 10 pregnant women suffer from malnutrition and anaemia, and, in consequence, 47% of children under the age of 5 are moderately to severely undernourished (WFP, 2008). FAO tells us that in the five years leading to the turn of the century, India added more newly hungry millions than the rest of the world put together (FAO, 2012). Action Aid has confirmed this for more recent years.

Why is there such a mismatch between the halting, uncertain, sporadic and un-sustained amelioration in the condition of the vast majority of Indians and growth in the booming service and manufacturing sectors of the Indian economy and the income of the entrepreneurial and highly skilled classes? Why is India prospering but most Indians are not? Why are higher outlays impacting so relatively little on all that makes life more bearable for the poor? And why is political attention to the issues of poverty so muted in comparison to the hurrahs we hear over GDP growth rates? For, alas, the poverty of our politics is reflected in the politics of our poverty!

In consequence, while there is no argument that augmented resources of the kind generated by economic liberalisation, are the necessary condition for poverty alleviation, it is becoming increasingly evident that exponential augmentation of anti-poverty spending is not the sufficient condition for even poverty alleviation, let alone poverty eradication.

In short, what, over and above increased spending, is required for accelerated growth to translate into inclusive growth? Could the answer lie in inclusive governance, that is, Panchayat Raj?

IV. Problems and Solutions

The latest devolution index issued by the Indian Institute of Public Administration (IIPA, 2011) which assesses the state of devolution to the panchayats comprises four elements:

· Panchayat Raj framework, that is, conformity to the provisions of the constitution to provide an “enabling environment” for Panchayat Raj

· Devolution of functions

· Devolution of finances

· Devolution of functionaries

These are then aggregated, with appropriate weightage, into an overall devolution index.[12]

The overall ranking puts Kerala on top at 70.01, with Karnataka and Sikkim in second and third place but a good 10 to 12 points behind Kerala. There is then a bunching of 5 States in the 50s; eight states in the 40s; four in the 30s; three in the 20s; and two in the 10s.

Rankings on other indices of devolution do not, however, conform uniformly to the overall ranking. For example, West Bengal, Madhya Pradesh and Tamil Nadu, which are the three highest on the framework index, are in 3rd, 7th and 6th place respectively in the overall ranking. Similarly, in the ranking on functional devolution, Gujarat is second but only 8th in the overall ranking, while Karnataka, second overall, drops to 5th position on functional devolution.

A cursory comparison of the Oxford Poverty and Human Development Index’s Multiple Deprivation (Mo) ranking of Indian states[13] with the devolution index (D) ranking by the IIPA would appear to bear out a positive correlation between effective devolution and lower multiple deprivation, especially if the income deprivation index is abstracted from the OPHI, that is, if one looks only at the dimensions of deprivation on public goods and services alone (which is what PRIs are concerned with).

It must be emphasized, however, that there are no simple lessons to be learned from the rankings about the impact of devolution on outcomes. The path to devolution requires dovetailing the devolution of functions, finances and functionaries within the framework of an effective constitution-conforming “enabling environment”. In other words, the more holistic the approach to implementing in letter and spirit all the related provisions of the constitution, the more effective Panchayat Raj will be. It would, therefore, be hasty to pass judgement on Panchayat Raj in any given state without reference to the enabling environment and the extent of effective devolution.

This underlines the point made in the introduction: the sporadic, halting and uneven progress of Panchayat Raj is due to a lack of clarity about the conceptual dimensions of this systemic revolution in responsive administration; this, of course, provides grist to the mill of the vested interests, principally the political-bureaucratic nexus, who stand to lose patronage, prestige and power if devolution proceeds apace.

The rationale for Panchayat Raj expounded by Mahatma Gandhi, Jawaharlal Nehru and Rajiv Gandhi, summarized in Section II of this chapter, and the data on income disparities given Section III, provide ground for advancing the proposition that participatory development is to be preferred to bureaucratic delivery mechanisms for inclusive governance to lead to inclusive growth.

In the absence of inclusive governance, the people at the grassroots, that is, the intended beneficiaries of poverty alleviation programmes, are left abjectly dependent on a bureaucratic delivery mechanism over which they have no effective control. The alternative system would be participatory development, or Panchayat Raj, where the people themselves are enabled to build their own future through elected representatives responsible to the local community and, therefore, responsive to their needs.

The Indian experience of the last six decades would appear to confirm that bureaucratic delivery mechanisms absorb a disproportionately high share of the earmarked expenditure: up to 85 paise in the rupee, said Rajiv Gandhi (based on one study commissioned by the planning commission of one programme in Bihar state); perhaps 83 paise says Dr. Kirit Parekh, former member of the planning commission, in an evaluation of one key programme, the Public Distribution System[14]; not quite so high, says the Prime Minister. We may thus approximate that 75 and 85% of expenditure on poverty alleviation schemes is absorbed by the delivery mechanism itself. No wonder outcomes are so derisory.

Worse, over a hundred schemes are delivered to the same set of beneficiaries through mutually insulated administrative silos, set up by central government ministries intent on jealously guarding their respective fiefdoms. Convergence of schemes at the delivery point becomes virtually impossible, thus depriving beneficiaries of the multiplier effect that would operate if the beneficiaries themselves, through their locally elected leaders, were to have the authority to plan and implement the utilisation of these resources in keeping with their own respective priorities.

The challenge being to convert accelerated growth into inclusive growth, the path favoured by government after government in India has been to exponentially increase spending on social sector and anti-poverty programmes in the expectation that a critical mass of expenditure will somehow be reached for the money thrown at the poor to become the straw they can clutch at to rise out of their misery. The intention is sound but commentator after commentator rues the fact that this has not worked.

The critical systemic fault lies in the present practice of implementation. Over a hundred social sector and poverty alleviation Centrally Sponsored Schemes (CSS)[15] are implemented by separate agencies. Each scheme, operating through parallel bodies set up by the central and state government bureaucracy in collaboration with civil society organisations, performs tasks that the constitution specifies might best be entrusted to the PRIs. In consequence, the beneficiaries remain hapless recipients of government/NGO largesse instead of actively participating in designing the schemes, adapting them to local community priorities and being effectively in charge of supervision, guidance and disciplinary action. The implementation agencies, therefore, look over their shoulder to those who entrusted the task to them instead of towards the beneficiaries for approval or course correction. In these circumstances, it is hardly surprising that Gram Sabhas (village assemblies) are reduced to mere spectators and rubber-stamps instead of providing “advice and consent” to the elected panchayat executive as is the democratic requirement when the executive is held responsible to the people. This proposition may be illustrated by a few specific examples. Primary education is a task proposed for elected local bodies. It is instead being run under a very well-funded CSS, the SSA - Sarva Siksha Abhiyan (“Education for All Movement”) through “parallel bodies”: the registered societies established by state education departments and NGOs largely or entirely dependent on Government funding. Physical achievements, such as the number of school buildings, are impressive; so are teacher recruitment, child coverage rates (including the coverage of girl students) and reduction of drop-out rates. But the highly respected Annual Survey of Education Report points out that a disturbingly high proportion of standard IV students cannot read the text books prescribed for standard II or even standard I (ASER Centre, 2010).

If Parent-Teacher associations were established under the panchayats and made responsible to the entire community through regular meetings of the Gram Sabha (village assemblies of all adult members, mandated in the Constitution), such democratic people-based supervision and control of primary education, instead of the present quasi-statist model, would, in all probability, lead to higher levels of learning. For, after all, the end result sought is not so much the number of school buildings but better educated children.

Certainly, the experience of Kerala, where all education including college education has been put under the three-tier panchayat system, would appear to bear this out. Kerala leads the country in the education sector. There is also considerable recognition of the progress made in this direction by an economically backward state like Rajasthan. The much-lauded move towards effective Panchayat Raj by Bihar in recent times is yet another indicator that such community supervision and control is possible not only in an educationally advanced state; it can also be undertaken in states not renowned for their educational advancement. The contrary example is that of Uttar Pradesh where poor levels of education are associated with poor performance in effective Panchayat Raj.

Similarly, SSA provides for school buildings but it is a separate ministry and quite separate CSS – the Total Sanitation Campaign run by the ministry of rural development – that has been assigned the responsibility for providing school toilets, without which girl students in rural India tend to be withdrawn on attaining puberty. By correcting such parallelism and lack of convergence, not only would sanitation improve but valuable lessons in hygiene would be learned by socially and economically deprived children and their families and the drop-out rate for girls at puberty would sharply decrease.

The political and administrative authority, that is, the central ministry concerned, the state departments concerned, and the NGOs concerned involving the PRIs because it would reduce their rigid control over their respective programmes, call into question their self-assessment of outcomes, and bring their actions under the supervision and disciplinary control of the local elected authority. The World Bank-funded Integrated Child Development Scheme (ICDS) to provide supplemental nutrition and child care for rural children, for instance, is run without reference to the PRIs although the eleventh schedule of the constitution specifically recommends at entry 25 that ICDS be placed under community supervision through the panchayats. They would point too to their accountability for expenditure to the Accountant General for Central Revenues (AGCR) and the Comptroller and Auditor General (CAG), a much-dreaded constitutional authority who reports directly to parliament and is responsible only to parliament’s premier standing committee, the Pubic Accounts Committee, chaired by a leading light of the opposition. Until, says the bureaucracy, their answerability to this awesome authority is modified, they have to account for each rupee that goes through their hands and that is much better done with their brethren in the permanent bureaucracy than in association with hundreds of thousands of transient elected panchayat representatives. The suggestions made in this regard for a thorough revamping of local bodies’ accounts by the AGCR itself and the Institute of Public Accountants (a body invariably headed by the immediate past CAG) (Sixth Round Table, 2004)[16], and a recent offer by the Indian Institute of Chartered Accountants to make their 500,000 members available for social audit have not carried much conviction, principally because it would be tantamount to asking turkeys to vote for Christmas.

Only a determined political will can overcome such surmountable objections. While some State governments have displayed the will, others have not. The leader of the pack over the last decade and more has been Kerala, with Karnataka running a close second, and some others – West Bengal, Tripura, Sikkim, Madhya Pradesh, Tamil Nadu, Gujarat, Rajasthan and Haryana – slowly catching up. But most others remain reluctant start-ups. Bihar is the dramatic exception: what Bihar has achieved in the last few years in promoting effective local self-government is the most encouraging development in Panchayat Raj (Alok and Chaubey, 2010:77).

In a briefing to members of parliament on the eve of the finalisation of the Approach to the Twelfth Five-Year Plan (2012-17), the deputy chairman of the planning commission underlined the point that while the economy had performed spectacularly on GDP growth rates, the single biggest failure of the government’s e”eleventh plan” (2007-12) had been the failure to secure inclusive growth (PRS Briefing, 2011). This notwithstanding the exponential increase in central government funds made available to States under some 139 CSS. He attributed the failure to translate dramatically augmented outlays into commensurate outcomes to “management failures” on the part of the States.

However, “management failure” is not an attribute of state governments alone; it is a general failure on the part of both the central and state governments to fashion an efficient and effective delivery system for public goods and services for those most desperately in need of inclusive growth. This notwithstanding the constitutional obligation to move from bureaucratic delivery to self-delivery through PRIs of programmes of economic development and social welfare.[17]

Therefore, whatever the primary responsibility of the state governments in this regard, it essentially lies in the hands of the central government to rise to its constitutional responsibilities under parts IX and IXA of the constitution by modifying CSS guidelines in such a manner as to ensure the centrality of PRIs in the planning and implementation of CSS. For, of the CSS, the prime minister, Dr. Manmohan Singh, had this to say years ago, in 2004, soon after assuming office:

“It is for us to honestly ask the question of whether we are making the best use of the money that we spend annually on the schemes being currently implemented? Do we have too many schemes, which are fragmented in concept, are rigidly designed and impose national parameters on highly differentiated local realities in terms of resource endowments or felt needs? Does the compartmentalization of our effort in multiple schemes in the Ministry or Ministries – both at the Centre and in the States – without a core vision make this investment sub-optimal? Before we set this right at the Centre we cannot be asking the States to do so” (GoI, 2006:50).

Recognising the fundamental need to systemically alter CSS guidelines, the cabinet secretary had, on the instructions of the prime minister, issued a circular to all central ministries in October 2004 asking them to modify their respective CSS guidelines “within three months” to ensure the centrality of the panchayats in “planning and implementation” as provided for in the constitution (specifically article 243G read with the Eleventh Schedule, as well as the corresponding article 243W in part IX A read with the Twelfth Schedule, and both with the provisions for district planning in Article 243 ZD).

An exercise to modify CSS guidelines had been undertaken, in consultation with the departmental secretaries concerned, by a committee chaired by Renuka Vishwanathan, special secretary in the cabinet secretariat, but as there was no high-level endorsement of the Renuka Vishwanathan Committee Report, nor any follow-up by the economically more influential ministries and entities concerned (ministry of finance, planning commission, PMO etc.), the Renuka Vishwanathan Report has withered on the vine.

Moreover, the National Development Council’s Empowered Committee on panchayat raj issues, comprising several state ministers of panchayat raj and chaired by the author in his previous capacity as minister of panchayat raj, had in 2008 submitted a Report unanimously recommending a host of steps for promoting the centrality of PRIs, that is, inclusive governance for inclusive growth. Three years on, the planning commission has yet to submit the report for ratification to the National Development Council.

It is not enough for the Planning Commission to simply attribute the failure of inclusive growth to “management failure” on the part of state governments. A pro-active role by the central government, especially in respect of CSS, could make a breathtaking difference to the more efficient and effective delivery of public goods and services to the poor and vulnerable to provide for a measure of equity in the face of the inescapable widening of inequalities in income and wealth promoted by the present high-growth model.

Equity now, not in some distant future, is essential for democracy to survive and development to be sustained. This is not hyperbole but common sense: already close to one-third of the districts of India, particularly districts with a dominant tribal population, is convulsed in Maoist/Naxalite insurgencies fuelled by displacement and deprivation (Home Ministry, 2011; GoI, 2011). Grassroots development through grassroots institutions of democracy, as provided for in The Provisions of The Panchayats (Extension to Scheduled Areas) Act, 1996, would do more to bring the tribal people back to the mainstream of democracy and development than any other single measure.[18]

The key lies in designing CSS on the basis of scientific activity mapping based on the principle of subsidiarity – which holds that anything that can be done at the lower level should be done at that level and no higher level. Such carefully and consensually structured activity maps, annexed to each set of CSS guidelines, might detail the functions to be devolved respectively to the village, intermediate and district levels, and thus provide the basis on which the devolution of finances is to be patterned, matched by a parallel devolution of functionaries to each level of self-governance, in rural as much as in urban localities.

Such empowerment will enable the local community to deploy the financial resources made available to them (and mobilised by them) to themselves plan and implement their own programmes of grassroots development and poverty eradication instead of depending on the grudging patronage of higher-level politicians, who have their own agenda, and an indifferent, self-serving local bureaucracy: grassroots development through grassroots democracy.

The imperative of inclusive growth has been grasped, but the imperative of inclusive governance has been barely incorporated into the conception and implementation of the eleventh plan or even key flagship programmes for inclusion, equity and social justice notwithstanding the prime minister’s public endorsement of the centrality of inclusive governance to inclusive growth.

Provided the required political will is displayed, and there is political mobilisation at the highest level to secure consensus, it should be possible to effect a systemic revolution in the delivery of basic goods and services. Nothing would more dramatically and immediately drive up human development indices. To this end, clarity in conception and sincerity in implementation is required on several points, particularly the following: Panchayat Raj is not a panacea for ending all the ills of the delivery mechanism but a systemic alternative to replacing a bureaucratic delivery mechanism that has failed to rise to the challenge. To be effective, Panchayat Raj has to be conceived and implemented holistically: where panchayats are elected but not empowered; where the local bureaucracy and technocracy is not made responsible to the elected authority; where the president of the panchayat does not function as a president-in-council consulting and securing the approval of his/her fellow-panchayat members; where functions (activities) are devolved on paper but are not accompanied by a parallel devolution of finances and functionaries; where the district planning committee is either non-functional or dysfunctional or dominated by non-PRI chairpersons nominated by the state or willfully ignored by the state and central planning authorities – in all such cases, panchayat raj will be sub-optimal or worse in its results. Securing the independence and strengthening of the state election authority to ensure free, fair and clean elections must be a continuing challenge, calling for the adoption of best practices evolved in different States.

While the most effective counter to corruption in PRIs would be through social audit undertaken in close association with committed NGOs, formal audit of local bodies along the lines recommended by the CAG and the Institute of Public Accountants would diminish, if not eliminate, corrosive corruption at the local level. In any case, the burden of leakages through currently rampant bureaucratic corruption together with the high administrative costs would be lowered through a systemic change to participatory development.

Community participation cannot end with the vote; it must translate into regular, informed and effective meetings of the Gram Sabha: to this end, the codification by legislation of the authority, powers and duties of the Gram Sabha would considerably augment the role and responsibility of the Gram Sabhas, the essential countervailing power to the abuse of power by the elected office-bearers in the PRIs and the local bureaucracy. It stands to reason that the more effective the outcome of Gram Sabha meetings, the greater would be the effective empowerment of the local community and the more enthusiastic and purposeful would be attendance at Gram Sabha meetings. An elected panchayat executive must function in a collegiate manner and be responsible to the Gram Sabha. In the absence of this, there would inevitably be abuse of power by those elected by the community but not responsible to them. This calls for reconsideration of the constitutional provision that constructs a fundamentally parliamentary system of Panchayat Raj but then superimposes a presidential authority by allowing for the direct election of village panchayat presidents who then do not feel the need to even consult with their panchayat members.

To render office-bearers in PRIs more accountable for their actions, the periodicity of reservations needs to be revisited. In most states/UTs, the period of reservations is limited to a single term, making re-election rare. This facilitates elite capture (Palanithurai, 2010). Extending reservations to at least two and, preferably, three terms would lead to greater social equity as office-bearers would mature in office and would be compelled to accord greater attention to the more disadvantaged sections of the village population in order to secure re-election.

Apart from redesigning CSS/ACA to ensure the centrality of PRIs in planning and implementation, there is pressing need to vastly augment the present scheme of incentivizing States, on the one hand, to promote further effective devolution and, on the other, to incentivize PRIs to be more transparent in their transactions and more accountable for their actions.

Perhaps the most urgent requirement of all is to cap, reverse and eliminate tribal unrest, insurgency and insurrection by prioritising the implementation of the Panchayats (Extension to Scheduled Areas) Act of 1996. It could be the last bulwark against a people’s uprising in tribal areas spread over nearly a third of the country, assessed by the prime minister, as the “most serious challenge” to India’s internal security.

These are pointers to improvements in legislation or institutional design that would progressively ensure better and cleaner Panchayat Raj. Many of these and others are detailed in the elaborate roadmap prepared by the ministry of Panchayat Raj (2011). These improvements are flagged to stopper the frequently heard cry of despair that points to flaws in Panchayat Raj with the intention of ending the experiment altogether. That would be to throw the baby out with the bath water. To paraphrase a 1954 quote from the A.D. Gorwala Committee report on cooperatives[19] that enjoyed considerable renown in its day: Panchayat Raj has failed. Panchayat Raj must succeed.”

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[1]The author would like to acknowledge his profound debt to Prof. J.P. Faguet of the London School of Economics, Dr. David Malone of the International Development Research Centre, Ottawa, and Dr. Shaandana Mohmand of the Institute of Development Studies, Brighton, as also to his daughter, Yamini Aiyar of Accountability Initiative, Centre for Policy Research, New Delhi for their invaluable assistance in guiding this paper to a measure of academic respectability from the idiom of polemical politics with which he is more familiar. Of course, responsibility for the end-product remains, warts and all, with the author. The author would also like to record his appreciation of the assistance in research rendered by Prof. V.N. Alok of the Indian Institute of Public Administration, New Delhi, and his colleague, Dr. P.K. Chaubey, as also Dr. Rajesh Shukla of the National Centre for Applied Economic Research, New Delhi, the principal scholar in contemporary India of income and wealth distribution. He also wishes to most sincerely thank Dr. Nupur Tiwari, his long-standing senior research consultant, for diligently putting together his various writings and speeches on the subject, searching out previous researches and references and pointing him in the right direction when he went astray (as he frequently did), as well as helping immensely with the footnotes. So also are thanks due to his young research assistant, Vandana Seth. Anirban Bandyopadhaya of Jawaharlal Nehru University was also of assistance.
[2] In common parlance, rural local self-government is referred to as Panchayati Raj or Governance of the Panchayats; purists insist, however, that grammatically the correct expression should be Panchayat Raj or Governance by the Panchayats. I have here followed the grammarians’ injunction.
[3] See Dr. B.R. Ambedkar’s Memorandum to the Constituent Assembly of 15 March 1947, especially his proposals for ‘Protection Against Communal Executive’.
[4] Variously called the District Magistrate or Deputy Commissioner in different parts of the country.
[5] Rajiv Gandhi, Selected Speeches and Writings, 1988, Vol. IV, Publications Division, New Delhi, speech to District Magistrates at Jaipur, 30 April 1988, p. 156 and p.161
[6] Two documents together became in 1988-89 the basis for the draft amendment to the constitution that inaugurated the present era of Panchayat Raj. The first was the outline constitutional amendments suggested by veteran socialist Asoka Mehta and the second was a draft of a possible constitutional amendment prepared in 1986 by another renowned jurist, L.M. Singhvi.
[7] According to article 243 A, Part IX of the Constitution of India, “A Gram sabha may exercise such powers and perform such functions at the village level as the Legislature of a Sate may, by law, provide”
[8] According to article 243 M (4) (b):”Parliament may by law extend the provisions of this Part to the Scheduled areas and the tribal areas…” referred to in article 244, read with the fifth schedule of the constitution
[9] Passed unanimously by both Houses in December 1996.
10] Alok and Chaubey (2010: 10, 11) furnishes the details of the ‘mandatory’ provisions.
[11] The exchange rate of the Indian Rupee hovers at Rs.40-45 to the US dollar.
[12] The methodology and mathematical formulae used might be seen at Appendix 4.5, p.32 of the Report
[13] OHPI Working Paper No. 15, Appendix 6, pp.44-47, attached to this paper, Attachment III
[14]Sarvekshana, Jan-March 1994, pp.1-34
[15] and ACA – Additional Central Assistance - allocated at its discretion by the planning commission
[16].
[17] See Article 243G, read with article 243ZD, and the eleven schedule of the constitution of India
[18] Speeches and articles by the author dilating on this will be readily made available by the author, who might be contacted at msaiyar@hotmail.com
[19] “Cooperatives have failed. Cooperatives must succeed.”

Inclusive Governance for Inclusive Development
The History, Politics and Economics of Panchayat Raj
Mani Shankar Aiyar, Government of India
September 2013

Abstract