Inclusive Growth through Inclusive Governance:

The Imperative of Panchayat Raj

by

Mani Shankar Aiyar, MP

India's first-ever Union Minister of Panchayati Raj (2004-09)

Distinguished Chairman, Mihir Shahji, Member, Planning Commission,

Friends, Colleagues, Comrades, and fellow"'left-wing jhola-wallahs",

Although "Inclusive Growth" remains the arch-stone of the Eleventh Plan, the

Prime Minister's injunction of 16 January 2009 that "Inclusive Growth is not

possible without Inclusive Governance", an affirmation not repeated since

then, appears to be observed primarily in the breach.

The forthcoming mid-term review of the Eleventh Plan affords an unique

opportunity, particularly to Chairman Mihir Shahji, to revisit the extant

methodology of "delivered development" to see whether its radical recasting as

"participative development" would not more effectively and efficiently ensure

access by local communities to their entitlements of public goods and services,

such as illiteracy eradication, primary education, primary health, sound

sanitation, an affordable and well-run public distribution system, basic rural

infrastructure etc., in short, all those 29 subjects illustratively listed in the

Eleventh Schedule to the Constitution to operationalise the imperative of

empowering local communities through Panchayat Raj to secure "institutions

of self-government" at the grassroots - grassroots development through

grassroots democracy (Article 243G).

1

These entitlements are barely reaching the intended beneficiaries because too

large and unacceptable a proportion of funds set aside for poverty alleviation, and

for rural (and urban) welfare and rural (and urban) development are swallowed by

the overloaded bureaucratic machinery in collusion with comprador civil society

organisations. Former Prime Minister Rajiv Gandhi had made a rough back-of-the

envelope calculation that perhaps 85% of budgetary allocations for such

programmes is absorbed by administrative costs. It is understood that a

subsequent estimate by the Planning Commission during the period 2004-09

indicated that the more accurately calculated figure might be 83%1. Some doubt

has been shed on even this estimate, but it would be safe to very conservatively

estimate that up to a quarter perhaps of all such budgetary allocations go into

administering these programmes, each of which has its own delivery silo,

insulated from all other delivery silos, thus effectively forestalling convergence at

the beneficiaries-end and blocking planning and implementation of these

resources by elected local bodies as envisaged in the language of the 73rd

and 74th

amendments, now included as Part IX and Part IXA of the Constitution.

In any case, whatever the precise figure and whatever the differences between

different programmes, it is matter of deep concern that such high delivery costs

are seriously depriving the aam aadmi of his and her entitlements, entitlements

voted by Parliament and, therefore, essential to the well-being of our democracy.

It is, therefore, deeply disturbing to see the dismissive tone of the Government

with regard to the shocking finding of the UNDP in its latest Human

Development report, released in India in October 2009 (ironically by the Deputy

Chairman of the Planning Commission himself - history's "cunning passages"

never cease!) that over the last fifteen years, during which

___________________________________________

1 Cf.Dr. Kirit Parikh, former Member, Planning Commission, in a TV programme hosted by Pankaj

Pachauri on NDTV (Hindi) in which I also participated, June 2009

1

anti-poverty and rural and urban welfare/development spending by the Centre has

risen fifteen times, that India's relative ranking on the UN Human Development

Index has risen from 134 to - well - 134! Outcomes are clearly totally non-

commensurate with outlays. And yet there is little commitment to a radical systemic

overhauling of the delivery system to make local bodies responsible for the delivery

to their communities of the community's entitlements of public goods and services.

Only Empowerment will lead to Entitlements, and only Empowerment and

Entitlements will together lead to Enrichment - the three Es to be achieved through

the three Fs - the evolution of Functions, Finances and Functionaries to the elected

institutions of local self-government as sanctioned and sanctified by the

Constitution. Short of that happening, India will prosper but Indians will not. And

accelerated growth, with its inevitable concomitant of accelerating disparities, could

destabilise our entire democratic framework - India's single greatest achievement

since Independence - as it has already begun doing in a third of our insurgency-

ridden districts.

There is something slightly bogus about slogans of "India Shining" and the

mouth-watering prospect on offer of India overtaking the GDP of the United

States by 2050 to join China in attaining global economic super-power status

within the lifetime of Asian children born in this decade. If a causal relationship

could be established between GDP growth and comparable HDI growth, the

growth in GDP/ per capita income would suffice as an index of progress. But if

the people are not inclusively made part of the growth process, I am not sure that

such growth is either economically or politically sustainable or, more importantly,

ethically justifiable2.

_____________________________________

2 Cf. Jndia Development Report 2008. Indira Gandhi Institute of Development Research, OUP, New Delhi, R. Radhakrishna and S. Chandrasekhar, in Overview - Growth: Achievements and Distress: “..there has been no significant acceleration in the process of poverty reduction in 1980-2005 despite an acceleration in the growth of per capita GDP." (Growth and Poverty Nexus p.5) In their Concluding Observations p. 18, they add, "The trickle down process of growth has been weak since growth is not located in sectors where labour is concentrated (for example, agriculture) and in states where poverty is

3

The World Food Programme tells us that half of world‟s hungry live in lndia.

Which is the more significant reality: our being the second-fastest growing

economy in the world - or that notwithstanding that extraordinarily high

growth rate we remain 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, where 9 out of 10 pregnant women suffer from

malnutrition and anaemia, and, in consequence, 47% of children under the age

of S are moderately to severely undernourished?3. 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 together4. Action Aid has just

confirmed this for more recent years.

On education inequality, I can hardly better Prof. Bardhan:

"Most people don't know that India's educational inequality is one of

the worst in the world: according to World Bank estimates, the Gini

co-efficient of the distribution of adult schooling years in the

Population, a crude measure of educational inequality, was 0.56 in

India in 1998-2000 which is not just higher than 0.37 in China in

2000, but even higher than almost all Latin American countries."5

When it comes to land distribution, Bardhan estimates the Gini coefficient of

asset inequality in rural India at 0.62 in 2002 as against China's 0.49 in the

same year,6 (How much the fair distribution of land contributes to equality is

made startlingly evident in the case of Ethiopia, one of the poorest Low HDI

countries in the world but with a Gini Index ranking comparable to the best:

concentrated (for example, Bihar, Orissa, Madhya Pradesh and Uttar Pradesh).” Their concern is that “The

present pattern of growth has the potential for widening inequality” and “if inequality increases beyond a

limit, social disarticulation would set in that may become a major barrier to growth.” 3World Food Programme 2008 www.wfp.org 4Food and Agriculuture Organisation www.faostat.fao.org 5Bardhan, supra 6Bardhan, op.cit

on par with the Czech Republic and not much below star performers like

Norway!)7

In consequence, there is a deeply disturbing disjunction between rapid GDP

growth and the slow- pace of HDI amelioration (that is, the difference between

the plus First World consumption patterns of the privileged and the abysmal

living conditions of the deprived which characterises and defines South Asia).

While we are told that India under economic reforms has zoomed from the nadir

of the 'Hindu rate of growth8 to being today the second-fastest growing economy

in the world - second only, as in everything, to China!- what is mentioned only

sotto voce, if it is bruited about at all, is that in the last fifteen years, the fruits of

accelerated growth have been so disproportionately distributed, so unfairly

skewed, that whereas in terms of dollar billionaires in 2007-08 we were rated

fourth in the world in terms of numbers (and second in the world in terms of their

collective assets)9, the average Indian - the aam admi - stagnates in comparative

terms exactly where he was an aeon ago.

Of course, in absolute numbers, and therefore in terms of HDI values, there has

been improvement, for the Report tells us that India has moved up from an HDI

value of 0.427 in 1980 to 0.511 in 1995 to 0.612 in 2007, thus raising the HDI

value by 0.101 in the last 12 years compared to 0.084 in the previous 15 years,

reflecting marginally higher average incomes across income categories,

___________________________ 7Ethiopia 29.8

Czech/Norway 25.8

UN HDR 2009, op. cit. Table M

8The fact is that in the first decade of planning, the Indian GDP growth rate was raised by as much as a factor of 5 over the growth rate bequeathed us by British colonial rule. British India's average annual growth rates from 1914 to 1947 have been variously estimated by economists Angus Maddison, Alan Ileston and Sivasubramonian at between 0.73% and 1.22%. (Bipin Chandra, "The Colonial Legacy" in "The Indian Economy: Problems and Prospects" ed. Bimal Jalan, Penguin, 1997, Table 4, p. 12) So, 3.5-4% represented an exponential leap in growth rates over the past and, therefore, not to be denigrated. 9P. Sainath, sourced to http:/www.forbes.com/fdc/welcome__mjx.shtm and cited in a lecture to the Bureau of Parliamentary Studies and Training, New Delhi, 7.9.2007. The position has altered since last year's meltdown and is changing again with the present recovery.

5

marginally increased spending and marginally better results in poverty alleviation10.

The best argument for higher growth, even if it stretches inequality, is well

illustrated by India's example of high GDP growth and lowered taxes having so

swollen Government revenues that Government expenditure on anti-poverty

spending has risen exponentially (if in nominal terms) by an astonishing factor of 15

over the last 15 years - from Central budget allocations of around Rs.7500 crore in

1994-95 to over Rs. 125,000 crore in 2009-10 (further upped to around Rs. 135,000

crore in the current fiscal)11

.

Tragically - and this is the running theme of my argument - outlays have had no

relationship with outcomes, outcomes having been nowhere near commensurate

with dramatically increased outlays. Indeed, through the most accelerated phase of

growth in India's economic history, which is the first decade of this century, we

have actually slipped in our ranking on the UN HDL Our relative position on the

HDI has disturbingly deteriorated in conjunction with our rise in GDP growth, as

illustrated by our sinking from 126 to 128 to 132 to 134 over precisely the period of

accelerating growth (2004-2007), even as, curiously, our worst performance in

GDP growth since

10 Extracted from Human Development Report 2009. Table G, "Human Development

Index Trends" pp. 167-170:

1980 1995 2007 India 0.427 0.511 0.612 Pakistan 0.402 0.469 0 572 Nepal 0.309 0.436 0.553 Bangladesh 0.328 0.415 0.543 Sri Lanka 0.649 0.696 0759 Afghanistan …........................... …… 0 352 Maldives ............................ ------- 0771

China 0.533 0.657 0.772

11 At an exchange rate of Rs.40 to the US dollar, this means the Central Government allocation for such programmes rose from USD 1875 million in 1994-95 to over USD 30,000 million in 2008-09 further upped to around USD 3 1.250 million in the current fiscal.

6

economic reforms (1997-2002) coincided with our rising on the UN HDI from

132 to 12712!

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?13

The problem lies in the answer to the second question - the muted attention given

to issues of poverty alleviation relative to the race to economic superpower status

- even as the solution lies in the answer to the first question -why outcomes are

non-commensurate with outlays.

The Prime Minister's Chief Economic Adviser, Prof. Suresh Tendulkar, has

invoked Simon Kuznetz's famous argument in his Presidential Address to the

American Economics Association on 29 December 1954 that while widening

inequalities of income and wealth were an inevitable concomitant of the growth

process, this did not amount to the sacrifice of equity because growth is a tide

that raises all boats, that everyone benefited from higher growth rates.

_______________________________________________________________________

12" India's ranking on the UN HDI

1997 132

1998 128

1999 115

2000 124

2001 127

2002 127

2003 127

2004 126

2005 128

2006 132

2007 134

(Compiled from successive UN HDI report. It may be noted that the base year of the data is two years old. Thus, the Report for 1999 will refer to the ranking in 1997 and the report for 209 to the ranking in 2007.

However, changes in the total numbers of countries surveyed and in methodology call for caution in comparing ranking over the years).

13cf. N.C.B. Nath, Political Perspectives on Chronic Poverty” in A.K.Mehta and A. Shepherd (ed), “Chronic Poverty and Development Policy in India”, Sage, New Delhi, 2006, pp 248-271:”…the political class is, by and

large, not equipped or willing to deal with chronic poverty problems” (p.266). See also Table 8.3 at pp. 258-

259 which provides a useful compendium of “Selected Opinions” on “Poverty Reduction and Political Regimes”

7

even if the higher the growth rate the wider the disparity14

. This comforting

doctrine came at the of two centuries of the Industrial Revolution in Bntan, a

century after the US economy had emerged as the largest in the world and,

post the Great Depression and the Second World War, after the miracle of

American Capitalism had, as John Kenneth Galbraith brilliantly demonstrated in

his book of that name, shown the way to sustained progress in dance of

traditional gloomy business cycle theories much in the manner that the bumble

bee flies whatever the laws of aerodynamics might say.

In India, the Kuznetz thesis has consciously or unconsciously influenced the

relentless pursuit of ever higher and ever more sustained growth rates, the

equity implications being sidelined in the much-vaunted belief that growth is

good for everyone even if some are fast-tracked while the majority .imp

Forward.

Let me outline the problem first before I move to the solution.

The politics of our poverty is reflected in the poverty of our politics.

Even the concept of a single National Poverty Line is ethically, politically and

economically flawed for not recognizing either 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' - or 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"15 to

when I would add the "transient poor" (as distinct from the "perennial poor")

by which I mean those thrown out of employment after year, of holding a

steady job who tend to become, as in Gujarat 2002, the vanguard of

14”India‟s Economy : Performance and Challenges-Essays in honour of Montek Singh Ahluwalia:.

OUP, 2010 p.82-99 “Inequality and Equity during Rapid Growth Process” 15Mehta and Shepherd, op.cit, “Chronic Poverty in India: An Introduction” pp.23-52

8

the 'angry proletariat' mobilized against a demonised minority - pace Hitler and the

Chief Minister of Gujarat.

The National Commission for Enterprises in the Unorganised Sector has 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

number of "extremely poor" and ''poor'' has decreased during the firs decade of post-

1991 economicreforms, 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 feet16

.

Instead of comprehending these complexities of multiple, multidimensional

poverty, the National Poverty Line divides the entire population into two

comfortable categories - the BPL (Below Poverty Line, about Rs.10 per day) and

the 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, because it eliminates the tiresome distinction

between the marginal survivor and the obscenely rich: all

______________________________________________________________

16Table 1.2. p.6.

Home Minister P.Chidambaram, in a speech to a Congress party function in Vigyan Bhawan on 26

March 2010 has cast doubt on the accuracy of the Arjun Sengupta Committee‟s assessment but, to the

best of this writer‟s knowledge, Government have neither give their reasons for this belated finding that

Sengupta might be wrong nor alternative income estimates for the share of our population living on less

than Rs.20 per day, which is the basis of Sengupta‟s calculation of the “poor and vulnerable”. It may be

noted that Sengupta‟s cut-off line of Rs. 20 per day is the minimum wage of Rs. 100 per day

recommended by the Union Government for the Mahatma Gandhi National Rural Employment

Programme but subject to the caveat that only one member of any family can be given employment on

any given day under the programme: this works out to a per capita wage of Rs. 20 for a family of five.

Almost no Indian poor or vulnerable rural family comprises less than five persons.

9

are APL and all, therefore, beneficiaries, in some aggregated manner, of the

growth process.

Under the National Poverty Line, only 26% are considered "poor"17

whereas by

any reasonable definition of poverty 77% at least ought to be regarded as "poor".

That is why a nuanced, graded and multi-deprivational definition of "poverty"

should be the starting point of any really serious frontal assault on poverty.

Alas, the poor are yet to find their voice, even as the media (for that matter, the

entire establishment) have become the megaphone of the classes that are

prospering. The preference for growth over social justice, indeed, the argument

that economic growth is the road to social justice, is advocated -with considerable

vigour, I might add - by the "dismal science of economics" on the classroom

economics argument bluntly stated by Prof. Bardhan (even if he strongly

disagrees with the argument) that:

"Preoccupation with inequality is harmful even for the poor because more

equity is achieved only at the expense of efficiency and economic growth."18

Governance in a time of rapid growth does indeed privilege growth over equity -

and justifies such privileging on the irrefutable ground that as growth, and growth

alone, provides the resources for the war on poverty, equity at the expense of

growth leads only to the redistribution of poverty. Hence the mocking of the

slogan which won Indira Gandhi an unbelievable two-thirds majority against all

comers combined together in the 1971 general elections: "Woh kehte hain Indira

hatao; hum kehte hain Garibi hatao". (“They say: Remove Indira; We say: Remove

Poverty")

_______________________________________________________________

17The recent Tendulkar Committee on Poverty estimates has raised that statistical illusion, promoted by the NDA's Minister of Statistics, Arun Shourie, to nearer 35%

18" Bardhan, supra

10

The contemporary establishment view is that the promotion of prosperity for some,

even if it means for the moment delaying distributive justice for most, should be

encouraged if we are to redistribute prosperity rather than redistribute poverty.

While, therefore, overcoming poverty remains the overarching goal of proclaimed

economic policy, the sensible first principle of economic administration, it is said,

ought to lie in avoiding sentimental slogan-mongering and recognising that

widening disparities are an inevitable concomitant of higher growth, so that higher

growth becomes the top priority for that will lead, eventually, to the redistribution

of prosperity on a tide that lifts all boats (even if the rising tide merely laps at the

low-lying boats while raising all yachts to tsunami heights!19

)

I concede the validity of the argument that vastly augmented government revenues

do indeed constitute the necessary precondition for mounting a battering of the

citadel of poverty. Indian fiscal policy post-economic reforms has definitively

demonstrated that higher growth combined with lower taxes so amazingly boosts

Government revenues that through the pumping of vast additional resources into

the War on Poverty, accelerated growth almost simultaneously translates into

inclusive growth. Unfortunately, it doesn't.

If it did, the World Bank's GDP/per capita Growth Indicators would be reflected in

similar trends on the UN Human Development Index. As we have already seen,

they are not; nor is there an identifiable gestation period over which the two tend

to come into alignment.

In consequence, while there is no argument that augmented resources, of the kind

generated by economic liberalisation, are the necessary condition for 19

Sitaram Yechury has argued that “ while the taxes foregone through subsidies to the corporates was

Rs. 4,28,000 crore annually, the allocation for Public Distribution System was Rs.52,489 crore”, nine

times less. (The Hindu, Chennai, 27.10.09). It may be noted Yechury is a top-ranking leader of the

Communist Party of India (Marxist).

II

Poverty alleviation, it is becoming increasingly evident in South Asia 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? The answer, I fervently believe, lies in

Inclusive Governance.

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,

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.

Not only is responsive bureaucratic administration almost a contradiction in

terms, 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; perhaps 83

paise says the Planning Commission in a recent evaluation; not quite so high, says

the Prime Minister. We can leave it to experts to argue how many angels can

dance on the head of a pin; for our purposes, it is enough to note that 75%-85% of

expenditure on poverty alleviation schemes is absorbed by the delivery

mechanism itself. No wonder outcomes are so derisory.

Worse, precisely because (in India) 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

12

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.

So far, I am on well-trodden ground. But the argument for a systemic reordering of

the delivery mechanism to shift from bureaucratic delivery to participatory

development runs much deeper. Let me elaborate.

In Nehruvian independent India, Constitutional governance and

Parliamentary democracy, combined with the integration of the princely states and

fairly far-reaching land reforms, led to a rapid dismantling of the dominant and

crushing feudalism of the colonial and pre-colonial period, promoting the political

and social Empowerment of a rising middle class. That middle class quickly secured

privileged access to their Entitlements, particularly in the two key human

development areas of education and health. From the earliest phases of planned

development, the Nehruvian State furnished the very best of world-class education

and technical training at perhaps the world's cheapest costs to the brightest in the

middle class through good to very good to truly outstanding Central Universities, a

network of Indian Institutes of Technology and Indian Institutes of

Management, and a large number of excellent medical schools, including the famed

All-India Institute of Medical Sciences20

. More recently, private engineering and

technical training colleges, general educational institutions and schools of business,

as also private universities like Amity and private hospitals like Apollo and Max have

ensured a wide ambit of educational and health opportunities to those that can afford

to pay for them. Most recently of

20It is the graduates of these institutions who are spearheading India‟s march to the vanguard in

Information Technology and making the health services of the United Kingdom and the United States

possible. It is also they who are providing the world with Indian expertise in entrepreneurship, business

management, finance and banking. There is, however, a downside to the story. In a lecture at the FICCI

auditorium, New Delhi, in the mid-Nineties, which I cite from memory, Prof. Amartya Sen pointed out

that while there were six times as many graduates and post-graduates that India was churning out every

year than China, China on the other hand, had six times a many as Indian children in primary school.

That perhaps accounts for where China has soared and where India has gone wrong.

13

all, Government has introduced legislation to enable foreign universities to bring

the best of their higher education to that small sliver of the Indian population

(which is also the small sliver of the rich and the famous) that gets sufficient

quality primary, secondary, and higher secondary education to even aspire for

higher education.

Thus Empowerment has led to Entitlements. And the combination of

Empowerment and Entitlements has given India's middle class Enrichment on a

scale undreamt of a generation or two ago. This is what has made India such a fast-

and high-rising star on the international economic stage. The sheer size of our

middle class make us, in absolute numbers, a huge market and a mouth-watering

investment destination.

But because the numbers of our desperately poor are much, very much larger, and

their living conditions among the very worst in the world, and with the

amelioration in their condition being so pathetically slow, I had earlier in this

Address described the slogans of "India Shining" and "South Asia Rising" as

"slightly bogus".

The challenge is to convert accelerated growth into inclusive growth - and the

path favoured by Government after Government in India, has been to

exponentially increase spending on 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 implementation has been hopeless. But, as is the wont of economists as a

tribe, they point the finger of accusation -dreadfully poor implementation - and

then think it is someone else's job to find the solution21

.

________________________________________________________________

21See, for example, "The India Mosaic", Academic Foundation, New Delhi, 2004, edited for the Rajiv Gandhi Foundation by Bibek Debroy, who suggested my name for this Inaugural Address: his own contribution to the volume, "The Idea of India and the Economic Tryst" quotes Nehru's famous 'Tryst

14

What then is the systemic solution? I suggest that it lies in replicating for the poor

the same pattern that has brought such impressive, growing and assured prosperity

to our burgeoning middle classes: Empowerment leading to Entitlements and the

two together to Enrichment: E-E-E.

Not until the disadvantaged and the deprived are politically and socially

empowered to build their own lives will they secure genuine and broad-spectrum

access to their basic entitlements. Our experience of serving up their Entitlements

of primary education, minimum health facilities, the public distribution system and

rural infrastructure through the district and sub-district level bureaucracy and

technocracy has been the single biggest failure of governance at the grassroots.

Patchy, sporadic access to Entitlements in the absence of Empowerment to secure

Entitlements is principally what has rendered outcomes so hopelessly out of

alignment with outlays. It is only through the Empowerment that grassroots

democracy brings that the poor will secure their Entitlement to grassroots

development and from there to Enrichment for all.

__________________________________________________________________

with Destiny' speech: "The service of India means the service of the millions who suffer. It means the ending of poverty and ignorance and disease and inequality of opportunity", and then goes on to deplore, in much the same terms used here, how distant we are from that goal. But beyond saying "The national goal cannot be accepted as a national one without a buy-in by these deprived sections" there is little by way of a roadmap as to how this might be achieved.

Similarly, the 8-point programme for dealing with chronic poverty suggested by Mehta and Shepherd,

op.cit. pp. 46-48, includes a number of normative recommendations but not a word on governance issues.

Arjun Sengupta's "Reforms. Equity and the IMF, Har-Anand, New Delhi, 2001, makes the case at pp.255-256 that "Development, however, is not just a matter of increasing the GDP" and touches the key point that "in social sector investments, there is so much fat and wastage that a proper system of delivering public expenditure through government organisations and Panchayats might have so much impact on productivity that it may not require much increase in the quantum of investment as against a properly targeted implementation of the existing investments themselves" - but does not elaborate, rather like Pontius Pilate who "would not wait for an answer"!

William N. Bissell, whose Making India Work, Penguin, 2009, is making waves actually seeks to promote people's participation by dismantling Panchayat Raj! (p.200)

Even the latest foray into this subject, India: Perspectives on Equitable Development Academic

Foundation. New Delhi 2009, excellent in analysing the problem falls short on the systemic solution.

Thus participative development - that is, grassroots development through

grassroots democracy - is our imperative need. The path to such development was

charted through the 73rd

and 74th amendments to the Constitution, which resulted

in the present Part IX (The Panchayats') and Part IXA ('The Municipalities'). In

these two Parts of the Constitution we have the key to Inclusive Growth through

Inclusive Governance. For Inclusive Growth, we need to hitch the horse of

accelerated growth to the wagon of participative development.

Unfortunately, tragically I would say, the planning and implementation of anti-

poverty and grassroots development programmes in India remains self-defeatingly

centralized, devolution being largely confined to good intentions and scraps of

paper, lacking in political will and conviction at the higher echelons and

compromised at the lower echelons by a petty bureaucracy loathe to cede its power

and pelf to humble if elected village folk.

The colonial mindset has to be thoroughly re-hauled to promote a massive

systemic change that replaces the patronizing, slow-footed bureaucratic delivery

mechanism by a system of local self-governance that vests social and political

power in elected representatives at the local community level, representative of the

community that elected them, responsible to their local electorate and, therefore,

responsive to the needs, demands and priorities of their constituents. In India,

Prime Minister Rajiv Gandhi rewrote the three Rs of learning - Reading, „Riting

and 'Rithmetic - into the three Rs of democratic local self-government:

Representation fostering Responsibility and Responsibility leading to

Responsiveness22

: R-R-R to realise E-E-E!

__________________________________________

22 Rajiv Gandhi, Selected Speeches and Writings 1988, Publications Division. 1989, p. 164 address lo District Magistrates at Jaipur. 30.4.88: "our basic equation, namely, that Representativeness and Responsibility equal Responsiveness"

16

The key lies in 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 that carefully and

consensually structured Activity Maps detail the Functions to be devolved

respectively to the village, intermediate and district levels, and thus provide the

basis on which the devolution of Functionaries to each level of self-

governance, in rural as much as in urban localities. Three Fs- Functions,

Finances and Functionaries – to provide the framework for the three Rs to lead

us down the three fold E-E-E path! Simple, no?

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. This is

what I call Inclusive Governance.

In India, we are already deep into the world's greatest experiment in

democracy - 250,000 elected institutions of local self-government to which our

people have elected 3.2 million representatives, with proportional

representation at each level for the scheduled castes and scheduled tribe, a

special legal dispensation for tribal areas.

India scores high in almost all dimensions of representativeness in local

government with regard to gender empowerment and affirmative action in

favour of the historically disadvantaged. Owing to reservations for women

pitched at a minimum of 33% of both seats and posts, there are as many as 1 2

™U»n women elected to local government institutions, about a million in

rural areas and the rest in urban areas. Of these, about 86,000 are office-

17

bearers. Bihar, a state generally represented as being among the most socially

backward in the country, has pioneered the innovation of raising the women's share

of assured seats to 50% (and actually electing close to 55% women to their local

bodies as women are not obliged to contest only from reserved seats). Several other

state governments followed suit and the ruling coalition at the Centre have now

pledged themselves to a Constitutional amendment which will raise the share of

assured women's seats to 50%, thus raising the number of elected women

representatives to nearly 2 million. There are, thus, more elected women in India

alone than in the rest of the world put together; it amounts to gender empowerment

in political and social terms on a scale which is without precedent in world history

and without parallel in the contemporary world.

Moreover, studies conducted in one state - Karnataka - have shown that, as against

33% reservations for Scheduled Tribe women within the share reserved for the

Scheduled Tribes, the actual share of elected tribal women is nearly double at 65%;

and the comparable figure for Scheduled Caste women is of the order of 54%, thus

signalling the fact that women's empowerment through Panchayat Raj is far ahead

in the depressed sections of society than among the 'swam jaati', the caste elites that

are often portrayed as the purveyors of elite capture of local government units in

rural India.

Resisting the temptation to dwell at even greater length on women's empowerment

through Panchayat Raj in the hope that this will come up in the discussion to follow

this lecture, let me turn to affirmative action through the Panchayat system in

favour of the historically disadvantaged - the Scheduled Castes and the Scheduled

Tribes, so called because they are exhaustively listed in Schedules appended to the

Constitution. While reservation of seats for the SC/ST in elected bodies has been a

defining characteristic of Indian democracy since the pre-Independence elections of

1937, Panchayat Raj has been designed to reflect the social composition of the

18

electorate at every level of the three-tier panchayat system, with the share of

SC/ST seat reservations being calibrated to the share of these sections of the

population at each level of the electorate - village, intermediate and district.

Reservations apply also to offices on a rotational basis.

Moreover, for tribal areas listed in the Fifth Schedule to the Constitution, the

Constitution mandates Parliament to pass legislation relating to Panchayat Raj in

such areas. Accordingly, the Provisions of the Panchayats (Extension to

Scheduled Areas) Act was passed in 1996 and has entered the political discourse

under the acronym PESA. The distinguishing feature of this crucial legislation is

that it empowers Gram Sabhas in Fifth Schedule areas to "approve" plans,

projects and programmes proposed by village panchayats as well as "authorise"

the issue of "utilisation certificates", the bureaucratic device - often misused - by

which the bureaucracy is held responsible for expenditure. In no other area of

governance is the authority to issue "utilization certificates" vested in the

beneficiary community other than under PESA. Further, the Act provides for

exclusive community control over minor forest produce and the right to be

consulted in respect of the exploitation of minerals and other forest wealth, a

powerful tool to resist social exploitation and displacement. But perhaps precisely

because of its far-reaching, even revolutionary implications, it is principally the

utter failure of the state governments concerned to faithfully and sincerely

implement PESA, despite all of them having passed conformity legislation

through their respective state legislatures, that is, in my view, responsible for a

third of the districts of India being convulsed, partially or wholly, in armed

insurgency in such tribal areas, ironically by partisans calling themselves

"Maoists".

At the time that this is being written (the first fortnight of April 2010) the nation

has been convulsed by the massacre of 76 security personnel in the forests of

Dandaknranya near Dantewada, Lord Rama's place of exile, within touching

distance of Konta where Rajiv Gandhi discovered on his first tribal

19

areas foray in July 1985 the imperative of affirmative action within the framework

of Panchayati Raj for tribals in Fifth Schedule areas - the genesis of the

Constitutional provision for Parliament itself to enact the Panchayat Raj law for

Fifth Schedule areas, which first led to the Bhuria Committee Report and, based on

its recommendations, the Provisions of the Panchayats (Extension to Scheduled

Areas) Act, 1996 (generally known by its acronym, PESA).

Unfortunately, tragically even in view of the needless deaths of so many brave

young personnel of our security forces, the consistent failure of the State

governments concerned, and of the total lack of conscientiousness on the part of the

Centre in urging the States concerned to conscientiously implement, in letter

and spirit, the provisions of PESA, as spelled out above, have contributed more than

any other single factor to the aggravation of the situation in forest areas. This has

facilitated the mushrooming of insurgency directed against the State in the heart of

India. For that very reason, the fast-tracking of PESA, especially in police thanas in

less insurgency-affected Fifth Schedule districts would contribute more than any

police action to depriving the guerrilla fish of the people's water in which they swim

for tribals would then, and only then, be presented with the stark choice of siding

with the State and securing "participative development" or going with the Maoists

and facing certain death - at the hands, perhaps, of the security forces but certainly

at the hands of their own Maoist patrons. For the present, the only face the State

shows them is the promotion of exploitative development23

which privileges access

by corporates to the enormous riches, under- and over-ground of mineral- and

timber-rich Fifth Schedule areas, while hopelessly failing to ensure the

privileges of self-government written into the Constitution and PESA.

23sometimes termed "aggressive development" by high authority

20

An expert committee report prepared for and at the instance of the Planning

Commission, and submitted two years ago in April 2008, recommended precisely

the approach outlined in the previous paragraph, but while to combat insurgency in

areas affected by what is called “Left Wing Extremism” (LEW), there is marked

relative neglect of the constructive recommendations of the Committee regarding

Part IX of the Constitution and PESA, which were eve more strongly recommended

by the Committee. Government‟s argument seems to be that the second part of the

Report cannot be operationalised till the first part is successfully implemented;

while I concede that this probably true of areas already overtaken by the Maoist

takeover in the absence of the effective presence of the State, since most

insurgency-affected districts are only partially affected, why not fast-track the

sincere implementation of the Constituion/PESA in relatively less-LEW affected

areas? Why must PESA-conforming participative development follow long drawn

out police action; why cannot the two proceed in tandem given that there is no “Re

Band” stretching from the Nepal border to Andhra Pradesh but, as former Home

Minister Shivraj Patil argued, only a speckled band of terrorism comprising some

red blobs and many white patches?

Under the Indian Constitution, Panchayati Raj being a State subject, State

legislatures and, more importantly, State governments have been most reluctant to

effectively devolve the three Fs-Functions, Finances and Functionaries- to the

institutions of local self government or to mobilize the Panchayat Raj system for

effective district planning as mandated by the Constitution. Democracy , being a

game of numbers, there is an inexorable push from below for more genuine

administrative and economic empowerment, but vested bureaucratic and State

legislature interests are fighting a relentless rearguard action to delay, derail and

defer devolution. Only in states where the political authority has demonstrated an

over-riding political will to push Panchayat Raj has there been significant progress

towards effective local self-government. 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.

The Central Government has also been woefully slow in using its immense financial

clout to push for effective Panchayat Raj. More than 75% of all funding for anti-

poverty and rural welfare expenditure comes from the Central budget. It is delivered

through nearly a hundred or more "schemes" of the Central Ministries, each of whom -

and, worse, each of which - set up their own respective silos, insulated from each

other, to deliver Centrally legislated entitlements of public goods and services to the

same set of beneficiaries: the poor. Notwithstanding explicit instructions issued

in October 2004 at the instance of the Prime Minister to all Central Ministers to

reorient their schemes to ensure the centrality of the panchayats in the planning and

implementation of these schemes - and that too within three months - not one Central

scheme has thus far been effectively redesigned, Central Ministers and officials taking

shelter behind the "may", as distinct' from the "shall" clause of the Constitution to say

they are giving the State governments the "option" of resorting to Panchayat Raj

Institutions but not obliging them to do so. Even the Planning Commission,

notwithstanding its own circular of August 2006 insisting on district planning as

provided for in Article: 243G read with Article 243ZD as the foundation of all

planning, has not withheld a paisa of Plan allocations for want of Panchayat-based

district plans. The absence of any real political will on the part of the Centre to insist

on effective Panchayat Raj has leached the Panchayat Raj system of effective

devolution. All one is left dependent on is the political will displayed by some States.

The one ray of hope is that the recommendations of the Thirteenth Finance

Commission, tabled in Parliament in February 2010, provide in principle for

massive and assured transfers to the Panchayat Raj Institutions and urban local

bodies of sizeable funds for "non-Plan", that is, maintenance and other revenue

expenditure. If only the Planning Commission in its forthcoming mid-term review

of the Eleventh Five-Year Plan were to follow in the footsteps of the Finance

Commission, genuine Panchayat Raj might still be achieved within a generation -

25 years - of the entry into force in April/May 1993 of the relevant provisions of the

Constitution: the deadline set by Rajiv Gandhi for himself.

There lies the fundamental explanation for India's shameful showing on the UN's

Human Development Index contrasted with her spectacular showing on GDP and

GDP-related Indices. The imperative of Inclusive Growth has been grasped, but the

imperative of Inclusive Governance has been barely comprehended notwithstanding

the Prime Minister's public endorsement of the centrality of Inclusive Governance

to Inclusive Growth. And, as already indicated, we are still at the rudimentary

beginnings of institution-building for Inclusive Governance. Not until the Ministry

of Panchayat Raj becomes as central to the development process as the Ministry of

Finance and the Planning Commission will accelerated growth start manifesting

itself as Inclusive Growth.

Much of the dichotomy between growth and equity arises through the privileging

of accelerated growth over inclusive growth24

. None of this can be rectified where

it matters most - at the grassroots - without Inclusive

______________________________________

24 P. Sainath,- Hindu, 15 August 2009, on tax revenues foregone in the interests of reviving GDP growth rate: "Simply put the corporate world has grabbed concessions in just two years (2008-09 and 2009-10) that total more than seven times the „fiscally imprudent‟ farm loan waiver. In fact, it means that on average we have been feeding the corporate world close to Rs.700 crore every day in these two years.” The calculation is based on concessions in direct taxes alone and does not include tax revenues foregone in indirect taxat ion.

23

Governance reprioritizing public investment decisions that through inclusive

governance by representative institutions of local self-governance foster patterns

of inclusive growth.

I wish GDP growth rates were all that there was to predicting the socioeconomic

outlook for my country. Sadly, the UN Human Development Report comes as a

damper, a reality check on how far India is still to go before we can lay any

claim to being, in moral or human terms, even a just country, let alone a humane

nation dedicated to Mahatma Gandhi's goal of "wiping every tear from every

eye".

It is a dangerous delusion to imagine that prosperity for a sliver of our population

- even if that sliver runs to hundreds of millions in absolute numbers - can blind

us to the reality of a billion and many hundreds of millions more living in

dreadful, dreary poverty with little to indicate that within any acceptable period

of time they will secure even a modicum of a fair share of our accelerated

growth to relieve the daily drudgery of their lives. We need Shining Indians

more than Shining India. And we can get them by listening to Mahatma

Gandhi responding on the eve of our Independence to a question about the

"India of your dreams". The Mahatma replied:

"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"25

Let us give our people an "effective voice" in the making of our country. That is

where the dynamics of rural (and even urban) transformation lie.

____________________________________________________________________

25

But the Karnataka poet, Gita Mahadeva Prasad, has perhaps said the last word:

“Dear Gandhi,

On the wall

We have framed you

See how the frames

Struggle to

Keep you in place!”(The Interior, Karthik Prakashana, Bangalore, undated, probably

2009)

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