MAINS MASTER PROGRAM (MMP) 2024

POLITY – 5
Devolution of Powers and Finances up to Local Levels and Challenges therein

Local Government in India

 Constitutional Status – 73rd & 74th Act, 1992
 Objective – Participatory & Accountability
 Major Provisions – Gram Sabha; uniformity in structure; regular elections;
reservation of seats for women, SC & ST; State Election Commission; State Finance
Commission; Devolution of powers & finances; Mandatory & Voluntary provisions

Achievements of Decentralization in India

 Political Participation
 Women Representation & Marginalized sections substantially increased
 Rohna Village in M.P – Pink panchayat; Meena Behen in Gujarat – SHGs
 Participation in Governance
 Example – Arati Devi (Gujarat) – Literacy Campaign, Chhavi Rajawat
(Rajasthan) – Water, Solar, Roads & Toilets etc.
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 Accountability, Transparency & Responsive governance

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 Gram Sabha; MGNREGA; Social Audit etc.

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 Improved service delivery

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Issues associated with Local Governance in India

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 Inadequate Devolution of Powers

 E.g., NGO, Praja Foundation – UGI, 2022 [No state has devolved all 18
functional items]
 Lack of Finances
 Lack of importance to State Finance Commission [not constituted regularly,
non-availability of financial data, no action taken report etc.]
 < 5% of finances with conditions
 Major source – Property tax [not collected & revised]
 Revenue of municipal corporations < 1% of GDP [Brazil – 7%; South Africa –
6%]
 Dependency on fund transfer from center & states
 70% funds on recurring expenditure & 30 % capital expenditure
 Irregular Elections
 UFC regular constitution of LB’s mandatory to get grants
 SFC not constituted regularly
 PIL filed in Andhra High Court to constitute 5th F.C
 Presence of parallel structures

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  E.g., Water Boards, Housing Boards, Kerala Water Authority [Kerala
Municipality Act – Water supply & Sewerage services to local bodies]
 Haryana Rural Development Agency etc.
 Issues of Sarpanch-Pati or Pradhan-Pati [rule of proxy]
 Lack of functionaries
 Schemes like MLA & MPLAD
 Constitutional disregard and non-constitution of DPC & MPC

Reasons as to why state governments fail to devolve their powers to local bodies.
 Control over power & resources
 Political considerations
 Financial constraints
 Administrative Challenges
 Resistance to change & lack of political will

Functions, Funds & Functionaries need to transform to functionality

 Functions [devolution of power, legislative backing]
 Funds [Financial Autonomy, Efficient Utilisation – budgeting, accounting, auditing
etc.]
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 Functionaries [Qualified personnel – elected, administrative, technical; Capacity

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building; Accountability mechanism – Performance Evaluation, Grievance redressal

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etc.]
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 Functionality
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 Integration of functions, funds & functionaries in desired outcome.

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 Participatory, collaboration & coordination, Review & evaluation

How to improve revenue sources to the local government

 Sources of revenue
 Tax revenue [property, advertisement tax etc.]
 Non-tax revenue [fees for utility services, Licenses & permits etc.]
 Grants & Transfers
 Borrowings [Financial Institutions, Municipal bonds etc.]
 How to improve financial resources?
 Broaden tax base
 Improve non-tax revenues
 Encourage borrowings & investments
 Public-private partnership
 Encouraging borrowings & investments
 Capacity building & training [Financial planning, budgeting & revenue
generation etc.]
 Citizen participation

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Ph: 08045248491, 7041021151 | Email: [email protected]
  Policy reforms [more devolution of powers]

Way Forward
 2nd ARC – 3F Approach & Functionality
 Example – Kerala Model of local Bodies
 More devolution of powers – Bruhat Bengaluru Mahanagara Palike Act, 2020
 Parallel agencies or parastatals should not undermine authority of ULBs
 Dedicated specialized training cadre for local bodies
 Activity Mapping & civic amenities to be domain of municipality [expert committee
on urban infrastructure, 2011]
 Performance linked devolution of Funds [15th Finance Commission]
 Mandatory ATR on finance commission report
 Role played by local bodies during Covid-19

Questions
1. Critically evaluate the achievements of the 73rd and 74th constitutional amendment
act in decentralization of power structure in India. [10]
2. What are the factors that prevent the local bodies from becoming effective
institutions of local self-government in India? Suggest measure to improve upon
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them. [15]
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3. ‘‘The states in India seem reluctant to empower urban local bodies both functionally
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as well as financially.’’ Comment. [10]

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Pressure Groups and Formal/Informal Associations and their Role in the Polity
Pressure Groups
 Definition - Pressure group consists of group of people who are actively engaged in
promoting and defending their common interest by influencing public policy.
 Structure of Pressure Groups
 Formal
 Informal
 Formal Pressure Groups
 Pressure groups which have well established institutional structure.
 Industry – FICCI, CII, ASSOCHAM etc.
 Trade Union – AITUC, BMS Etc.
 Professional groups – IMA, Bar Council of India, Indian Bank Association etc.
 Farmers Association – BKS, All India Kisan Sabha etc.
 Informal Pressure Groups
 Pressure groups that do not have well established institutional structure.
 Example – People’s movement by Anna Hazare (India against corruption) –
Lokpal, Patidar, Marathas agitations; Chipko movement
 Methods/Functioning of Pressure Groups

2nd Floor, 45 Pusa Road, Opp. Metro Pillar 128, Karol Bagh, New Delhi-110005
Ph: 08045248491, 7041021151 | Email: [email protected]
 
Electioneering [Voting behaviour, funding etc.]

Lobbying [Discussion with policy makers]

Propagandizing [Public campaigns, Protest & demonstrations etc.]

Petitions & Legal actions [PIL on electoral bond scheme, ban on tobacco &
alcohol sale etc.]
 Policy advocacy [Research & Publication]
 Networking & coalition building
 Case study
1) How successful are farmers as pressure groups in India?
 Techniques – Lobbying, Propagandizing, Petitions & Legal actions, Policy
advocacy & Networking & coalition building
 Example - 2020-2021 Farmers’ Protests against farm laws, Maharashtra
Farmer Suicides [PIL & farm waivers etc.]
2) What are the techniques followed by business groups & how effective are
they?
 Techniques – Lobbying, research & policy advocacy, public campaigns,
networking & coalition building, supportive ecosystem – PPP, capacity
building & training
 Example – GST reforms, make in India & start up India initiative etc.
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 Political Parties as pressure groups

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 Techniques – propagandising & mobilisation of public opinion, debates &

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discussion in legislature, Legal mechanisms, negotiation & forming alliances etc.

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 Example – INC on Agni veer, NEET, BJP – Abrogation of Article 370, DMK on
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states autonomy etc.

Questions
1. “Pressure groups play a vital role in influencing public policymaking in India.” Explain
how the business associations contribute to public policies.
2. Pressure group politics is sometimes seen as the informal face of politics. With
regards to the above, assess the structure and functioning of pressure groups in
India.
3. What are the methods used by the farmer’s organizations to influence the policy-
makers in India and how effective are these methods?

2nd Floor, 45 Pusa Road, Opp. Metro Pillar 128, Karol Bagh, New Delhi-110005
Ph: 08045248491, 7041021151 | Email: [email protected]
 Constitutional Bodies
Comptroller and Auditor General of India [CAG]
 Constitutional / Legal Provisions
 Art. 148 – Appointed by President
 Art. 149 – Duties & Functions
 Art. 150 – Accounts of the Union
 Art. 151 – Submission of Reports
 CAG (Duties, Powers & Conditions of Service) Act, 1971
 Constitutional Safeguards
 Removal like Judges of SC
 Conditions of service cannot be varied to disadvantage
 No further employment
 Expenditure charges on CFI
 Duties of the CAG
 Financial Audit - receipts payable to and expenditure of from the Consolidated
Fund of India.
 Audit all transactions of Contingency & Public Accounts
 Audit of Government companies & Corporations
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 Audit of compliance [Regularity & Propriety]

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 Audit of performance [Economy, Efficiency & effectiveness of utilization of

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Funds] – Arvind Gupta Vs UoI, 2013

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 Importance of CAG
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 Ensures financial accountability, Transparency, fiscal discipline & responsible

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decision making
 Good Governance
 Friend, Philosopher & Guide of the PAC
 CAG one of the most important constitutional functionaries [Dr. B.R.
Ambedkar]
 Reforms Related to CAG office
 Expansion of ambit of CAG – E.g., PPP projects, Govt. Funded Societies etc.
 Collegium system of appointment
 Making it part of PAC as in UK & Australia
 Longer term as in UK and USA [10 & 15 years respectively]
 Supply of data, records to CAG without delays
 Multi-member CAG
 Language of the CAG to be simplified
Questions
1. The Comptroller and Auditor General (CAG) has a very vital role to play. Explain how
this is reflected in the method and terms of his appointment as well as the range of
powers he can exercise. [10]

2nd Floor, 45 Pusa Road, Opp. Metro Pillar 128, Karol Bagh, New Delhi-110005
Ph: 08045248491, 7041021151 | Email: [email protected]
 2. “Comptroller and Auditor General is the cornerstone in ensuring public financial
accountability under our political system”. Comment [10]
3. CAG work necessarily involves pointing out the irregularities, inefficiencies, leakages
& corruption in our public financial management system. Comment [10]

Finance Commission of India

 Constitutional / Legal Provisions
 Art. 280 – President to appoint Finance Commission
 Finance Commission Act, 1951
 Functions of the Commission
 Vertical & Horizontal distribution of revenues
 grant-in-aid to states
 recommendations to augment fund of the states
 any other matter referred by the president
 Terms of Reference of the 15th Finance Commission
 Principle governing tax devolution to states & grant in aids
 Augment revenue to local bodies
 Review fiscal performance & recommend roadmap for fiscal consolidation
 Assess the impact of GST on centre & states
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 Principle governing performance-based incentives

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 Review current arrangement for financing disaster management

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 Recommendations of 15th Finance Commission

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 41% Vertical devolution – States

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 Criteria for vertical distribution – income distance, population, Demographic

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performance, forest & ecology, area, tax effort

 Sector-specific grants – Nutritional support & digital infrastructure in schools
 Grants to local bodies – improve urban & rural local bodies
 fiscal deficit and debt levels – 4% SGDP
 GST rationalization
 Third party evaluation of CSS
 Modernization fund for defence & internal security
 Performance based incentives for states [population control, increase in tax
revenue etc.]
 Issues related to Finance Commission
 Gradual shrinking of divisible pool of revenue
 Increase in cess & surcharge
 Freebies by the states
 Strings attached to sector specific grants – Health, education, water supply etc.
 Fiscal deficit target [3% of SGDP - 2023-2024]
 Population criteria [2011 census]
 Sustainability of GST revenue to states

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Ph: 08045248491, 7041021151 | Email: [email protected]
  Way Forward
 Terms of Reference – states to be made a stakeholder
 Central sponsored schemes should be reduced – give more financial autonomy
to states
 Fiscal federalism should be preserved & strengthened
Question
1. What do you know about the terms of reference of the 15 th Finance Commission?
Discuss some of the issues associated with the recommendation of the commission.

National Commission for Scheduled Caste / Scheduled Tribe / Backward Classes

 Constitutional Provisions
 Articles – 338, 338A & 338B
 Constitutional Amendment - 65th 1990; 89th 2003; 102nd 2018
 Powers & Functions
 Investigate & monitor all cases related to their constitutional & legal rights
 Inquire into specific complaints related to scheduled caste, scheduled tribes &
backward caste.
 advice on the planning of socio-economic development
 make recommendations to union or states for the welfare of the community
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 annual report to the president

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 powers of the civil court in case of inquiry

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 Constitutional status to NCBC – Impact

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 Recommendation may carry more weightage [Accountability]

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 May reduce political interference [Autonomy]

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 Broader mandate – recommend inclusion & exclusion of list of communities in

backward classes
 Policy recommendations for the welfare of the community
 Challenges in their effective functioning
 Politicization of appointments
 Resource constraints in funding
 Lack of support staff & infrastructure support
 Recommendatory nature of the commission

Question
1. The constitutional status of the NCBC is a significant step forward in enhancing its
role, authority, and effectiveness in addressing the issues of backward classes in
India. Discuss [10]

2nd Floor, 45 Pusa Road, Opp. Metro Pillar 128, Karol Bagh, New Delhi-110005
Ph: 08045248491, 7041021151 | Email: [email protected]