On Account-Ability

The Narendra Modi-led NDA government may be right in delegating more responsibilities down the hierarchy and even prodding Panchayats to take important decisions and manage funds at their levels, but have the village bodies been empowered to handle the enormous responsibilities that come with it?

Budget 2016 has earmarked a Rs 2.87-lakh-crore grant to gram panchayats (GP) and municipalities in line with the 14th Finance Commission recommendations - a quantum jump of 228 per cent for the current financial year compared to the preceding five fiscals. This translates into an average assistance of Rs 80 lakh per GP and Rs 21 crore for each urban local body. That's a lot of money. But have the GPs been able to judiciously spend the money they got for the development work in previous years? Well, if we go by a study under the Centre for Policy Research's PAISA for Panchayats research project, the village bodies might not have had the opportunity to get empowered.

The Delhi-based think tank found that only a fraction of the funds that were to be spent within its jurisdiction was handled by the panchayat. The rest is managed by other entities such as state departments, government-owned organisations, district bodies, and block and taluk panchayats. What's worse, these entities did not even maintain records of the fund flows at the GP level, and the entire chain lacked transparency and accountability, leading to inefficient handling of funds.

The study analysed the source and utilisation of funds that flowed into 30 gram panchayats in Karnataka in 2014/15, and found that only 3 per cent of the money spent by various arms of the government within the GP jurisdiction went through the hands of the panchayat. In other words, the panchayats were not directly handling 97 per cent of the development or social security programmes that happened under their nose. Nor were they aware of the nature and extent of this expenditure.

Despite Karnataka's reputation as one of the pioneering states that walked the talk on fiscal devolution, the situation was found wanting. The clear message, therefore, is the need for an audit mechanism into the money flow into India's over 2.5 lakh GPs. More so, as the fund flow to rural India - to its six lakh villages - has been the highest in recent times.

In fact, the study reveals that in spite of the state's efforts, the intergovernmental fiscal transfer system is neither designed nor operationalised to fulfill its vision of effective devolution to panchayats. The recommendations of the think tank are clear: the state government should make efforts to ensure there are no unfunded or overlapping mandates for panchayats, and their proportion of discretionary spending be increased. It also calls for an open-record-keeping system that can measure real-time allocations, releases and expenditure at the gram panchayat level.

If the increase in allocations by the Central government were to transform the villages and small towns, the recommendations should be considered seriously by not just Karnataka, but other states as well.