Answer

Decentralization refers to the transfer of power, resources, and decision-making from the central government to lower levels of administration. The 73rd and 74th Constitutional Amendments (1992) aimed to empower Panchayati Raj Institutions (PRIs) and Urban Local Bodies (ULBs). Despite these provisions, many local bodies struggle with limited financial autonomy and administrative control, hindering effective governance at the grassroots level.

Constitutional Provisions for Decentralization through the 73rd and 74th Amendments

• Constitutional Status to Local Bodies: The 73rd and 74th Amendments (1992) granted constitutional recognition to Panchayats and Urban Local Bodies (ULBs), ensuring direct elections and statutory powers for decentralized governance.
• Three-Tier Governance System: The 73rd Amendment introduced a three-tier Panchayati Raj system  Gram Panchayat, Block Panchayat, and Zila Parishad to strengthen grassroots democracy.
• Devolution of Functions: The 11th and 12th Schedules of the Constitution assigned 29 subjects to Panchayats and 18 subjects to ULBs, covering local governance responsibilities.
• State Finance Commissions (SFCs) & Fiscal Transfers: Article 243I mandates SFCs to review local body finances every five years and recommend resource-sharing mechanisms.
• Reservation & Participation: Articles 243D and 243T provide 33% reservation for women in PRIs and ULBs, including seats for SCs, STs, and OBCs, enhancing political inclusion.

Ineffectiveness of Local Governance Despite Constitutional Provisions

• Limited Financial Autonomy: Local bodies rely heavily on state and central grants, with only 5-10% own revenue generation, leading to fiscal dependency.
• Parallel Bureaucratic Control: State governments retain control over urban planning, sanitation, and water supply through parastatal agencies, limiting the power of local bodies.
  For example: Bengaluru’s water supply is managed by BWSSB, not BBMP, reducing municipal control over urban infrastructure.
• Delays in State Finance Commission (SFC) Implementation: Many states delay SFC formation or ignore recommendations, disrupting fiscal planning for local bodies.
• Weak Gram Sabhas & Public Accountability: Despite legal provisions, Gram Sabhas remain weak, often manipulated by political elites or bureaucrats, reducing participatory governance.
• Rigid Rural-Urban Classification: Many areas function as urban zones but remain classified as rural, leading to administrative confusion and lack of essential services.

Challenges in Local Governance

Administrative Challenges

• Bureaucratic Interference: State-appointed District Collectors and Municipal Commissioners control fund disbursement, overriding elected local representatives.
• Lack of Administrative Capacity: Panchayats and ULBs lack trained personnel and technical expertise, hampering governance efficiency.

Financial Challenges

• Inefficient Revenue Mobilization: Local tax collection, especially property tax and user charges, is poorly enforced, leading to financial constraints.
  For example: In 2023-2024, Delhi’s municipal corporations suffer from low property tax recovery, affecting service delivery.
• Dependence on Centrally Sponsored Schemes (CSSs): Funds from MGNREGA, Swachh Bharat, and Jal Jeevan Mission come with rigid guidelines, limiting local flexibility.

Institutional Challenges

• Lack of Financial Transparency: Absence of audited financial reports and digital tracking leads to corruption and inefficient fund utilization.
• Poor Borrowing Powers: While local bodies can borrow under the Local Authorities Loans Act (1914), lack of creditworthiness restricts financing for infrastructure.

Multidimensional Reforms to Strengthen Local Bodies

• Strengthening Fiscal Autonomy: Implement property tax reforms, user charges, and GST revenue-sharing models to improve local revenue generation.
• Empowering State Finance Commissions (SFCs): Make SFC recommendations legally binding and ensure timely fund devolution to local bodies.
• Enhancing Digital & Administrative Capacity: Train Panchayat officials in e-governance, GIS mapping, and financial management for better local planning.
• Reducing Parallel Bureaucratic Control: Transfer functions like water supply, sanitation, and urban planning directly to ULBs and Panchayats.
• Reforming Rural-Urban Classification: Update the rural-urban classification system to recognize peri-urban zones and ensure appropriate governance structures.

Empowered local governance is the cornerstone of inclusive development. Strengthening fiscal autonomy, ensuring capacity-building, leveraging technology for transparency, and fostering citizen participation can revitalize grassroots democracy. A bottom-up approach with cooperative federalism can transform local bodies into engines of governance, making “minimum government, maximum governance” a reality for India’s sustainable future.

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