Evolution of Devolution of Power and Finances, Local Levels and Challenges

This article deals with the Evolution of Devolution of Power and Finances, Local Levels and Challenges. This topic is important for UPSC General Studies paper 2.

Table of Contents

India, as a federal republic, has embarked on a notable path of devolving powers and finances to local levels, acknowledging the critical role of grassroots governance. This decentralization process is designed to empower local bodies, foster participatory democracy, and cater to the diverse needs of communities. By shifting authority and resources closer to the people, India aims to enhance local governance, ensure more responsive and inclusive decision-making, and strengthen the overall democratic framework. This journey underscores India’s commitment to building a more equitable and efficient system where local entities play a central role in addressing community-specific issues and promoting development.

Devolution Of Finances

The devolution of powers and finances to local levels in India marks a crucial step toward inclusive and responsive governance. Despite notable achievements, persistent challenges still necessitate strategic interventions.

To ensure the success of this transformative process, it is imperative to strengthen fiscal decentralization, enhance local capacities, ensure uniform devolution, and mitigate political interference.

The efforts towards effective devolution aims to realize the vision of empowered local self-governance, where local entities have the authority and resources to address community-specific needs effectively. Through continuous efforts, India can build a robust system that promotes participatory democracy and equitable development, ensuring that local bodies play a central role in governance and decision-making.

Methods Of Devolution

After understanding about the devolution of finances and powers we should now learn about the methods we have for the devolution of finance and power

Constitutional Provisions – The Indian constitution provides decentralization of power between state and ‘union’ government. It should be noted that when visionary leaders shaped the Indian constitution they had this in mind that’s the reason why Union is used instead of Central when referring to the government.

a) 7th Schedule of Indian constitution provide lists of subject under central and under state subject.

b) 6th schedule of Indian constitution contains provisions related to the Administration of Tribal Areas in the States of Assam, Meghalaya, Tripura and Mizoram.

c) 73rd and 74th Amendments to the Constitution of India in 1992 mandated the establishment of Panchayats and Municipalities, outlining their powers and functions

d) The Panchayat Extension Schedule Areas ACT 1996 The central government passed it to ensure residents of scheduled regions had access to self-government through Gram Sabhas.

2. Fiscal powers – Union Finance Commission recommends distributing financial resources between the central and state governments, and State Finance Commission recommends grants to local levels for various functions.

3. Administrative decentralization – division for administrative and management of powers among central and state government and further to local governments.

Challenges for Devolution of Power

Devolving power is a positive step toward balancing authority between state and central governments and promoting equality. However, it also comes with certain challenges, such as:

Various leaders of southern states had claimed that Using 2011 data in Terms of Reference(TOR) by the finance commission will penalize southern states, which have made considerable progress in population control and it will impact their competence for rewards in such areas.
Issues at the local level can escalate into conflicts due to interventions by local leaders. For example, problems may arise when local leaders prioritize personal or political interests over the community’s needs.
Lack of equal distribution with local government and panchayat, which make it difficult for them to full-fill their responsibility.
GST implementation has reduced states’ autonomy to set tax rates, forcing them to rely more on central government funding for their specific development needs.

Centrally Sponsored Schemes are announced by center but are funded by both center and state in the 50-50, 70-30 ,80-20 or 90-10% ratio. This places the state government in difficulty to utilize the resources as per their needs.

Impact of Devolution

S.NO.	NEGATIVE IMPACT
1.	Local governments are ineffective in deployment as they lack capacity ad personnel.
2.	State governments show resistance for devolution powers to local governments.
3.	Devolution often leads to conflict among both state and local governments because of lack of coordination.

S.NO.	POSITIVE IMPACT
1.	The devolution of 4 F’s i.e. Funds, function, functioning and functionality
2.	Brings transparency and accountability in actions by governments.
3.	Devolution has made government function more responsive and answerable.