Background

The Centre for Budget and Policy Studies has been working in the area of local governance in India since its establishment in 1998. In India, urban and rural areas have always been looked after by different departments. Accordingly, the creation of local governments also meant two constitutional amendments. After the 73rd and 74th Constitutional Amendments were passed in 1993, decentralisation of governance at smaller spatial scales, such as [three tiers of] panchayats in rural areas and [various categories of] municipalities in urban areas, became a central theme in economic and social policy. CBPS has been working in the broad area of such decentralisation from a unique perspective [see www.cbpsindia.org]. CBPS took up the issue of looking into the financial provisions of local self-governments, mainly by studying budgetary processes, provisions and utilisation patterns. These give a detailed view of the extent of devolution of functions and funds by the State governments in the spirit of decentralisation and the degree of autonomy enjoyed by local governments in dealing with local issues.

Urban Governance

CBPS has worked with Urban Local Self Governments (ULSGs) in Karnataka and Maharashtra over the past 5-6 years, giving us the following insights into various issues of governance at this level:

1. There are some primary asymmetries among the various governance relationships at the ULSG level:

a. Between the local government and the administration at State level
b. Between elected representatives and the local administration
c. Between citizens and elected representative

All these relationships are basically unequal in the vital matter of access to information.

To start from the greatest of these inequalities, the local government, instead of being an agent of the citizens of the ULSGs, are cast into the role of being agents of higher levels of State administration. They are asked to support policies and ‘pass’ development projects without being either consulted regarding their suitability, or informed about their details. They are kept in the dark about their finances, and the whole process of budget making at the local level is, therefore, reduced to a randomised guessing game.

The relationship between the local elected representatives and the ULSG administration is similarly skewed in terms of access to information, though not as badly as in the previous case. Administrative officials, who are privy to information from higher levels of government, act more as agents of the line departments of the higher level of government than of the local government. Their basic function seems to further the aims and objectives of the State level administration, rather than to support genuine socio-political consensus around issues of local governance. Keeping the elected body in the dark in many matters is a routine part of this overall mindset. As a result, elected representatives frequently pass resolutions on matters about which they know very little.

This leaves the citizens of the ULSGs in the darkest possible area of the information network at the local level. They cannot know why certain policies were implemented and why others were not. They have no forum in which to raise questions, and the lack of any information leads to the inability to question. As a result, overseeing by civil society is non-existent in local self-governments. Elections also become an ad hoc process, rather than playing the genuinely democratic function of performance-based reward/punishment.

2. There is no process of planning for social, economic and infrastructure development at the ULSG level, to which all stakeholders at the local level can contribute.

This very crucial gap in governance has left most urban centres in India with a pattern of haphazard growth, congestion, poor basic amenities and no plan for economic uplift of the poorer sections of society. While lack of knowledge and information greatly impedes this process, there is also no historical governance tradition of a forum where such stakeholders can make their wishes known.

Given the changing demographics of India, urban governance is going to be increasingly under pressure to deliver better planned and more equitable services to its citizens. Small urban centres often lack the capacity to do this effectively on several fronts. Urban planning is a skill that must be learnt keeping in mind local conditions, which include not just an audit of natural resources, but also human needs projected into the future. Such skills are often lacking in urban local self governments, leading to haphazard growth and extremely poor basic amenities, which impacts the ability of the poorer sections of society to lift themselves out of poverty. While a council is elected in a democratic process, the elected representatives often have a very narrow vision limited to specific sections of the electorate. As has been historically seen, this again leaves out the economically and socially disadvantaged from having a voice at the level of city governance.

Urban planning needs a sound framework on which to build future societies. This means an integration of infrastructure and economic growth. Urban centres, as loci of economic activity, must increasingly look to issues of employment generation and poverty alleviation as the basis on which to plan for urban growth. These plans cannot be made in isolation by any ULSG. It must take into account the entire ‘catchment area’ of opportunity for economic advance in order to plan for urban infrastructure. While urban governance is tied closely to the district level administration, these ties are more paternalistic than those of partnership. This relationship can change for the better if ULSGs have the ability to integrate district level information into planning for their areas. The District Planning Committee, a constitutional entity, which at present is a non-operational body in most States, is the logical point of district level integration of development planning for both urban and rural self-governments. Again, upward pressure from such local governments can help to start useful consultations of the DPC.

Rural Governance

In rural India, the 73rd amendment has created three constitutional bodies; district panchayat, block/taluk panchayat and gram panchayat. The level of devolution of resources and functionality to these has been left to the individual State legislatures to decide upon and there is a large variation in this regard across the country. Our work in several states has shown that while the information inequalities outlined above are also in force here, this complex governance structure for rural India makes information even harder to track, collate and interpret.

The main difference between the rural and urban governance structures is that while urban local governments have only control of infrastructure spending, the rural panchayati raj institutions (PRIs) have additional control over spending in the arenas of social sectors like health, education, along with subjects related to the primary sector of the economy, such as agriculture, irrigation, etc. This means that if there is to be any kind of tracking on the vital matters of policy, allocation and spending on any of these, the budgets and other related data from/about the PRIs must be studied.

CBPS has worked in several districts of Karnataka on these issues. Recent work in two districts of Karnataka has found an equal lack of information and understanding of processes at the local government level. There are also some deeply distressing conclusions about the degree to which the government has withdrawn from vital social sectors. This seems to be happening without the knowledge and understanding of the local elected representatives, and the political process required to make such far-reaching decisions appears to be completely absent. Here too, the lack of a common purpose shared by the administration and the elected bodies is clear to see.

Given this over all lack of information on one hand, and unplanned spending on the other, accountability becomes a very difficult issue. Who is to be held accountable for what function is never very clear and the buck is passed back and forth between the administration and the elected representatives at the local level, again leaving the citizens with no clear mechanism of long term supervision.

It is no surprise therefore that the District Planning Committee for which there is a provision in the 74th amendment, and which is ‘to integrate the plans of rural and urban areas’ has not really begun to function. If local governments are to work as envisaged in the constitution, a first step is to remove the information gaps that constrain these bodies from playing their constitutional roles.

Budget Information Service

CBPS will work on the creation of a Budget Information Service (BIS) to fill many of these gaps in governance related information.

For Whom

The client-base for such a service is visualised to be quite diverse:

· Local governments: elected representatives and administrators at the panchayat, municipal, district and State level
· Civil society: NGOs, self help groups, slum dweller’s organisations, resident welfare associations, academic institutions
· Policy makers: State and district level policy makers for development strategies
· Financial stakeholders: Financial lending institutions, Central/ State/ bilateral/ multilateral donors

Purpose

BIS aims to fundamentally change the nature of dialogue in the decentralised sub-State governance arena by making information available to all those who wish to use it.

BIS Structure

A working Budget Information Service will have three basic functional components.

1) Data collection, collation, entry, mining, etc.
2) Research and analysis of data and related policy
3) Advocacy of data use in planning for growth, equity and good governance

Data Requirements

The following kinds of data will be collected for creating databases that can be linked to each other on the research front:

· Budgets: District and local government budgets, with analyses of revenue and expenditure. Such an analysis will include a wide range of parameters, beyond basic trend patterns. The data base will encompass the following additional components:

o Data on financial allocations for specific sectors in the state’s budget
o Data on receipts in the districts of the funds allocated, with details of time and quantum
o Data on actual expenditures at the local levels
o Data on the processes of decision making in these areas
o Data on audit of expenditures, by the Local Fund Audit, by the Accountant General and by others
o Data on local resources raised, with all relevant detail
o Data on expenditures in these areas by para-statal bodies
o Data on the recommendations and implementation of state finance commissions
· Social and Economic audits: These will include data from various surveys done by State and Central agencies such as, the economic census, survey of industry, consumption-expenditure and employment-unemployment surveys, human development reports, and many such others.
· Estimation of sectoral district income: CBPS has developed a methodology and software (INDICAL) for such estimation. The data demand on this front will drive a great deal of debate in its own right. Creating a link between infrastructure planning and economic activity at the district level must start from such sectoral estimates.

While some of the data is available with government agencies, some of it will have to be collected by CBPS with the particular view of making it relevant to local governance debate. This is especially true of estimating district sectoral income. This is a task that CBPS will undertake from first principles, since no State is at present engaged in making such estimates based on local data.

Contextualising data from various surveys conducted by national agencies will require a point of view that is at the moment completely missing from the decentralisation debate. This is most true of local governments themselves, as well as the negotiation between local and State and Union Governments. Some of the data generated by Union Government agencies will have to purchased; some obtained under the Right to Information Act.

Data Analysis and Policy Research

Since analysed data will be made available to a diverse set of clients, it will require innovation to make it relevant to the particular context in which the demand for information is made. This is likely to be a learning process, and richly rewarding in terms of long term traditions of data use being developed in a highly localised and participatory manner. Some of the data analysis will feed into planning processes at the district/local levels, again the intent being to establish a working connection between the past and the future that is factual. To cite an example from the experience of CBPS in such work, elected representatives found it extremely illuminating to be given comparative per service unit expenditure figures across neighbouring municipalities; such as roads (per kilometre), water supply (per bore well), public lighting (per street light), and so on.

Based on such analysis, there will also be policy related research undertaken to suggest solutions that bridge the gap between local aspirations and State level decision making. For example, much policy work is needed in redefining the role of para-statals, such as those that supply basic amenities like water, electricity, along with those that provide financial and infrastructure development services to local governments. From recent experience, this is likely to become a major issue, given the debate on privatisation of many of these services and the impact of such a policy on local democratic institutions, their transparency and accountability.

The role of the State Finance Commissions that determine the pattern of State allocations for local governments also needs to be strengthened by creating a systematic demand process at the local level. At the moment such allocations are arbitrary and local governments are never told the reasons behind the formulas used, if any.

The role of the State in decentralisation policy making in terms of devolution of power and resources will be kept under the scanner and much of the data analysis will be undertaken to track these credentials of the State.

Creating demand for BIS

While BIS will react to demand for information, it will also advocate the use of data for good governance practice. To this end, many types of means can be used to create demand for information where none might exist.

CBPS has evolved a method of communicating its research results that it has been using in municipalities successfully.
· Presenting revenue and expenditure data in the form of numbers and their trends and patterns via intense budget analysis workshops
· Using films to communicate conceptual qualitative issues of governance that then fit into the context of the finances

For example, CBPS has made documentary films on urban governance based in two small towns in Karnataka and Maharashtra. The films feature citizens, councillors and administrators speaking about issues of local self governance from the perspective of each kind of stakeholder. We have also made two films on maternal health care that looks into local government roles in maternal health service provision. Screenings of these films to diverse audiences have evoked excellent response, with long debates taking place about the issues raised in the films regarding what is and what should be.

Such methods also have the capacity to cut across lines of class and literacy to bring very diverse stakeholders together on the same platform. Map based multimedia presentations are also very valuable tools in a capacity building strategy that promotes knowledge and use of local data for effective and equitable development planning.

The following capacity building activities will be required to create demand for BIS:

· Building capacity for use of budget and related information for local governance: this can be for local governments themselves (CBPS has experience that this demand exists, especially among elected representatives), the media and civil society organisations. This will typically take the form of workshops, using various aids that are considered most suitable for the given audience. The passing on of information will be coupled with open debate on matters of democratic functioning.

· Local debates on the efficiency of expenditures, of the link between taxation and decision making, of the local inputs to the District Planning Committee. The effort will be to create a debate on not only priorities, but also the effectiveness of expenditures—how much output do we get per rupee spent as opposed to how many rupees do we spend for a level of output.

· Regular information bulletins based on the data collected, at specified intervals, such as budget presentation time in the state, the time of the supplementary budget discussions, the presentation of the performance and outcome budgets, and so on.

This creation of demand will take place in a governance atmosphere that actively discourages ‘too much’ dissemination of information. The experience of CBPS over the past 4 years in this regard has been that a gentle but sustained pressure is required to make people see that they will benefit by listening to what we are advocating. This process is time consuming, and results on this front are slow to achieve, but it is also our experience that a patient approach does achieve them. Without this component to the work outlined here, the BIS will be a creation with no takers.

Outputs of BIS

Some of the outputs of BIS are listed below, by no means exhaustively.

· Creation of a detailed and well connected data base on decentralised governance, urban and rural
· A large amount of knowledge created with the help of data analysis that connects directly with issues of local self governance, contextualised for diverse stakeholder concerns
· Feedback on decentralisation policy at the State and Central levels
· A large amount of training/dissemination material using print, multimedia and audio-visual formats
· Publications focussing on substantive issues as gleaned from the data and research

For more information, please contact:
Dr Vinod Vyasulu
Vyasulu@gmail.com