Decentralisation will completely overhaul the way we have looked at delivery of public goods and services
There is a Seventh Schedule to the Constitution, with Union, Concurrent and State Lists. Governments are elected to deliver governance. Other than processes, legislative and regulatory content, governance is about delivery of public goods and services, with “public goods” not defined in the classic economist’s sense. Thus, the Seventh Schedule tells us who should do what. There is an optimal layer of government at which these should be delivered. A higher layer is sub-optimal and so is a lower layer. There are both economies and diseconomies of scale. There was a Seventh Schedule to the Constitution. It is important to make this point. The Seventh Schedule is not cast in stone. Today’s Seventh Schedule is not what it was in 1950. The Union List expanded. The Concurrent List expanded and the State List shrunk. The Constitution doesn’t use the word “Centre”. It uses the word “Union”. But unfortunately, the expression “Centre-State” has entered the discourse. These changes in Seventh Schedule reflected greater centralisation. There wasn’t a single amendment in the reverse direction, the direction of decentralisation and devolution. This tendency to over-centralise, not only through changes in Seventh Schedule, has been commented on in several reports. The 2010 Report of the Commission on Centre-State Relations is one such. Hopefully, there will be a Seventh Schedule that is different, with decentralisation to the third tier of governance. 29 “public good” items should be on a panchayat list and 18 on a municipality list.
Yes, in 1968, the 1st Administrative Reforms Commission didn’t want a review of Seventh Schedule. But the Rajamannar Committee of 1971 did and the world of 2015 is different from that of 1968. Do we want decentralisation and devolution (and the question isn’t merely a fiscal one)? If you go by some elements of the current discourse, we don’t want decentralisation/ devolution. We want the “Centre” to do assorted things. Witness the criticism after Union Budget 2015-16 was presented, about the Centre not spending enough on health. Why should the Union government spend on health? Health doesn’t figure in the Union List. Medical education and medical professions figure in the Concurrent List. Do we then want the Centre to spend money on Medical Council? I am not being facile. There is indeed a sub-group of chief ministers and it will recommend rationalisation of central schemes. It is perfectly possible this sub-group recommends continuation of some variety of a National Health Mission. The limited point is that health is not Union government’s natural Constitutional mandate. It is in the State List, and not just as Entry 6 there.
There is a furore over land also. Entry 18 in the State List makes land squarely a state subject. Show me where land figures in the Union List. I am not suggesting the debated central land legislation is illegal. Far from it. But how is it justified? It is justified under Entry 42 of the Concurrent List, which is about “acquisition and requisition of property”. Read Entry 6 in the Concurrent List too, which is about “transfer of property other than agricultural land”.
It doesn’t seem definition of property under Entry 42 was meant to cover agricultural land, in the spirit of Seventh Schedule. Sure, the legality has been tested many years ago, including in a case involving the government of West Bengal. Even with the present, and not future and amended, Seventh Schedule, I think Union government should legislate on items in Union List. If it is an item on the Concurrent List, Union government should only legislate when State governments ask it to, not otherwise. Just as there are problems in devising Delhi-drivencentralised templates for centrally-sponsored schemes, there are issues with central laws in factor markets (add labour too) that ignore
In international negotiations, be it labour standards or environmental norms, our argument has been the following. Do not impose standards evolved in developed countries. Different countries are at different levels of development. By the same token, different states are at different levels of development. Their land, labour and natural resource markets differ. What’s wrong with allowing states to decide? What’s wrong with Delhi letting go? What’s wrong with labour moving to the State List? As long as the present Seventh Schedule continues, there is great temptation for Parliament to legislate on items on the Concurrent List. That’s the reason it is important to amend Seventh Schedule and reverse the trend, witnessed especially in mid-1970s, of moving items from State List to Concurrent List and from Concurrent List to Union List. Because of recommendations of 14th Finance Commission, some fiscal devolution has automatically happened. The fiscal devolution isn’t only Union-State. It is also about state to local bodies and intra-state differences. Decentralization and devolution aren’t purely fiscal. The non-fiscal elements are more important and also require a change in mind-set. I don’t think that has happened. We, at least some participants in the discourse, somehow prefer central planning and direction.
After one year, where’s the big bang? The answer depends entirely on what one’s subjective preference and definition is of “big bang”, oblivious of the fact that the world, and universe, are steady state, not big bang. But if one is going to use the expression big bang, I don’t think there can be a bigger bang than what’s occurred and is going to happen even more, decentralisation to states that goes way beyond fiscal devolution. This will completely overhaul the way we have institutionally looked at delivery of public goods and services and layer of government at which they are delivered. For various reasons, countervailing citizen pressure has resulted in demand for better goods and services, often at local body level. The supply-side changes require the kind of institutional change that is just beginning.
The author is Member, NITI Aayog. Views are personal