Maharashtra’s desire to be in the forefront among business-friendly States promoting the Central government’s pet policies has come at the expense of its constitutional responsibility to strengthen local governance. As the State continues to prioritise the implementation of big-ticket schemes such as the Smart Cities Mission, it is demanding greater revenue generation and sustained efforts for overall improvement from its Urban Local Bodies (ULBs) and Panchayati Raj Institutions (PRIs). At the same time, it has taken away their key sources of income, the local body tax and octroi, ironically for business reasons.
Over the years, the State has done little to improve the quality of basic services in the ULBs and the PRIs, thereby discouraging citizens from paying taxes on time in return for inefficient civic services. The delivery of basic services such as water supply, sanitation, and sewerage has remained poor in the ULBs and PRIs. The State did not own up to its responsibility to push the local bodies towards the road map of growth laid out by the 14th Finance Commission (FFC), which included regular submissions of annual accounts by the ULBs and PRIs, increase in their ‘own’ revenue, and publication of benchmarks of urban services.
In this context, it seems unfair to expect the ill-equipped local bodies to rise to the occasion and support major urban schemes launched by the Narendra Modi government, including the development of 100 smart cities, rejuvenation of 500 cities under the AMRUT scheme, and the Housing For All initiative.
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With ballooning liabilities and slow growth in ‘own’ revenue of the ULBs and PRIs, the State has been rendered a mere guarantor to banks and central agencies on behalf of the local bodies. Despite the staff strength of six lakh employees and an overabundance of over 100 schemes sponsored by the Centre and the State governments, Maharashtra’s 259 ULBs and 28,291 PRIs are still heavily dependent on the government for revenue receipts. In 2010, the PRIs received 12 per cent of the State’s revenue receipts; this grew to 17 per cent by the end of 2015. In the financial year 2014-15, 51 per cent and 49 per cent of total allocations were budgeted for ULBs and PRIs respectively.
The FFC had also laid out a solid road map by provisioning a major spend to strengthen the third level of governance in States. But Maharashtra did not provide the required support measures diligently. The State’s carelessness in attempting to put in place safeguards against misuse of funds by the PRIs has already been exposed by a report of the State FFC. The Commission blamed the successive governments in Maharashtra which ignored the horizontal devolution formula recommended by the Central Finance Commission (CFC) as a healthy road map for the development of local bodies. The formula took into account population, size and geography of urban and rural areas when making a budgetary provision for local bodies. But this was never put on priority.
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Also, a weak city and village-level leadership — both elected and bureaucratic — meant there has been little accountability in the enormous amount of spending over the years. The State, despite all its attempts, has failed to collect audited accounts for works worth Rs. 70,000 crore at the local body level in the last five years.
The picture is grimmer in the two most vital departments of the government, urban and rural, which have direct connections with the development of ULBs and PRIs. Data shows the State urban development department did not collect utilisation certificates to the tune of Rs.3,064 crore in 2009, and this number grew to Rs.12,660 crore at the end of 2014.
The rural development department in turn did not collect utilisation certificates for works to the tune of Rs.7,279 crore carried out at the village level in 2014. This statistic presents two alarming scenarios: either the funds are just lying in the bank accounts of local bodies or they have been misused in the name of local development.
Maharashtra’s top-down approach to push schemes without laying the foundation for them goes against the spirit of the 74th Amendment of the Constitution which promises devolution of State’s powers, resources and administrative support to the ULBs and PRIs. While it’s true that local bodies have considerable scope to perk up revenues from their own sources, the responsibility ultimately lies with the State to augment these resources — improving collection of property tax, sharing land conversion charges with the local bodies, and so on.
The State has shown a general unwillingness to adopt reforms and recommendations that could help improve its local governance system. The State machinery has been more than reluctant to pass on its powers to ‘purchase’ at the micro level, while it continues to suffer from an obsession to procure goods and services at every possible opportunity.
Enhancing powersFor greater and better participation of ULBs and PRIs in Central schemes, the State must look to enhance their powers and responsibilities through a single legislation. For example, instead of the municipalities in Maharashtra being governed by a host of acts — the Mumbai Municipal Corporation Act of 1888; the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act of 1965; and the Bombay Provincial Municipal Corporations Act of 1949, among others — they can be brought under one Act.
Without doubt, there is an urgent need to bring greater accountability in spending at the village and panchayat level. The State must bring uniformity across municipal corporations and panchayats in the procurement of supplies and services, effective implementation of projects, and put in place an efficient procurement regime. These guidelines must facilitate ease of procurement at the lowest level.
Once and for all, the State must fully and effectively devolve funds and functions to the local bodies, even if it means giving up on its all-important power to procure and purchase. This will mean true devolution of power.
sharad.vyas@thehindu.co.in