COMMITTEE ON DECENTRALIZATION OF POWERS

(Sen Committee Report)

Preliminary Report

Government of Kerala 1996

CHAPTER - 1

INTRODUCTION

The Government of Kerala constituted this Committee, for recommending measures for effective decentralization of power to the Local Self-Government Institutions (LSGIs). The specific terms of reference of the Committee are:

(i) To study the Kerala Panchayat Raj Act, 1994 and the Kerala Municipality Act, 1994 and other related Acts and Rules and to propose, in the light of practical experience, necessary amendments to the above Statutes and Rules in order to achieve the objective of decentralization of power to local self-Government institutions. (ii) To suggest necessary amendments to the above Acts and Rules so that power can be delegated effectively to the lowest level of administration and to enable local self-government institutions to enjoy full autonomy in the exercise of such power. (iii) To define the administrative and financial powers to be delegated to local self-government

institutions and to suggest procedures in critical areas such as financial powers and to propose appropriate modifications to the existing Acts and Rules.

(iv) To suggest appropriate structural changes in order to make the functioning of District Panchayats effective. (v) To suggest necessary modifications relating to the officers and staff who can be brought under the charge of Panchayats and Municipalities. (vi) To study the factors that stand in the way of making available full autonomy to local self-government institutions and to make necessary suggestions so that this objective can be achieved. (vii) To make suggestions to enable local self-government institutions to contribute effectively to the

development process particularly the creation of assets and to ensure public participation and transparency in local administration.

The Committee had its first sitting on 24th July, 1996 and held fourteen more sittings. It had interaction with the State Planning Board, the District Panchayat Presidents, Mayors, representatives of the Municipal Chairpersons, Block and Grama Panchayat Presidents, District Collectors, Directors of the Panchayats, Municipal Administration and Local Funds Audit Departments, and representatives of various organisations of employees.

This interim report has been finalised based on these discussions and the internal discussions within the Committee.

SCOPE OF THE INTERIM REPORT

The interim report has been prepared with the following limited objectives:

(i) To provide a perspective to the concept and process of decentralization; (ii) To identify the bottlenecks in the effective functioning of the present arrangements and suggest the remedial measures required immediately; and (iii) To suggest the areas for policy initiative in the short term period of six months.

This interim report covers all LSGIs but greater emphasis has been given to the District, Block and Grama Panchayats as they do not have the experience and facilities which most of the municipal bodies have.

CHAPTER - 2

THE APPROACH

Decentralization is a concept that has been variously defined and differently interpreted. Its meaning could range from mere deconcentration to full autonomy. For the purpose of this report, it is to be understood as working towards the creation of "institutions of self-government" as enjoined in Articles 243 G and 243 W of the Constitution of India. The Committee believes that a new chapter is being added to the Indian federal polity. Public governance in the country can no longer be the same. The Committee went into these aspects in detail and its approach is outlined below.

A. WHAT IS LOCAL SELF GOVERNMENT ?

Local Self-Government is essentially the empowerment of the people by giving them not only the voice, but the power of choice as well, in order to shape the development which they feel is appropriate to their situation. It implies maximum decentralization of powers to enable the elected bodies to function as autonomous units with adequate power, authority and resources to discharge the basic responsibility of bringing about "economic development and social justice". It is not enough to formally transfer powers and responsibilities to the LSGIs. They have to be vested with the authority to exercise them fully which requires concordant changes not only in the appropriate rules, manuals, government orders and circulars governing development administration, but also in the conventions, practices and, even, the value premises of the government agencies. Decentralization does not mean just deconcentration where a subordinate is allowed to act on behalf of the superior without a real transfer of authority, or delegation where powers are formally conferred on a subordinate without any real transfer of authority. It implies devolution, where real power and authority are transferred to enable autonomous functioning within the defined areas.

Decentralization in its true sense should be democratic decentralization. With the constitutional recognition accorded to Grama Sabhas and Wards Committees, the necessary condition for genuine participatory democracy has been created. The greater the involvement of these people's bodies and the more effective their functioning, the fuller would be the realization of the objectives of LSGIs. So power should flow through the elected bodies and its members to the people and should not be blocked at any level, as power ultimately belongs to the people and it is only legitimate that it is handed over to them.

Thus LSGIs would facilitate exercise of legitimate and legal authority by the people and the elected bodies. It should put an end to the various extra-constitutional power centres influencing the development process at the grass roots level. Often power is seen, felt and recognized by its abuse: at times, arbitrary, discretionary exercise of power is found attractive. Power denotes separation and distance from the powerless, and is distinguished by typical symbols and trappings. It is not this 'power' that is to be transferred to the LSGIs. It is the power to build capabilities, increase production, reduce inequalities, and promote harmony that is to be vested in them - a facilitative power. Development is basically enhancing the capabilities of people and enlarging their choices.

And the transfer of power has to be more in the vertically downward direction than in the horizontally sideways direction. In other words, the powers of the state to bring about development are to be handed over to the LSGIs and not just the powers now exercised by the functionaries of the state at the corresponding level. Horizontally, the power to decide what to be done, how to be done, and the priorities of doing, will move to the elected institutions. The officials will retain their professional power to advise but they have to act as per the decisions of the elected bodies. The role of the departments henceforth would be, not to take decisions by themselves, but to help the people to take decisions and then carry them out. Their professional role would expand while their administrative role would shrink.

Decentralization is a process and cannot be achieved in one stroke. It has to undergo a continuous process of redefining, adapting and adjusting. So it is essential to closely monitor the working of the new system, and to take measures to improve it as and when required.

B. SOME BASIC PRINCIPLES

Some basic principles should govern the transfer of functions and powers to the LSGIs and their exercise by them. The salient among them are explained below:

(i) Autonomy:

The LSGIs should be left to function freely and independently. Government supervision should be limited to the obligatory and regulatory functions of the LSGIs. In developmental matters, only national and state priorities and general guidelines need be indicated to help them take their own decisions. Of course, autonomy does not mean sovereignty. A multi-level exercise of developmental functions implies the existence of a sphere of independent action at each level, a sphere of cooperative and coordinated action, a sphere of delegated agency function, and a sphere of guidance from above, in the descending order of magnitude.

Autonomy has three basic aspects:

1. Functional autonomy 2. Financial autonomy 3. Administrative autonomy

LSGIs have to be assigned clear functional areas with the required resources, staff and administrative infrastructure and enabled to raise resources and to take independent decisions and implement them. Autonomy implies that various levels of LSGIs especially the Panchayats should not be seen as hierarchically organized, with one unit controlling the others below it. However there is need for active co-operation, co-ordination, complementation, and integration. These could be attained by an iterative process of consultation and the system should be so designed as to facilitate such a process.

(ii) Subsidiarity:

It means what can be done best at a particular level should be done at that level and not at a higher level. If this principle is applied, the process of transferring functions and powers should start from the level of the Grama Sabhas and Wards Committees and go up to the Union Government. Only residual functions need get allotted to the higher level.

(iii) Role-clarity :

This would govern the exercise of autonomy. Decentralised development implies unity of vision and diversity of means. This calls for a clear perception by the various levels of their role in the developmental process so that the sub-systems can support each other and do not work at cross-purposes. There must be clarity at the conceptual and operational level about what each tier of local self-government can do in each area of development. Of course, neat divisions are not possible, nor are they desirable. Yet functional clarity should be there. Only this can facilitate proper devolution of powers, their creative exercise and a meaningful monitoring of the whole process.

(iv) Complementarity:

This is closely related to the principle of role-clarity. While functions should not be overlapping and repetitive, they should merge into an overall unity through a process of horizontal integration. This would mean that the activities of higher levels should complement those of the lower levels and the programmes implemented by all agencies in a given LSGI would be consistent with local needs and priorities and would converge into an integrated local plan.

(v) Uniformity:

This implies that the norms and criteria for selection of beneficiaries, sites or prioritization of activities and pattern of assistance within a given LSGI would be the same for all programmes implemented within its area irrespective of the agency sponsoring such a programme.

(vi) People's participation:

It is necessary to involve the people fully, particularly those sections hitherto excluded from the development process. And participation should not be limited to mere information giving or consultation or contribution or even, seeking prior concurrence. It should reach the level of empowering the people to take their own decisions after their analysing their situation. Genuine participation is not the same as mobilization.

The LSGIs provide the institutional structure to facilitate participatory-democracy. The reservation of seats for women, Scheduled Castes and Scheduled Tribes in the various LSGIs is meant to ensure greater participation of vulnerable sections in the process of development. People's participation should be there in all stages of a development programme right from identification of a need and formulation of a scheme through its planning, implementation, operation and maintenance as well as monitoring and evaluation phases.

The Grama Sabhas and Wards Committees are ideal vehicles for promoting direct decision-making and mobilizing local resources in cash, kind and labour.

(vii) Accountability:

The LSGIs are accountable to the people within their jurisdiction, and, in certain respects, to the whole nation. The accountability to the people is not to be left to the elections alone to be settled. There has to be provision for continuing social audit of the performance of the LSGIs in the Grama Sabhas and Wards Committees as well as by special groups. The accountability to the nation can be ensured through objective audit, both concurrent and post-facto.

(viii) Transparency:

Every decision taken has to be based on norms and criteria evolved on the basis of social consensus and the rationale behind each decision has to be made public. There should be freedom to the people to know every detail of how money is going to be spent, before a scheme is taken up; and how it was spent, after its completion. The procedures and the language of the administration need to be demystified and made people-friendly.

C. IMPROVEMENTS EXPECTED FROM THE NEW SYSTEM

Assuming that the concept of decentralization and its basic principles are adhered to in letter and spirit, then certain important improvements could be brought about by the LSGIs, if they consider these possibilities as objectives to be pursued. In the context of Kerala, such possibilities could be:

(1) To make development sustainable by harnessing the efforts of the people by involving them fully in the development process from the pre-planning stage up to the evaluation stage. Better understanding of local problems and needs, better supervision of programmes, and local contributions can give the much needed push to the Kerala economy. Such participatory action should keep in view the goals of improving productivity, working towards greater self-reliance, and achieving better standards of living.

(2) To eke out resources not only through local contributions but also by reducing corruption by vigilant supervision of works and schemes by Grama Sabhas and Wards Committees, people's groups and socially active individuals and organizations.

(3) To improve the speed and quality of the delivery system. Perhaps the most visible, felt and immediate change which LSGIs can bring about is a qualitative improvement in the rendering of government services through a process of popular demand-induced responsiveness in the bureaucracy. Also by getting over departmentalism, the functional fragmentation of development interventions can be avoided. By seeing a problem or assessing a need in its totality, the LSGI is in a better position to pool all its resources, financial and human, in its intervention. This convergence of services and resources can increase the productivity of investments significantly. The LSGIs should make the best use of the experience and expertise of officials considering them as an important resource.

(4) To act as a people-friendly institution, and to serve as an information centre for the ordinary man.

In the changed context, the LSGIs have to take "economic development and social justice'' as their basic function and assign a supportive and complementary role to their semi-regulatory as well as amenity-providing and welfare-oriented civic functions.

D. ROLE OF EACH TIER

The Committee intends to provide a framework for assigning appropriate roles to each tier of local self-government. The probable basis for transferring institutions and scheme responsibilities would include the following factors in practice:

(i) Service area - Institutions or schemes which service only a Grama Panchayat should be under that panchayat and likewise for the higher tiers and the municipal bodies.

(ii) Technical complexity - Simple schemes can be handled by lower level LSGIs and technically sophisticated schemes require handling by larger institutions with the required manpower. (iii) Management complexity - For example, running of a seed farm intended to supply seeds to a

region can be managed at the district level if the management needs are not all that complex. Similar logic works in assigning high schools, technical institutions etc.to the District Panchayat.

(iv) Physical size - As in the case of roads, the physical dimensions can be the factor in deciding the level of ownership.

(v) Financial size - Financial limits can be set for approval, implementation and running of certain projects.

(vi) Nature of a scheme - It is always better that a pioneering or pilot project with large scale replication possibilities is run by a higher level body. Within a same scheme there could be multiple roles. For instance, in a pilot scheme implemented by the District Panchayat, the Block Panchayat could carry out construction activities while the beneficiary selection be done by the Grama Panchayat or better still, the Grama Sabha.

CHAPTER – 3

LOCAL SELF-GOVERNMENT INSTITUTIONS IN THE DEVELOPMENT PROCESS

A. INTRODUCTION

The current financial year has gone far ahead and not much meaningful change can be introduced at this stage. Preparations for changes to be made from the next year onwards can start at an early date so that well-planned action is possible right from the beginning of the next financial year. In the meantime if redistribution of departmental funds among the LSGIs is found to be desirable this may be made. _

Planning on the basis of untied funds to LSGIs should start from below. All the LSGIs must formulate their schemes for the year on the basis of their priorities. These schemes together with departmental proposals and related funds will go to District Planning Committee (DPC) which can prepare the total plan for the district following the State Planning Board (SPB) guidelines. In addition to creating new assets, maintenance and renewals may be included in the schemes. If a DPC finds that some modifications in schemes of lower tiers are necessary, then such modifications can be made effective only after mutual discussions with the concerned LSGIs. Grama Panchayats must prepare their plans on the basis of suggestions from Grama Sabhas.

A project spreading beyond the limits of a Grama Panchayat area will go to the Block Panchayat and that going beyond the area of the block will go to the District Panchayat. SPB will take care of inter district schemes.

Though Grama Panchayat schemes will be usually small, technical help from officials placed at a higher tier may be necessary. Such technical help should be arranged, but such technical officials must have no power regarding sanctioning. She/he is only to provide technical help under the management of the Grama Panchayat. If no such official help is available, then the Panchayat must be free to hire non-official help. Fixing of the financial ceiling of a scheme is not necessary.

Proper accounting of expenditure and checking of quality of work is a must; proper account books and vouchers should be maintained.

Beneficiaries of a scheme or representatives elected by them, will form the beneficiary committee. They should supervise the implementation of the schemes and scruitinise rates and quality. Where technical specifications are necessary, these should be written in simple language which can be understood by a layman. In addition a women's committees will be formed in the Grama Panchayats and Municipalities to scruitinise the costs and quality of work.

The operationalisation of these broad suggestions is dealt with in detail in the succeeding paragraphs.

B. THE PLANNING PROCESS

The core function of the LSGIs as laid down in the Constitution would be "making plans for economic development and social justice". In the context of Kerala, district level planning could not be fully realised so far, as the short-lived District Councils were not involved in the planning exercise. The Grama Panchayats have had some experience in local level planning in the last seven years by virtue of handling funds given 'untied' by the state government as well as the Jawahar Rozgar Yojana (JRY) funds. In the current year's budget the government has set apart Rs.329.41 crores under Plan and Rs.I51.22 crores under Non-Plan to be spent through the LSGIs, which includes an untied portion of Rs 98.30 crores. Now the state is on the threshold of a massive pioneering experiment in participative planning for the preparation of the 9th Five Year Plan.

In the light of the approach expounded in Chapter-2, the Committee suggests the following points for immediate action to ensure greater involvement by the LSGIs, in the planning process:

( 1 ) For the current year, the bulk of the Plan funds are to be routed through the departments and they are mostly tied to specific schemes and the LSGIs would have only a limited role of selecting beneficiaries or just authorising expenditure. The following procedure is suggested for the utilisation of these funds:

(i) The State Planning Board may first asses the spill-over commitments, that is, funds required to clear payments for past works and other committed expenditure. This has to be met by the departments from their funds, for there is no point in using the LSGIs only as a payment counter. In the case of incomplete works, the LSGIs may be given the right to accept them or not for completion.

(ii) The remaining funds can be allocated district-wise. Within the district, the District Planning Committee (DPC) can allocate funds and schemes among the LSGI's for which a guideline formula may be fixed by the Planning Board with

a pronounced weightage based on a well-worked out index of backwardness.

(iii) Once this has been done, it has to be unambiguously laid down that wherever applicable the selection of beneficiaries, sites, and laying down of priorities etc. would have to be done by the appropriate LSGIs. In all cases, the administrative sanction has to be given by them before the scheme is taken up. Later the expenditure has also to be authorised by them. The LSGIs should be clearly empowered to monitor and supervise the implementation, which would include the power to inspect sites, call for records, hold review meetings, stop payments if irregularities are detected, etc. This full and active involvement of LSGIs would give them useful practical experience, enabling them to take up larger responsibilities in the next year.

This exercise has to be done immediately to avoid the possibility of inequitable allocation among the LSGIs and schemes getting irrationally split up.

(2) LSGIs have to be fully as well as formally associated with district-focussed schemes like District Primary Education Project (DPEP), Community Based Convergence of Service (CBCS), and special programmes like the Urban Basic Services for the Poor (UBSP).

(3) The District Rural Development Agency (DRDA) may be wound up and the District Panchayat can carry out the functions of the DRDA. The staff of the DRDA must be transferred to the District Panchayat. Of course, in keeping with Government of India guidelines separate accounts can be maintained for DRDA funds and independent auditing done. Similar course of action is suggested in the case of agencies like the Fish Farmers Development Agency (FFDA).

(4) The funds earmarked under JRY for DRDA level spending, may be allocated to blocks on the basis of a clear formula reflecting poverty concerns. The Block Panchayat should plan and implement schemes for its share. Implementation can be supervised by the District Panchayats on the lines now followed by the DRDA.

(5) The Integrated Child Development Services (ICDS) project setup should be transferred to the Block Panchayats and Municipal bodies immediately.

(6) The district hospital and other hospitals servicing more than one block or municipal area should be brought under the District Panchayats. Taluk hospitals which cater to an area bigger than a block or municipality should have a management committee consisting of heads of LSGIs of their service areas and other required members to advise on provision of services and policy matters. All the district level health schemes like TB/Leprosy/Blindness control, school health programme etc. should be implemented by the District Panchayats.

(7) Immediate relief work under natural calamities should be taken up by the LSGIs in the affected areas, with the District Panchayat co-ordinating this work. In the case of post-calamity rehabilitation and repair works, the funds should be allotted to the District Panchayats and municipal bodies which must have a plan of action based on severity of damage. The implementation should be by the LSGIs owning the assets.

(8) In accordance with the llth and 12th Schedules of the Constitution, provision of drinking water should be entrusted to the LSGIs. As the first step, commissioned water supply schemes may be handed over to the willing LSGIs by the Kerala Water Authority for running them. Necessary amendments to the concerned Acts have to be made to enable the LSGIs to take up their own water supply schemes.

(9) It is desirable to have a quick evaluation (by an independent agency) of the kind of planning which went into the preparation of schemes by the Grama Panchayats utilising the untied and JRY funds in the last seven years. This exercise would help to highlight the strengths and weaknesses of the past efforts, and more importantly, would serve as the empirical basis, for guiding the planning process in future.

(10) A participatory socio-economic and resource survey may be initiated immediately in each Grama Panchayat and municipal body so as to have the required database for planning from below. Local educational institutions and Non-Government Organizations could be involved in this exercise.

(11) All local plans have to originate from below, from the needs expressed by the Grama Sabhas and Wards Committees and their priorities. Through an iterative process there has to be a harmonizing of priorities of each level based on norms and criteria arrived at by consensus. The State Planning Board, after laying down the state priorities and indicating the proportionate investment in different sectors, should hold discussions with the District Planning Committee and finalise district priorities and spatial plans, so as to attain the general objectives. A similar exercise has to be done by the DPCs vis-a-vis the LSGIs of the district. Once the norms are agreed to violations can be pointed out by the Planning Board and the DPC and got rectified by the concerned LSGI. Other than adherence to pre-agreed norms, on no count should the priorities and schemes selected by the LSGIs be changed. Of course, unified command

system can be resorted to for carrying out programmes reflecting national concerns like family welfare, health strategies for Maternal and Child Health, prevention and control of various diseases, control of epidemics, eco-development strategies etc.

(12) In keeping with this recommendation no prior approval of the budget of any LSGI is required. However the DPC can scrutinise the budgets and point out defects if any with reference to the budget guidelines issued by the government.

(13) The schemes implemented by state level corporations and boards which are related to the subjects transferred to the LSGIs need to be incorporated in the district plan. Selection of location/beneficiaries can be made locally by the concerned LSGIs in accordance with the norms fixed by the funding agencies. (14) The planning process for the disadvantaged groups, particularly the Scheduled Castes (SCs) and Scheduled Tribes (STs) needs to be carefully worked out. The earmarking of Plan funds exclusively for the benefit of SCs and STs under the Special Component Plan (SCP) and Tribal Sub Plan (TSP), is one of the most progressive policy decisions in the general strategy of direct attack on poverty. This non-divertible resource commitment - about 10% in the case of Kerala - has, by convention, become a sort of inviolable covenant. The LSGIs should uphold it and improve the quality of planning and implementation. Since almost the entire SCP/TSP component of the Plan is expected to be transferred to the LSGIs, at their level, it is likely to constitute around one-fourth of the total allocation. This may create a wrong impression of disproportionate and unfair allotment to a small minority. This has to be guarded against as it is commonly accepted that the Scheduled Castes and Scheduled Tribes constitute the outliers as far as development is concerned in Kerala. Though the SCs and STs make up only about 11% of Kerala's population, the poorest decile consists mostly of these groups. Thus, to realise the constitutional obligation of social justice, the resources set apart for the SCs and STs should be spent only for their benefit, as per their needs and in terms of their priorities. And since development of such "excluded" groups is very difficult, special planning efforts are required. Taking all these aspects into account, the Committee proposes the following procedure. (i) The working group system has to be discontinued.

(ii) The SCP/TSP component will be separated from the general Plan funds at the State level, as of now, and allocation of funds to districts made as per a formula

based on the size and backwardness of the SC-ST population. There should be some ceiling on the share of funds to be spent on certain sectors (to be fixed district wise by the State Planning Board).

(iii) At the district level proposals have to be initiated from below. At the Grama Sabha and Wards Committee levels, a separate sub group consisting of only SCs for SCP and STs for TSP would list out the needs, set priorities and lay down the criteria of site selection, beneficiary selection, etc.

(iv) Detailed socio-economic data on SCs/STs would be gathered, preferably by the Grama Panchayats and municipal bodies and made public at the Grama Sabha, Panchayat and municipal ward levels.

(v) A Task Force has to be created at the level of the Grama Panchayat and municipal bodies by identifying a group of SCs for SCP and STs for TSP. The size of this group can range from 10 to 30 depending on the population of SCs and STs in the LSGI and this has to be distributed among the wards proportionately. At least 50% of this Task Force should consist of women. The Grama Sabhas and Wards Committees should select the nominees from among themselves. The tenure of this Task Force shall be one year. The SC/ ST members of the LSGI shall be members of this Task Force which has to be headed by the head of the LSGI. Task Forces can be created at the Block and District Panchayats by drawing members from the Task Force of the immediately lower tier.

(vi) In the case of SCP the Grama Panchayats could focus on beneficiary-oriented schemes and the Block Panchayat could concentrate on development of infrastructure. The DPC should approve schemes under Special Central Assistance, and those implemented by the Kerala State Electricity Board and other agencies not transferred to the LSGIs. (vii) As far as TSP is concerned, it is better to finalise the entire Plan at the level of the DPC based on

proposals from the LSGIs. The implementation will be by the appropriate LSGIs.

(viii) The District Panchayats/Municipal bodies should manage the hostels and other institutions run for the benefit of SCs and STs.

(ix) There should be closer monitoring of SCP and TSP. Both the Planning Board and the DPC have to scientifically monitor the level of development of SCs and STs. Special Social Audit Groups of respected citizens can be created to go into the planning and implementation of SCP and TSP.

(x) In case it is found that schemes not benefiting SCs or STs have been taken up under SCP and TSP, the amount misspent has to be provided under next year's budget of the LSGI. In the case of infrastructure, the majority of beneficiaries has to be SCs or STs as the case may be. This has to be ascertained by the LSGI and recorded before sanctioning of a scheme under SCP or TSP. If schemes not benefiting SCs or STs is sanctioned, those responsible should be

penalised by recovering the expenditure on such a scheme from them. Similarly shortfall in expenditure would be carried over to the succeeding year.

(xi) There may be a sub-committee of DPC for SCP and TSP.

The Committee hopes that these special arrangements would facilitate the empowerment of the SCs and STs.

(15) The right to information of the LSGI vis-a-vis certain departments and agencies not transferred to them has to be specifically upheld. LSGIs, at various levels need to be given relevant information by the Kerala State Electricity Board, Kerala Water Authority, Irrigation Department, Civil Supplies Department, Revenue Department etc. Similarly officers of these departments at appropriate levels have to attend meetings of LSGIs whenever specially requested. (16) With regard to funds, the Committee's recommendations are: (i) The LSGIs should be facilitated and encouraged to collect development cess/ user charges in appropriate cases.

(ii) Local resources mobilisation in the form of voluntary contribution in cash, kind and labour will have to be encouraged. (iii) LSGIs should have the freedom to maintain a revolving fund to facilitate economic development activities by supplying inputs and realising costs on supply. (iv) In the case of departmental funds, a speedy procedure has to be prescribed for transfer of funds. A time limit, which cannot be transgressed without inviting penalty, has to be laid down.

(v) To facilitate ease of access and use of funds at their disposal, LSGIs which are beyond a prescribed distance from the treasury may be allowed to open Bank accounts. (17) In order to facilitate closer linkages with the banking system, the State Government may initiate steps to make the DPC Chairperson, the chairperson of district level banking committees and the Block Panchayat President, the chairperson of the block level committees. At the block level, the Grama Panchayat Presidents should also be invited. Municipal bodies should be represented in the concerned committees. (18) In the new set up the District Planning Committee will be the hub of the planning activities. The committee makes the following recommendations with respect to the DPC, in addition to those indicated earlier: (i) The DPC should be empowered to invite experts to help it out on specified issues.

(ii) The technical support to the DPC needs to be strengthened. (iii) The statistics win at the district and taluk levels should service the DPC. (iv) The DPC should consolidate the database at the district level and scientifically keep track of the state of development of the district. The National Informatics Centre could assist the DPC.

(v) The DPC should monitor and evaluate the development schemes of all departments and agencies at the district level. The District Development Council (DDC) in its present form should be abolished and reconstituted as an extended version of the DPC including the present representation pattern of the DDC. It can discharge the review and co-ordination function exercised so far by the DDC. It should meet once in every month, chaired by the DPC Chairperson.

(vi) The DPC should integrate the District Credit Plan into the District Plan. Also the departmental Plan schemes have to be harmonised with district priorities. (vii) The DPC may have sub-committees for (a) Monitoring the data base and keeping track of the development levels in various parts of the district.

(b) Drafting the plan

(c) Special Component Plan (SCP)/Tribal Sub-Plan(TSP). (viii) There should be reservation for SC/ST and women in the DPC also. For the present purpose,

selected people representing these categories from among elected representatives could be made permanent invitees. (19) The State may consider creation of a State Development Council (SDC) with the Chief Minister as chairperson and the Leader of the Opposition as vice-chairperson including all Ministers, all DPC chairpersons, Mayors, representatives of Municipal Chairpersons and the Vice-chairperson of the State Planning Board with the Chief Secretary to Government as the Member-Secretary. Its functions could include,

-Discussing development policy issues having implications for local level development and regional development and arriving at a consensus.

-Harmonising the district plans and the state plan.

-Sorting out policy matters necessary for strengthening local self-governments.

-Tackling inter-district issues concerning development

C. IMPLEMENTATION

Recognising that LSGIs can achieve a significant improvement in the quality of implementation, the Committee recommends the following:

(1) For the funds transferred to the LSGIs the powers of administrative sanction should be limited only by the budget or plan provisions of the concerned LSGI.

(2) For technical sanction, several options need to be provided. The powers of technical sanction of field level technical staff should be enhanced. For technically complex structures different set of powers can be prescribed - such structures have to be identified by the government. The government should assign services of various engineers cutting across the present departmental set-up, to the LSGIs.

(3) All LSGIs should be given the option of utilising the services of private engineers or engineers of public sector or other autonomous government agencies for taking estimates and giving approval. Also such an option has to be there for measurement, check measurement, preparation of bills and vetting of bills. The government may prescribe, the qualification/experience of the technical staff required for different types of work, of different dimensions and costs, and for the different technical functions.

(4) In order to simplify matters, a variety of designs for different types of construction can be prepared by the government using the services of its experts as well as those of engineering colleges, research institutions and voluntary agencies, indicating their standards and specifications, their material and manpower requirements etc. Such a manual of designs, standards and specifications should be simple for use by the LSGIs.

(5) Appropriate technology has to be encouraged, particularly in construction. Low cost designs can be obtained from engineering colleges, research institutions and organisations like Nirmiti Kendra and Costford, their technical specifications vetted and popularised. Necessary amendments in the departmental technical manuals and guidelines have to be made to incorporate the appropriate technologies.

(6) Except in specified cases involving technical complexity, all works could be imple- mented by beneficiary committees if so decided by the LSGIs and in such cases the contractor has to be avoided even in the disguised form of nominee of the beneficiary committee.

(7) The recommendations indicated as 2,3,4,5 and 6 should be followed up by the State Government constituting a small working group consisting of eminent technical ex- perts and administrators to present clear cut final proposals for decision within three months.

(8) In the case of works entrusted to a contractor also, beneficiary committees would have powers of monitoring and social audit.

(9} All the estimates prepared for various works should have an appendix describing the quantity and quality of materials, the labour requirements and the cost estimates in a language understood by the layman.

(9) Panchayat members should not be nominees. Benami works need to be checked at any cost.

D. PEOPLE'S PARTICIPATION

To enlist genuine participation of the people, the suggestions of the Committee are:

(1) The Grama Sabha has to be strengthened as follows: (i) The quorum of Grama Sabha should be raised to 10%.

(ii) The Grama Sabha should meet as frequently as possible, at any rate not less than once in three months. (iii) For the Grama Sabha, there should be written invitations to every household. (iv) Every member of the Grama Sabha should be given a copy of the Government Order detailing the rights and responsibilities of Grama Sabhas with a covering letter by the Grama Panchayat President. (v) The rights of the Grama Sabha should be specified, to include: (1) To know the action plan for the next three months as far as schemes are concerned.

(2) To know the detailed estimates of the works proposed to be taken up.

(3) To lay down norms and criteria for selection of beneficiaries and then to select beneficiaries as per those norms and criteria.

(4) To know the detailed item-wise accounts of every expenditure incurred within the area of the Grama Sabha.

(5) To know the rationale of every decision of the Panchayat concerning that area.

(6) To ascertain from the officials, the services they will render and the work they are to do in the succeeding three months.

(7) To generate proposals and indicate priorities for preparation of the Five Year and Annual Plans.

(8) To set up sub-committees to undertake or oversee any item of work in furtherance of the rights and responsibilities of the Grama Sabha. (vi) The responsibilities of the Grama Sabha could include: (1) Dissemination of information on development and welfare programmes.

(2) Canvassing participation in health, literacy and similar development cam- paigns.

(3) Collecting essential socio-economic data.

(4) Providing feedback on the performance of development programmes.

(5) Resorting to moral suasion to pay taxes, repay loans, promote environmental cleanliness, maintain social harmony etc.

(5) Mobilising local resources to augment panchayat resources.

(6) Supervising development works as volunteer teams.

(7) Creating arrangements to report quickly incidence of epidemics, natural calamities etc. (vii) The convener of the Grama Sabha should maintain a record of the decisions taken in each meeting. This must be available in the Panchayat office for reference and copying. (viii) Failure to convene the Grama Sabhas should be deemed to be a violation of the provisions of the Kerala Panchayat Raj Act and calls for penal action including loss of membership of the convener in

case of two consecutive instances of noncompliance. (2) In the Municipalities, the Wards Committees may be selected as decided by the general body of the ward electors. In municipal corporations the present system can continue. There should be a time limit of 45 days for constitution of Wards Committees. The recommendations made with regard to Grama Sabhas shall mutatis- mutandis apply to the Wards Committees of all municipal bodies. (3) Social audit should be facilitated by taking steps like: (i) Making all estimates, list of beneficiaries, assistance given in each scheme, muster rolls, bill, vouchers, accounts etc, open documents for scrutiny by any citizen and providing photocopies of them on payment of actual cost. (ii) Stipulating that all applications for various licenses, permits, certificates, given to a LSGI are given a queue number and this priority should not be violated. Registers indicating date of application and date of clearance in each case should be available for reference by any applicant. If possible copies should be published in the notice board. (iii) Making public, assessment of tax, grant of exemption etc. to ensure that there are no complaints of undue preferential treatment to some people. (iv) Constituting social audit committees compulsorily at the level of all LSGIs other than Grama Panchayats consisting of respected citizens and professionals to audit developmental programmes whenever they deem it appropriate.

(v) Setting up special women's watchdog committees at the level of Grama Panchayats and Municipalities including two nominees of each Grama Sabha or Wards Committee, one being a member of any Scheduled Caste or Scheduled Tribe. Such committees would have the same rights as social audit committees and would scruitinise costs, estimates, the quantity and quality of materials used in works, adherence to norms in selection etc. (4) Now there is provision for constitution of functional committees by the LSGIs. Government may issue detailed instructions on their constitution, purpose, areas of functioning and mode of functioning. These committees are very relevant in ensuring people's participation at the implementation and monitoring stages and later in op- eration and maintenance.

(5) Transparency of decision making should be ensured in all LSGIs by framing rules of business requiring each resolution to be speaking, giving the rationale for the decision.

(6) In order to ensure greater involvement of the people, particularly the poor, in all the stages of the development process, participatory structures like neighborhood groups and development societies may be set up as supportive structures of the Grama Sabha and Wards Committee. Lessons may be drawn from the experience of such strategies in Alappuzha and Malappuram districts implemented through the Neighbourhood Groups (NHGs), Area Development Societies (ADSs) and Community Development Society (CDS).

CHAPTER - 4

MAKING THE LOCAL SELF-GOVERNMENT INSTITUTIONS FUNCTIONAL

The Committee is of the opinion that mere transfer of functions and powers through the legislative process is not enough to make the LSGIs fully functional. It has been made clear that LSGIs are not just add-ons to the existing development administration; the new generation LSGIs imply a total change from the past. To make the system alive and functional some of the areas of immediate concern are outlined below:

A. PROCEDURAL MATTERS

Developmental programmes and their working are mostly governed, not by statutes, but by executive decisions communicated in the form of Government orders (G.Os), manuals, guidelines, circulars, clarifications etc. And then, a whole lot of precedents and conventions dominate the day-to-day running of the development administration. Therefore unless legislative intervention is complemented by a comprehensive set of executive working instructions, the new system cannot function smoothly. Unfortunately in Kerala, this critical action has not been carried out in a coherent, consistent and concerted manner, resulting in a chaotic situation particularly in the new LSGIs like the District and Block Panchayats. In the case of the old institutions like Corporations, Municipalities and Grama Panchayats, this lapse has resulted in their functioning in the traditional civic-welfarist mode without changing over to a truly development mode. In this context, the recommendations of the Committee are:

(1) The LSGIs should be given clear working instructions on how to exercise the functions transferred to them. Though this was clearly stipulated in the Government Order dated 18/09/95, the Committee was informed that only the Health Department, and to a certain extent, the Rural Development Department can claim to have gone into really operational aspects in their orders. So all the departments have to issue appropriate orders facilitating smooth and independent exercise of the functions transferred to the LSGIs. Such orders, among other things may include the following points: (i) The LSGIs have the right to choose beneficiaries, sites and make other choices in the schemes handed over to them.

(ii) No action should be taken by any department on any programme or incur any expenditure without the prior concurrence of the appropriate LSGIs. (iii) The LSGIs are not bound to release funds for activities not having their prior approval (iv) The authority to give technical approval, where needed, has to be specified, and also the time limit, beyond which it shall be deemed that the technical approval has been given and further action can be taken by the LSGI. Higher powers of Technical Sanction may be conferred on field functionaries. Also the LSGIs should be authorized to get the schemes technically vetted by outside agencies with prescribed qualifications. (v) The procedure for purchase of materials, hiring of services, and the financial limits on these counts has to be laid down straightaway. (vi) The role of higher level officials in the departments has to be prescribed visa-vis the items transferred to the LSGIs. It should be minimal, and in any case, restricted to advice and support and not control. A decision of a LSGI in conformity with existing rules should not be interfered with. Senior officers should supervise the officials transferred to the LSGIs to ensure that they support the LSGIs fully. They can also tender their advice for the consideration of the LSGIs. (vii) The mode of review of activities/programmes by the LSGIs including periodical reporting, is best left to them. However guidelines may be issued to enable them to exercise this function effectively. The departmental officials must be clearly told of this right of review of the LSGIs. (viii) As of now, most of the institutions transferred to the LSGIs would be subject to dual control. The process of giving total control to the LSGIs subject to certain standards and norms has to be initiated. Until this is completed, the role-range of the LSGI and the department has to be clearly indicated in each case, to avoid overlap and ambiguity. (2) To set off the process of constructive action by the LSGIs concerning the schemes and institutions transferred to them, circulars outlining the possibilities of local action can be issued by heads of department.

(3) The level of control over staff transferred - like sanction of various kinds of leave, disciplinary powers, sanction of loans and advances etc. - has to be specified. As a general rule whenever something is done at a higher level which has some bearing on the working of the official transferred to the LSGIs, like sanction of long leave, deputation to training etc, it should be so done, only with the knowledge of the head of the LSGI.

(4) Liabilities of any kind existing on the date of transfer to LSGIs like pending bills, rent claims etc. should on no count be placed on the LSGIs.

(5) In the education department, necessary amendments to the Kerala Education Act and Rules have to be made. (6) A different procedural issue is concerning the implication of the head of a LSGI being its executive head- The Committee's opinion on this aspect is: (i) While the head of the LSGI should be fully in the know of all development matters and have the power to call for every file and correspondence and issue instructions on them, and authorise expenditure, they should not be burdened with administrative trivia like routine signing of registers, bills, cheques, letters, dealing with administrative claims of staff like Provident Fund, pension etc. She/he need only generally keep watch on these matters as part of office supervision or act in response

to a complaint. (ii) The Secretary should also act as the chief executive officer of the LSGI carrying out its decisions. B. ROLE OF OFFICIALS AND DEPARTMENTS

Unless the LSGIs are endowed with requisite staff from the departments working under their control and direction, it would not be possible for the new system to achieve its objectives. The Committee feels that though it is a complex issue, a consensus is possible protecting the interests of staff and the LSGIs. Since this will take time, only immediately needed actions are recommended:

(1) Without detriment to the status and prospects of an employee in her/his department, a LSGI should have the right to redeploy staff from various departments under its control to man the posts sanctioned to it.

(2) A LSGI must have the right to assign technical tasks to any technical officer under its control and this shall not be constrained by the previous responsibilities of the official in his earlier assignment in her/his department.

(3) The LSGIs should have the right to fill up temporarily the sanctioned posts under their control which are vacant, from the employment exchange or, in case there are no candidates registered in the employment exchange for that post, by following the procedure fixed by the government.

(4) The transfer of staff to the LSGIs needs to be rationalized. The guiding principle should be to transfer work and worker together. This has to be done immediately by departments in cases where institutions or funds have not been transferred fully. Particularly urgent is the case of welfare pension disbursements, school repairs etc.

(5) At present there could be instances where an officer has to service more than one LSGI or both the department and the LSGI. In such cases, the district or regional officers of departments, should issue proceedings specifying the dates on which that particular officer has to attend to the duties of the LSGIs indicated. On such dates the officer must be deemed to be on working arrangement to that LSGI, which implies that she/he has to produce a certificate from that LSGI before claiming salary, TA etc. (6) For the staff transferred to them, the LSGIs should have the following powers: (i) Sanction leave, or recommend leave when substitute arrangements cannot be made locally. (ii) Enforce attendance in meetings. (iii) Prescribe field duties. (iv) Approve tour programmes. (v) Have a role in assessing the performance of officers. They may make reports to the assessing authority on the performance of officers with respect to their role under the LSGIs. (vi) Enforce minor punishment in disciplinary matters. Necessary amendments to rules and orders have to be made. (vii) Call for reports and require attendance at LSGI sittings. (viii) Review transfer of staff made within the jurisdiction of respective LSGIs if there is any violation of the norms for transfer of such staff. (7) The headquarters office of the LSGIs should not function as secretariat under any circumstance. This would only bureaucratize the LSGIs. Department officials should route the files to the head of the LSGI or the standing committee or the council through the Secretary and get them back with appropriate decisions. The minutes/ resolutions/proceedings/ correspondence regarding a particular department should be prepared by that department only. Departmental officers should also be authorized to draw cheques under intimation to the Secretary of the LSGI, besides submitting monthly accounts. (8) The dichotomy created between the rural and urban areas within a district by the Seventy-third and Seventy-fourth Amendments to the Constitution makes it difficult to match the new set-up with the existing organisation of district administration. Hence the most appropriate and optimum compromise has to be struck in allotting officers from the various levels of the district set-up, among the LSGIs. The Committee feels that the best way of rearranging would be as follows:

The services of the officers of the departments discharging the functions transferred to the LSGIs must be placed at the disposal of the LSGIs on the seniority principle, with the senior-most officer of a

department at the district level allotted to that LSGI having the largest 'service area' of that department. Applying this principle, the district level officers along with their supporting staff would be allotted to the District Panchayats. But by virtue of his position as district officer, the professional role played earlier will continue. His professional expertise should be made available to the entire district. For this he has to inspect and review the working of his subordinate officers, with a view to ascertaining their performance vis-a-vis the duties entrusted to them by the LSGIs as well as by the State Government, if any. The district officer will continue to exercise his statutory duties as before. The District Panchayats must have due regard for the multiple responsibilities of the district officers while assigning tasks to them. This recommendation will apply, mutatis mutandis to the officers to be allotted to other LSGIs also. This would call for a rationalisation of the staff of each department working in the districts, by allotting them appropriately to the respective LSGIs. If all LSGIs at a particular level cannot get a separate officer, then such an officer should be placed at the disposal of the next higher tier of LSGI with clear allocation of work.

(9) In tune with the earlier recommendation it is recommended that the District Collector should be made the Secretary and Chief Executive Officer of the District Panchayat, taking into account the status and position of her/his post, the training and expertise of the District Collectors in co-ordination, planning and execution of development programmes, the supra-departmental character of the District Collector's post and the

statutory powers vested in the post. At the same time, it should be made clear, that the District Collector's independent statutory as well government-representative roles should not be infringed by the District Panchayat.

This change has to be brought in immediately as it is felt that even though at present the District Panchayat has only a modicum of powers, the District Collector's association right from its infancy will only strengthen it and make it capable of taking on the larger role envisaged in the immediate future. To assist the District Collector in carrying out her/his development responsibilities, it is desirable to post another IAS officer, junior to her/him who will act as Additional District Collector and Additional Secretary to the District Panchayat.

(10) As regards the Secretaries of Grama Panchayats and Block Panchayats, the existing system may continue for the present. Concrete suggestions will be given in the final report.

(11) Block Development Officer with staff and functions has to be fully placed under the Block Panchayat. (12) The heads of department and officers above the district level have a clear facilitatory role vis-a-vis the LSGIs, which would include: (1) Issue necessary instructions to effect a smooth changeover, (2) Monitor the working of their officers in discharging their LSGI duties. (3) Conduct extensive field visits. (4) Give ideas and suggestions about schemes and projects concerning their depart- ment (5) Monitor the performance of LSGIs and give necessary professional advice. (6) Issue timely clarification on doubts raised from below and sort out problems, if any. C. GENERAL MATTERS

The Committee's recommendations on certain general matters of importance are,

(1) Audit of LSGIs needs to be strengthened. Concurrent audit should start immediately and every LSGI should be audited at least once in three months in the first year, more as an auxiliary process than as a fault-finding one. Mobile audit parties may be constituted by redeploying staff rendered surplus by transferring of functions, espe- cially in the Panchayat and Municipal Administration departments.

(2) The Local Funds Audit Department has to be strengthened by redeployment of surplus staff from other departments and the process initiated to develop it into an autonomous entity on the lines of the Comptroller and Auditor General. Its profes-sional qualities also need to be upgraded.

(3) There should be a time limit of three months for finalising accounts by the LSGIs failing which penal action should be resorted to. (4) The government may set up an expert group consisting of professionals from the Audit and Accounts Department of the Central Government, the Finance Department of the State Government, Chartered Accountants etc. to draft the following manuals for LSGIs, (i) Accounts manual (ii) Audit manual (iii) Budget manual (5) Similarly a Public Works Manual needs to be written for the use of the LSGIs, for which a drafting committee of professionals including experts in appropriate construc- tion technology may be set up. This can go along with the manual of designs, standards and specification, suggested for preparation, earlier in this report. (6) A cascading training programme needs to be initiated to speed up the current process of training through selected institutions. A core team of professional experts can be created centrally for each

district, who can then conduct courses at the district and block levels for the LSGI functionaries, elected and official. (7) A simplified narrative version of the LSGI Acts and Rules has to be prepared and given to all members of the LSGIs. (8) A massive awareness campaign may be launched among the public through press features, advertisements, TV sports and programmes, cinema slides, posters, quiz competitions, students fora in schools and colleges, NGO programmes and so on. (9) The government may set up a cell to draw up a simple but detailed user's manual covering welfare schemes, development schemes, and all matters of public interest including laws which concern the public. This could be done in modules to facilitate easy revision and made available to LSGIs free of cost and others on payment. Using this the LSGIs especially the Grama Panchayats and Municipalities should function as information centres for the ordinary public. (10) In order to avoid long drawn-out procedures, during the transitional period, there should be a mechanism at the government level for taking quick decision, monitoring follow-up action and clarifying issues. Therefore it is desirable to have an Empow- ered Committee of the concerned Secretaries to Government under the chairmanship of the Chief Secretary. It is hoped that the Council of Ministers would also monitor this.

All recommendations in this Interim Report are offered in the nature of a package for immediate follow up action. The Committee believes that it will be accepted as such.

MEMBERS OF THE COMMITTEE ON DECENTRALIZATION

(Constituted by the Government of Kerala as per G.O.(Ms)No.l31/96/LAD dated 4th July, 1996)

1. Dr.S.B.Sen, Chairman, State Finance Commission, Govt. of West Bengal.

2. Sri.V.J.Thankappan. Former Minister of Local Administration, Kerala

1. Sd.K.Prakash Babu, M.L.A

2. Sri.T.K.BaIan, M.L.A

3. Sri.T.N.Jayachandran, I.A.S (Retd.)

4. Dr.M.A.Oommen

5. Dr.M.P. Parameshwaran

6. Sri.P.K. Sivanandan, I.A.S

7. Sri.S.M. Vijayanand, I.A.S

8. Sri.K. Mohandas, I.A.S,

Secretary to Government, Local Administration Department. Chairman

Vice-chairman Member

Member-Secretary