Decentralisation is the Key to Better Governance, Outcomes
After the momentous event of obtaining ‘Freedom at Midnight’, India awoke to a dawn of enormous challenges and possibilities. A giant country stitched together out of 600 different princely states, colonially administered provinces, and principalities had to find a way to work as one entity. Such a feat had not been attempted before in recorded history. Today, more than 70 years after that epoch making event, India is still not only an integral entity, but one that is growing towards regaining the important role it once enjoyed on the global stage.
This achievement has been variously attributed to different factors, ranging from a shared history and cultural heritage, to a shared philosophical tradition, and so on. In my view, the most persuasive argument I have come across is that India owes its resilience and capacity to withstand centrifugal forces threatening to pull it apart, to its decentralized district administration. In 740 districts across the country, the same administrative machinery works every day to attend to the quotidian needs of citizens and businesses, independent of instructions or directions from State capitals.
In a modernising and growing India, these impulses for local government have an important role to play in making governance more effective, and bringing governance closer to the people. The institutions of Panchayati Raj that were put in place after India became independent were intended to perform that function. However, their role and autonomy were severely circumscribed by short-sighted actions of State Governments, which viewed the devolution of powers to panchayats as a threat eroding their own powers. It is only with the devolution of powers that was done by the Government of Kerala in 1996 that meaningful steps were taken for the first time in the country to equip local government bodies with the powers they needed.
My purpose here is to highlight ways in which such a step will benefit governance, and thereby business and industry, and through them, the economy as a whole. SMEs constitute the backbone of the industrial manufacturing sector worldwide, and indeed form the bedrock of the strong manufacturing capabilities of all major industrial economies. SMEs depend on services that are available in the local ecosystem as they are too small to build the capabilities for themselves.
The provision of ‘municipal services’ like drinking water supply, electricity, public transport, sewage and garbage disposal and treatment is an important determinant of economic activity directly and indirectly. It is the promise of availability of these services in urban areas that draws SMEs to these areas.
Skilled manpower is an essential factor of production that is needed by SMEs. A pool of young people ready to start work with a minimum of training needs to be available locally if SMEs are to function successfully. By devolving powers to control and supervise the school system coming under these local bodies, we will ensure that the local community is able to better manage these facilities to ensure that the students get the resources they need, and the teachers attend schools for which they are paid by the State.
Dispute resolution mechanisms play an important part in determining business outcomes. The local bodies can play an important role in speeding up dispute resolution, by intervening to help bring disputes to a resolution speedily and to the mutual satisfaction of both parties. The DIC located in the district can play a part in this process.
Industrial disputes are inevitable wherever there are workers, and where we are dealing with a democratic polity and government. What is important however is that such labour disputes are resolved quickly, and in accordance with the law and relevant rules. In most SMEs, this may not be possible to accomplish internally, because they are too small, or they can ill afford work stoppages. In such cases, the effective intervention of the State Labour Department, through the district-level DLO and his or her team becomes crucial.
My proposition is that if we empower the local bodies like city corporations and municipalities to work towards building their business ecosystems, we will be empowering them to reach out to other resource pools like colleges and technical training institutes, becoming catalysts to drive change for the better.