UPSC MainsECONOMICS-PAPER-II201325 Marks
हिंदी में पढ़ें
Q19.

Centralized Planning in India: 73rd & 74th Amendments

Indian planning structure and system still remains largely in favour of a centralised nature of planning. The 73rd and 74th Constitutional Amendments have hardly brought about any change in reality in the nature of Indian planning process. Critically evaluate this statement.

How to Approach

This question requires a critical assessment of the impact of the 73rd and 74th Constitutional Amendments on the centralization of Indian planning. The answer should begin by outlining the pre-amendment centralized planning structure. Then, it should detail the provisions of the amendments aimed at decentralization. Finally, it needs to evaluate the extent to which these amendments have genuinely altered the centralized nature of planning, acknowledging both successes and limitations. A balanced approach, supported by examples and data, is crucial.

Model Answer

0 min read

Introduction

Indian planning, since its inception post-independence, has been largely characterized by a top-down, centralized approach orchestrated by the Planning Commission (now NITI Aayog). This model prioritized national goals and resource allocation determined at the center. However, the 73rd and 74th Constitutional Amendments of 1992, aimed at institutionalizing local self-governance through Panchayats and Municipalities respectively, were envisioned as a significant step towards decentralizing the planning process. The core argument presented is that despite these amendments, the Indian planning structure remains predominantly centralized, with limited real devolution of power and resources to local bodies. This answer will critically evaluate this assertion, examining the extent to which the amendments have truly transformed the nature of Indian planning.

The Pre-Amendment Centralized Planning Structure

Prior to the 73rd and 74th Amendments, Indian planning was heavily influenced by the Soviet model. The Planning Commission, established in 1950, played a pivotal role in formulating Five-Year Plans, allocating resources, and setting national priorities. Local bodies had limited autonomy and were largely dependent on the central and state governments for funds and guidance. This resulted in a disconnect between planning and local needs, often leading to inefficient resource utilization and a lack of local ownership.

The 73rd and 74th Constitutional Amendments: A Shift Towards Decentralization?

The 73rd Amendment (Panchayati Raj) and the 74th Amendment (Nagarpalika) aimed to address this imbalance by:

  • Adding Part IX to the Constitution: This dealt with the Panchayats and provided for their constitution, functions, and powers.
  • Adding Part IXA to the Constitution: This dealt with the Municipalities and provided for their constitution, functions, and powers.
  • Mandating State Governments to devolve powers and responsibilities: This included the preparation of plans for economic development and social justice.
  • Ensuring regular elections to local bodies: This aimed to enhance their accountability and legitimacy.
  • Providing financial resources to local bodies: Through state finance commissions.

Critically Evaluating the Impact: Centralization Persists

Despite the constitutional mandate, the reality on the ground reveals that the Indian planning process remains largely centralized. Several factors contribute to this:

1. Financial Dependency

Local bodies continue to be heavily reliant on funds transferred from the state and central governments. State Finance Commissions, despite being mandated by the Constitution, have often lacked the necessary authority and resources to ensure adequate financial devolution. According to the 15th Finance Commission report (2020-2026), the share of states’ own tax revenue transferred to local bodies remains relatively low.

2. Administrative Control

State governments often retain significant administrative control over local bodies, limiting their autonomy in decision-making. Bureaucratic hurdles and a lack of capacity within local bodies further hinder their ability to effectively plan and implement projects.

3. Lack of Genuine Participation

While the amendments emphasize participation, genuine grassroots participation in planning is often limited. Local plans are frequently influenced by political considerations and top-down directives, rather than reflecting the actual needs and priorities of the community.

4. Sectoral Planning Dominance

Centralized sectoral planning continues to dominate, with local bodies often relegated to implementing centrally designed schemes. This limits their ability to integrate local needs and priorities into the broader planning framework.

5. Weak Institutional Capacity

Many Panchayats and Municipalities lack the necessary technical expertise and administrative capacity to effectively formulate and implement plans. This is particularly true in less developed regions.

Evidence of Limited Decentralization

A study by the Ministry of Panchayati Raj in 2018 revealed that only a small percentage of centrally sponsored schemes were fully devolved to Panchayats. Furthermore, the implementation of schemes like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) often faces challenges due to delays in fund transfers and bureaucratic inefficiencies at the state level. The performance of local bodies in areas like urban infrastructure development and primary healthcare also indicates a continued reliance on central and state government initiatives.

Areas of Progress and Emerging Trends

Despite the limitations, some progress has been made. Certain states, like Kerala and Karnataka, have demonstrated a greater commitment to decentralization, with significant devolution of funds and functions to local bodies. The emergence of participatory planning initiatives, such as People’s Plan Campaigns in Kerala, showcases the potential of decentralized planning when coupled with genuine community participation. The focus on ‘Localisation of Sustainable Development Goals’ (LSDGs) framework is also a positive step towards aligning local planning with national and global development objectives.

Conclusion

In conclusion, while the 73rd and 74th Constitutional Amendments were a landmark step towards decentralization, the Indian planning process remains largely centralized in practice. Financial dependency, administrative control, and a lack of genuine participation continue to hinder the effective devolution of power and resources to local bodies. While some states have shown promising progress, a fundamental shift in mindset and a stronger commitment to decentralization from both the central and state governments are crucial to realize the full potential of local self-governance and create a truly participatory and responsive planning system. Further strengthening of State Finance Commissions and capacity building of local bodies are essential steps in this direction.

Answer Length

This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.

Additional Resources

Key Definitions

Decentralization
The transfer of authority and responsibility for planning, decision-making, and resource allocation from central authorities to lower levels, such as local governments.
Five-Year Plans
Comprehensive economic plans formulated by the Planning Commission of India, outlining the nation’s development goals and strategies for a five-year period.

Key Statistics

As per the Reserve Bank of India (RBI) report on State Finances (2022-23), the share of grants-in-aid to local bodies in total state government expenditure varies significantly across states, ranging from less than 1% to over 10%.

Source: RBI Report on State Finances, 2022-23

According to a 2021 report by the PRS Legislative Research, the proportion of own revenue of urban local bodies (ULBs) to their total revenue remains low, averaging around 20-30% nationally.

Source: PRS Legislative Research, 2021

Examples

People’s Plan Campaign (Kerala)

Launched in 1996, this initiative involved extensive community participation in identifying local needs and formulating development plans at the Panchayat level. It resulted in the creation of detailed local plans and the effective utilization of funds for local development projects.

Frequently Asked Questions

What is the role of State Finance Commissions?

State Finance Commissions are constitutional bodies responsible for reviewing the financial position of Panchayats and Municipalities and recommending principles governing the distribution of taxes, duties, tolls, and fees between the state and local bodies.

Topics Covered

EconomyPolitical ScienceEconomic PlanningDecentralizationLocal Governance