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Art of the state

The Seventh Schedule is not set in stone. Government must push for greater decentralisation.

Written by Bibek Debroy , with input from Decentralisation |
Updated: May 21, 2015 12:52:01 am
government, governance, decentralisation, Centre state relationship, centre state ties, government functioning, india government, Constitution Seventh Schedule, Seventh Schedule governance, Bibek Debroy column The Seventh Schedule is not set in stone. Government must push for greater decentralisation.

There is a Seventh Schedule to the Constitution, with Union, concurrent and state lists. Governments are elected to deliver governance.

Other than processes, and legislative and regulatory content, governance is about the 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 suboptimal, and so is a lower layer. There are both economies and dis-economies of scale. The Seventh Schedule is not cast in stone. Today’s Seventh Schedule is not what it was in 1950: The Union list has expanded, as has the concurrent list, while the state list has 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 the 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, and not just through changes in the Seventh Schedule, has been commented on in several reports. The 2010 report of the Commission on Centre-State Relations is one such. It is to be hoped that there will be a Seventh Schedule that is different, with decentralisation to the third tier of governance. Twenty-nine “public good” items should be on a panchayat list and 18 on a municipality list.

Yes, in 1968, the first Administrative Reforms Commission didn’t want a review of the 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? 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 the Union budget of 2015-16 was presented, of 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 professions figure in the concurrent list. Do we then want the Centre to spend money on the Medical Council of India? I am not being facile. There is indeed a sub-group of chief ministers and it will recommend the rationalisation of Central schemes. It is perfectly possible that this sub-group will recommend the continuation, of some variety, of a national health mission. The limited point is that health is not the Union government’s natural constitutional mandate. It is in the state list, under Entry 6.

There is a furore over land as well. Entry 18 on 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 the “acquisition and requisition of property”. Read Entry 6 in the concurrent list, too, which is about the “transfer of property other than agricultural land”. It doesn’t seem that the definition of property under Entry 42 was meant to cover agricultural land, in the spirit of the 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 the Union government should legislate on items in the Union list. If it is an item on the concurrent list, the Union government should only legislate when state governments ask it to, not otherwise. Just as there are problems in devising Delhi-driven centralised templates for Centrally sponsored schemes, there are issues with Central laws in factor markets (add labour, too) that ignore India’s heterogeneity.

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. So what is 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 the Seventh Schedule and reverse the trend, witnessed especially in the mid-1970s, of moving items from the state list to the concurrent list, and from the concurrent list to the Union list. Because of the recommendations of the 14th Finance Commission, some fiscal devolution has automatically happened. The fiscal devolution isn’t only Union to state. It is also about state to local bodies and intra-state differences. Decentralisation and devolution aren’t purely fiscal. The non-fiscal elements are more important and also require a change in mindset. I don’t think that’s happened. We, or at least some participants in the discourse, somehow prefer Central planning and direction.

After one year, where is the big bang?
The answer depends entirely on what one’s subjective preference and definition of “big bang” is, oblivious to the fact that the world, and the 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 the states that goes way beyond fiscal devolution. This will completely overhaul the way we have institutionally looked at the delivery of public goods and services and the layer of government at which they are delivered. For various reasons, countervailing citizen pressure has resulted in a demand for better goods and services, often at the local body level.

These supply-side changes require the kind of institutional change that is just beginning.

The writer is member, Niti Aayog. Views are personal

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