COVID-19 supplements heightened economic challenges to the Governments in Indian Federalism

Table 1: Percentage Shares of Income group-wise Suicide Cases

Source: Report on “Accidental Deaths and Suicides in India”, NCRB, MoHA (various years)

Table 2: Percentage Shares of Profession-wise Suicide Cases

Source: Same as Table 1

These two tables, therefore, rationalize the use of suicide data by income-category and profession-category to track the economically vulnerable segments that are likely to be badly affected by the lockdown. The findings of these two tables are corroborated by the estimates from the latest available consumer expenditure survey conducted in 2011-12 by NSSO (68^th round). It could be seen from Table 3 that the casual laborers’ monthly per capita consumption expenditure (MPCE) on foods across rural and urban areas are more than 50 percent of their total MPCE. According to the estimates from this round’s employment-unemployment survey, this particular segment of the population (farmers/cultivators, agricultural laborers, and daily wage earners) was approximately 30 crores.

It would have been more appropriate to have the reasons behind the income-wise and profession-wise suicide data. However, as the NCRB has not provided such classification, we seek to provide a few plausible reasons, based on our analyses. Among several reasons, these may include indebtedness and poverty. In sum, what could be imagined from the sobering analyses in this section is that the casual laborers/daily wage earners do not have adequate savings (also assets) to purchase food products and other basic goods and services for the next a few weeks, and thus, they are not in a situation to withstand this more than one-month lockdown, as of now.

Table 3: MPCE on Foods and Non-Foods in Rural and Urban for Casual  Laborers

Source: NSSO Unit level data of 68^th Round Survey on Key Indicators on Household Consumer Expenditure in India (2011-12), MoSPI, GoI.

When these income-based and profession-based increasing trends in the absolute number of suicide cases, in normal circumstance itself, are alarming, then what would be the number due to this sudden shock of the COVID-19 outbreak? Thus, the government should ensure that its support packages are reaching in time to this vulnerable segment of the population. This poses heightened challenges for all three tiers of government in India. Most certainly, it is a challenging task to find out these citizens in the likes of security guards, cleaners, rickshaw pullers, street vendors, garbage collectors, and domestic help, and many others from every corner of the country. This is where the significance of decentralized governance is realized. Understandably, this pandemic has put the mettle of robustness of public health service delivery and decentralized governance to the test.

Decentralized Governance and Service Delivery to the Poor

To deliver essential services to the abjectly poor, the Panchayati Raj Institutions (PRIs) are of high importance than ever before, particularly in which, gram panchayats (GPs). For effectively delivering foods and services to the targeted population, many states have already made the GPs the nodal agency. The GPs are delegated with the authority to act as a coordinating institution between bottom-up demands and requirements of citizens and top-down supply and management. It is because of the facts that local politicians have an abundant understanding of local needs, and local citizens have clout over local politicians.

The first two dimensions of decentralization, which are political decentralization and administrative decentralization are the key two dimensions that are of high priority to fighting against the ramifications of this pandemic. Political decentralization is the devolution of functions (29 subjects devolved to the PRIs as per the Eleventh Schedule of Indian Constitution), which transfers policy responsibilities and legislative powers from central government to state and subsequently to local level governments. Administrative decentralization is the devolution of functionaries to the local bodies, which transfers planning and implementation responsibilities to the lower level of governments. After the devolution of these two dimensions, fiscal decentralization ensues. This transfers funds based on critically evaluating bottom-up demand and needs of the local governments through activity mapping.

All these three aforesaid dimensions of decentralization are complementary to each other and have synergistic consequences on public service delivery, and fiscal decentralization is the bearer of the effects of both political and administrative decentralization. Nevertheless, the immediate public interests are twofold: one, to break the infection chain by adhering to the lockdown and ensuring that the citizens are maintaining social distancing; and two, efficient and lightning-fast service provisioning of health and food. To ensure these two points, political and administrative decentralization are the key dimensions now.

Politicians and policymakers have a significant role in bringing down the gap between citizens’ voices and requirements and the delivery of essential services by the providers. The citizens’ voice influences local politicians, and consequently, politicians would persuade the front-line service providers. This would, in turn, diminish the scope of errors while going forward to effective service provisioning. Understandably, public service provisioning is assigned to decentralized tiers because of the proximity to citizens and their superior knowledge of revealed choices and preferences, while the national government should focus on macroeconomic stabilization and redistribution policies.

However, there are serious operational issues in designing the transfer system in India due to its heterogeneous economic development pathways across different states followed by their local jurisdictions. Thus, to deliver the essential services during this lockdown, the states may face challenges due to two issues and evidence.

These are one, although the benign intention of the 73^rd and 74^th Constitutional Amendment Acts was to improve service delivery at the lower level as a corollary of limited devolution of decision-making authority followed by corresponding functionaries and finances from the states to their respective PRIs, the intergovernmental fiscal relation is at stress; and two, there is enormous evidence regarding misuse of public authority for private benefits. The poor segment would tend to suffer if fiscal illusion in public choice theory occurs, where local beneficiaries are not abundantly aware of intergovernmental fiscal transfers, more specifically, current entitlements due to the lockdown. However, there could potentially be an incongruity between the imposed vast responsibilities to the PRIs and their capacity, and that is where the devolution of extra functions would need to be matched with devolved functionaries and finances.

However, it is clear that this pandemic needs to be considered as an epiphany for two predominant reasons. These are one, the state governments to have devolved adequate decision-making power to the PRIs to improve the PRIs’ fiscal autonomy; and two, central and state governments to put greater emphasis on health infrastructure to absorb such sort of any unforeseen shock in future.

Since the incidence of infected persons across the country keeps on increasing, for which, the lockdown period has been extended till 3^rd May, a few recent studies argued that India may fall short of infrastructure (particularly, hospitals and medical equipment) given the current rate of infections.

Only what these discussions signify is that the success of the states in containing the infection and reaching the declared economic packages to the targeted people critically depends on the decentralized institutional structure from states to their local bodies. Thus, the present COVID-19 crisis would distill the states as to who has robust decentralized institutional structure and monitoring mechanism through their continuous efficient and innovative approach.

It is now important to discuss which state has competently utilized its decentralized governance in effective and innovative ways. Although varying decentralized public management is very noticeable across states, some states have put up an impressive performance. In this regard, the Kerala government’s efforts are seen to be rife to tackle this sudden pandemic in many possible ways. During the initial days of lockdown, Kerala and Maharashtra were at the top in terms of the incidence of infected people. But soon after, the state could manage to flatten the curve. It has happened mainly due to the ability of the state government to mobilize and devolution its front-line service providers and public officials at the gram panchayat level. First and foremost, with close monitoring of the state government, all the PRIs have started implementing the lockdown effectively through identifying clusters and thereby, protecting from the spatial distribution of infection.

The experience of the Nipah virus outbreak in the recent past has enormously succored the state government in efficiently managing this pandemic in a carefully planned decentralized manner. The state government, with the help of activists at the panchayat level and front-line health service benefactors from the primary health centers (PHCs) and community health centers (CHCs), are ably reaching to the local citizens to enrich them with health and hygiene-related information and practices. At the same time, the devolved functionaries from the state to local bodies and local level front-line service provider institutions (such as ASHA, Anganwadi, etc.) jointly working on ensuring the economic packages are not only being delivered on time but also no person is left out of accessing those packages.

Maharashtra tops the table as of now in terms of the highest number of COVID-19 infected people. But, the state government has realized the need to leverage its PRIs. The state government has devolved a substantial amount of public officials to its panchayats and municipalities to ensure the local citizens are maintaining social distancing and sufficient delivery of food items, medicines, and other essential services. Notably, the state government has enabled the local bodies to make any immediate required decisions on their own.

In contrast, there are a few instances where center-state relations have come under stress in terms of containing the infection rate. The Ministry of Home Affairs constituted 6 Inter-Ministerial Teams to assess the situation and augment state efforts to effectively fight and contain the spread of COVID-19. Among these 6 teams, two each deputed for West Bengal and Maharashtra and one each for Madhya Pradesh and Rajasthan. Although the Central Government exercised this authority conferred in the Disaster Management Act 2005, the government of West Bengal argued that the Center’s interference has violated the spirit of federalism.

Nevertheless, the pandemic gave impetus to intergovernmental relations and cooperative federalism. Fundamentally, this is key to fight against the pandemic to diminish the infection to that economic activities could resume, at least, in a phased manner. Thus, to conclude, each state should try to learn from other states’ decentralization practices to make sharp efforts for curbing the incidence of infection in due course.

*Co-authored by Jay Dev Dubey , Fellow, National Institute of Public Finance and Policy (NIPFP), New Delhi.