In my previous blog, I had rued that even when the government makes changes that are ostensibly beneficial by opening information portals, making processes online and so forth, citizen behaviour by and large remains the same. People still are mystified by the government, intimidated by it, and therefore prefer to transact with it through agents and others perceived to be more influential.

For instance, a well-meaning transport department official can work hard to bring most of the processes transacted in an RTO’s office online, but people still recommend that one goes through an agent to get one’s work done. Why court ‘trouble’, whatever that means, they say.

In such circumstances, when people by and large are enslaved by past patterns of submissive behaviour, supply side transparency initiatives are bound to fail.

Not really. 

There is cause for optimism.

I often take pot shots, for good reason, at finance departments. They are the ones who suggest that everybody else ought to be transparent, except themselves. So one would imagine that initiatives to make fiscal information on government transactions transparent would all come to naught. While that may generally be the case, it is not so, all the time.

It was possible, for every panchayat and municipality to know how much money it could expect to receive every fiscal year.

Take the case of Karnataka, where the state took a landmark decision in the mid-1980s to strengthen its panchayats. Prior to the 73rd and 74th amendments that mandated elected local governments in all states, Karnataka was a pioneer in democratic decentralisation.

One of the special arrangements that were made at that time was to have a special annexe to the budget document, named the Link Book, which detailed out the financial allocations carved out by each department for the schemes and programmes they transferred for implementation to the Panchayat system.

This was not achieved without stiff resistance. Departments were reluctant to give up their programmes to the panchayats as they suspected a loss of control. However, this was overcome by patient negotiation with each department by a ‘brains trust’ of civil servants committed to democratic decentralisation, driven by politicians who led this political reform.

Once each department conceded to transferring programmes to the panchayats, the budgets that pertained to these programmes were moved into the Link Book. A full 24 per cent of the budget of the state government moved into the Link Book through this process.

Kerala went one step further in its ‘big-bang’ decentralisation efforts in the mid-1990s. It clubbed together a largely untied budget allocation to the panchayats, and put that information onto a separate budget annexure. Going beyond Karnataka’s system – which only allocated funds up to the district level – the Link Book did not further break up the allocated funds to the intermediate and village Panchayat levels. The Kerala annexure allocated funds to each of its nearly 1,000 local governments. It was possible, for every panchayat and municipality to know how much money it could expect to receive every fiscal year.

While the Kerala system could need more reforms, mostly by way of greater flexibility in how to operate the allocated funds, it remains the gold standard for India on how to allocate funds to local governments from the state budget. Clear transparency, right down to the level of each panchayat with clear directions on how and how not to use the funds, is the credo followed.

In the meantime, while the Link Book system has endured the ravages of time, much needs to be done to update the system. Overall, departments crept back to their old ways of centralisation, as political commitment to the idea of strong panchayats waned. Schemes and programmes that entailed discretionary expenditure were reallocated to the state budgets, and Link books began to contain only salary payments that passed through the local governments on the way to the accounts of departmental staff who stood nominally transferred to the latter.

Through a research study conducted by the Accountability Initiative in 2014-15, the Link Book system was critically analysed. We discovered that Link Book allocations had diminished as a proportion of the state budget and stood at about 17 per cent of the budget. We also discovered that much of these funds, particularly those going to the district and intermediate panchayats, were salary payments.

More than Rs. 22,000 crore (about 15 per cent of the state budget) ought to have been put in the Link Book if the state were to strictly follow its commitment on functional assignments to the panchayats. Yet, these funds were being directly operated by the departments concerned, bypassing the panchayats. 

A full 24 per cent of the budget of the state government in Karnataka moved into the Link Book through this process.

Amongst our key recommendations was that the Link Book system needed to go further down. It was not enough to allocate the funds to the district level and stop there. These allocations needed to be further broken down and allocated to the intermediate and village panchayats, so that those elected bodies too, could plan and implement their responsibilities effectively. 

The state administration was positive. They accepted our recommendations. That was a good beginning, we felt. 

I shall continue this optimistic story in my next blog.

T.R. Raghunandan is an Advisor at Accountability Initiative.

Also Read: A Perspective: The Demise of the Line Department?

Also Read: The Importance of Information Portals for Accountability from a Transparency Campaigner’s Perspective