22 Governance of Small Towns

Amita Bhide

Introduction

Governance refers to the framework of arrangements that are employed by society to take decisions and enact policies about the conduct of public life. It is thus a critical process that involves politics, laws, management,administration and several dynamic interplays between civil and political society. Governance thus is a concept that moves beyond the government to also understand the government-society interface.

The Indian Constitution has an explicit commitment to the encouragement of panchayati raj as part of the Directive Principles of State Policy. Governance of large cities has evolved under the tutelage of British colonial power and then under the influence of post-independence ideas of urban management. However,small towns present a special case of governance with their intermediate positioning in between rural and urban areas. There have been significant shifts in assessing the merits and demerits of decentralisation at the level of the local. Small town governance, in particular, is characterised by significant ambivalence. The shifting contours of this debate give an insight into the scalar shifts in Indian politics and the character of its public institutions.

 The role of caste, class and gender is significant in shaping the socio-economic structure of the small town; it also shapes the local state and its workings. The dynamics that result from the interface of the local state with practices that are sought to be introduced by current day reforms are interesting and represent multiple possibilities.

Governance: The Conceptual Shifts

The conventional meaning of governance was focused around government. The Webster’s English Dictionary (1982) defines governance as an act and process of governing, thereby equating it with what governments do. This implies that the government is at the centre (figuratively and operationally) of policy-making, programming and execution and has full control of these processes. In recent years, there have been several significant shifts in this conception. This reconceptualisation first began in Europe, subsequently spread to the United States and then to different parts of the world via the United Nations Development Programme (UNDP). The key dimension of this shift was the attempt to understand governance as beyond the government and involving society-government interfaces and arrangements, whereby decision-making pertaining to public and social life, action and its execution would be more linked to elements beyond those formally occupying office. Peters and Pierre (1998) identify the following dimensions of this shift.

(a)Acknowledging the Importance of Networks: The presence of networks that lobby, advocate as well as those that may be potentially influence policy.

(b) Shift from Control to Influence: State may not be best placed to make and execute all decisions, and hence, involvement of multiple stakeholders to enable consensual decision-making.

(c) Convergent Use of Public and Private Resources: Need to restrain ubiquitous role of State and promote use of private resources through partnerships.

(d) Use of Multiple Instruments: The centrality of the state is often accompanied by the overwhelming use of law as an instrument of policy. There is a shift towards using other instruments such as financial, participation, etc, in order to achieve goals.

This shift in governancewhich is also called New Public Management essentially reconceptualises the role of state to be that of a facilitator. It articulates several processes that may be implicit in earlier governance processes and legitimates them. Bringing them to the fore has enabled the emergence of new governmentalities (ways in which State envisages and operationalises its relationship with various entities in society) and modes. These include public-private partnerships, stakeholder consultations, participative policy-making, and influence of external parties on the exercise of power.

Several development agencies, including the World Bank and UNDP began to articulate the relationship between governance and development.

The World Bank (1992) thus defined governance as the exercise of power and authority for the management of a country’s social and economic resources. The concept of good governance was thus born. Good governance was indispensable if project objectives were to be met. The characteristics of good governance were transparency, accountability, efficiency and good management practices. This was then revised to include decentralisation, in a bid to make governments “closer” to people.

Decentralisation was a programme that was actively pursued by the UNDP which saw transparency, effectiveness, accountability, participation and equity as the major parameters of good governance. This advocacy of governance programmes by these aid agencies meant their large scale adoption across several countries. The outcomes of such programmes vary but the legacy of good governance and the emphasis on the facilitative role of the state remains.

There are several critiques of this shift in governance. Grindle (2010:2), for example, points out that the concept of good governance is a good idea but had been “conflated to deliver growth, reduce poverty and deliver effective democracy”. Pendse (2000) critiques the assumptions in the concept of good governance. It assumes the presence of civil society with an expanded public domain, where there are few contestations and there is dialogue between the various elements of society. On the other hand, even citizenship is contested in India and the relationships between state and various elements of society may be downright conflictual In this context, notions of partnership may deepen some of the cleavages. Nanda (2006) points out to the insistence of governance as enforced precondition by the World Bank and other influential actors and the incursion of a monetary agency into a political terrain. Jayal (1997) points out that the role of the state in the new dispensation is confined to making rules that enable markets to work and to compensate for market failures. Founded in a tradition of liberal democracy, good governance seeks to universalise certain values which may not do justice to the historically produced, and hence, specific traditions of democracy in several developing countries like India, and actually eliminate politics. Harrison (2004) concludes that the outcome of several interventions for good governance in Africa has been to actually weaken the state instead of enhancing its capacities.

Practices of new public management have been incorporated into the Indian state in an increasing manner since the 1990s. One of the most interesting shifts is the move towards decentralisation vide the 73rd and 74thConstitutional Amendments which gave a constitutional place to the third tier of government, ie, local government including panchayats and municipalities.

Local governance has been a site of significant reform since then. The Urban Reform Incentive Fund introduced as part of the Tenth Five-Year Plan.The set of compulsory and optional reforms that formed the preconditions to availing funds from the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) or the Integrated Development of Small and Medium Towns (IDSMT) have sought to reform the urban local governments both in terms of their finances, powers and in terms of operating protocols. Public-private partnerships, consultations prior to plans, achieving personnel-performance efficiency, developing standards for services, shifting towards double entry account systems are some of the practices which have become part of the standard package of reforms across all these projects. Urban local governments are expected to adopt these practices if they want to avail funds. And hence, these have become part of the vernacular of municipal bodies. The shift towards new public management is thus an essential part of contemporary urban transformations.

Shifts in Governance Paradigms of Small Towns

There are three distinct phases in the discourse around small town governance in India. The Constitution does not make any explicit reference to urban governance or local governance in urban areas. It makes a commitment to panchayati raj in rural areas and though many small towns may be block or district headquarters, they are not treated as part of the rural governance system.

On the other side of the settlement spectrum, municipal institutions are a legacy of the colonial government in structure, form and function. They have often found themselves unable to deal with the challenges of the post-Independence period that brought in new democratic forces and confronted bureaucratic supremacy. The post-Independence Indian state treated decentralisation of urban governance with suspicion (Vyasulu 2004). Municipal bodies and local politics could be very narrow-minded, parochial and preoccupied with self-interest.

The Indian system thus shifted towards a centralised system. Governments of urban areas were subjected to arbitrary and long suspensions; there was a parallel formation of bureaucratic entities that performed critical functions. In the 1990s, there was an attempt to shift towards a more decentralised mode, a shift that largely remains incomplete even now. In the most current phase, the governance model is being corporatised, ie, local governments are expected to follow operative principles such as management of revenues, finances and assets akin to private sector companies with citizens as their customers.

The discourse on urban governance is replete with ambiguity, comprising various mixes and legacies of these three phases as well as their hopes. This is reflected in the terminology too: urban local bodies (ULBs) (essentially emphasising their localness in a uniform, disembodied manner), city governments (governments that have control over all the city’s affairs), municipalities (an institutional form and legacy).

There have been significant shifts in how the role of small towns has been conceptualised by policy. The Urban-Rural Relationship Committee,1966 prescribed rural industrialisation, with the shift of industries from cities to regions and efforts to decongest cities with a vision to create more harmonious development. Next, the National Commission on Urbanisation advocated an explicit spatial strategy to facilitate urbanisation; small towns were seen as the intermediary nodes between the rural and the urban.

However, these intentions rarely translated into efforts to plan small towns or upgrade their resource availability. Rather there were efforts to control them through state level interventions. In the JNNURM regime too, small and medium towns received a relatively small share of resources, but were subjected to the same set of reforms that larger cities were expected to adhere to. Thus, small towns have not registered as a separate category of towns that deserve to be understood “differently.” They are defined either through a lens of “hope” (the other of the bad city) or through “lack” (of amenities, capacities) and “scale”(less of everything seen in large cities).

Phase I: Ultra Vires: Local Governments as Creations of the State Government

The phase from independence to 1990s was one in which urban local governments were increasingly treated as “ultra vires” meaning bodies that derive their existence and powers from the superior body. The legacy of local government from the British era was diverse. There were some strong governments in cities like Mumbai, Chennai, where the local elite had shaped the city in partnership with the British. But this did not extend to industrial townships, which had notified area committees under the reign of industrial capital, or the “mofussils” or small towns which had district boards(Sivaramakrishnan 2013).

In the post-Independence period, the supremacy of the state government over urban local governments was asserted. This had a certain democratising impact of the region over the city, but it also constrained the ability of the local governments, who became increasingly dependent on the state governments for resources, expertise and mandate. The new problems of slums, housing, large-scale planning and capital investment were entrusted with newly-formed state government institutions such as development authorities, housing boards, water and sewerage boards. The local governments were increasingly reduced to municipal bodies which maintained basic services – the last point of delivery. Elections, appointments too became matters of state government intervention and often subject to political whim and fancy. In this period, the diversity of urban local governments was retained but their powers, resources and functioning were highly curtailed.

Phase II: Recognition and Democratisation

The 74thConstitutional Amendment is described by many as an amendment that gave new life to urban local governance. The amendment recognised the ULBs as a distinct, third layer of government with 18 allotted functions under the 12th Schedule. A more uniform architecture of urban local governments included nagar panchayats in transitional areas, municipal councils in medium-sized towns and corporations in large cities. Decisions of financial allocation to them were to be made through state finance commissions. Similarly, a framework for regular elections and representation was created. Thus, a basis for urban government was laid down for the first time in the country.

Under the 74thAmendment, small towns are governed by either nagar panchayats or by municipal councils. The experience of the years from 1990s to the current period of the amendment shows that the amendment has been vulnerable to discretionary treatment by state governments(All India Institute of Local Self Governance 2013). An overall framework of constitution, election and representation is in place but the declaration of statutory urban areas or their classification into nagar panchayats, councils, the acceptance of reports of state finance commissions and the actual transfer of resources, functions and functionaries are dependent on state governments. Decentralisation as envisaged by the amendment thus remains an unfinished task.

Phase III: Corporate Decentralisation

The launch of the JNNURMin 2005 with its counterpart for small towns,viz, IDSMT launched a new phase of change in the governance framework of small towns. This project gave substantive funds to small towns for upscaling their basic infrastructure and expected them to reform along the same lines as larger cities. The reforms include those in land and property markets, taxation, administrative efficiency along corporate lines, complete transfer of functions, funds and functionaries as envisaged by the constitutional amendment and some efforts at inclusion of poor by reserving land for them and making provisions for them in the annual budgets. The monitoring of these reforms linked to projects was done by the central government. A new actor, ie,the central government was thus introduced into the overall architecture of governance. The character of governance was sought to be moulded along more corporate lines; the actual experience of the reforms is another thing altogether and has been discussed in subsequent sections.

Small Towns: The State of Governance

Resistance to Being Urban

The constitutional amendment had envisaged the architecture of governance which included the formation of nagar panchayats for transitional areas and municipal councils for intermediate sizes of towns. The experience of several states is that many towns eligible to have nagar panchayats or municipal councils actually are not declared as urban areas.The experience of Tamil Nadu, one of the only states to declare all eligible towns after the 2001 Census as statutory urban areas is illuminating in this regard. Of these, 566 panchayats with a population under 30,000 were reclassified as rural panchayats in 2004 due to local demands. There, thus, seems to be an active resistance to acquiring an urban status. Samanta (2014) points out further complexities in the politics of classification. In West Bengal, the population threshold for urban areas is higher than other states, ie, 30,000. Thus, many census towns continue to be governed by panchayats. Bhide and Waingankar(2011) in a study of Maharashtra identify several examples of contestations around being declared urban such as Kharghar(literally a hole in between planned Navi Mumbai and Panvelmunicipalities, which is still a grampanchayat) and active opposition of peripheral villages being appended to corporations in several parts of the state. Powerful elements like politicians, mercantile class, and real estate developers prefer the rural status as it offered a space for “informal” practices to continue. Citizens prefer it as there are more rural schemes.Sivaramakrishnan(2013) concludes that there are few incentives in the system to be declared as urban. This is an indictment of the overall status of small town governance.

Issues of Coordination

Urban local governments are a part of the overall system of small town governance. There are several issues of coordination across varying state institutions. Varadiraju(2013),for example,points out that in Karnataka the district planning systems are quite powerful, and these plans are prepared without the integration of urban plans. Further, while larger cities have developed more autonomous governance systems, smaller cities and towns continue to be governed under the rural governance framework through offices that are ill-equipped to deal with urban planning issues. Their requirements are thus neglected. Samanta(2014) makes similar observations in the case of West Bengal.

Karnataka, Gujarat, Maharashtra, West BengalandKerala have local government systems that are well-institutionalised and yet small towns suffer neglect. In the case of states like Uttar Pradesh, where most functions are even more centralised and technical capacity exists only in state-level institutions, coordination is an even greater issue and the municipal government is not seen as a significant institution. Bercegol and Gowda(2012) observe that there is competition between these government agencies and suggest that this may be linked to the technical organisations being dominated by higher and educated castes while municipal governments are dominated by relatively lower castes.

Performance and Service Delivery

Several studies point out that, the level of services and amenities declines as one moves down the scale of settlements. Kundu et al (1999) show the disparity of amenities across size and scale is greater in states like Bihar, Orissa, Madhya Pradesh, Kerala and Uttar Pradesh. Further, they argue that while there was an improvement in levels of infrastructure in Class I towns in these states in the period 1981-91, the levels of amenities in smaller scale towns had not improved.

Sharma (2012) who visited seven small towns in North India concurs. She observed that the level of services in these towns is extremely poor. Hampered by poor finances, rich and the poor alike in these towns face severe shortfalls in services. Management of solid waste represents an area that illustrates these difficulties. In Mirzapur, cycle rickshaws are used to transport waste, more than half of which find themselves back on the roads. In Janjgir, where even cycle rickshaws are not available, men pull handcarts to transport waste. The experience of solid waste also extends to other areas of functioning. There are several issues of wasteful expenditure and lack of planning. Thus, Sharma(2012) reports how the concrete was laid out on part of a road making the road several feet higher than adjoining houses in Madhubani, Rajnandgaon and Sehore. A road cleaning machine was bought in Janjgir at Rs 45 lakh to clean the one and only road in the town. The performance and delivery of services at small town level is thus poor. The question is – can this be seen as solely linked to the local governments themselves? Is this reflective of a broader culture of public institutions in the country? Does this need to be seen in the light of funding opportunities and grant structures that direct funding to predetermined ends, instead of supporting local government articulation of needs? Does this need to be seen in connection with thestructuring of grants for single and predetermined purposes to which local governments need to hitch their programming?Are local governments – the last tier with the least powers be held solely responsible for services that are generated through a highly centralised system?

Capacity Issues

Poor capacity is often cited to be the core reason for the low levels of service delivery and performance of the local governments in small towns. Poor capacity has multiple meanings – low levels of own revenue, shortage of qualified human resources and poor management capacity. Sharma (2012) cites president of Janjgiras saying that their revenue sources are fixed and limited to property tax, mandi tax and water tax. Further, the earnings from these are limited. These limits in places where there are no industries or buoyant taxes severely constrain the ability of small towns to invest in capital expenditure like infrastructure. In fact, many of them find it difficult to pay the salaries of their employees too. Another issue linked to poor finance is the dependence on grants from state governments to the tune of 70% or more.

The area that is most affected in terms of performance is dealing with poverty. Small towns are often the first berth of rural migrants. Studies show that a bulk of the urban poor are located in small and medium towns. However, local bodies in these towns have little funds at their disposal for dealing with the issues linked to poverty.

Issues linked to capacity of small towns are highly interconnected, and therefore, vexed. For example, there are few employees in Chandrapur Municipal Council in Maharashtra as revenues are low and the rate of revenue collection is low because there are few people to go door to door and collect revenue (Bhide and Waingankar2011). While the current funding patterns assume that the local governments are expected to be implementing the 18 functions envisaged by the 74th Constitutional Amendment, these functions are not completely transferred to the local governments.State government institutions such as planning directorates, water and sewerage boards, development authorities, housing boards wield a lot of power. Funds and functionaries are also not allotted in due proportions.

On the other hand, partial programmes of administrative reforms have further undermined the human resource capacities of small town governments. Critical posts have been abolished or not filled. Based on a study of four towns in Uttar Pradesh,Bercegol and Gowda (2012) conclude that the differences in services seen in these cities are related much more to decisions of regional governments than to the performance of the municipalities. The issue of capacity, while important is thus grossly distorted, pointing out to the need for a more comprehensive analysis of our design for decentralisation.

Democratisation

Studies of the local state in small towns are few. A study of 1967 general elections in a small town in Uttar Pradesh by Khadija Gupta documents the influence of caste and class in these elections in spite of the town being part of a reserved constituency (Gupta1971).

Barbara Harriss-White has undertaken longitudinal studies of a small town called Arni in South India. Her observations on the local state are extremely insightful. The features of this local state are that there is a significant overlap in the actors in the state apparatus and civil society; the role played by “non-official” but powerful people is important, private status of officials is important as well. The resources of these local governments are receding and its financial affairs are characterised by fraud and tax evasion (Harriss-White 2003: p88).The local state is thus embedded in a framework of accumulation that has a wide base, enmeshes both public and private resources and serves to protect the interests of an agrarian and mercantile capitalist class. Accumulation, for which the state becomes a conduit, follows contours of caste and gender, albeit with limited spaces for new groups to consolidate and emerge. Bercegol and Gowda(2012) concur with these observations and point out that the principal actors in municipal politics largely comprise local landlords and business men, public work contractors, who see municipal power as a source of rents from commissions and tenders for public services and seek to monopolise it.

Democratisation is limited and constrained in this context and reflects shifting strategies of these coalitions to maintain power. Studies of local politics in small towns of Maharashtra reveal an emergent pattern of coalitions across ideologically disparate parties. In SangliMiraj-Kupwad Municipal Council, thus, the Nationalist Congress Party has formed a coalition with the Bharatiya Janata Party-Shivsena and the Jamat-e-Islami. This pattern is prevalent in several small towns such as Pimpri-Chinchwad, Ambernath, etc. Another pattern is the hollowing out of the formal local state in terms of resources and responsible governance.This has been done through a takeover of several key decision-making areas from the local governments such as taxation(removal of independent local tax like octroi), appointments(creation of state level cadre for local government, restriction on new hires) and oversight on performance of local bureaucracy(Bhide and Waingankar 2014). Thus, even the introduction of gender quotas in electoral representation as a step towards democratisation of politics fails to make a dent in the patterns of accumulation or in terms of creating a space for hitherto neglected groups.

Emergent Issues of Governance

The imposition of a “reforms” regime that pursues liberalisation and seeks to corporatise governance has affected the patterns of governance of small cities in many interesting ways. It also raises new questions about the framework of governance of small towns.Mukhopadhyay(2006), for example, expressed a concern about the lack of core constituency for reforms being advocated by the JNNURM and that reforms were being pushed through a bureaucratic process as opposed to a more political process. Bercegol (and Gowda2012) based on the study of four small towns in Uttar Pradesh concludes that the reforms regime is thoroughly delinked from the realities of the small towns. A uniform architecture of governance as envisaged in the constitutional amendments as well as in the reforms does do justice to the diversity of contexts of small towns. Reforms are thus met with responses of multiple kinds.

A detailed study of the changing relationship of the small urban local bodies to the state government of Maharashtra (Bhide and Waingankar2011) finds that the structure of grants is slowly changing to constrain the overall availability of “free” funds to the small towns. Further, it is being linked to indicators of “performance,” which in turn, are monitored by the state-level officials. On the other hand, this does not seem an adequate incentive for improving the overall revenues and efficiency. Several properties still remain out of the property tax purview, and collection rates are poor.

Most projects today do incorporate an element of private partnerships, but there are several instances of user charges being opposed by councillors even after the partnership terms have been decided. “Reforms” have thus not been able to contend with the culture of “fiscal populism” (Bercegol and Gowda2012) in place. Swain (2013) finds an actual possibility of “resistance” by small municipalities in Madhya Pradesh when they rejected participation in an unfair financial regime represented by the JNNURM, which would initially flush them with money for capital investment that they were not prepared for and then expect returns at higher rates.

In the context of tribal areas like North-East, reforms have brought in a wave of municipalisation that interfaces with strongly organised indigeneity(2012). This interface produces a gradual incorporation of the municipality, but on terms which are distinct such as greater roles of traditional leadership and moulding of projects to suit local conditions.

Prasad (2014) in a study of Tirupati and Vishakhapatnam in Andhra Pradesh concludes that the JNNURM and the accompanying reforms have accelerated the pursuit of narrow interests by dominant classes and castes. The language of inclusivity and participation becomes a veneer which only displaces the problem of socio-economic disparities and leads to their widening.

In Brief

Small town governance in India has been the victim of ongoing policy shifts and an inadequate consideration of local capacities, politics and resources. Even the current regime of decentralisation and reforms does not give due credence to the extent of centralisation of resources and capacity in the system and adopts approaches that are piecemeal. The current state of governance is dismal due to this. There is no doubt that decentralisation is necessary, but there is a need to give far more comprehensive thought to the overall framework of governance, understand small towns as distinct sites and initiate an overhaul and reform of the system not just at the bottom, but also from the top and the intermediary, ie, the state levels.

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