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LATEST NEWS UPDATES | How India can foster economic democracy -Ejaz Ghani

How India can foster economic democracy -Ejaz Ghani

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published Published on Dec 30, 2021   modified Modified on Dec 31, 2021

-The Hindu Business Line

At present, panchayats make no contribution to the design of schemes. Their autonomy is negligible. This needs to change

Decentralisation has long been recognised as an efficient instrument for promoting economic democracy, and delivering services to meet the needs of people. There are three different channels for decentralisation — political, administrative and fiscal. Political decentralisation promotes trust and cooperation between government agencies and citizens. Administrative decentralisation enables authority to be shared so that local governments can design and implement programmes more appropriate to local conditions, than a centrally designed one-size-fits-all system. Fiscal decentralisation enables revenue-raising and expenditure powers across different levels of government to create a level-playing field.

India has made huge progress with political decentralisation, but challenges remain with fiscal and administrative decentralisation. This is reflected in huge spatial disparities between lagging and leading regions, with more than 100 million people living in poverty in the lagging regions. India needs a level-playing field to promote economic democracy.

Although India is politically decentralised, fiscal decentralisation remains lopsided. State governments are responsible for spending more than 50 per cent of total government expenditure, but most of it goes towards interest payments and salaries, leaving little room for development initiatives. Lagging States do receive higher per capita fiscal transfers, when these transfers are explicit transfers. However, discretionary transfers largely go the richer States.

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The Hindu Business Line, 30 December, 2021, https://www.thehindubusinessline.com/opinion/how-india-can-foster-economic-democracy/article38073118.ece?homepage=true


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