Decentralised governance, development programmes and elite capture

D. Rajasekhar · M. Devendra Babu  R. Manjula Decentralised Governance, Development Programmes and Elite Capture Decentralised Governance, Development Programmes and Elite Capture D Rajasekhar M Devendra Babu R Manjula • Decentralised Governance, Development Programmes and Elite Capture 123 D Rajasekhar Centre for Decentralisation and Development Institute for Social and Economic Change (ISEC) Bengaluru, Karnataka, India R Manjula Centre for Decentralisation and Development Institute for Social and Economic Change (ISEC) Bengaluru, Karnataka, India M Devendra Babu Centre for Decentralisation and Development Institute for Social and Economic Change (ISEC) Bengaluru, Karnataka, India ISBN 978-981-13-1899-3 ISBN 978-981-13-1900-6 https://doi.org/10.1007/978-981-13-1900-6 (eBook) Library of Congress Control Number: 2018952887 © Springer Nature Singapore Pte Ltd 2018 This work is subject to copyright All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore Preface The idea of this book took shape after the successful conclusion of our research study on elite capture in 2012 for the research programme on decentralisation, rural governance and inclusive growth, funded by the International Development Research Centre, Canada, and implemented by National Council for Applied Economic Research (NCAER), New Delhi When the study findings were communicated to the academic community in various seminars and discussion meetings, there was a considerable discussion on the role of decentralised governance, social capital and international agreements in checking the elite capture tendencies Interestingly, there was also a discussion on the processes contributing to elite capture in the programmes implemented by the local decentralised government This led us to think that we should gain a deeper understanding on the issue of elite capture, which in turn resulted in revisits to the field areas for studying the process This book is a culmination of this five-year journey It discusses the process of elite capture in the development programmes implemented through Grama Panchayats (GPs), the lowest tier in the rural local self-government structure in India The scope of this book is wide and includes decentralised government, election expenditure, decentralisation, international agreements, self-help groups, checks and balances in development programmes, voice mechanism and the elite capture The book will be of help to researchers from several social science disciplines, civil society, policymakers and implementers from the grassroots to the national-level government The methods adopted to collect primary data and evidence for this book are unique and include collection of quantitative evidence from the same set of households at two points in time; qualitative discussions with representatives of local government, officials, local institutions, citizens and key stakeholders; election expenditure incurred by candidates contesting to GPs at two points in time Regular visits to the field helped in developing a rapport with our informants and in gaining more insights into the process of decentralised governance, checks and balances, working of international agreements, and voice mechanisms and elite capture v vi Preface In this five-year journey, we have received help and support from a large number of well-meaning individuals, and it is difficult to name each one as the list is long In particular, we express our grateful thanks to Prof Hari Nagarajan, Prof Shashanka Bhide and Mr Suman Berry for financial support to the initial study We also thank Professors V M Rao (late), Gita Sen, G Thimmaiah, Abdul Aziz, Meenakshi Sundaram and N Sivanna for their comments and suggestions We are grateful to anonymous referees for their helpful comments and suggestions on earlier versions of this study The study findings were presented in 2010 during the Round Table on Elite Capture at the Institute for Social and Economic Change (ISEC), Bengaluru, India; in 2011 at the Australia India Institute, University of Melbourne, Australia; and in 2014 during a seminar at the Christ University, Bengaluru We thank participants of these seminars, especially Mr Mani Shankar Iyer, former Minister for Panchayat Raj, Government of India, and Prof Salim Lakha, University of Melbourne, Australia We are indebted to sample households, elected and non-elected officials to sample GPs, candidates contesting in the elections and key informants for providing valuable information We gratefully acknowledge the support and encouragement provided by the past and present Directors of ISEC starting from Professors R S Deshpande, B K Pattanaik, M R Narayana and M G Chandrakanth We would also like to place on record the excellent administrative support provided by the office of registrar and accounts Special thanks to former Registrars Col Ashuthosh Dhar, Dr H Shashidhar, Sri R Narayanan, Col Utthaiah and present Registrar Dr P S Srinath Last but not least, we thank our colleagues at the Centre for Decentralisation and Development at ISEC, especially Ashoka, Veena, Bheemaraya, Murali, Shivaraju, Vanishree and Ravindra, for the field assistance, and Ms Nupoor Singh, Associate Editor, Springer, for her constant encouragement and support Bengaluru, India D Rajasekhar M Devendra Babu R Manjula Contents 1 9 10 11 11 12 14 15 16 Elite Capture in Decentralised Institutions: A Literature Survey 2.1 Introduction 2.2 Elites, Elite Capture and Programme Capture 2.2.1 Elites 2.2.2 Elite Capture 2.3 Why and How Elite Capture Occurs 2.3.1 Elections and Elite Capture 2.4 Impact of Elite Capture 2.5 Conclusion References 19 19 19 20 22 22 24 25 27 27 Overview of Decentralisation in Karnataka 3.1 Introduction 3.2 Grama Sabha 31 31 32 Introduction 1.1 Context and Importance 1.1.1 Concept of Decentralisation 1.2 Decentralisation and Inclusive Governance 1.2.1 Did Decentralised Government Promote Inclusive Governance? 1.3 New Roles of the Local Government 1.3.1 HYOGO Framework 1.3.2 Millennium Development Goals 1.3.3 Self-help Groups 1.4 Need for the Study 1.5 Methodology 1.5.1 Repeat Visits 1.6 Organisation of the Book References vii viii Contents 3.3 3.4 3.5 3.6 3.7 Reservations in PRIs Administrative Decentralisation Functional Decentralisation Fiscal Decentralisation Transparency and Accountability Mechanisms 3.7.1 Panchayat Jamabandhi 3.7.2 Programme Guidelines/Controls 3.7.3 Upward Accountability 3.8 Recent Policy Initiatives 3.9 Conclusion References 33 34 37 40 43 44 45 46 46 47 48 51 51 51 53 55 56 58 59 60 62 62 63 64 66 67 Grama Panchayats: Background of Members and Governance 5.1 Introduction 5.2 Profile of Elected Members 5.2.1 Election Expenditure 5.2.2 Gender Composition 5.2.3 Caste Composition 5.2.4 Age of the Elected Members 5.2.5 Education Levels Among Elected Members 5.2.6 Land Ownership Status 5.2.7 Occupational Status 5.2.8 Reservation Status 5.2.9 Prior Political Experience 71 71 72 73 74 75 77 77 80 80 80 83 MGNREGS and Housing Programmes: Checks and Balances to Prevent Elite or Programme Capture 4.1 Introduction 4.2 Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) 4.2.1 Checks and Balances in MGNREGS 4.2.2 Are Checks and Balances Working? 4.2.3 Issue of Job Cards and Provision of Work 4.2.4 Bank Accounts 4.2.5 Muster Roll Manipulation 4.2.6 Social Audits in MGNREGS 4.3 Housing Schemes 4.3.1 Rural Ashraya Housing Programme 4.3.2 Ambedkar Housing Scheme 4.3.3 Indira Awas Yojana (IAY) 4.4 Conclusions References Contents 5.3 Functioning of Sub-institutions 5.3.1 Grama Sabha 5.3.2 Standing Committees 5.4 Income and Expenditure Pattern of GPs 5.4.1 Expenditure Pattern of Grama Panchayats 5.5 Conclusion References ix 84 84 87 87 95 102 103 MGNREGS, Elite and Access to Benefits 6.1 Introduction 6.2 Implementation of MGNREGS 6.2.1 MGNREGS at the State Level 6.2.2 MGNREGS at the GP Level 6.2.3 Pattern of Expenditure Under MGNREGS 6.2.4 Complaints/Grievances 6.3 Socio-economic Characteristics of Sample Households 6.4 Awareness of MGNREGS 6.5 Planning/Preparation of Action Plans in MGNREGS 6.6 Participation in MGNREGS 6.6.1 Who Benefited? Who Captured the Benefits? 6.7 Embezzlement of MGNREGS Funds 6.7.1 How Does Capture Take Place? 6.8 What Factors Explain? 6.9 Conclusions References 105 105 106 106 107 110 110 113 116 118 121 123 125 131 132 133 133 Housing Schemes, Elite and Capture of Benefits 7.1 Introduction 7.2 Progress of Housing Schemes in India and Karnataka 7.2.1 Progress of Housing Programme in the Sample GPs 7.2.2 Selection of Households for Housing Benefits 7.2.3 Definition of Houselessness 7.3 Procedure to Select the Beneficiaries 7.4 Housing Benefits Obtained by Sample Households 7.5 Procedure Adopted to Select the Households 7.5.1 Targeting of Housing Benefits 7.5.2 Construction of the House 7.6 Elite Capture 7.6.1 Incomplete Houses 7.6.2 Checks and Balances Have Not Worked! 7.7 Conclusions References 135 135 137 138 141 141 142 143 145 147 149 149 155 156 158 159 x Conclusions 8.1 The Context 8.2 The Main Focus 8.3 What Is Elite Capture? 8.4 An Overview of Decentralisation 8.5 Checks and Balances to Prevent Elite Capture 8.6 Performance of PRIs: What Lessons Emerge? 8.7 MGNREGS 8.8 Housing Schemes Contents 161 161 162 163 164 165 165 166 167 154 Housing Schemes, Elite and Capture of Benefits to GP officials However, getting the instalments released has become an ordeal for these households One female beneficiary from this village received assistance of Rs 40,000 in four instalments for the construction of a house, which ultimately cost Rs 150,000 She had paid Rs 2,000 to GP secretary to get the housing benefit sanctioned After the sanction, she spent Rs 3,000 to bribe the GP Secretary to get the instalments released as well as on transport However, another two beneficiaries have not received instalments because they have not paid the GP secretary A beneficiary was sanctioned Rs 40,000 under IAY But she has received only one instalment of Rs 10,000 although she completed the construction of the house at a total cost of Rs 80,000 When she asked, the GP Secretary stated that ‘the remaining amount has still not come, will pay you whenever we receive money’ Another beneficiary of the Ashraya (Basava) housing scheme was sanctioned Rs 40,000 Although she completed the construction of house by spending a little over Rs 40,000, she has yet to obtain three instalments worth Rs 30,000 She spent around Rs 2,000 on transport and other expenses to get the instalment released, but even then she was not successful When asked, the stock response is that we will release the money as soon as the grant is released According to the information provided by the GP, almost all the grant had already been released Box 7.5: Rampant corruption in the housing scheme In this village from the developed district, 200 out of 1,200 households are houseless in the sense that they live in huts or congested houses There is therefore considerable demand for government housing benefit GP officials however sanction housing benefits either to their relatives or those who bribe them A wealthy Lingayat from this village who has served in the GP as a member has emerged as an elite and has played an important role in the sanction of housing benefits in collusion with the GP Secretary Three sample households from this village stated that they paid Rs 5,000 to Rs 10,000 to this person before the housing benefit was sanctioned Being poor, they had to borrow to pay the bribe The expenditure in all the cases was much greater than what the government sanctioned They needed to borrow the additional amount from relatives and informal agencies to complete home construction The above cases depict the incidence of elite capture in the sanction of housing schemes and release of instalments to the poor Because of the shortage of money and delayed release of instalments, many poor households reported that they suffer 7.6 Elite Capture 155 in the process The poor borrow from friends and relatives, informal agencies and chit funds to complete the construction of houses, to receive each instalment and to get the final instalment If there is considerable delay in the release of instalments, the poor suffer even more because they have to pay interest to moneylenders and other informal agencies On the other hand, rich households spend more than they receive as housing assistance In one village in the irrigated district, we came across a case where Rs lakh was spent on constructing the house, whereas while the sanctioned amount was only Rs 40,000 This house also contained many valuable objects In a village from the irrigated district, a vokkaliga farmer got housing assistance of Rs 40,000 sanctioned with the help of GP member The last instalment was not paid at the time of our first survey When we revisited the village in 2017, it was found that the house construction was complete We also found that the total amount spent on the construction was Rs lakhs The higher expenditure was also on account of construction of a room on the first floor The official from the GP refused to give completion certificate on the grounds that if he takes a photo, the room on the first floor becomes visible and that construction of the first floor was against the rules Hence, the last instalment was not released When the sample household repeatedly visited the office, the PDO told that ‘the last instalment will not be released If you continue to pester me, I will initiate action to recover the entire amount that was already disbursed’ Afraid, he stopped approaching the GP This beneficiary does not belong to the category of poor household, and hence the refusal to release the last instalment was not really a great blow him The case however shows that the checks and balances have worked in this case to prevent corruption Second, this case suggests that housing benefits meant for the poor were given to the non-poor 7.6.1 Incomplete Houses When the survey was conducted in 2010, it was found that 70% of the sample households stated that they have constructed the houses There were interesting variations across the districts Almost all the sanctioned houses were constructed in the highly developed district But, over 63% of the sanctioned houses in the transition district were incomplete We have revisited the remaining 30% of the households in 2017 to ascertain whether the houses sanctioned in 2010 were complete or not It was found that of 29 houses, only 21 were complete and the remaining were still found to be incomplete in 2017 The reasons for not constructing the houses are the following First, as the case of Saraswathi from the developed district reveals that the housing assistance was never released to her and hence she could not construct the house Second, the households faced several difficulties in getting their instalments released This has compelled them to give up the housing project 156 Housing Schemes, Elite and Capture of Benefits 7.6.2 Checks and Balances Have Not Worked! A question that comes to our mind is that why and how checks and balances are not working to prevent elite capture? The discussions held across the Grama Panchayats reveal the following The GPS system was introduced in 2010–11 to determine the location of the house and release of instalments directly into the bank account of the beneficiary only after the GPS coordinates match This seems to have worked to some extent as the following case reveals When asked whether two houses will be sanctioned to the same household, the president of a GP from Transition district replied that if two sons have partitioned and both of them are living separately then two houses can be sanctioned to the same household However, they need to have separate sites If two government houses are constructed on the same house site, the GPS coordinates show this as one house and money cannot be released The above shows that the introduction of GPS has reduced the tendency of sanctioning two houses to the same household if the house site is the same However, this does not prevent if house sites are distantly located Another major problem is that the system of GPS has contributed to delays in the release of instalments and eventually to the abandonment of housing project as the following two cases reveal One SC small farmer from the backward district stated that harassment during the release of instalments compelled him to give up the house construction After the house is sanctioned and when we approached the GP for the release of the next instalment, the officials visited to take the photograph and GPS coordinates They subsequently said that they were unable to upload the information in the computer and delay the release of instalment for several months Since I have taken loan to construct the house, I did not have money to pay to the officials I therefore stopped the house construction 60-year old marginal farmer, belonging to Muslim minority category, from the backward district stated that the instalments will be released without any delay if we make a payment Since I could not make the payment, they made to run around the office for the release of instalment and delayed by stating that the documents could not be uploaded After sometime, I simply gave it up and did not complete the construction A PDO from the irrigated district claimed that video recording of Grama Sabha meetings has ensured that the beneficiaries are selected in these meetings He also stated that the names of the selected beneficiaries will be read out in the meeting In the same GP, it was however learnt that of the 16 houses sanctioned, 15 were divided to all the members and one additional house was given to the President The final selection was also made in the GP meeting When we probed this further, one GP member informed that video recording is usually manipulated in the following manner There is considerable manipulation in so far as the selection of housing beneficiaries is concerned Final resolution on selection is not made in the Grama Sabha meeting As far as video recording is concerned, it is true that someone will be recording In the Grama Sabha meeting, one name will be announced For instance, the name of Boregowda will be announced in the meeting; but, they not specify which Boregowda it is The officials also not parade the selected person in the meeting Video recording of another meeting with different names announced is also presented as the Grama Sabha meeting in some instances! 7.6 Elite Capture 157 Table 7.6 Complaints on implementation of housing schemes in the sample Grama Panchayats received during 2008–09 District/GP Nature of complaints Nature of action taken Reason for not taking action Highly developed Demand for IAY Assured to give after NA district allotment Developed district Demand for IAY Assured to provide NA Not getting in the coming instalments financial years Government has not disbursed money and hence cheques were not passed at the Taluk Panchayat Irrigated district Nil – Transition district Backward district Nil Sanctioned two houses for the same household Give preference to physically challenged – NA Selection was made NA on the basis of public NA opinion 5% reservation for physically challenged NA Note: NA not applicable The above shows that although the government has introduced some checks and balances to reduce the corruption and elite capture, these have not worked in some cases In other cases, checks and balances have sadly caused further problems to the poor people 7.6.2.1 Muted Voices from Below We also collected information from the secretaries of all GPs on whether complaints have been made about the implementation of the housing scheme in the selected GPs, and if so, the nature of the action taken by the GP If action on the complaint was not taken, we asked for the reasons This information is reproduced in Table 7.6 In seven out of 10 GPs, no complaint was made about the implementation of the housing scheme In three GPs, however, complaints were made Two of these complaints were in the nature of suggestions or requests, while the other two were complaints First, a suggestion was made to GP in the backward district that preference should be given to the physically challenged in the allocation of housing benefits; the concerned GP responded that it had reserved 5% of housing benefits for the physically challenged The second suggestion/request in two sample GPs (one from the highly developed district and the other from the developed district) was for IAY houses; the respective GPs assured them that houses would be sanctioned in the coming years if there was allotment Of the two complaints, one was a complaint to 158 Housing Schemes, Elite and Capture of Benefits a GP from the backward district that two houses had been sanctioned to the same household; the GP responded that this was decided at a Grama Sabha meeting The second complaint was to a GP from the developed district on the delay in getting the instalments; the GP responded that this was due to the delay in the release of money from the government Despite these suggestions and complaints, the picture from the secondary data provided by the GPs is that the implementation of housing schemes is by and large satisfactory to the households in the jurisdiction of the sample GPs As the discussion in the preceeding sections shows, this is far from the truth as there have been problems in almost all the 18 sample villages This means that one of the following or all in some combination may be true First, people are not aware that there is a system of registering complaints Second, the GPs are avoiding the registering of complaints or only accepting oral complaints Third, people are afraid of making complaints The primary data collected from the households reveal that those who have received housing benefits have been facing from a number of problems such as inadequate amounts, delays in the release of instalments, cuts in the instalments, etc We have asked the sample households whether they have lodged any complaints Although the poor suffer from the problem of elite capture, they stated that they not complain to higher officials, because they feel that nothing will be done The incidence of civil society organisations such as NGOs is reported to be low and, if some organisations are present, people not have much trust in them A large number of SHGs are present in all the GPs Have they played any role in enabling the people to voice out their concerns? We have had an in-depth discussion with SHG representatives and other key stakeholders on this issue It was learnt that SHGs are usually involved in activities such as savings contributions and credit disbursement They not participate in the community activities such as raising issues relating to housing in the Grama Sabha meetings 7.7 Conclusions Housing insecurity is intense in rural Karnataka not so much due to homelessness but because of the presence of married children and the compulsion to lead life in congested houses The housing insecurity is also due to imminent partitioning of households, and the pressure on the household head to provide decent housing to the children The Karnataka government has initiated three housing schemes for the benefit of the poor These schemes provide modest financial assistance, and have incorporated some checks and balances to ensure that the benefits reach the poor Rules that the benefits should go to BPL and SC/ST households and that money should be released in instalments, etc., have been introduced to ensure that elite capture is minimal In this chapter, we examined the implementation of housing schemes in 18 villages spread over 10 Grama Panchayats in five Karnataka districts We found that although the targeting is reasonably successful, the incidence of corruption is quite high Poor 7.7 Conclusions 159 households invariably have to pay money to the elite for the sanction of housing benefits and for the release of instalments They also have to spend money on running around offices and officials As a result, the amount sanctioned to the total amount fell short in a significant proportion of the sample households Such a shortage was very pronounced in the case of SC/ST households, and those dependent on wage labour The elite invariably have some connection with the GP—current or former presidents, current or former members and the secretary The release of sanctioned grant in four instalments has the potential to contribute to delays in the release of funds and to the problem of non-completion of houses At each stage, information on stage completed is to be provided to the GP and request for the inspection is made An official from the GP visits the house, makes an inspection and GPS verification, takes a photo and files a report on the status of house construction We argue that the selection procedure and method of instalment releases contributed to elite capture, and obstructs the progress in the achievement of housing objective The poor suffer due to such elite capture They have to depend on high-cost borrowing to start construction of the houses, to become eligible to receive the instalments and to complete the construction The somewhat high incidence of incomplete houses is due to this problem This suggests that the very purpose of the housing scheme is defeated at least in the case of about one-fourth of the households The poor not have any voice mechanisms There are no institutions to support the poor in raising their voice They not perceive any positive outcome if they take their grievances to higher officials References Heller, Patrick and Rao, Vijayendra (eds) (2015) Deliberation and Development: Rethinking the Role of Voice and Collective Action in Unequal Societies The World Ban: Washington Reddy, Nandana and Acharya, Damodar (2007) Striking at the Roots of Democracy Economic and Political Weekly, Vol 42, No 18, May Rajasekhar, D, M Devendra Babu and R Manjula (2017) Are Elections to Grama Panchayats Party-less? The Evidence from Karnataka, ISEC Working Paper 402 Chapter Conclusions 8.1 The Context Decentralisation is a process that transfers political, administrative and fiscal responsibilities to the local elected bodies, and also empowers communities to ensure that these bodies function effectively In the literature, it is often justified that decentralisation will result in good development outcomes The decentralised government, being closer to the people, is in more advantageous position to obtain information on the situation, problems and needs of the people It is also argued that elected leaders to decentralised government have incentives to formulate plans according to the needs and preferences of the people, and implement them in such a way that the people, in general, and their constituency, in particular, benefit from such need-based and decentralised plans Political argument that is often made in support of decentralised government is that decentralisation promotes true democracy by way of enabling the participation of the people in the governance and accountability From the fiscal angle, it is argued that local planning provides cost-efficient services as local government utilises the local resources and considers local preferences more carefully than the case with the central government Decentralised governance and empowerment of local elected bodies will lead to participation of the people, especially by those belonging to disadvantaged groups Frequent elections to decentralised government, introduction of transparency mechanisms and devolution of political powers have potential to empower the poor and enabling their participation in local decision-making, and holding the government officials accountable for their actions Affirmative action policies can help disadvantaged groups to have a voice in the local governments Because of these, local elected government is expected to result in participation of the disadvantaged groups, better local decision-making, improve the efficiency and responsiveness of public officials and reduce the influence of local elite Decentralised governance is seen in India as an important platform facilitating better local decision-making Hence, powers have been devolved to the decentralised © Springer Nature Singapore Pte Ltd 2018 D Rajasekhar et al., Decentralised Governance, Development Programmes and Elite Capture, https://doi.org/10.1007/978-981-13-1900-6_8 161 162 Conclusions governments in India through the 73rd and 74th Constitutional Amendments The 73rd amendment relates to rural local governments (panchayats) and the 74th to urban local governments The important provisions enshrined in the 73rd Amendment Act are: constitution of Grama Sabha (people’s assembly) at the village level which facilitates people to participate in the local governance and planning; reservation of seats and the offices of chairpersons of panchayats for the vulnerable sections of society such as SC/ST, women and who in turn articulate the needs and requirements of their respective groups in the statutory meetings and plans to fulfil them; powers, authority and responsibilities such as planning for economic development and social justice and implementation of plans; devolution of subjects; constitution of planning committee at the district level for preparing a draft development plan for the districts which includes rural and urban plans; and powers to impose taxes, grants and other fiscal powers Despite the amendment and successful implementation of decentralisation measures, the governance and service delivery at the local level in rural areas suffer from several problems; of them, elite capture is most important as it can have adverse implications on local decision-making, planning, service delivery, poverty reduction and inclusive growth 8.2 The Main Focus It is in this context that this book attempts to find out whether elite capture is taking place in the development programmes implemented through Grama Panchayats (GPs), the lowest tier in the panchayats structure It also documents the micro-level process of elite capture and assesses whether checks and balances incorporated in development programmes prevent elite capture This book is different from those looking at the issue of elite capture As it is, the literature on elite capture is scarce The issue of elite capture, in the past, was looked mainly from the sociological perspective, i.e how the local upper/dominant castes and class garner the positions and benefits But today the context is different To overcome this kind of situation, a new and strong governance system is in place at the local level In this book, we approach from the view point of how the decentralised governance is addressing the issue of elite capture The question is that why elite capture remains to be important in the current globally influenced environment and in what way they impact on development and state policies In the current global environment, panchayats have been assigned new roles of mobilising of self-help groups, adopting Hyogo 2005 framework relating to the role of community and local government in natural disaster risk reduction, MDGs relating to habitat, environment and disaster preparedness, adaptation and mitigation in climate smart agriculture These issues are addressed in this book Development programmes of central and state government such as Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) and Housing schemes—Indira Awas Yojana, Ashraya and Ambedkar implemented by GPs are taken as illustrative cases and also because these two programmes account for 8.2 The Main Focus 163 bulk of their expenditure Though the study has focused on two schemes of NREGS and housing, they are very important for the poor addressing their social security and livelihood needs and human development MGNREGS is one of the biggest social protection programme in the country Housing is the most popular scheme that is in operation for quite some time now These two schemes account for bulk of the government expenditure Hence, we feel that an analysis of these two important development programmes is indicative enough to understand the functioning of decentralised governments and governance Qualitative and quantitative data collected from randomly selected GPs from five districts in Karnataka state for two time points—2010 and 2017 are used in this book The study also depended on the review of secondary sources for the other states which are used to address the study questions The quantitative data includes those collected from sample GPs, and households benefiting from MGNREGS and housing schemes Focus group discussions were conducted with the help of a checklist, developed separately for each programme Village-level cases on elite capture have also been prepared One may argue whether one can make generalisations based on small set of case studies We would like to clarify that the purpose of this book is to draw general conclusions relating to decentralisation, social protection and elite capture based on case studies of representative Grama Panchayats We are of the opinion that studies looking at the process of decentralisation and elite capture are needed to understand the extent to which it matches with the macro level picture and trends We are also of the opinion that there is need for studies that provide an account on the processes of decentralised governance and its outcomes at the micro-level 8.3 What Is Elite Capture? In the literature, elite capture refers to situations where the elites shape development processes according to their own priorities and appropriate development resources for private gain Programme capture refers to the process where the non-poor use their economic power in exchange for preferential treatment in welfare services The elites have superior social, political and economic status, because of which they are able to influence the development process—the selection of beneficiaries for anti-poverty programmes, providing resources, determining the specific development works to be undertaken and technology to be used, etc In the literature, the following have been identified as factors contributing to elite capture The greater homogeneity and cohesiveness among the elite together with lack of empowerment and higher levels of ignorance among the poor have been identified as factors contributing to elite capture The elite dominate programmes where the public good has to be created, implemented and managed by the community Decentralisation without proper accountability results in the elite capturing a larger share of public resources meant for the poor Expenditure incurred in the elections to local government also contributes to elite capture 164 Conclusions 8.4 An Overview of Decentralisation In India, over concentration of powers at the centre, failure to hold local elections, recognition of the need for political decentralisation to manage the stresses and strains of ethnic, regional and religious diversity, and failure of various centrally sponsored schemes to achieve the desired impacts on the ground led to new constitutional amendment (73rd) mandating all states to establish Panchayat Raj Institutions Now the 73rd Constitutional Amendment mandates all states to hold elections to PRIs once in years This provides continuity for the system Reservations have been provided for various sections with an understanding that these members take note of the problems/needs of their respective groups and articulate in various forms to fulfil them Planning and development are important powers rested with PRIs For this, the sectors where the PRIs have power to make decisions were specified Now it is 25 years since the beginning was made in decentralised system, the experiences shows that these local institutions are on a firm footing Though the assignment of powers to PRIs varies from state to state, one common observation is that these institutions are responsible for providing basic services, improving the vulnerable sections and in all these aspects there is positive improvement However, still there are points of apprehension such as participation of members and in particular the women in various platforms, involvement of citizens in the affairs of local governance These lacuna lead to decisions taken by a few powerful people Karnataka state brought out path-breaking legislation in 1985 and made a concerted attempt to implement the Panchayat Raj System during 1987–88 under new legislation The state government complied with the 73rd Constitutional Amendment by bringing in a new Panchayat Raj Act, 1993 Karnataka state has, thus, pioneered in establishing true rural local governments For effective functioning of these governments, the state has, by and large, implemented provisions of the 73rd Amendment Act Further, reforms have been initiated from time to time to make the Panchayat Raj Institutions are efficient, transparent and accountable Though panchayat bodies in Karnataka are ahead of other Indian states in quantitative terms, they lag behind in qualitative aspects (governance and development) The meetings of Ward and Grama Sabhas are not held regularly If at all they are held, the quality of business transacted is often poor A large number of people from depressed castes and women have been elected to Panchayat Raj Institutions However, their participation in these institutions is far from satisfactory Administrative decentralisation has lagged behind; as a result, the elected leaders not have any control over the bureaucrats working in the PRIs Development at the panchayat level is not initiated through untied grants on which elected bodies have full control, but through schemes over which bureaucrats have greater control Under these circumstances, the elite who are dominant in terms of class, education and political background have become important in the decision-making and implementation 8.5 Checks and Balances to Prevent Elite Capture 165 8.5 Checks and Balances to Prevent Elite Capture Elite capture is likely to occur in development schemes implemented in societies where socio-economic inequality is more pronounced and where people are unable to raise their voices against the powerful elite Checks and balances are, therefore, incorporated into a development scheme such as MGNREGS and housing programmes to prevent misuse Chapter in this book examines the extent to which these checks and balances have worked with the help of literature review It is argued that notwithstanding checks and balances in the design of MGNREGS and housing schemes, the evidence shows misuse of resources in the scheme in several forms and makes some suggestions towards making checks and balances effective The evidence also suggests that individuals or institutions that are expected to follow the guidelines or act as checks and balances are either involved in the misuse of funds or protect those who have misused the programme 8.6 Performance of PRIs: What Lessons Emerge? We have analysed the performance of sample gram panchayats in terms of governance, planning, implementation, monitoring and outcomes in Chap The various institutional mechanisms provided for participative planning and development at the Grama Panchayat level are the meetings of Ward and Grama Sabhas, standing committees, panchayat meetings, etc An examination of working of these institutions (i.e meetings, and participation) within the system was undertaken because they would reveal the levels of effectiveness, transparency and accountability in the system The working of these sub-institutions again depends on the type of functionaries (elected and non-elected) Indicators such as education, caste, age, occupation, political background, etc., of the elected officials play an important role in the functioning of the entire system An analysis of these aspects leads us to draw the following conclusions and also the measures required to make the system work in the transparent and optimal manner First, it is eulogised that decentralisation is a better option for local public sector management But the success of decentralisation depends on certain conditions Broadly, decentralised institutions must have political, administrative, functional and fiscal autonomy In their absence, they become mere agents of higher level governments In Karnataka, political decentralisation is effected according to the 73rd Amendment Act The President (Chairperson) of the Panchayat is made ‘Executive Head’ This means that the elected body is made supreme over the bureaucracy In this context, the question is: how independent they are in taking decisions concerning service and development matters? In other words, the elected officials have control over the administrative personnel, the functions they perform and on budget and expenditure decisions? The Karnataka decentralisation shows that the rural local governments have a fairly large number of personnel, a number of responsibilities 166 Conclusions and a fairly large budget at their disposal As against this, the working experience of the institutions shows that the elected officials have very little control over its staff and personnel since they are deputed by the state, and the respective parent departments at the state level to which the staff and personnel belong wields the power Again, the responsibilities entrusted to the local governments bring out that there are too many programmes and schemes with different guidelines, conditions, etc., about which the majority of elected members have very little knowledge Added to this, role clarity among the three-tier panchayats on various schemes is a major problem As a result, there are possibilities of misallocation and misuse of funds by influential officials, non-official members and middlemen Further, lack of autonomy in the mobilisation of resources and allocation of the same may also lead to elite capture at various levels Second, the expenditure incurred on panchayat elections has been growing and this has considerable influence on the profile of leaders elected to Grama Panchayats The profile of elected leaders has changed between 2010 and 2015 The proportion of leaders belonging to affluent sections has increased at the expense of those cultivating small landholdings and depending on wage labour The growing election expenditure will also have impact on elite capture Third, the low level of knowledge and awareness among the elected and nonelected officials on various governance rules and development matters lead to lack of transparency, accountability and equity The way the meetings of Ward and Grama Sabhas, standing committees and even the Gram Panchayat are conducted provides ample evidence on non-participation by the public, officials, lack of transparency and accountability in the decisions and outcomes This leads to the tendencies of elite capture In most of the GPs, we have not seen any display of the works taken up under MGNREGS, and names of the selected beneficiaries under housing schemes at prominent places Added to this, under MGNREGS, social audits have not been conducted and village monitoring committees were not constituted Under these circumstances, only the elite and influential would dominate the governance and delivery of services Fourth, the thrust of major programmes like MGNREGS at the Grama Panchayat level whose capabilities (officials and non-officials) are very low (in terms of capacity building, budget making, planning and implementation) leads to elite capture of different types The state has been witnessing compounded problems in the implementation of the scheme In spite of various checks and balances incorporated in the scheme, the recent appointment of ombudspersons for each district to look exclusively into the misuse and complaints of MGNREGS is a pointer to the way the scheme is progressing 8.7 MGNREGS The study analysed whether there has been any capture of the MGNREGS programme by the elites From the analysis, it was evident that the elites did capture the programme The interesting finding is that these elites did not necessarily belong to 8.7 MGNREGS 167 the upper castes as has been argued by the other studies Quite a few elite belonged to depressed caste groups and these people had wealth and political connections Awareness among sample households on MGNREGS was poor About 6% of the households stated that none of their household members had worked under the programme; official statistics however maintain that they had in fact worked This shows the existence of ghost workers It was also found that official statistics with regard to the number of days of work were manipulated to inflate the number of working days This was found in the case of about 22% of the sample households Case studies supported the evidence of programme capture by the elite The misuse by the elites happened in the following ways (1) The number of workers was inflated in the muster rolls by including the names of bogus workers (2) Labour-saving machinery was used in place of labourers and the number of persondays of work was inflated (3) Only partial payments were made to workers as against their actual payment (4) Despite the introduction of system of direct transfer of wages into the bank accounts of wage labourers, vested interests devised their own ways of manipulating the wage payments (5) Local contractors and GP officials retained job cards in their possession They showed that these job card holders worked, and they managed to obtain their signature through ingenious methods In rare cases, they even forged the signatures It was evident that the PDO/secretary of the GP and/or GP members were involved in the misuse of funds apart from some influential people Evidence showed that embezzlement became possible only with the connivance of politicians or bureaucrats at a higher level (There is a practice of paying commission to various persons like President of GP, PDO/Secretary, Engineer, Executive Officer of TP, etc., by the contractor/executor of the works) About 38% of the total sample households reported that their household members did not receive full payment for the work carried out under the programme Of them, only about 19% have actually complained to the higher authorities like Grama Panchayat president or members or PDO/secretary 8.8 Housing Schemes Housing insecurity is intense in rural Karnataka not so much on account of homelessness in the strict sense of the term, but on account of the presence of married children and the compulsion to lead life in congested houses The housing insecurity is also due to imminent partitioning of the households, and the pressure on the household head to provide decent housing to the children In the implementation of three housing schemes, rules that the benefits should go to BPL and SC/ST households, release of money in instalments, cheque payment, etc., have been introduced to ensure that the benefits go to the poor and elite capture is minimal In addition, the government introduced centralised monitoring of fund release to ensure that there is no delay in the release of instalments, and the officials were asked to undertake mandatory uploading of the data before the end of every week 168 Conclusions It is shown in the book that a significant proportion of the beneficiaries belong to the SC/ST community and most of them undertake wage labour in agriculture or non-agriculture for their livelihood This suggests that the targeting is reasonably good However, the incidence of corruption is quite high The officials and elected leaders of GPs resorted to corruption at the time of sanctioning, inspection of the stage of house construction and release of instalments If the beneficiaries not pay, there was considerable delay in the release of instalments The check and balance of centralised monitoring did not work because the officials of GPs did not upload the data before every weekend by giving excuses of server down, electricity shutdown The elites who are behind this are elected leaders to GPs and they are not necessarily those belonging to upper castes Now, the elites also come from backward and disadvantaged castes, but they have wealth and political connections They also have connections with the wider world Poor households invariably have to pay the elites for obtaining the housing benefits and release of instalments They also have to spend money in running around offices and officials, thereby incurring expenditure on transport, food and others As a result, the amount sanctioned to the total amount fell short in a significant proportion of the sample households Such a shortage was very pronounced in the case of SC/ST households, and those depending on wage labour for sustenance The elites invariably have some connection with the GP—current or former presidents, current or former members and secretary The poor suffer due to such elite capture They have to depend on high-cost borrowing to start the construction of the houses, to become eligible to receive the instalments and to complete the construction A somewhat high incidence of incomplete houses is due to this problem This suggests that the very purpose of the housing scheme is defeated at least in the case of about one-fourth of the households There was some protest from the people on the way things are happening In two of the sample GPs, there was a formal protest on targeting and delays in the release of instalments The vast majority of the sample households, who suffered due to elite capture, did not lodge a formal or informal protest because of lack of awareness on procedures, absence of civil society institutions, etc Further, they also perceive that they not have any voice mechanisms They not perceive any positive outcome if they take their grievances to the higher officials There are no institutions to support the poor in raising their voice The factors contributing to elite capture in the development programmes include the following First, limited decentralisation in terms of lack of expenditure autonomy, dependence on higher levels of the government for funds for local development, reliance on schemes not having flexibility and so on will make the decentralised government ineffective and makes the staff important Second, poor governance which gets reflected in non-conduct of minimum number of Grama Sabha meetings, limited awareness on Grama Sabha meeting and non-attendance of citizens in Grama Sabha meetings As a result, peoples’ participation in the presentation of needs and preferences, participatory planning and budgeting not take place In any case, the over reliance on specific purpose schemes makes the decentralised planning redundant Third, the civil society consisting of NGOs, people’s federations, community based 8.8 Housing Schemes 169 organisations and so on, is either non-existent or does not pay much attention to what goes on in the area Although SHGs are present in a large number in all the GPs, they are preoccupied with savings and credit activity, and not show much interest in local development Fourth, muted voices are another issue The poor in the absence of organisations among them are scared to protest against the rich and powerful In addition, the patron–client relationship also comes in the way To conclude, transparency and accountability are the strong pillars of good governance At the GP level, in large cases, there is no transparency in priorities and budgetary allocations There is no relationship between Grama Sabha outcomes and adoption of budget and development plans The extent of participation of households in the Grama Sabhas ranged between 20 and 57% The people who are aware of misuse and maladministration in the local panchayat not often bother to question or complain to higher ups The study found elite capture in MGNREGS and housing programmes implemented by decentralised governments Elites typically are wealthy and have political influence The elites need not necessarily belong to the upper castes as traditionally viewed; they can as well come from backward or even disadvantaged castes But one common feature is that they are relatively wealthy, have higher rung political connections, served (or serving) in the PRIs and have outside connections Most of the sample households have despised the role of the elite; yet, they did not register any formal protest out of fear or because of patron–client relations The study finds that the poor governance in decentralised government is contributing to elite capture The elected representatives of GPs have little control over their personnel They also have little knowledge on guidelines/checks and balances of different schemes that they are supposed to be implementing; collusion between official and non-official members leading to misallocation and misuse of funds by influential officials, non-official members and middlemen The way the meetings of statutory bodies such as panchayat meetings, standing committees, Grama Sabhas are conducted contributes to non-participation of people, and poor transparency and accountability in the decisions and outcomes In most of the GPs, the works taken up under MGNREGS and names of housing beneficiaries have not been displayed at prominent places Social audits have not been conducted under MGNREGS and village monitoring committees were not formed These circumstances lead to a situation where only the elite and influential would dominate and influence the governance and delivery of services and benefits The checks and balances incorporated into the schemes did not come to the rescue of the poor because the officials have often colluded with the elite in subverting the rules In housing programme, the checks and balances of linking GPS coordinates of the house to the release of payments have resulted in considerable hardship to the poor and corruption In the event of elite capture, people have adopted coping mechanisms (such as migration in search of work or borrowing from informal agencies to complete house construction), but such mechanisms have made the poor even more vulnerable .. .Decentralised Governance, Development Programmes and Elite Capture D Rajasekhar M Devendra Babu R Manjula • Decentralised Governance, Development Programmes and Elite Capture 123... 2.2.2 Elite Capture 2.3 Why and How Elite Capture Occurs 2.3.1 Elections and Elite Capture 2.4 Impact of Elite Capture. .. 16 Elite Capture in Decentralised Institutions: A Literature Survey 2.1 Introduction 2.2 Elites, Elite Capture and Programme Capture 2.2.1 Elites