III

To see LSGIs as being uncontaminated by class-struggle would be an idealistic error, reminiscent of the old "village community" hypothesis of Baden Powell. They contain class contradictions, and the mode of use of resources devolved to them under the decentralization agenda occurs via class struggle (whose intensity however varies depending on the degree of antagonism that is immanent in the class configuration). But even if there was no decentralization and the mode of use of plan resources for these particular items was bureaucratically determined, then the outcome would still have been determined by class struggle, but class struggle over shaping bureaucratic preference. In short, decentralization neither does away with, nor engenders, class-struggle in the countryside which exists anyway and is a fact of life.

The impact of decentralization on this pre-existing fact of life can be three-fold. First, it provides an opportunity to the rural poor to assert themselves in a way that bureaucratic decision-making would not have made possible. True, the bureaucratic outcome may turn out in many instances to be more "humane", but it leaves no scope for the rural poor to realize their subjectivity in this domain. For this very reason, however, the need for organizing the rural poor to assert themselves becomes paramount, and this need can be fulfilled only through the intervention of a political Party. The idea of Party-less LSGIs in other words represents a throwback to the idealism of the "village community" concept. This greater ability on the part of the rural poor to assert themselves would necessarily come into conflict with the prevailing property relations in the countryside (except in situations where radical land redistribution has already been carried out), but that only underscores the fact that "decentralization" is a part of the dialectics of class struggle. It is not some "ideal" arrangement at which society can remain frozen, but part of the process of carrying forward the dialectics of class struggle, which does not necessarily mean of course a state of continuous violent conflict. (In fact, the organization of the rural poor by a political Party committed to their emancipation is a means of controlling violent conflict).

Secondly, it provides a legacy for the construction of a better society. Any socialist society must build on the institutions bequeathed to it by the pre-existing society. Indeed a part of the reason for the excessive centralization, and the accompanying authoritarianism, that prevailed in the earlier socialist societies lay in the absence of any representative democratic institutions in these societies prior to the emergence of socialism on which the latter could build its foundations. In that sense the decentralization experiment, by empowering elected bodies, puts life into a whole range of institutions on the basis of which a future society can be built.

This argument must be sharply distinguished from the so-called “social capital” argument. First, we are talking here of representative political institutions, not clubs or addas, or religious gatherings, or the innumerable instances of social interaction among individuals that the so-called “social capital” theory picks up for celebration. The flourishing of such instances of social interaction is not only perfectly compatible with the putting in place of thoroughly non-representative political institutions, but has actually accompanied, throughout the history of modern India, the most bizarre attempts at the denial of political rights to large masses of the people. And secondly, we are talking about representative political institutions through which the conflict between classes plays itself out, not about institutions sans such conflict, and hence about institutions defending the status quo, which typically constitute the desideratum of “Social Capital” theory.

Thirdly, it trains the people in the art of book-keeping, in the art of responsible financial management etc. which constitutes another legacy for the future, apart from strengthening even the existing system of parliamentary democracy. One of the weaknesses of revolutionary Russia that Lenin had highlighted was the absence of knowledge of "bourgeois management principles". The overcoming of this absence, even partially, would go a long way towards providing the basis for the construction of a socialist society in the future.

While there is no conflict between the perspective of class struggle leading to the creation of a socialist society and the empowerment of the LSGIs within our prevailing social order through greater devolution of resources (just as there is no conflict between such devolution and the erection of a planned economy), the opposite error can also be committed, namely the the mistake of treating the LSGIs as if they already constitute the organs of popular rule. There is an ocean of difference between LSGIs within a bourgeois-landlord order and "communes" in a socialist order. While the latter can be built, looking at the matter in very general terms, on the foundations provided by the former, the vast gulf between the two must not be overlooked.

IV

Let me now come to the difference between Kerala-style "decentralized planning" and the imperialist concept of decentralization. This latter has no theoretical basis, and hence is different from any of the four senses in which the term has been used in economic literature, to which reference was made earlier. Indeed, it is never explicitly set out as one coherent vision; on the contrary, there is a certain (deliberate) fuzziness about it which allows it to mean all things to all people^[4] . One therefore has to cull out the main features of this concept of decentralization not so much from theoretical writings on the subject as from the practices enforced on particular State governments, such as Andhra Pradesh, which have accepted the tutelage of imperialist agencies. There is also an additional problem, namely there are different imperialist agencies lording over different States and over different sectors, which may make generalizations difficult. We can discern nonetheless a degree of consensus among them over conceptual issues, on the basis of which we can reconstruct the imperialist concept of decentralization.

This consensus arises above all from the fact that all of them see “decentralization”, even in the sense of devolution of powers and resources to lower tiers of administration, as an aid to a “free-market” economy. For instance, the World Bank puts forward its fuzzy views on decentralization in a section of the World Development Report 2002 which is titled Building Institutions for Markets. In other words, “decentralization” for imperialist agencies is not a matter of relocating powers, resources and functions within an activist State (in matters of investment), but of building an apparatus that fits into the “neo-liberal” paradigm.

It is not surprising in this context that the following four propositions regarding decentralization are more or less common to all the imperialist agencies. First, while they talk about Gram Sabhas they invariably see the Gram Sabhas as being presided over, and led by, not the elected representatives of the people, but by outside officials. Their perspective in short is not one of strengthening representative institutions in the countryside, but of providing a democratic veneer to a process of essentially bureaucratic decision-making (which can always be manipulated to fall in line with their wishes). Secondly, they see the major tasks of the LSGIs being carried out through a number of Committees, consisting not of elected representatives of the people but of “experts” and corporate-NGOs, and these are to be allowed to enter into direct negotiations with funding agencies for loans for particular projects. Thirdly, their emphasis is on “Self-Help” groups rather than the “Right” of the LSGIs to a share of the Plan funds of the State government. To be sure, Self-Help groups can be of assistance to the rural poor under certain circumstances, but what is noteworthy about the perspective of these agencies is the overwhelming emphasis on these groups to the exclusion of the LSGIs’ “Right” to Plan Funds. And finally, whenever any infrastructure projects are undertaken at the local level, these agencies insist on the imposition of “user charges”, i.e. their exclusive emphasis is on the adoption of the commercial principle even in the matter of peoples’ access to basic amenities.

What these four propositions amount to is a negation of representative institutions, a negation of all political activity, reflective of class struggle in the countryside, in local government, a negation of “Rights” of the people to Plan Funds as users of infrastructure, and the erection of a mai-baap ethos, reminiscent of the old colonial administration trying to wear a paternalist cloak, with imperialist-aided NGOs being presented as the benevolent patrons of the countryside.

In short, this concept of “decentralization” visualizes a substitution of the State by a set of NGOs in the implementation of local projects, including especially social sector projects, the funds for which, whether drawn from the State budget or from foreign donors, are expended through these NGOs. Putting it differently, imperialist "decentralization" is concerned neither with a particular model of planning, nor even a mere substitution of the free market for planning, but with establishing a direct access of imperialist agencies to the Indian countryside through a bunch of NGOs who are in no way accountable to the people.

What is often missed by those who do not see the difference between Kerala-style decentralization and the World Bank concept is that the LSGIs are also a part of the State apparatus. Transferring certain responsibilities to the LSGIs therefore is tantamount to a redistribution of responsibility within the State structure, but a redistribution that has the aim of enforcing greater accountability of the State. The concept of "users' sovereignty" invoked above was linked essentially to this greater accountability. Such "sovereignty" could be exercised only because of the introduction of greater accountability on the State for which decentralization was a means. To be sure, the sheer fact of decentralization would not bring about all these changes; on the contrary, in regions where the poor are unorganized, decentralization could have the opposite effect of strengthening the local oppressors, who, prior to decentralization, might have been kept in check through the actions of "benevolent" elements of the bureaucracy. But, in principle, democratic decentralization is to be preferred, no matter how unsatisfactory its immediate results (this point of course is not relevant for Kerala) , because it enforces greater accountability on the State and restores greater subjectivity to the people.

Imperialist decentralization however has nothing to do with the subjectivity of the people, even when the people are consulted on their preferences, since it operates not through statutory institutions but through voluntary organizations. Indeed, its very objective is to reduce the scope for the operations of statutory institutions, and their replacement by voluntary agencies which are either directly funded by imperialist donors, or are funded from the State budget which in turn has come to depend heavily on imperialist sources for funding social sector expenditures. In short, World Bank decentralization refers essentially to a withdrawal of the State from the social sector, while the aim of decentralized planning was not a withdrawal but greater accountability of an activist State.

Enfeebling the third world State, even the third world bourgeois State, breaking down whatever relative autonomy it may have vis-à-vis imperialism, and reducing it to the status of either a collaborationist or a client or even a puppet State, is a persistent objective of imperialism. This is because a relatively autonomous third world State can act as a bulwark against imperialist domination. This enfeeblement is brought about through a number of different instruments. For instance, the imposition of neo-liberal economic policies necessarily results in an accentuation of the fiscal crisis of the third world State, which is then used to induct direct funding of social sector expenditures by imperialist agencies (the DPEP is a classic example of this and there are designated "World Bank districts" in India where this important social sector expenditure has become the responsibility of the Bank). The Bank's notion of "decentralization" is a part of this project of enfeebling the third world State, and is therefore well-integrated into the plethora of neo-liberal policies. One aspect of these policies which has been well recognized is the withdrawal of the State from an autonomous active role in the social sector in favour of the market; the other aspect which has received less attention however is the withdrawal of the State from an activist role in this sector in favour of imperialist agencies which then penetrate the countryside both directly and through imperialist-funded NGOs.

V

It follows from what has just been said that, Kerala-style decentralization, far from being indistinguishable from imperialist decentralization, actually faces a threat from the latter, or at any rate from the package of policies of which the latter is an integral part. The real problem with Kerala-style decentralization in the present context lies in other words in the fact that it tends to get undermined not because of its own failings but from outside: from the pursuit of the neo-liberal agenda by the country's government, and from its efforts to push neo-liberal "reforms" on the State governments.

The neo-liberal dispensation necessarily implies an accentuation of the fiscal travails of the Central government, which the latter in turn passes down to the State governments. It is noteworthy that during the nineties the ratio of the Central government's tax revenue to the GDP went down while that of the State governments went up, and yet the latter were afflicted with acute fiscal crises by the beginning of the new century. It is not just one or two States that are facing fiscal difficulties but virtually every State, though to differing degrees. Reduced transfers from the Centre, and the pay-hikes in the wake of the Central government's acceptance of the Fifth Pay Commission report, have of course played their part in precipitating this fiscal crisis of the State governments. But a very important contributing factor has been the sharp increase in interest rates on State government debt.

The Central government's own borrowing rates have gone up with the end of the ad hoc Treasury Bills route, which came with neo-liberalism. What is more, the Centre has deliberately, gratuitously, and quite unwarrantedly, jacked up the rates of interest it charges on loans to the State governments, and used the debt-trap to which it has pushed the State governments to impose neo-liberal policies on them. It has even used the offices of the Eleventh Finance Commission to impose "reforms" on States as a pre-condition for their obtaining funds that are due to them anyway under the Constitution^[5]!

With the State governments starved of funds, the LSGIs too find themselves short of resources. No worthwhile "local level planning" is possible under these circumstances. Besides, when the State governments are short of funds, they turn to international agencies like the ADB or the World Bank for financing investment projects in rural areas which they themselves would have otherwise done^[6] . These agencies in turn have their own ways of allocating their funds between projects, and monitoring the use of their funds in rural infrastructure, which either preclude the involvement of the LSGIs or give them at best a token role^[7] . A vibrant programme of decentralization, which can lead to the greater assertiveness of the rural poor, thus runs counter in a fundamental sense to the trajectory of development of a neo-liberal economic regime.


References

Dobb, M.H. (1969) Wefare Economics and the Economics of Socialism, Cambridge University Press, Cambridge.

The World Bank (1997) “The State in a Changing World”, World Development Report 1997,
Oxford University Press, Oxford.

The World Bank (2000) “Entering the Twenty-first Century”, World Development Report 1999-2000, Oxford University Press, Oxford.

The World Bank (2002) “Building Institutions for Markets”, World Development Report 2002, Oxford University Press, Oxford.


[4] See for instance The World Bank (1997, 2000, 2002).

[5] A dissenting note by Dr.Amaresh Bagchi, a member of the Eleventh Finance Commission, took strong exception to this procedure adopted by the Commission.

[6]This itself is the result of fallacious reasoning on the part of the Central government. Since no foreign exchange is required for such investments, borrowing from domestic banks which are flush with funds and would put very little "conditionalities" would have no worse consequences than borrowing from these agencies which do insist on "conditionalities". But the Central government is quite liberal in allowing the States to borrow from these agencies, and charges much higher interest rates to the states than these agencies do, while it is very strict in allowing States to borrow from domestic banks.

[7] When local agencies are to be involved in the implementation of such projects, then, as mentioned earlier, NGOs, or parallel institutions to the LSGIs as in Andhra Pradesh, seem to be the preferred option.