Author: cprindia

CPR-LAND RIGHTS INITIATIVE REVIEWS SUPREME COURT CASES ON LAND ACQUISITION FROM 1950 TO 2016
RIGHTS LAND ACQUISITION

Context:

India faces serious challenges in creating development processes that generate economic growth while being socially inclusive, ecologically sustainable, politically feasible, and in accordance with the Rule of Law. Equitable and efficient acquisition of land by the state for economic development projects, including infrastructure and industry, lies at the heart of these challenges.

Simultaneously, securing constitutionally guaranteed land rights to the poorest and most vulnerable communities in India against the state and other dominant communities, has been considered crucial to their economic and social empowerment. Land is not only an important economic resource and source of livelihoods, it is also central to community identity, history and culture. Unsurprisingly then, throughout India, dispute over state acquisition of land that deprives people of their land rights spans various dimensions of economic, social, and political life.

How do we mitigate this conflict?

The CPR Land Rights Initiative report on ‘Land Acquisition in India: A Review of Supreme Court cases from 1950-2016’, offers some preliminary answers to this question. Not only is this report the first comprehensive country-wide study of land acquisition disputes since India’s independence, but also for the first time ever analyses these disputes along various metrics, such as i) public purpose, ii) procedure for acquisition, iii) compensation, iv) invocation of the urgency clause, v) pendency of claims, and vi) tracks trends with respect to distribution of disputes across geography and time, and central and state laws. The Report also analyses litigation under the newly enacted Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR Act) for the three year period, 2014 to 2016.

Key findings:

Reasons for inequity between state and land losers: The Report concludes that the political and social contestation over land acquisition stems from the inherently coercive nature of the land acquisition process, which creates a severe imbalance of power between the state and land losers. While much of this imbalance was created by the text of the Land Acquisition Act, 1894, a considerable part of it could also be attributed to executive non-compliance with the rule of law. The result is a situation of great inequity for the land losers.
Legal reform under the LARR Act should be implemented by government, not subverted to redress these inequities: The Report finds that specific provisions of the LARR Act are steps in the right direction to redress the imbalance of power that was built into the Land Acquisition Act, 1894 in so far as: i) they empower livelihood losers along with title-holders to bring claims for compensation and rehabilitation, ii) bring compensation requirements in accordance with existing reality, and iii) introduce requirements of consent and social impact assessment. The Report shows that litigation helps channelise political contestation of state action into legal as opposed to extra legal disputes. Therefore, by empowering hitherto disempowered land losers to bring claims under the LARR Act, the Act will help preempt extra-legal conflict. Since conflict inevitably stalls or derails legitimate development projects, it is in the interest of the government to comply with, and not subvert the LARR Act.
Legal reforms must be supplemented by administrative and bureaucratic reforms: The Report highlights that legal reform is a necessary but not a sufficient precondition for ensuring greater equity and efficiency within the land acquisition process. In the absence of administrative and bureaucratic reforms, the introduction of the LARR Act will not succeed in eliminating inequities and inefficiencies embedded within the implementation of existing land acquisition procedures. In fact, the increase in procedural requirements under the LARR Act implies an even greater need for securing executive compliance with the rule of law, in order to translate the equities intended by these additional procedures into reality for land losers.
Types of administrative reforms required: Such administrative reforms include building of state capacity to meaningfully comply with the increased procedural requirements stipulated by the LARR Act, and designing institutional structures that incentivise such compliance with the rule of law. This, in turn, requires a serious mind-set shift within the government toward accepting the reform enshrined in the LARR Act, and not subverting it as we have seen in both the LARR Ordinance, and the state amendments to the LARR Act, as also the rules adopted to implement the LARR Act in the states.
Watch (above) a detailed presentation of the findings from the report.

AS PART OF ‘POLICY CHALLENGES – 2019-2024: THE BIG POLICY QUESTIONS FOR THE NEW GOVERNMENT AND POSSIBLE PATHWAYS’
CPR LAND ACQUISITION

By Namita Wahi

An estimated 7.7 million people in India are affected by conflict over 2.5 million hectares of land, threatening investments worth $ 200 billion.1 Land disputes clog all levels of courts in India, and account for the largest set of cases in terms of both absolute numbers and judicial pendency. About 25% of all cases decided by the Supreme Court involve land disputes, of which 30% concern disputes relating to land acquisition.2 Again, 66% of all civil cases in India are related to land/property disputes.3 The average pendency of a land acquisition dispute, from creation of the dispute to resolution by the Supreme Court, is 20 years. Since land is central to India’s developmental trajectory, finding a solution to land conflict is one of the foremost policy challenges for India.

Understanding Incidence and Pendency of Land Conflict in India

Legislative and administrative factors are responsible for the high incidence of legal and extralegal conflicts over land, and judicial factors are behind the pendency of land disputes. Competing historical and current policy narratives of property rights over land, have resulted in the coexistence of numerous, conflicting laws leading to legal disputes over land. This is the legislative factor. This problem is compounded by administrative failure to comply with the rule of law. This is the administrative factor. The pendency of conflict, in turn, is a result of legal and evidentiary barriers in bringing land disputes to court, largely due to administrative and judicial incapacity; this prevents expeditious resolution of land disputes. This is the judicial factor.

Conflicting narratives, policies and land laws create land disputes

There are two conflicting narratives about ownership and management of land in India. The first narrative – inherited from the British colonial state5 – views common land, or land that is not privately owned, as merely a commodity, no different from labour and capital, with the state as the ultimate owner.6 This claim to ultimate ownership gives the state the power to redistribute land at will, as largesse to selected beneficiaries.7 Such state acquisition of land has historically been the source of considerable dispute. According to estimates by CPR’s Land Rights Initiative (LRI), these disputes constitute 30% of all land litigation in the Supreme Court over the past 70 years. LRI’s comprehensive study of land acquisition litigation before the Supreme Court over a 66-year period, from 1950 to 2016, reveals that all litigation is with respect to privately held land. In contrast, data from the Land Conflict Watch project reveals that the vast majority of current, on-ground, extralegal conflict over land is with respect to common lands.8 Thus, it is clear that in the face of state acquisition of land, when people have legally recognized land rights, they go to court. Where their rights are insufficiently recognized by law, they protest on the ground.

The second narrative – articulated by the ‘people’, including farmers, both landowners and tenants; and other traditional communities, such as cattle grazers, forest dwellers, tribals and fisherfolk – views land as an economic, social and cultural resource over which multiple groups exercise property rights. Usually, after intense on-ground contestation, the property rights of certain groups like Scheduled Tribes (STs)and tenants have been protected by the Constitution9 and statute,10 while in case of other groups like fisherfolk,11 their rights are protected by custom and, often, executive action.

As a consequence of these two historically competing policy narratives, the constitutional, legislative and administrative framework governing land is as fragmented as the land holdings in India.12 Enacted at different points of time, land laws clash with each other, because they seek to articulate in law these two competing narratives. For instance, the provisions of the Forest Rights Act, 2006, are in conflict with those of the Indian Forest Act, 1927, and the Forest Conservation Act, 1980, and are also threatened by proposed amendments to the Indian Forest Act.13 Legal conflicts also arise when laws are enacted or amended at different times to appease different stakeholders. For instance, the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (RFCTLARR) Act has, in the five years since it came into force, been amended by seven state legislatures.14 This will likely create more legal disputes with respect to land acquisition, because the original RFCTLARR Act provisions had been included with a view to addressing growing conflict over land acquisition.15 Moreover, in many states, we find laws that provide for eviction of unauthorized occupants over public lands coexisting with laws that provide for regularization of unauthorized occupation, thereby creating potential for dispute/conflict at the level of law itself.16

Finally, the legislative landscape is complicated by the fact that many subjects pertaining to ‘land’ are in the ‘state’ and ‘concurrent’ lists of the Constitution, leading to a multiplicity of original and active land laws.17 Yet, there is no official comprehensive database of all land laws in India. A first of its kind, ongoing LRI study estimates that India has over a thousand original and active central and state land laws.18

The problem of ‘multiple laws’ is exacerbated by the fact that these laws are administered by numerous government ministries at the central level, and departments at the state level. These include, for instance, the ministries of Law and Justice, Rural Development, Mining, Industries, Infrastructure, Urban Development, Tribal Affairs, Home Affairs and Defence.

Administrative non-compliance with law also creates and prolongs land disputes

Where laws are clear, disputes and conflicts arise because of administrative non-compliance with the rule of law due to both unwillingness and incapacity. The LRI study of all Supreme Court cases on land acquisition during 1950-2016 shows that 95% of the disputes arose because of administrative non-compliance with the legal procedure for acquisition of land, including the process of computation of market value compensation for land acquired.19 Around 34% of the disputes involved irregularities in completion of the procedure for acquisition. Almost half of such cases concerned with procedural irregularities involved administrative unwillingness to comply with the rule of law. The remaining half of the cases involved administrative incapacity to comply with the rule of law, in part because of governmental failure to regularly update administrative manuals based on changes in the law. Moreover, the government was more likely to lose than win these land disputes before the Supreme Court.20

Additionally, since colonial times, land in India has been broadly administered by the revenue and forest departments. But there have also always existed disputes between both departments as to which land belongs to which department. This in turn creates and prolongs land disputes.

Finally, legal disputes over land are also created by evidentiary barriers for establishing rights over land in the absence of documentary proof21 because of outdated/no land surveys22 and inaccurate/outdated land records23 in most states. The Department of Land Resources has sought to resolve the problem of inaccurate land records through the ‘Digitisation of Land Records Modernisation Programme’. However, unless the government makes a serious attempt to update land records on the ground to reflect the property rights of all landowners, digitizing them would not eliminate the problem of inaccurate land records.

Judicial reasons cause pendency of land disputes

Once a land dispute goes to court, serious judicial incapacity leads to pendency of disputes. First, a major cause for pendency of all disputes is India’s low judge-to-people ratio.24 Land cases form more than half of all civil cases and constitute over a quarter of cases before the Supreme Court; they also have the longest pendency compared to other cases. Hence low judge-to-people ratio particularly prolongs resolution of land disputes. Second, the judiciary, particularly at its lowest levels, lacks the financial, technical and infrastuctural capacity necessary to resolve disputes quickly.25 Finally, poor enforcement of court decisions by the government, and limited judicial capacity to follow up on such enforcement, especially when such decisions go against the government, also lead to prolonging of land disputes.

Policy Recommendations for Reducing Incidence and Pendency of Land Disputes

Eliminate legal conflicts. No government has ever attempted an exercise to rationalize existing land laws. But this is the need of the hour. The Law Ministry and Law Commission are best positioned to conduct or commission such an exercise. This would involve, first, the creation of an exhaustive database of all land laws in India. Once such a database of laws is created, the Law Ministry and Law Commission must identify, and Parliament must repeal, laws that deny rights of certain groups of people, particularly women,26 and eliminate genuine conflicts between laws.

Improve administrative willingness and capacity to implement the rule of law: The government must take steps to ensure greater administrative capacity and willingness to implement the rule of law. In addition, we need greater coordination between government departments dealing with land, transparency of land administration, and better access to land data. This can be achieved by undertaking the following measures.

The Department of Land Resources, currently under the Ministry of Rural Development, is the nodal agency for coordination of land policy across states. But land is not merely a rural concern. As India becomes increasingly urbanized, the government needs to have a more comprehensive imagination of land requirements for rural and urban populations. The creation of a separate Ministry of Land to serve as the nodal agency for coordinating land policy across different types of land is critical.
There needs to be a coordinated effort between the Ministry of Law and Justice, Department of Land Records, Ministry of Environment and Forest, Ministry of Tribal Affairs, state boards of revenue, and state forest departments to resolve conflicting land laws and streamline land administration.
All government departments dealing with land, and particularly those involved in land acquisition, must update administrative manuals in accordance with changes in legislation and judicial precedent.
Through dedicated interdepartmental meetings and other coordination, government must resolve land boundary disputes between the revenue and forest departments.
The government must devote financial and technical resources to conduct land surveys and update paper records to reflect property rights of all the people, as opposed to digitization of existing records that are substantially inaccurate.
The government must ensure better skills training so that officials dealing with land have both the knowledge and the capacity to implement the rule of law. Institutional mechanisms should be designed to incentivize compliance with, not defiance of, the rule of law.
Given the low success rate of government appeals, the government must carefully evaluate the likelihood of success of an appeal before pursuing it. Government officials must be incentivized to not appeal cases that have little likelihood of success following such an evaluation. This would go a long way in reducing pendency of land disputes.
The government must wholly commit to transparent land administration and comply with its obligations under the Right to Information Act, 2005, to make digitally accessible all land laws, executive notifications, rules, circulars, etc. pertaining to land administration. In addition, the government must open up to public scrutiny departmental data on compliance with land laws.
In addition to legislative and administrative reforms, judicial reforms can go a long way towards reducing the pendency of land litigation in India. The first step in this direction would be the implementation of key recommendations of the Law Commission.27 These include:

Changing the base for determining sanctioned posts for judges from ‘Judge: Population Ratio’ to ‘Rate of Disposal Method
Filling up all existing vacancies
Increasing the retirement age of subordinate judges to 62; and those of High Court and Supreme Court judges to 65 and 68 years respectively.
Greater financial allocations to the lower and higher judiciary, to enable infrastructure, technical and skills upgradation
Some states like Bihar have created separate land tribunals for expeditious resolution of land revenue cases. This model should be studied, and if found effective, should be replicated in other states.

Conclusion

Land conflict in India, both legal and extralegal, has existed from colonial times because of the imposition by the British state of the notion that all land not privately held belongs to the ‘state’. This concept has been continuously resisted by the ‘people’ who were disempowered by the colonial state’s deprivation of their legal property rights under precolonial administration. Over time, competing ‘state’ and ‘people’ narratives over land have led to conflicting policy and legal interventions. This has, in turn, led to legal disputes over land. Even when laws are clear, administrative failure to comply with the rule of law, due to unwillingness and incapacity, contributes to the incidence and pendency of land disputes. Serious judicial incapacity in turn prolongs pendency of land disputes.

Due to the increasing population pressure on land, and the corresponding demand for land to fuel the development engine, the scale and scope of land conflict today has assumed gigantic proportions, stalling development projects and threatening livelihoods and investments. Equitable and efficient intergenerational management of land is necessary not just for India’s economic development, but also for its political and social stability. Therefore, working towards resolving land conflict, in light of the above policy recommendations, is an imperative agenda for the new government.

Other pieces as part of CPR’s policy document, ‘Policy Challenges – 2019-2024’ can be accessed below:

The Future is Federal: Why Indian Foreign Policy Needs to Leverage its Border States by Nimmi Kurian
Rethinking India’s Approach to International and Domestic Climate Policy by Navroz K Dubash and Lavanya Rajamani
India’s Foreign Policy in an Uncertain World by Shyam Saran
Need for a Comprehensive National Security Strategy by Shyam Saran
A Clarion Call for Just Jobs: Addressing the Nation’s Employment Crisis by Sabina Dewan
Time for Disruptive Foreign and National Security Policies by Bharat Karnad
Multiply Urban ‘Growth Engines’, Encourage Migration to Reboot Economy by Mukta Naik
Schooling is not Learning by Yamini Aiyar
Clearing Our Air of Pollution: A Road Map for the Next Five Years by Santosh Harish, Shibani Ghosh and Navroz K Dubash
Protecting Water while Providing Water to All: Need for Enabling Legislations by Philippe Cullet
Interstate River Water Governance: Shift focus from conflict resolution to enabling cooperation by Srinivas Chokkakula
Managing India-China Relations in a Changing Neighbourhood by Zorawar Daulet Singh
Beyond Poles and Wires: How to Keep the Electrons Flowing? by Ashwini K Swain and Navroz K Dubash
Regulatory Reforms to Address Environmental Non-Compliance by Manju Menon and Kanchi Kohli
The Numbers Game: Suggestions for Improving School Education Data by Kiran Bhatty
Safe and Dignified Sanitation Work: India’s Foremost Sanitation Challenge by Arkaja Singh and Shubhagato Dasgupta
Safeguarding the Fragile Ecology of the Himalayas by Shyam Saran
Female Labour Force Participation: Asking Better Questions by Neelanjan Sircar
Towards ‘Cooperative’ Social Policy Financing in India by Avani Kapur
1 Land Conflict Watch, https://www.landconflictwatch.org/.
2 This is based on preliminary findings from a CPR Land Rights Initiative study, and is also consistent with findings from a comprehensive quantitative study of the Supreme Court’s caseload between 1993 and 2011. See Nick Robinson, ‘A Quantitative Analysis of the Indian Supreme Court’s Workload’, Journal of Empirical Legal Studies,10(3) (2003): 570-601.
3 Daksh, ‘Access to Justice Survey, 2016’, http://dakshindia.org/wp-content/uploads/2016/05/Daksh-access-to-justice….
4 Namita Wahi et al., ‘Land Acquisition in India: A Review of Supreme Court Cases from 1950 to 2016’ (New Delhi: CPR, 2017).
5 Articles 294 and 295 of the Indian Constitution stipulate that the Indian state succeeds to all property, claims and assets of the British state.
6 B.H. Baden Powell, The Land Systems of British India (Oxford University Press: 1892); B.H. Baden Powell, A Manual of Jurisprudence for Forest Officers Being a Treatise on Forest Laws (Calcutta, 1882).
7 An LRI study estimates that there are 102 laws of land acquisition alone, including state amendments to the Land Acquisition Act, 1894. Supra note 4.
8 ‘Land Conflicts in India: An Interim Analysis’, https://rightsandresources.org/en/publication/land-conflicts-india-inter….
9 Article 244(1) and Article 244(2), read with the Fifth and Sixth Schedules respectively, create special protections for land rights of Scheduled Tribes in geographically demarcated areas, known as Scheduled Areas.
10 Starting with the Bengal Tenancy Act, 1885, almost each agrarian state has laws protecting tenancy rights. Similarly, the Forest Rights Act, 2006, recognizes land rights of Scheduled Tribes and other forest dwelling communities.
11 A prolonged movement has sought the enactment of a Fishing Rights Act, along the lines of the Forest Rights Act.
12 86.21% of all land holdings in India are small and marginal holdings taken together (0.00-2.00 ha). See Census of India.
13 Nitin Sethi et al., ‘Modi government plans more draconian version of colonial-era Indian Forest Act’, The Wire, 21 March 2019, https://thewire.in/rights/modi-government-plans-more-draconian-version-o…
14 These include the states of Tamil Nadu, Gujarat, Rajasthan, Maharashtra, Telangana, Andhra Pradesh and Jharkhand. See Namita Wahi, ‘How central and state governments diluted the historic land legislation of 2013’, The Economic Times https://economictimes.indiatimes.com/news/politics-and-nation/how-centra….
15 Jairam Ramesh et al., Legislating for Justice: The Making of the 2013 Land Acquisition Law (New Delhi: Oxford University Press, 2015); Namita Wahi, ‘The Story of Jairam Rajya’ India Today, June 2015, https://www.indiatoday.in/magazine/books/story/20150622-jairam-ramesh-la….
16 Ongoing LRI study on ‘One Thousand Land Laws’.
17 Article 246 read with the Seventh Schedule of the Constitution of India.
18 CPR ‘Land Laws’ Database; see: https://www.cnbctv18.com/legal/hundreds-of-indian-land-laws-cause-confus….
19 Wahi et al., ‘Land Acquisition in India’.
20 Ibid. p. 28.
21 Sections 61-64 of the Indian Evidence Act, 1872, emphasize that documents must be proved by primary evidence, that is, presentation of the document itself. However, many people with legally recognized land rights do not have documentary proof for the same. This makes judicial resolution of land disputes extremely difficult.
22 Much of the northeastern part of India, including the state of Assam, has never been fully surveyed. The last full land survey for the state of Bihar happened in 1950s-1960s.
23 Former Minister for Rural Development notes that the state’s failure to fairly compensate those who lost land under the 1894 Act arose due to inaccurate land records, rampant undervaluation of sale deeds, and absence of land markets in many rural areas. See Ramesh et al., Legislating for Justice.
24 Two reports – the 245th Law Commission Report on ‘Arrears and Backlog: Creating Additional Judicial (Wo)man) power’ (2014), http://lawcommissionofindia.nic.in/reports/Report_No.245.pdf, and the 230th Law Commission Report on ‘Reforms in the Judiciary: Some Suggestions’, http://lawcommissionofindia.nic.in/reports/report230.pdf – highlight this as a major cause for disputes.
25 Ibid.
26 Bina Agarwal, ‘Gender and Legal Rights in Agricultural Land in India’, Economic and Political Weekly A39 30(12) (March 1995).
27 Supra note 24. (Q: Pl give direct source)
28 245th Law Commission Report, 29.

AS PART OF ‘POLICY CHALLENGES – 2019-2024: THE BIG POLICY QUESTIONS FOR THE NEW GOVERNMENT AND POSSIBLE PATHWAYS’
CPR BUREAUCRACY SOCIAL SECTOR SCHEMES

By Avani Kapur

A unique feature in India’s federal architecture is the pivotal role played by the Union government in financing and monitoring social welfare programmes, and in ensuring that all states have adequate resources and are held accountable for meeting social policy goals. During 2000-2018, the Government of India (GoI) spent over Rs 14 lakh crores on social services.1 A significant proportion of this expenditure is met through Centrally Sponsored Schemes (CSSs) – a specific purpose transfer from the Union to states, usually in the form of schemes.

While the practice of using specific purpose transfers dates to the pre-Independence era, over time, CSSs have emerged as the primary vehicle through which the GoI finances and directs state expenditure towards national priorities. Their dominance can be seen in their sheer numbers and the quantum of money flowing through them. During the 11th Five Year Plan (2007-2011), there were 147 scheme specific transfers accounting for over 40% of total central transfers to states.2 This increased signifcantly in the 12th Plan period. Of the total Rs 8.61 lakh crore transferred by the Union government to states between 2012 and 2015, Rs 5.88 lakh crore (68%) was released as assistance under CSSs.3

The importance of CSSs as a fiscal instrument lies in the fact that they are the primary source of non-wage, uncommitted funds available to states. With a majority of states’ own resources tied to wages, pensions and other committed liabilities (sometimes over 80-90%4), CSSs were designed as a top-up to augment state expenditure, allowing them to address infrastructure and human development deficits.

In principle, the rationale for CSSs is sound and in keeping with first principles: fiscal equalization to ensure that minimum standards of public services are provided to all citizens. Over time, however, the design and proliferation of CSSs have undermined this very rationale. Richer states with better administrative capacities have been able to capture a larger share of CSS funds, resulting in a significant misallocation of resources. Analysis by the Economic Survey 2016-17 of the six top CSSs – Pradhan Mantri Awaas Yojana (PMAY), Sarva Shiksha Abhiyan (SSA), Mid-Day Meal (MDM), Pradhan Mantri Gram Sadak Yojana (PMGSY), Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) and Swachh Bharat Mission (SBM) – found that under no scheme did the poorest district receive even 40% of the total resources. In fact, for the MDM and SBM, the share was under 25%.5 Other studies of the SSA and National Health Mission (NHM) found similar results – that is, states with poorer health indicators did not necessarily get larger per capita transfers.6

Moreover, the centralized nature of CSSs often makes them an inefficient tool to address state-specific needs and has undermined the autonomy of states to undertake expenditure decisions based on their local needs.

Recognizing these limitations, numerous attempts have been made to restructure schemes and restore them to their rightful place – the states. The last major impetus came with the adoption of the recommendations of the 14th Finance Commission, which increased state governments’ share in tax devolution by 10 percentage points. The resultant decrease in the fiscal space available with the GoI reiterated the need to significantly decrease and restructure CSSs. This led to the constitution of a committee of chief ministers under the aegis of the NITI Aayog. The committee made several recommendations including scheme rationalization, determination of a transparent criterion for interstate allocation, and greater flexibility in and creation of an institutional mechanism for Centre-state negotiation.

The changes that followed were minimal. While schemes were reordered under ‘umbrella’ programmes, within each umbrella programme, sub-schemes continued as before. As per the Union Budget 2016-17, even after the creation of 28 umbrella programmes, there were 950 Central Sector and CSS sub-schemes accounting for about 5% of the GDP and 9% of the total GoI expenditure.7 Three years later, in the interim budget for 2019-20, Central Sector Schemes constituted 12% of GoI expenditure, up from 9% in 2016-17; CSSs accounted for another 9%.8

More importantly, there was no real change in the design or implementation of the schemes. Meetings for the planning of of education and health programmes continued as before, and the notification to allocate 25% as flexible, discretionary funds was not reflected in many of the scheme planning documents. Instead, the disbandment of the Planning Commission has resulted in an institutional vacuum with respect to planning. CSSs now fall under the domain of central ministries, leading to further centralization of social policy financing.

A call for rationalizing CSSs, however, has again gained momentum. The GoI recently committed to evaluating all CSSs before fresh appraisals are made and making scheme approval coterminus with the Finance Commission cycle. Accordingly, the Development Monitoring and Evaluation Office (DMEO) under the NITI Aayog has invited proposals to evaluate 28 umbrella CSSs under 10 sectors. Real change in social sector financing, however, will only be visible if the current design of CSSs is completely overhauled, in addition to scheme rationalization being carried out.

Before I offer some indicative steps on how this can be achieved, it is useful to highlight some of the main inefficiencies in the current design of CSSs. Broadly, these can be classified into four interrelated areas: planning failures, implementation failures, fiscal inefficiencies and administrative red tape. Each of these is described below.

Planning Design Failures

Budgets for CSSs are determined based on incremental plans prepared by the respective state governments and approved by a committee at the central level. This has given individual ministries significant discretion in determining scheme design and approving state-specific plans and budgets. There is often an inherent tension between central government priorities and states’ perceived needs. However, since the Centre controls the purse strings, central priorities dominate. To illustrate: in 2010, the Bihar chief minister had launched several state entitlement schemes for education, such as cycles, uniforms, etc. In its SSA budget, thus, the state proposed a low allocation for entitlement. However, the GoI’s own prioritization of entitlements meant that despite no demand, Bihar’s entitlement budget under SSA was enhanced by over 200%. In another example, in 2013–14, one state government wanted to use the SSA budget to provide vehicles for block-level officials to improve school-level monitoring. The approval board at the Centre, however, denied this request as purchase of vehicles was not permitted under SSA rules.9

Implementation Failures

CSSs are typically designed by the central government but implementation rests with the state and local governments. Most CSSs come with rigid guidelines for execution which privilege a top-down, ‘one size fits all’ model with fixed norms and unit costs. For the NHM, for instance, the guidelines lay down fixed population norms to set up health facilities. These, however, underestimate requirements in states such as Rajasthan and Madhya Pradesh which have a population density lower than the national average.

More importantly, even granular implementation details such as hiring processes, training modules and schedules, communication strategies, etc. are laid down by the Centre. Consequently, states and local governments have very little flexibility in adapting implementation based on their specific jurisdiction. The problem is even more acute at the point of service delivery. In education, for instance, if a school wants to spend more money on buying teaching material rather than painting walls, the norms simply don’t allow it. Similarly, a survey conducted by Accountability Initiative in 2013 found that the pressure to meet RTE infrastructure requirements resulted in money for boundary walls being sent to all schools in Himachal Pradesh even though construction couldn’t be undertaken due to land unavailability.10

Fiscal Inefficiencies

Most CSSs are designed as a cost-sharing programme between the Union and the states. With the division of CSSs into ‘core’, ‘core of the core’ and ‘optional’, states are expected to contribute 50-60% of the total approved budgets from their own plan funds.11

Within a scheme, however, the matching ratio is uniform across states irrespective of their fiscal capability. Release of funds by the GoI is contingent on states releasing their own share and meeting other conditionalities such as the submission of Utilisation Certificates (UCs). This has three important consequences with respect to distribution of resources. First, the uniform fund-sharing ratio often makes it difficult for the low-income states to put in their requisite share. As subsequent fund release is contingent on states submitting their share, this has an effect on the total quantum of money received by fiscally weaker states. Thus, while Karnataka may perform better than Bihar on most development indicators, it may also be able to avail of the CSS grant by making its matching contribution, while Bihar may find it difficult to put in its share. Second, the presence of conditionalities for fund release means that there is a considerable difference between the approved allocation and actual grants. In 2016-17, for instance, only 85% of total NHM approved budgets were released. These differences are amplified at the state level. Thus, while Bihar (one of the poorest states) received 79%, Gujarat and Haryana (fiscally stronger states) received over 100%.12 This creates uncertainty in implementing schemes and invariably states with greater shortfall in services levels suffer the most. Finally, the fixed fund-sharing ratios also creates perverse incentives for states which may not need the additional CSS fund to try and get it.

Layered Bureaucracy and Administrative Red Tape

Finally, detailed and rigid guidelines, complex paperwork and numerous conditionalities for fund release under CSSs have also created considerable administrative red tape, resulting in inefficiencies in approvals and fund flows. The situation is exacerbated by the fact that for some CSSs, the central government has set up parallel institutional structures responsible for CSS implementation in states, thereby creating a new stakeholder in the implementation process. Under the SSA and NHM, for instance, scheme planning and implementation rests with autonomous bodies known as State Implementation Societies.13 The multiplicity of roles means that even simple tasks require approval and technical sanctions from different authorities. A study of the NHM in Uttar Pradesh conducted by Accountability Initiative found that it took a minimum of 22 desks through which the file had to pass for the release of funds from Treasury to the State Health Society (SHS). Other studies have found that the figures for Bihar and Maharashtra stood at 32 desks and 25 desks, respectively.14 Possibly as a consequence, release of funds from the SHS to the Treasury took as long as five months in Maharashtra and over three months in Bihar and Uttar Pradesh.15 Delays at one level have a knock-on effect and often funds reach the last mile in the last quarter of the financial year.

Five-step Process in Reforming the CSS Design

These challenges highlight the need to move away from past reform efforts (which have focused on minor tweaks in CSSs) towards the first principles of the rationale behind specific purpose transfers. This will require a five-step process.

Moving from a Schematic to a Sectoral Approach

The first step is to limit the number of schemes. One way of doing this is to link finances to ‘national goals’. The committee of CMs on restructuring CSSs laid out nine key areas as part of the National Development Agenda for Vision 2022. It recommended that instead of the previous government’s strategy of bundling schemes under 22 umbrella programmes, funds could be released specifically for priority areas rather than multiple sub-schemes. This would give states the flexibility to plan activities within each priority area as per their own development needs. Steps in this direction have already been taken. The recently launched Samagra Shiksha – an overarching programme for school education extending from pre-school to class 12 – merged three previously independent CSSs. In theory the scheme allows states to prioritize interventions and sectors as per their need. Preliminary analysis of the scheme budget shows that indeed states are making decisions in keeping with their specific needs (albeit still guided by the GoI). Thus, while Uttar Pradesh and Bihar – which continue to lag behind in elementary education – allocated over 80% of their Samagra Shiksha budget for elementary education, states such as Haryana and Himachal Pradesh have focused on secondary education, allocating over 40% to the same. Similar steps should be taken in other sectors.16

Moving towards Block Grants

Having identified priority areas, the next step would be to ensure states have enough resources to fund these areas. Instead of allocations being linked to detailed and cumbersome planning and budgeting processes with restrictive, centralized guidelines, block grants could be given to states. This would allow for prioritization of different inputs and secure greater ownership by state governments. An example of this can already be seen in the Rashtriya Krishi Vikas Yojana (RKVY), a CSS established in 2007 to rejuvenate falling agricultural growth rates. Unlike most other CSSs, RKVY offers the flexibility to a state to choose activities under the scheme that most suit its requirements. Projects are prepared by the departments concerned and then scrutinized by a committee under the the state government’s Agricultural Production Commissioner. Most importantly, approval of the project is not done by the GoI but by the State Level Sanctioning Committee (SLSC), chaired by the Chief Secretary and with representatives from the Ministry of Agriculture and NITI Aayog as members.

Ensuring Equitable Interstate Distribution

Third, interstate distribution of the normative block grant portion of funding amongst states can be based on a formula that takes into account aspects like population, area and proportion of difficult areas, along with sector-specific needs. Differential cost-sharing norms that take note of the shortfall in service levels could further assist in ensuring that the distribution of funds fulfils the criteria of need and equality. Moreover, the formulaic nature of the grants will ensure predictability of fund flows and allow for better planning.

Reforming the Public Finance Management System

The fourth step is streamlining inefficiencies in the approval and fund flow process. This can be done by building a just-in-time Expenditure Information Network (EIN) which brings all expenditure units under one system. The first step in this process was undertaken in 2017, when the GoI mandated all CSS expenditure to be routed through the Public Finance Management System (PFMS). The system envisages each implementation unit to be under one system, thereby allowing the Centre and states to monitor funds at different levels. The problem, however, is that the system still functions as a push system, with funds being routed through multiple levels requiring approvals at every stage. By moving towards a pull system, each implementing unit could have the ability to automatically withdraw funds as needed. A defined resource envelope and appropriate access codes would ensure that funds are not misused.

Augmenting Capacity of the Evaluation Office

Finally, instead of focusing on monitoring the nuts and bolts of implementation, the GoI must build its capacity to develop a credible database on monitoring outcome indicators on a real-time basis. Currently, an inherent weakness in the CSS design is its focus on inputs. This creates perverse incentives for the entire administrative machinery to focus on ensuring adequate inputs, or at best, meeting output targets. Here, the DMEO’s role could be expanded by investing in systems to generate regular, credible and granular data on various outcome indicators and to conduct concurrent evaluations of key programmes. Over time, performance on outcomes could be linked to additional financial incentives available to states.

Other pieces as part of CPR’s policy document, ‘Policy Challenges – 2019-2024’ can be accessed below:

The Future is Federal: Why Indian Foreign Policy Needs to Leverage its Border States by Nimmi Kurian
Rethinking India’s Approach to International and Domestic Climate Policy by Navroz K Dubash and Lavanya Rajamani
India’s Foreign Policy in an Uncertain World by Shyam Saran
Need for a Comprehensive National Security Strategy by Shyam Saran
A Clarion Call for Just Jobs: Addressing the Nation’s Employment Crisis by Sabina Dewan
Time for Disruptive Foreign and National Security Policies by Bharat Karnad
Multiply Urban ‘Growth Engines’, Encourage Migration to Reboot Economy by Mukta Naik
Schooling is not Learning by Yamini Aiyar
Clearing Our Air of Pollution: A Road Map for the Next Five Years by Santosh Harish, Shibani Ghosh and Navroz K Dubash
Protecting Water while Providing Water to All: Need for Enabling Legislations by Philippe Cullet
Interstate River Water Governance: Shift focus from conflict resolution to enabling cooperation by Srinivas Chokkakula
Managing India-China Relations in a Changing Neighbourhood by Zorawar Daulet Singh
Beyond Poles and Wires: How to Keep the Electrons Flowing? by Ashwini K Swain and Navroz K Dubash
Regulatory Reforms to Address Environmental Non-Compliance by Manju Menon and Kanchi Kohli
The Numbers Game: Suggestions for Improving School Education Data by Kiran Bhatty
Safe and Dignified Sanitation Work: India’s Foremost Sanitation Challenge by Arkaja Singh and Shubhagato Dasgupta
Safeguarding the Fragile Ecology of the Himalayas by Shyam Saran
Female Labour Force Participation: Asking Better Questions by Neelanjan Sircar
Understanding Land Conflict in India and Suggestions for Reform by Namita Wahi
1 ‘Reserve Bank of India Handbook of Statistics on the Indian Economy’, Public Finance Statistics, https://dbie.rbi.org.in/BOE/OpenDocument/1608101727/OpenDocument/opendoc…
2 B.K Chaturvedi, ‘Report of the Committee on Restructuring of Centrally Sponsored Schemes (CSS)’ (New Delhi: Planning Commission, Government of India, 2011).
3 NITI Aayog, ‘Report of the Sub Group of Chief Ministers on Rationalisation of Centrally
Sponsored Schemes’ (New Delhi: NITI Aayog, 2015), http://niti.gov.in/writereaddata/files/ Final20Report20of20the20Sub-Group20submitter20to%20PM.pdf.
4 See, for instance, Y. Aiyar and A. Kapur, ‘The Centralization Vs Decentralization Tug of War and the Emerging Narrative of Fiscal Federalism for Social Policy in India’, Journal of Regional and Federal Studies 29(2) (2018): 187-217.
5 Ministry of Finance, ‘Universal Basic Income: A Conversation With and Within the Mahatma’, Economic Survey 2016-17, Chapter 9, https://www.indiabudget.gov.in/es2016-17/echapter.pdf.
6 M.G. Rao, ‘Central Transfers to States in India: Rewarding Performance While Ensuring Equity’ (New Delhi: NITI Aayog, 2017).
7 Ministry of Finance, ‘Universal Basic Income’.
8 Rathin Roy, ‘Changing Fiscal Dynamics’, Seminar Magazine 717 (2019)
9 Aiyar, et al. ‘Rules versus Responsiveness: Towards Building an Outcome-Focussed Approach to Governing Elementary Education Finances in India’, Accountability Initiative Working Paper (New Delhi: Centre for Policy Research, 2015).
10 Accountability Initiative, ‘District Report Cards, 2014’ (New Delhi: Centre for Policy Research, 2014).
11 For the North East and Himalayan states the Centre usually provides 90%.
12 Accountability Initiative, ‘National Health Mission, 2017-18’, Budget Briefs (New Delhi: Centre for Policy Research, 2018).
13 In NHM it is known as State Health Society.
14 See, for instance, M. Choudhury and R.K Mohanty, ‘Utilisation, Fund Flows and Public Financial Management under the National Health Mission’, NIPFP Working Paper Series (New Delhi: National Institute of Public Finance and Policy, 2018), https://www.nipfp.org.in/media/medialibrary/2018/05/WP_2018_227.pdf.
15 Accountability Initiative, ‘National Health Mission’.
16 Accountability Initiative, ‘Interim Budget 2019-20’, Samagrah Shiksha Budget Briefs (New Delhi: Centre for Policy Research, 2019).

CII-CPR NATIONAL CONFERENCE ON SANITATION
SANITATION

The Conference was held against the backdrop of the first year anniversary of the Swachh Bharat Mission to deliberate on issues and draw out an effective course of action to make Swachh Bharat a reality. In particular, the Conference focused on engaging the private sector in sanitation service delivery to India’s cities and villages – covering both, existing initiatives and future possibilities.
The study report can be accessed here.

Inaugural Session (full video at the top)
The inaugural session saw speeches by Mr Ajay Shriram, Immediate Past President, CII (click here to watch the video); Dr Pratap Bhanu Mehta, President, Centre for Policy Research (click here to watch the video); and Mr M Venkaiah Naidu, Minister for Urban Development, Housing and Poverty Alleviation and Parliamentary Affairs, Government of India (click here to watch the video).

Plenary Session I: The Sanitation Economy: Roles & Opportunities
This session set the tone for looking at scope and varied opportunities the sector holds for different stakeholders in the emerging sanitation economy. Click here to watch the video.

Mr. Shubhagato Dasgupta (Senior Fellow, Centre for policy Research) presented the key findings of the report. This report will be useful for both- the government and the corporate sector to understand models of industry engagement in sanitation and to inform policy and research. Click here to watch the video

Plenary Session II: The Essentials: Behaviour Change and O&M
In this session models were presented that have successfully transformed poor infrastructure; interventions that brought about effective behaviour change; lessons learnt from the ground; and discuss policies and regulations that can enable sustained maintenance of community/public toilets and waste management facilities. Click here to watch the video.

Plenary Session III: Transforming the Ecosystem – Partnerships, the Road Ahead
The session focussed on Public Private Partnerships (PPPs) for achieving sustainable sanitation. Panellists discussed the institutional arrangements and innovative strategies that can help forge such collaborations, the roles different parties can take and examples where such PPPs have achieved the desired outcomes. Click here to watch the video.

PART 2 OF A BLOG SERIES BY THE CENTRE FOR POLICY RESEARCH (CPR) AND PRAYAS (ENERGY GROUP)
ENERGY RESEARCH

The series is titled Plugging in: Electricity consumption in Indian Homes.

Electricity consumption in Indian homes has tripled since 2000. The percentage of households with access to electricity has increased from 55% in 2001 to more than 80% in 2017. In 2014, an electrified Indian household consumed about 90 units (kWh) of electricity per month on an average; enough to run four tube-lights, four ceiling fans, a television, a small refrigerator, and small kitchen appliances with typical usage hours and efficiency levels in India. This is three-fourths of the average monthly household consumption in China, a tenth of that in the USA, and a third of the world average. In this post, we take a closer look at data on India’s residential electricity and the disparities in access and consumption across states. We also reveal some inconsistencies between different sources, pointing to the need for better data.

All states show considerable increase in total residential electricity consumption in recent years according to data compiled by the Central Electricity Authority (CEA) from distribution companies (see Figure 1). Between 2004 and 2015, states like Assam, Bihar, Chhattisgarh, and Jharkhand with low initial household electrification showed a high growth rate of their residential electricity use (about 11%-16%). States with higher household electrification like Delhi, Punjab, Haryana, and Tamil Nadu grew at lower, but still substantial, rates (6%-8%), with high absolute numbers.

Figure 1: Residential Electricity Consumption growth in selected states (2004-2015)
Source: Annual General Reviews for individual years (CEA).
The CEA data along with the census data and the rural electrification data can be used to estimate average monthly electricity consumption of an electrified household in different states. We validate this against the tariff orders issued by state regulators and find interesting results (see Figure 2).

Three insights emerge:

One, an electrified household in Delhi consumes about 250-270 units or kWh of electricity per month on average, approximately the same average amount consumed by an electrified household in Germany. At the same time, such an electrified household in Delhi consumes significantly more than other Indian cities (Chandigarh: 208 units; Ahmedabad: 160 units; Puducherry: 150 units; and Mumbai: 110 units). This is in part due to high ownership of air-conditioners (12% of total households) and air-coolers (70%), and tariff subsidies in Delhi. Yet, other socio-economic reasons still need to be examined.
Two, electrified households in larger states like Maharashtra, Gujarat, and Tamil Nadu, with higher rates of electrification, consume on an average a lower amount of about 80-90 units per month. Karnataka is on the lower end with about 60 units. On the other hand, households in Punjab (about 150 units) and Haryana (about 110 units) consume much more. . While there may be some discrepancies in the data due to incorrect reporting on use and number of consumers by distribution companies, the scale of these discrepancies is likely to be small given the limited number of un-metered and illegal connections in the residential sector.
Three, states like Uttar Pradesh (UP), Jharkhand, and Chhattisgarh show high monthly household electricity consumption. It is unlikely that states with a high share of newly electrified households and low reliability of power supply consume as high as an average household in Chandigarh or Mumbai. The reported household consumption is high possibly due to metering issues. For instance, 40% of the total residential connections in UP are rural un-metered connections. As their actual consumption is not metered, the distribution companies estimate their consumption based on norms approved by the regulator (currently the norm is 144 kWh/kW/month, a high number). Distribution companies have not conducted any sample studies to justify this norm despite being asked by the regulators. High estimation of consumption from un-metered connections as well as measurement issues in metered connections can mask the actual consumption.
Finally, the electricity consumption within states also exhibit significant inequity at the household level. According to the National Sample Survey Office (NSSO)’s surveys, about 20% of electrified households consume less than 30 units of electricity per month, while about 80% consume less than 100 units per month. In rural areas, 90% of the electrified households consume less than 100 units. This distribution varies with states. In most states, about 15-20% of all the households consume less than 30 units per month. The states consuming the least electricity are Karnataka, West Bengal, Bihar, and Jharkhand. For more details on results see our recent report.

Understanding the factors that lead to such variation in consumption patterns across states and households is important for managing future electricity demand (and to monitor the performance of schemes such as UDAY for the financial revival of distribution companies, and Saubhagya for providing electricity connections to all un-electrified homes). This requires accurate and comprehensive data on electricity consumption which, at present, is a serious area of concern (particularly the limited reporting by distribution companies).

In the next two posts, we look at the most basic use of electricity in Indian homes – lighting – and how the provision of lighting services are changing in the country.

This piece is authored by Aditya Chunekar and Sanjana Mulay from Prayas (Energy Group).

This blog series is also available on the Prayas website here.

This article was republished in Eklavya Magazine in Hindi under ‘स्रोत विज्ञान एवं टेक्नॉलॉजी फीचर्स’, and can be accessed here.

To subscribe to email updates on the series, click here.

Other posts in this series:

Electricity Consumption in Indian Homes
India’s LED Lighting Story
Illuminating Affordable Homes
The Efficiency of Appliances
Appliances used in Affordable Housing
Electrifying the National Capital Region
Exploring the different uses of household appliances
Role of human behaviour in driving electricity use

CPR FACULTY ANALYSE
INTERNATIONAL POLITICS

As an international tribunal in The Hague rejected China’s claim to sovereignty over most of South China Sea, ruling instead in favour of the Philippines, and China refused to abide by the decision, CPR faculty comment on it:

In an interview to Rajya Sabha TV (above), Shyam Saran unpacks the various aspects of China’s claims over the waters of the South China Sea; deconstructs the tribunal ruling and its impact; and contextualises China’s response geopolitically.
G Parthasarathy in an interview on NDTV analyses China’s dismissal of the tribunal decision rejecting its claims to the South China Sea and how this is likely to lead to increased tensions internationally, including commenting on how India should respond.
In China’s Challenge to the Law of the Sea, Brahma Chellaney writes that China’s refusal to accept the decision of the tribunal is indicative of its ‘incremental approach to shaping the region according to its interests’ through ‘confounding, bullying and bribing adversaries’.