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Situating the state in rural India

“The state is at best a necessary evil and at worst a corrupt and inefficient system. We can easily do without it and run the country on corporate lines. This will help avoid the dirtiness of politics.”

Such sentiments often resonate in the air today. These are the voices of the rising middle classes and the free market brigade. For reasons unrelated to their ‘logic,’ they can claim some academic support.

There are scholars who contend that the state as an institution has not struck deep roots in India and that it is indeed an alien concept. However, this is contested by another school which argues that the average citizen perceives the state to exist and function, she or he has learned how to cope with and make use of it but is aware all the time that the state shares a porous border with society.

The ground reality is, as may be expected, a rather more complex mosaic and requires to be viewed through a nuanced lens for a full appreciation. The issue is: how do citizens relate to the state? Institutions of local government such as panchayats provide a convenient entry point for an analysis, not least because citizens are less prone in the rural areas to look for an alternative to the state.

In the last decade and a half, panchayats have secured constitutional status. Participation, transparency, and accountability that make possible genuine democracy are now increasingly looked upon as major ingredients of good governance. This depends critically on how citizens relate to the state.

It is arguable that in the Indian context this is significantly influenced by socio-cultural factors. As a result, the boundary between the state and society tends to be porous but the institution of the state does exist and is recognised as such by citizens.

A research study conducted at the Madras Institute of Development Studies (MIDS) has made an attempt to understand the citizen-state matrix by utilising, with significant modifications, the technique of ethnography. The inquiry was conducted in Tamil Nadu, Karnataka, and West Bengal.

The principal issue inquired into is the citizen-state relationship. Two research staff members, one of either gender, took up residence in one village each in the three States. They lived there for nearly four months and, broadly speaking, used the methodology of the anthropologist. Specialist anthropologists should factor in the limited nature of our inquiry and make allowance thereby for the minuscule period of the stay in the villages.

A fundamental point that attests to the vitality of panchayats is the extent of interest shown by budding political leaders in contesting and winning elections at this level. There is evidence of the dominant castes manipulating elections to the office of the panchayat president in an effort to retain their control over government at this level, at least in Tamil Nadu and Karnataka.

Some of the practices known at the State level, such as moving members to “attractive” locations just before elections, are becoming common. In the case of elections to offices that are reserved, there is evidence of the upper castes supporting a milder and more pliable backward class representative.

For instance, it was found in one panchayat in northern Karnataka that the upper caste had a definite preference for a section of the Scheduled Castes which is more pliant, unlike another group which is close to the Dalit Sangharsh Samiti.

An important area in which there is an engagement between the citizen and the state is with respect to taxation. It is to be noted that the power to tax is mostly devolved by state legislatures on the lowest tier of local governance, namely, the village panchayat. In most States, house tax and property tax constitute the most important source of tax revenue at this level. Yet this accounts for only a small percentage of the panchayat’s total revenue, not more than 10 per cent.

Due to a number of factors the realisation of property tax by the panchayats has been very poor. First, the assessment of property is done in an arbitrary manner: the nature of the property and the quality of construction is hardly taken into account. This results in poor people paying a higher tax per square foot than the rich. Quite often the tax is levied at a flat rate with hardly any element of ‘progressiveness’ built into it. Secondly, most of the panchayats do not carry out a periodic revision of taxes unless there is pressure from the State government. An important reason for this is the potential risk of political unpopularity if tax rates are raised and taxes are collected rigorously. There is widespread reluctance among people to pay taxes independent of the quality of service provided.

Panchayats which have access to non-tax revenues — rents from buildings, auction of trees and timber products, licence fees, to name a few — show relatively less inclination to mobilise revenues through taxes. Property tax revenue is inversely correlated with prosperity — the panchayats in the backward and poor areas mobilise more tax revenue per household. This is certainly true of Tamil Nadu and Karnataka. In West Bengal the position is that most of the properties are exempted from payment of property tax.

There is a paradox here. Panchayats which have no access to non-tax revenues also have a narrow tax base. But at the same time they are compelled to raise tax revenues aggressively if, as in Karnataka, the panchayat is expected to meet certain payment obligations from its own resources. Good examples are the salary of the bill collector, honoraria for the president and vice-president and expenditure on conducting the meeting of the panchayat. This can be seen as the effect of a budget constraint leading to vigorous tax collection.

In the villages studied in Karnataka and Tamil Nadu, on the whole the poor are seen to be more regular with tax payments than the relatively affluent sections. This leads to interesting inferences and pointers for further work. The mapping exercise of the entire village conducted as part of the study indicates that while the poor are more tax-compliant, the larger part of the resources of the panchayats in Tamil Nadu and Karnataka are allocated for the construction of amenities in those parts of the village where the well-off reside. And given that, by and large, the well-off mainly consist of the upper or dominant castes (incidentally, they are also defaulters in payment of taxes) the skewed resource allocation is obvious.

One explanation for the prompt payment of taxes by the poor is a perception that benefits are likely to be denied by the state (panchayat) if taxes are not paid. There is evidence to indicate that inclusion among the beneficiaries of development programmes is made contingent on the payment of taxes.

In all the three States studied, there is recognition of panchayats as the state but there are interesting differences. One of them is that citizens access panchayats through different instruments. In West Bengal, for instance, the interaction between the citizen and the state is more through the mechanism of the party. In Tamil Nadu, the citizens have a reasonable relationship with the village panchayat but it is the bureaucracy and the line departments which enjoy acceptance in the villages.

In Karnataka, the citizens’ interaction with the panchayats takes place mainly through the local leaders, who in most cases are also elected representatives of panchayati raj institutions (PRIs). The point is that even though the access is through different instruments it is essentially the panchayat that is kept in focus.

The picture that emerges is the following. Panchayats as institutions of local government are certainly much more in the public eye today than, say, a decade or two ago. But the trajectory of development and the degree to which panchayats are empowered depends a good deal on the socio-political context of the state being studied.

Also, as suggested earlier, the very fact that dominant castes and other vested interests attempt to manipulate the system should be seen as evidence of its strength.

(V.K. Natraj is a former Director, and G.S. Ganesh Prasad is an Assistant Professor, of the Madras Institute of Development Studies, Chennai.)

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