PANCHAYATI RAJ, 1992 | POWER TO THE PEOPLEEmpowering grassroots governance, the 73rd and 74th Amendments to the Indian Constitution redefined democracy, ushering in local self-rule and inclusivityBy Kaushik Deka DOYENS OF DEVOLUTION: Rajiv Gandhi with Mani Shankar Aiyar, who went on to become the first minister of panchayati raj in 2004. (Photo: Prashant Panjiyar)By the late 1980s, India’s political structure was grappling with systemic challenges. Development programmes launched in the name of rural upliftment were floundering, stymied by inefficiencies, corruption and a glaring disconnect between policy and the grassroots. Panchayati Raj Institutions (PRIs), envisioned in Article 40 of the Directive Principles, were largely symbolic entities, hamstrung by irregular elections, inadequate financial powers and captured by the elite. The urban landscape was equally fragmented, with municipalities undermined by state interference, fiscal insolvency and ad-hoc governance.Rajiv Gandhi, buoyed by a massive electoral mandate in 1984, sought to change that. The Panchayati Raj and Nagar Palika Bills, finally introduced in 1989, proposed constitutional status to PRIs and urban local bodies (ULBs), ensuring regular elections, reservations for marginalised groups and financial devolution. However, the political turbulence of the late ’80s, including the backlash from the Shah Bano case and the Mandal Commission report, weakened Gandhi’s political capital. His assassination in 1991 tragically cut short his reformist agenda. It was his successor, P.V. Narasimha Rao, who navigated the legislation through a fractious Parliament. The 73rd Amendment Act was pas­sed in December 1992, establishing PRIs as constitutional entities with provisions for a three-tier system, financial devolution, and reservations for Scheduled Castes, Scheduled Tribes and women. The Eleventh Schedule listed 29 functions to be devolved to PRIs, ranging from agriculture to public health and education. Simultaneously, the 74th Amendment Act redefined urban governance by mandating the formation of nagar panchayats, municipal councils and municipal corporations. These institutions were entrusted with planning and implementing development schemes, with the Twelfth Schedule listing 18 functions including urban planning, water supply and slum improvement.When the Congress came back to power in 2004, a new panchayati raj ministry was created with Rajiv Gandhi’s old confidant Mani Shankar Aiyar at its helm. He championed policies to further enhance financial and administrative powers of the PRIs as laid down in the 1992 amendments. Together, these amendments represent the zenith of democratic decentralisation. By embedding institutions like the State Election Commissions and State Finance Commissions, they ensured these bodies were not mere titular entities but vibrant instruments of governance. The PRIs and Nagar Palikas became platforms where marginalised voices could exert political agency. Today, more than a million women representatives play active roles in PRIs.Yet, these amendments are not without challenges. Financial devolution remains a stumbling block, with states reluctant to share adequate funds, functions and functionaries. Despite this, success stories abound—Kerala’s holistic decentralisation model and Rajasthan’s devolution experiments exemplify what can be achieved with political will and administrative resolve. This is what the architects of these amendments envisioned—bringing governance closer to the governed. PM JAN DHAN YOJANA, 2014 | BANKING THE UNBANKEDTen years of PMJDY have transformed financial access for millions, empowering them to save, invest and access credit, while driving economic and social changeBy Sonal Khetarpal LAUNCHING A LEGACY: PM Narendra Modi and then FM Arun Jaitley launching PMJDY, Aug. 2014. (Photo: Vikram Sharma)This year marks the 10th anniversary of the Pradhan Mantri Jan Dhan Yojana (PMJDY), a groundbreaking initiative that brought millions of underprivileged Indians into the formal banking system. Launched in August 2014, the scheme offered zero-balance savings accounts without any minimum balance requirement, free RuPay debit cards, and essential financial security features like accident insurance of Rs 2 lakh and an overdraft facility of Rs 10,000. From its inception, PMJDY has grown exponentially. The number of accounts surged from 147.2 million in March 2015 to 531.3 million today, with deposits totalling Rs 2.31 lakh crore.Beyond numbers, the initiative has created ripples across the economic landscape. Access to a bank account is more than a financial milestone; it’s an enabler of economic independence. In fact, with the proliferation of UPI and digital payments, many of these accounts became active, as it was now safer to receive payments and accumulate savings. The average balance in PMJDY accounts rose from Rs 1,065 in 2015 to Rs 4,352 in 2024, reflecting growing trust and utility. Account holders could now leverage their financial history to secure loans, reducing reliance on predatory moneylenders. This, in turn, has increased the disposable income in their hands, which can be spent on better food, education and health—thus leading to better social outcomes. The accounts also serve as a crucial platform for direct benefit transfers (DBTs), ensuring subsidies and government benefits reach the underprivileged efficiently. For instance, millions of workers in the unorganised sector got access to life and accident insurance through the government’s Jan Suraksha schemes. Moreover, PMJDY has played a pivotal role in fostering gender equality, with women owning 55.6 per cent of accounts—an encouraging step towards financial inclusivity. Commemorating the 10th anniversary of this ambitious scheme, Union finance minister Niramala Sitharaman said that “universal and affordable access” to formal banking services is “essential for achieving financial inclusion and empowerment”.But despite its success, PMJDY faces hurdles. A 2021 study conducted by Bank of Baroda and Women’s World Banking revealed that most women use their accounts only for receiving subsidies and DBTs, missing opportunities to build credit histories or explore financial tools like micro-insurance and pensions. Additionally, 20 per cent of accounts remain inactive, and over 8.2 per cent still have zero balance.While PMJDY has been instrumental in reshaping financial access in India, sustained efforts in financial literacy and consumer protection are essential. Educating account holders on managing and growing their savings, coupled with ensuring security, will be key to unlocking the scheme’s full potential. (Photo: Ranjan Rahi)RIGHT TO INFORMATION ACT, 2005 | BREACHING THE BABU BARRIERBorn from grassroots resilience, this landmark legislation put the might of information in the hands of millions while making the powers that be accountableBy Kaushik Deka GROUND ZERO: Aruna Roy at a Mazdoor Kisan Shakti Sangathan programme in Rajasthan, 1996In the dusty lanes of Devdungri, Rajasthan, a revolution quietly took root. Peasants, led by the fiery resolve of Aruna Roy, Nikhil Dey and Shankar Singh of the Mazdoor Kisan Shakti Sangathan (MKSS), demanded access to muster rolls—mundane employment records that held the secret to systemic corruption. Their demand for transparency soon ballooned into a national movement, culminating in the groundbreaking law, the Right to Information Act (RTI), 2005.Pushed by Sonia Gandhi and the Nat­ional Advisory Council, of which Roy was also a member, this legislation was enacted by the United Progressive Alliance (UPA) government under prime minister Manmohan Singh in 2005. The Act became a cornerstone of India’s democratic architecture, granting citizens the legal right to access information from public authorities. By dismantling the pervasive culture of secrecy, a relic of colonial era laws like the Official Secrets Act of 1923, the RTI Act empowered ordinary Indians to hold the bureaucrats and politicians accountable. The impact has been nothing short of transformative. It has exposed several high-profile scams, shining a light on corruption at the highest levels. For instance, the 2G spectrum scam showcased the arbitrary allocation of telecom licences, costing the exchequer an estimated Rs 1.76 lakh crore. The coal allocation scam (known as Coalgate) laid bare irregularities in coal block allotments, involving political and corporate heavyweights. RTI applications also unearthed the Adarsh Housing Society scam, where apartments meant for war widows were illegally allocated to bureaucrats and politicians in Mumbai.At the grassroots, the RTI Act has become a tool of empowerment. Dalit students have used it to chall­enge biased admission practices, while rural communities have scrutinised public distribution systems to expose pilferage of ration supp­lies. Farmers have accessed land records to fight encroachments and demand fair compensation. The Act’s penalty provisions have deterred bureaucratic delays, thus fostering accountability. However, this beacon of transparency faces existential threats. Successive governments, wary of its disruptive potential, have sought to dilute its provisions. Amendments introduced in 2019 undermined the autonomy of Information Commissions by placing their salaries and tenures under government control. More recently, the Digital Personal Data Protection Act, 2023, exempted “personal information” from disclosure, a move critics argue will blunt the RTI’s edge in combating corruption.In a nation where millions of RTI queries are filed annually, its journey has not been without bloodshed; over 100 RTI activists have been killed, their courage met with violent reprisal. Yet, the RTI remains a symbol of participatory democracy. Its legacy lies not just in its legal framework but in the grassroots movement that birthed it—a testament to the power of coll­ective action. As it enters its third decade, the RTI Act stands as both a triumph and a challenge: a tool for democratic accountability and a barometer of the state’s commitment to transparency. AADHAAR ROLLOUT, 2009 | GIVING CITIZENS AN IDENTITYThe world’s largest biometric ID system, Aadhaar has streamlined welfare delivery, leading to financial inclusion and securityBy M.G. Arun THE HI-TECH PUSH: A file photo of UIDAI founding chairman Nandan Nilekani. (Photo: Getty Images)The establishment of the Unique Identification Authority of India (UIDAI) in 2009 marked a watershed moment in the country’s digital and governance landscape. At its core was Aadhaar, a 12-digit unique identification number for India’s teeming population designed to consolidate identity verification into a single, robust system, integrating biometric and demographic data. Today, Aadhaar stands as the world’s largest biometric ID system, revolutionising how government welfare reaches citizens.The initial vision for Aadhaar took shape during the United Progressive Alliance (UPA) government led by prime minister Manmohan Singh. The intent was clear: eliminate duplicate and fake identities making identity verification easy and cost-effective, thus enabling targeted delivery of social and welfare schemes. Nandan Nilekani, co-founder of Infosys, was handpicked to lead the UIDAI. Nilekani’s leadership is widely credited with turning a conceptual idea into reality. In his words, “All I had was one page saying, ‘Give every Indian a unique ID.’ It didn’t say how.” By 2010, Aadhaar had a brand name, logo and rollout strategy, with Nilekani ambitiously aiming for 600 million unique IDs before stepping down. However, Aadhaar’s mass implementation gained momentum under the Narendra Modi-led National Democratic Alliance (NDA) government, which gave the project a decisive push. In 2016, the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act was passed, solidifying its role in good governance. By linking Aadhaar to schemes such as subsidies, pensions and employment benefits, the government enhanced transparency and minimised leakages.Despite its benefits, Aadhaar has faced scrutiny, particularly concerning data privacy and security. While the Supreme Court upheld its constitutionality, it restricted Aadhaar’s mandatory use for services like opening bank accounts, obtaining mobile numbers, and school admissions unless tied to government subsidies. Nonetheless, Aadhaar’s integration into the financial ecosystem has been transformative. By linking it to bank accounts, the Aadhaar Payment Bridge enables direct benefit transfers, streamlining welfare delivery. The Aadhaar Enabled Payment System, meanwhile, empowers individuals to conduct basic banking transactions easily, but securely. This proved invaluable during the Covid-19 pandemic, facilitating seamless transfers to millions.With 1.38 billion Aadhaar numbers issued as of October 2024, its impact is undeniable. By bridging gaps in governance, empowering citizens and driving financial inclusion, Aadhaar remains a cornerstone of India’s digital transformation, albeit one that must continuously balance innovation with the protection of individual rights. GOODS AND SERVICES TAX, 2017 | GOOD, STREAMLINED TAXGST marked a pivotal shift in taxation, simplifying the process, improving compliance, boosting revenues and fostering economic integrationBy Anilesh S. Mahajan HISTORIC SESSION: Then president Pranab Mukherjee addressing the joint parliamentary session to launch GST, Jun. 30, 2017It was in early 2000, when at a meeting convened by then prime minister Atal Bihari Vajpayee, the economic advisory panel—comprising the Reserve Bank of India (RBI) Governor Bimal Jalan and his predecessors I.G. Patel and C. Rangarajan—advocated for sweeping reforms in the country’s tax structure. With India newly opened to global investments and seen as a burgeoning consumer market, the need for a simpler, unified tax system became evident.The seeds of change were sown when finance minister Yashwant Sinha, in July 2000, announced the formation of two task forces led by his advisor, economist Vijay Kelkar. Among their recommendations, the proposal for a unified Goods and Services Tax (GST) emerged as a game-changer, aiming to replace the fragmented and cumbersome tax regime. The focus was on reducing cascading taxes, simplifying compliance and fostering economic integration. Fast forward to July 2017, India finally implemented the GST, unifying 17 central and state taxes. It introduced three major changes: taxation moved to the point of consumption, replacing the earlier system of levies at factory gates; the cascading effect of taxes was minimised through input tax credits; a single GST return replaced the need for multiple tax filings.Though transformative, this 17-year-long journey was fraught with challenges. State finance ministers debated the intricacies for years, grappling with concerns about revenue loss and the impact on manufacturing hubs like Gujarat, Tamil Nadu and Maharashtra. Before GST, states competed for investments by offering tax exemptions, often at the cost of creating inefficiencies. The new system removed such disparities, though it left manufacturing-heavy states at a disadvantage compared to consumption-driven ones. Efforts to address these concerns began in 2007, with the Empowered Committee of State Finance Ministers, led by West Bengal’s Asim Dasgupta, studying GST’s implications. Four years later, PM Manmohan Singh-led UPA regime tabled the GST Bill in Parliament, but manufacturing states put their foot down. Among those opposed to it was the then chief minister of Gujarat, Narendra Modi. After storming to power at the Centre, Modi worked with then finance minister Arun Jaitley to propose a time-bound compensation to the states for any revenue loss due to GST. The bill finally made its way through Parliament in August 2016.Despite these initial hurdles, GST stands as one of India’s most significant tax reforms. The formation of the GST Council—a federal body chaired by the Union finance minister and including finance ministers from all states and Union Territories—ensured collaborative decision-making. Yet, complexities persist. The current GST structure includes seven tax slabs, from nil-rated goods to the highest 28 per cent bracket, with additional cesses making the effective tax rate even higher. This multi-slab system has drawn criticism for diluting the promise of simplification.Nevertheless, GST’s impact is undeniable. Logistics efficiency has improved, as state border checks for goods movement have been eliminated, leading to a boom in the warehousing sector. According to a recent report of the credit rating agency CRISIL, the turnaround time has come down by 20-25 per cent while the logistics costs fell by 1.5-2 per cent vis-à-vis the pre-GST era. Compliance has surged, with GST taxpayers growing from 6.4 million in 2017 to 14 million in 2023. November 2024 saw GST collections touch Rs 1.82 lakh crore—the fourth highest for any month since inception—driven by 9.4 per cent growth in domestic consumption. Gross GST collection has grown to Rs 14.56 lakh crore—a 9.3 per cent YoY rise—in April-November 2024.By formalising the economy and boosting transparency, GST has not only increased indirect tax compliance but also bolstered direct tax collections. While imperfections remain, the reform underscores India’s ability to navigate complex challenges in pursuit of economic progress.- EndsPublished By: Shyam BalasubramanianPublished On: Dec 21, 2024 18:33 IST
