Working Papers
  • Have Economic Reforms Trumped Democratic Decentralisation?:The Experience of Gujarat in India
  • Author : H.S. Shylendra
  • Jan - 2019

In a manner of speaking, economic reforms and democratic decentralisation were launched in India almost simultaneously as if they were complementary. While reforms by way of liberalisation and privatisation, have been responses to mitigating and overcoming the consequences of an economic crisis since the early 1990s, democratic decentralisation is the outcome of a long drawn political process culminating in constitutional amendments in 1992 aimed towards empowering local governments both politically and administratively. Inducing economic stability and growth by unleashing processes conducive to decentralised economic decisions leading to an overall efficiency in resource allocation has been the primary goal of economic reforms. On the other hand, political decentralisation is aimed at both deepening and widening   democracy at grassroots level and building local capacities for efficient and inclusive planning and development.

Can economic reforms and democratic devolution go together? Is there a trade-off between the two? Can the prevailing political-economy ensure a balance between the two forms of decentralisation? This paper based on available evidence attempts to examine these questions with reference to Gujarat in western India, which is one of the leading reform-driven and growth-oriented states of the country. The paper based on a critical analysis of the interrelationship between the nature of devolution and economic reforms concludes that the latter seem to have triumphed over democratic decentralisation in Gujarat. A minimum guaranteed devolution to local governments in the constitution is suggested as a safeguard against the vicissitudes of state-level politics.

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