Looking beyond the Centre: The Political Economy of Devolution

08 Jul 2013 - Editorial

The ongoing controversy and debate over devolution and the future of the 13th Amendment only underlines how far from being resolved the ethnic question remains in Sri Lanka. Effective devolution, including of land and police powers, and other legal and policy measures to safeguard their rights are seen by ethnic minorities both as an entitlement and as necessary to transit from a post-war to a post-conflict polity. However, far more influential are calls by Sinhala nationalist ideologues to do away with the 13th Amendment—perceived as a political legacy of the armed conflict and Indian intervention—bolstered by the Rajapakse regime’s insistence that economic development trumps the ‘ethnic question’ and minority rights.

Often lost in this high voltage debate are issues pertaining to the political economy of Provincial devolution and decentralisation or participatory development at the local government level. Of particular relevance are the links between centralisation of power and un-democratic economic decision-making, the rising cost of which is already attracting significant resistance. While drawing attention to these dimensions we also interrogate politically expedient use of concerns pertaining to efficiency and accountability of Provincial and local governments to legitimise more centralisation rather than strengthen these institutions.

Provincial Councils and Devolution

Over the last few decades the powers and hence functioning of the Provincial Councils (PCs) have been extensively interfered with and undermined by the Centre. Lacking in political and fiscal autonomy and suffering from administrative and institutional capacity deprivations, PCs have been reduced to structures of patronage and adjuncts to a powerful Centre. The resulting institutional weaknesses are now held against PCs to justify doing away with them while ignoring the structural impediments to their autonomous and effective functioning.

A crucial concern is the lack of fiscal autonomy and over-dependence of PCs on transfers from the Centre, the consequences of which exacerbate uneven development and provincial inequalities. Provincial revenues in 2011 amounted to around 0.6% and capital expenditure a mere 0.1% of GDP respectively; the corresponding figures for the Central Government was 14.3% and 6% of GDP respectively.

In 2011, the Business Turnover Tax (BTT), which was an important source of revenue for PCs was abolished and subsumed under the Nation Building Tax, the bulk of whose revenue goes to the Central Government. While the BTT revenues were far from sufficient for PCs, it did provide them with a pool of funds that could be used for provincially determined projects. Problems exist with over dependence of NBT tax as the main source of transfers to PCs. While one-third of the NBT collections are allocated to PCs, allocations in 2013 saw a significant drop: 1st Quarter transfers in 2013 stood at Rs. 6,040 million in contrast to Rs. 6,375 million during the same period in 2012.

That the government at the Centre perceives the political autonomy of PCs as an obstacle was evident from the Divi Neguma legislation that raised significant questions about the limits and powers of the Centre in policy making, an acknowledgement of which by the Supreme Court eventually precipitated an illegal impeachment of the Chief Justice. Divi Neguma, with its stress on secrecy and a highly centralized structure to drive rural development under the control of a super-sized department presided over by Basil Rajapakse, runs counter in letter and spirit to provincial devolution and local governance. Indeed, it appears that the legal challenges to Divi Neguma and the Centre’s discomfort with any resistance to its development agenda also fuelled moves to further limit the powers of PCs if not abolish them all together.

Decentralisation and Local Government

The National Policy on Local Government (NPLG-gazette No. 1632/26 – December 18, 2009) not only contained many laudable aims but also an honest admission of the severe limitations of local government in the country, including: “lack of public confidence”; “lack of civil society participation”; “lack of accountability and responsiveness in service delivery”; and “lack of facilities for meaningful democratic representation.”

Local governments (Urban Councils and Pradeshiya Sabhas) have long suffered from very low capital budgets financed largely by meager local revenues. While Local Governments depend on the Provincial Government for recurrent expenses, they have to rely on the largesse of the Central Government and patronage of the ruling party in particular for capital / development expenditure.

As in the case of Divi Neguma Bill there was no public consultation or review of the proposals to establish Jana Sabhas, local governing councils at the village / Grama Niladhari levels. Concerns including about the structure, process of constitution, and mandate of the latter were further exacerbated when it was reported that several hundred Jana Sabha Secretaries were to be employed on the recommendation of the local organisers of the ruling party/alliance.

It is vital that the question of devolution also address issues pertaining to rendering decentralisation and local governments inclusive. For instance, women account for a mere 2% of elected local government representatives and 4% of PC members in Sri Lanka, the former amongst the lowest in the world. The Local Authorities Election (Amendment) Act in 2010 has only pushed away further the prospects for a much-needed mandatory quota for women while doing away with the one for youth that did exist.

People in the plantation economy, already amongst the most deprived sections of the country, are also subject to systemic exclusion. The Pradeshiya Sabha Act No. 15 of 1987 restricts the scope of development interventions by local authorities in estate areas, leaving some of the most exploited and vulnerable communities at the mercy of corporate interests.

To conclude, the thrust towards centralisation of state power is characteristic of the ongoing attack on devolution as well as decentralisation. This has helped pave the way for a full-scale imposition of neoliberal economic policies, in particular the large-scale expropriation of land and resources. Indeed, centralization and concentration of power can greatly facilitate market penetration and transfer of resources to domestic and foreign capital.

This will not only aggravate uneven development but also entrench inherently undemocratic and repressive state power at the Centre. The larger role for the military in urban development and appointment of military figures as Governors and Government Agents is just one manifestation of this. Thus, the debate on devolution is not only a question pertaining to the rights of ethnic minorities but is fundamentally about democratisation itself and must necessarily encompass the broad range of concerns pertinent to participatory democratic government.