Issues in economic governance: Why does program delivery vary across states?

1. Issues in economic governance:Why does program delivery vary across states? Regina Birner Professor of Social and Institutional Change in Agricultural Development, University of Hohenheim, Germany

2. IFPRIState-level Hunger Index

3. Why do development problems persist in spite of considerable investment by the government to address them? What to do about it? Learning from the reform experience of different states

4. Overview • Introduction • Variation in governance across states • Conceptual framework • Insights from empirical research in Bihar & Karnataka • Rural services and program delivery • Survey and case study findings • Policy implications

5. India Today - State of States Ranking (Score) Composite of 8 economic, social and governance indicators India Today 2009

6. Gender Equality • Government of India (2002). National Human Development Report 2001. New Delhi: Planning Commission. (Composite of five indicators)

7. Perceptions of CorruptionFindings from a Transparency International survey Transparency International India – Center for Media Studies (2005)

9. Absentee rates of personnel in primary schools and health care centers Source: World Development Report 2004

10. Access to agricultural extension Source: NSSO State of Indian Farmer Survey (2005:6)

11. Other types of indicators • Examples: • Actual use of funds from centrally sponsored schemes, such as the National Rural Employment Guarantee Scheme • For example, Bihar did not use substantial amounts due to problems to comply with implementation regulations • Access to services measured using Citizen Report Cards (Public Affairs Centers) • Targeting performance in government schemes, such as the Public Distribution System or the Integrated Child Care Services Scheme (ICDS)

12. Why does program implementation differ across states? Conceptual framework

13. Conceptual Framework Demand-side reform approaches Characteristics of local communities good fit • Contextual factors • Education levels • Social structure (Inequality, exclusion) • Political conditions • Level of economic development Reforms to improve voice &accountability (e.g., reservation rules, community empowerment) Ability of citizens to demand and supervise services Performance of services and programs* Priorities * Quality * Efficiency * Equity * Sustainability good fit Capacity of administration to finance and supply services Reforms to improve capacity for service delivery(e.g., staff, qualification, incentives) Supply-side reform approaches Characteristics of service providers good fit Vicious cycle

14. Understanding the problems of program implementation:Example: National Rural Employment Guarantee Scheme (NREGA) Case study: Bihar Study team: Regina Birner, K.G. Gayatrhidevi (ISEC), Madhushree Sekher (TISS), Katharina Raabe, Neeru Sharma (ex-IFPRI), Amrita Shilphi (Institute of Dalit Studies)

15. ApproachStudy site: District Nalanda, Bihar • Village case study • Focus group: Gram Panchayat and Block Panchayat representatives, villagers, Block public official • Process Net-Map with focus group • Process of implementing NREGA is mapped step-by-step on a large sheet of paper, based on focus group information • Arrows are used to describe actions needed for implementation • Carom board pieces are used to visualize risks of leakage and other implementation problems • Follow-up discussions with different stakeholders • Workers • Gram Panchayat representatives • Public officials

16. 3 14 (3) 7 2 4 5 8 15 9 16 10 11 1 6 17 12 13 Zilla Parishad Block Program O. Overseer Block Dev. Officer Employment Worker Block Panchayat Farmers’ Committee Labor Group Gram Panchayat 1. Decide about NREGA activity, inform 10. Inform to get people ready 2. Send proposal for approval 11. Issue employment cards, maintain attendance sheet 3. Inform about approval 12. Supervises money flow 4. Inform about start of work 13. Measures work (maintenance book) 5. Ask for estimate 14. Informs about work done 6. Goes to village, makes estimate 15. Provides money for work (signs checks) 7. Informs about estimate 16. Informs about money received 8. Calls, gives advance money 17. Distributes money 9. Informs about advance (3.) (System before hiring Block Program Officer)

17. 3 14 7 2 4 5 8 15 9 16 10 11 1 6 17 12 13 Zilla Parishad 8 8 Block Program O. Overseer 10 Employment Worker Block Panchayat Farmers’ Committee Labor Group Risk of leakage(in total, 30% ofNREGA funds) Gram Panchayat 1. Decide about NREGA activity, inform 10. Inform to get people ready 2. Send proposal for approval 11. Issue employment cards, maintain attendance sheet 3. Inform about approval 12. Supervises money flow 4. Inform about start of work 13. Measures work (maintenance book) 5. Ask for estimate 14. Informs about work done 6. Goes to village, makes estimate 15. Provides money for work (signs checks) 7. Informs about estimate 16. Informs about money received 8. Calls, gives advance money 17. Distributes money 9. Informs about advance 18. Last year

18. Governance reforms in Bihar under Nitish Kumar (from 2005 onwards) • “Supply-side reforms” • Bringing back experienced IAS officers • Modernizing administrative procedures, e.g., computerizing the treasury • “Demand-side reforms” • Far-reaching decentralization and community empowerment • Gram Panchayat (GP) councils get authority to hire and supervise primary school teachers and aganwadi workers • User groups have to sign attendance sheets prior to salary payments • Challenge: GP presidents and council members demand bribes • 50% reservation for women in Panchayati Raj institutions • Challenge: Build capacity of elected representatives • Results: Too early to judge – governance reform is a long-term process • Conclusions: Political will at the top level matters! • But need to address the challenges inherent in each reform

19. Complaint mechanism – Bihar (Madhubani) Effort to improve government responsiveness * Driven by the Chief Minister * People come to District Offices to have problems resolved on the spot * Evidence of challenges of this approach

20. Governance reforms in Karnataka Results from a survey with ISEC and TISS Study team: Regina Birner, K.G. Gayatrhidevi, Nethra Palaniswamy, Katharina Raabe and Madhushree Sekher

21. Background • Karnataka: Leader in decentralization • Decentralization precedes constitutional reforms • Transfer of authority for funds, functions and functionaries to local governments for all subjects • Strong emphasis on training elected Panchayati Raj members using innovative methods • Efforts to empower community-based user groups • Study approach • Case study to understand local procedures • Survey among households (ca. 1,000), community-based organizations, elected officials and administrative staff

22. Survey in five sectors in Karnataka 2008

23. Challenge of demand-side reforms: Targeting Problems of Local Public Expenditures • Analysis of fiscal grants to Gram Panchayats (by Nethra Palaniswamy and Nandini Krishnan) • Question: • Is there elite capture in the allocation of funds to Gram Panchayats and to villages within Gram Panchayats? • Allocation to Gram Panchayats: Formula • Allocation to villages within Gram Panchayats: Decision of Panchayat council without rules or formula (negotiation) • Results • Formula-bound targeting to Gram Panchayats works well • Elite capture for targeting at the village level

24. Allocation of expenditure across villages

25. Page 25 How inclusive are community-based organizations?

26. Page 26 Challenges on the supply side:Age profile of frontline service providers

27. Page 27 Education level of service providers Only 17% in agriculture or biology

28. Constraints identified by service providers(Karnataka)

29. Assessment of severity of constraints • Analysis of the reports of the Second Administrative Reform Commission: • Few suggestions that address political interference

30. Page 30 Staff perceptions on recruitment and promotion (percentage of respondents)

31. Conclusions • Evidence that service provision and program implementation differs widely across states • Capacity of citizens to demand services and ability of the state to deliver services differs across states • Risk of a vicious cycle • Opportunities to break the vicious cycle • Demand-side governance reforms • Supply-side governance reforms • Insights from the research • Political incentives crucial – need to understand them better! • Both demand-side and supply side reforms are needed. • Each reform involves its own challenges! • Good governance is a matter of checks and balances!

32. Thank you!

33. State of states ranking - methodology • Prosperity and budget • percentage of population above poverty line, percentage of urban population, per capita capital expenditure, inflation, per capita debt, per capita GSDP, per capita revenue of SEB; • Law and order • (number of policemen per lakh people, ratio of cases filed to pending cases in district and lower courts, share of murders, kidnappings, rapes and molestations to total cognisable crimes); • Health • (infant mortality ratio or imr, ratio of male IMR to female IMR, percentage of births assisted by trained personnel, percentage of homes having tap water as principal source of water, registered doctors per million population, sex ratio and per capita expenditure on health and family welfare by state Government)

34. State of states ranking • Education • (literacy rate, proportion of 10-plus children having completed primary education, ratio of boys to girls in elementary school, teacher-pupil ratio and expenditure on elementary education per 6 to 14-year-old); • Consumer market • (households owning TVs, number of affluent households in urban and rural areas, per capita deposits in banks and per capita ownership of two-wheelers); • Agriculture • (percentage of cultivated area under cash crops, agriculture GSDP per rural population, agriculture electricity consumption per rural population, foodgrain yield, loans extended to farmers and net irrigated area); • Infrastructure • (percentage of homes with electricity, percentage of villages connected with pucca roads, per capita road length, bank branches, LPG connections, post-offices and telephones);

35. State of states ranking • Investment • (per capita capital expenditure, commercial bank credit and gross capital formation in manufacturing, ratio of factories to number of disputes, ratio of industrial workers to urban 15-59 population, and percentage of sickness).

37. “Towers” of carom game pieces visualize levels of leakage in which different actors could be involved Actors involved are identified and marked on sheet of paper Arrows show implementation activities Fotos: E. Schiffer

38. Page 38 Professional contacts of extension agents (by development level of Block) during past year

39. Page 39 Challenges of demand-side reforms: Membership in community organizations