The third broad area is infrastructure and sustainable natural resource development. While the economic aspects of these are well-recognized, the governance challenges are not adequately addressed. For instance, effective land administration is crucial to capital formation in agriculture and soil conservation.
Energy plantation and biofuel production would require great administrative innovation and grassroots coordination.
Urban management involves much more than resource allocation for infrastructure and poses formidable challenges of governance. Power distribution management through local people’s involvement and ownership in a consumer-friendly way is more a governance issue than an economic or tariff problem. We need to create innovative modes of governance in dealing with many such growing challenges.
Social security is a relatively new and growing area of state activity to which the administrative system must respond with alacrity, sensitivity and efficacy. The recent enactment of the employment guarantee law, the efforts in the pipeline to provide a measure of social security to the unorganized sector workers, and many healthcare risk-pooling mechanisms contemplated require effective delivery system, which can address the special challenges posed in this emerging sector of state activity.
All these and other governance and administrative challenges have to be addressed in the context of serious resource constraints. The Fiscal Responsibility and Budget Maintenance Act enacted in 2001 is a useful measure, but has obviously not fulfilled the expectations. Laws alone cannot address fundamental fiscal problems.
We need to raise resources, reduce unproductive subsidies, and get better i outcomes for every rupee utilized. Past experience shows that revenue cannot be increased by enhancing tax rates in a centralized administration. There has to be an increasingly transparent link between taxes and services rendered, and better tax administration to ensure greater compliance.
Subsidy reduction is politically painful, and the people have to see an alternative and better application of the resources saved in order to accept de-subsidization. And the administration must become far more accountable and effective in delivering results with the same expenditure. In order to accomplish these goals, there should be conscious efforts to establish the links between the citizen’s vote and public good, and taxes and services, and fuse authority with accountability at every level. Therefore, effective empowerment of local governments and stakeholders, and reform to ensure effective and sufficient delegation with accountability at every level to deliver should be the cornerstone of governance reform.