Decentralization and State Control: Devolution of Finance, Functions, and Functionaries in India

Abstract

The constitutionalising of local self-government through the 73rd and 74th Constitutional Amendments marked a significant moment in India’s democratic and federal evolution. These reforms sought to deepen democracy by devolving powers, responsibilities and resources to local governments. More than three decades later, decentralization in India has produced institutions that are electorally vibrant but administratively constrained. This paper examines the paradox of extensive formal devolution coexisting with persistent state control. Using the analytical framework of finance, functions, and functionaries (the “3Fs”), it argues that decentralization in India has unfolded as a managed and politically conditioned process rather than a comprehensive transfer of authority. While fiscal transfers and functional assignments have expanded unevenly, control over administrative personnel has remained firmly centralized. The retention of authority over functionaries emerges as the central mechanism through which state governments preserve power over local governance. The paper contributes to decentralization scholarship by shifting attention from constitutional design to political economy, highlighting personnel control as the key constraint on substantive local self-government in India.