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Country case study: Sri Lanka

21 Impact of decentralization on rural development at the local level, Bedgar Perera, Sri Lanka

21 Impact of decentralization on rural development at the local level, Bedgar Perera, Sri Lanka

Sri Lanka is a tropical island of 65 000 km2. with approximately 75 percent of the population of 18.5 million living in areas defined as rural and nearly half of the population depending on agriculture for their living. During the last five decades, Sri Lanka has been investing a significant part of her resources in three major social development programmes: The food subsidy programme education programme and health services. After the successful anti-malaria campaigns in the 1940s and the spread of health services, death rates fell rapidly resulting in unprecedented high rates of natural increase of population. Between 1946 and 1953, the population increased by 22 percent and from 1953 and 1963, the corresponding increase was 37 percent. In order to keep up with this growth and to improve coverage of services in response to popular demand, expenditure on these programmes grew rapidly and absorbed approximately 10 percent of the GDP up to late 1970s. The cumulative effect of these investments, in the provision of a minimum food basket, education and health services, was the exceptional gains Sri Lanka made in living standards in comparison with low-income and middle income countries. In most instances, the social development indicators of Sri Lanka were better than those of middle income countries.

However, high unemployment rates and macro-economic imbalances have been significant problems in Sri Lanka since mid 1960s. There was a transition from a land-surplus economy in need of immigrant labour to develop her tea and rubber plantations, to a labour-surplus economy. Unemployment rates rose from about 10 to 11 percent of the labour force during the 1950s to a record high of 24 percent in the 1970's. The GDP Growth Rates were at a record low level and private foreign investment fell to a negligible level as result of economic policies adopted under the state-controlled economy. The overall effect was a virtual collapse of the economy in the mid-1970's.

The year 1977, with a change of government, saw a shift in policies for opening up and liberalizing the economy. This led to an increase in interest in investment from donors and foreign investors. The new policy was to undo the previous anti-market orientation policies that had dominated the decision-making process for decades and to promote the economy to be less dependent on protection and to become more outward looking. Liberalization has been remarkable in the industrial, agricultural and the financial sectors. Sri Lanka was not an exception to face the external unfavourable economic environment in the late 1970s that led to the large external and domestic imbalances. There was no option other than restructuring the economy to redress its adverse balance of payments situation.

As a result, since the 1980s, the centrepiece of the macro-economic strategy has been the Structural Adjustment Programmes (SAP) and the Stabilization Programmes initiated in consultation with the World Bank and the International Monetary Fund (IMF) in 1988 aimed at removing a number of entrenched impediments to economic growth. These programmes enabled Sri Lanka to obtain a Structural Adjustment Facility (SAF) from the IMF and Economic Restructuring Credit from the World Bank to tide over a period of balance of payments instability. Various reforms attached to these conditional supports are continuing and their focus is mainly on the areas of restructuring of the government budget, public enterprise reforms, monetary policy and financial sector reforms, poverty alleviation and human resource development.

Parallel to these developments in the past, governments at different times have attempted to decentralize the administrative and public institutions by establishing new ones or restructuring the existing ones with varied objectives and as strategies to accelerate development efforts.

The post independence political history from 1948 can be seen as a continuation of the centralized policies and bureaucratic systems established under the colonial rule. Yet, these systems had necessarily to undergo a process of adjustment to the needs and exigencies of self- rule. It can be said that the process of change since the early 1970s is actively continuing in different forms of social, political, economic and administrative reforms and adjustments. Furthermore, each step in this process has, in effect, meant greater decentralization. Thus one of the observable trends in Sri Lanka, particularly over the last two decades in the field of political, institutional and administrative systems and structures, has been a dominant move towards decentralization and devolution. Such moves have the objective of promoting decentralization towards sub-national levels and local participation in planning and development interventions. The cumulative effect of these changes can be properly grasped only by contrasting the current situation with that of 25 years ago when the centre, and its institutions, had almost a complete concentration of decision-making authority with hardly any institutions at the periphery.

Decentralization and devolution of decision-making to the local level has been increasingly recognized as an unavoidable process in Sri Lanka's context. Such programmes were often launched without sufficient prior examination of relevant issues and ensuing social repercussions. Questions have also been raised regarding the efficacy of the process towards the development programmes, poverty alleviation, employment generation and rural development as a whole. This study reviews a number of experiments with decentralization in Sri Lanka since its independence, in the process of socio-economic and political development. The study describes these, examines their results/impacts, and identifies factors affecting their implementation.

Decentralization, administration & local institutions

The goal of development policies in most developing countries was to distribute the benefit of economic growth more equitably to increase the productivity and income. Decentralization is often justified as a way of managing national economic development more effectively. It is thought that decentralization will improve Government's responsiveness to the public. In some countries, decentralization is pursued in reaction to the technical failure of comprehensive planning or the weak impact of multi-sectorial macro-economic programming. Neither of these has significantly increased the ability of central Governments to formulate, articulate and implement national development policies (Rondinelli, 1978).

Some relate decentralization with the objectives of self-reliance, democratic decision-making and popular participation in Government. Ultimately, decentralization is a political decision and its implementation is a reflection of the country's political process (Rondinelli, Shabir, Shaemia, 1984).

Types of decentralization

The concept of decentralization is broad and its components are many. Definitions and classifications are therefore necessary for analysis. Decentralization can be defined as the transfer of responsibility for planning, management and resource mobilization and allocation from the central government and its agencies to: field units of central government, ministries or agencies; subordinate units or levels of government; semi-autonomous public authorities or corporations; area-wide regional or functional authorities; non-governmental, private or voluntary organizations (Rondinelli, 1981)

The nature of decentralization varies according to its scope, functions and the degree of responsibility for and discretion in decision-making that is transferred by the central government. Due to its complexity, it is necessary to distinguish between the major types of decentralization that have been adopted in developing countries. They can be categorized into four types. i.e. de-concentration, delegation, devolution and privatization. (Rondinelli, 1981)

Sri Lanka has used the above four types of decentralization at different times in combination or one at a time from independence to date. It will be discussed later in this study. Further, the above organizational types for which the responsibilities were transferred and the four types of decentralization indicated above form the analytical framework for this study.

Past Experiences & Review

The elements of decentralization and evolution/establishment of local institutions can be traced to the pre-independence era (before 1948) under British colonial rule. The country was divided into nine provinces and 19 districts. Below the district level, the structure reflected the traditional spatial administrative organization with a hierarchy of Headmen. The Government Agent was in charge of the province and was directly responsible to the Governor. From being initially entrusted with revenue collection and maintenance of law and order, the Government Agent soon came to be in charge of practically every aspect of life in the province. It was largely through the Government Agents that the British consolidated and maintained their authority all over the country.

Significant developments during the pre-independence era were: Abolition of hereditary village headmanship in the 1830s which soon adversely affected village councils and local organizations; Enactment of irrigation ordinances in 1856 and 1867 provided for reviving village councils for conflict resolution and the selection of irrigation headmen by the proprietors (for some the beginning of modern local government in Sri Lanka); and the Enactment of the Village Council Ordinance in 1871, which extended the functions of Village Councils to cultivation, fisheries and rural roads. Government departments and regional branches were established, as were Divisional Revenue Officers at Divisional level (subdistrict). Enactment of the Village Communities Ordinance took place in 1924. Elected Village Councils, Municipal Councils, Town Councils and Urban Councils (Municipal Councils in larger cities) were established. During this period, efforts were made to distinguish between services of the Central Government and services of the local authorities. The latter were primarily to be financed from the locally generated revenue.

The Period 1948 - 1970

Formation of sectorial Departments and changes in authority structures accelerated speed in the first decades of independence. Over 150 departments and central government ministries operated in the districts largely outside the sphere of influence of the Government Agent. There were also para-statal corporations operating regional offices in the districts. The driving force behind this development was the ambition of national political leaders to make the now independent country self-sufficient in basic food commodities and provide intensive welfare services .

The Local Government (Administrative Regions) Ordinance of 1946 provided for a vertical authority structure within the Department of Local Government which bypassed the Government Agent and eroded his strong position. However, the Government Agent's role was becoming more discernible after recognizing the problems of coordination in the districts. The Government Agent headed the District Agricultural Committee which played an important role in the late 1970s in promoting agricultural development from the Centre, and concentrating Government activities in agriculture.

No further changes took place at the subnational level except for establishment of District Development Councils (DDCs) as an alternative mechanism for the Government Agent (GA) in person; and Rural Development Societies (RDSs) in most villages as a part of the village development movement launched in 1948 as a special programme under a separate agency, the Department of Rural Development within the Ministry of Home Affairs. The Government Agent was responsible for rural development. The societies were democratically organized and they were to contribute to the main base for self help societies (assisted by the government machinery).

Many such self help activities were undertaken by these societies in to promote rural industy, cottage industry and vocational training for employment generation in rural villages on a limited scale. Some researchers indicate that expectations of self help societies as local level development coordinators were unrealistic from the start: it is suggested that this role could not be fulfilled becauses neither authority nor finances were adequate. Local societies has therefore to remain content with promoting voluntary labour for a limited range of activities which needed people's participation. Instead of achieving their dream of assuming leadership for comprehensive rural development, they played subordinate roles. It may be due to the fact that their intended role made them similar by design to the local authorities and village councils. These two types of centrally promoted organizations have been separate bodies with similar aims, successful only to a limited extent.

Decentralization in the period 1948-1970

During this period most central government, ministries, departments and para-statal bodies established their provincial/district offices. More significant decentralization was in the agricultural sector, highways, irrigation, public health, education and para-statal bodies like the State Banks and the Paddy Marketing Board. Some agencies established their field units at divisional level e.g. the Agricultural Extension Service. As regards decentralization, it was a remarkable achievement in providing central government services even to rural villages. Effective delivery systems for agricultural inputs, credit and technology transfer were thus established, servicing the rural sector.

Marketing facilities were provided through a network of cooperatives in addition to their role of distribution of: a) basic food items and provisions under the Food Subsidy Scheme to the rural poor and b) agricultural inputs to the rural areas, while District Agricultural Committees and District Coordinating Committees were effective in mobilizing rural farmers for increased food production based on the Central Government Policy of achieving self-sufficiency in rice.

Promotion of village level organizations, particularly the Rural Development Societies and Women's Rural Development Societies under the Department of Rural Development was put into effect during this period. The rural sector had more opportunities to participate in village development work and in self help type voluntary actions. Women's participation in community development work and income generation activities increased remarkably during this period.

Through the main form of decentralization of central government responsibilities to the District level implemented during this period, a positive impact on rural sector families was highly visible. (However, quantitative analytical studies have not been undertaken to measure such impact.)

The Period 1970 - 1977

The United Front Government, which came to power in 1970, concentrated on selective administration, decentralization and the establishment of numerous local level institutions for bringing decision-making authority down to lower levels. The main feature of the new approach was much increased emphasis on decentralized planning and greater opportunities of rural employment.

The first important step was the establishment of:

a) District Development Councils (DDCs) at the district level comprised of Members of Parliament from the same district and the most senior level departmental officers of the district, with the Government Agent as the principal implementation officer.

b) Divisional Development Councils (Div. DCs) at the divisional level (later at the electorate level) comprised of the Member of Parliament as the council chairperson, divisional level government officials and representatives of institutions such as village councils, cooperative societies, cultivation committees and people's committees. The functions assigned to these councils were formulation of development plans, identification of and coordination and monitoring of plan implementation. The development thrust for which this organization structure was established came to be known mainly by the name of Divisional Development Council Programme, indicating that it was the divisional bodies which were considered as central to the operation. The councils were closely linked to the system of cooperative societies at the village level.

c) Agricultural Productivity Committees (APCs) at the divisional level under the Agricultural Productivity Law of 1972, comprising of farmer representatives and operated from the newly established Agrarian Service Centres;

d) Cultivation Committees at the village level set up under the Paddy Lands Act of 1958 to promote agricultural development and safeguard the provisions of the Act including protection of the rights of tenant farmers;

e) People's Committees at village level to sensitize and apply a check on government bureaucracy with a view to making the administration more responsive to the needs of the country and to the wishes of the people with the task of formulating and implementing national economic plans.

Theoretically, the above institutional framework thus established covering the three sub national levels, i.e. the district, division and the village, provided ample opportunities and a broad base for participation of all segments of the public in decision-making at all levels in the development process.

In reality, the enlistment of the Member of Parliament as the Chairman of the Divisional Development Council was but a formalization of already existing realities of the dominance of party politics in the councils. The Member of Parliament had all along played the key role in decision-making and the councils and committees had in addition become partly political instruments.

From a participatory point of view, the positive side of these developments was a greater opportunity for the politically favourite sections among the population to partake in decision-making than had so far been the case for the common people.

Another innovative step towards the decentralization in resource allocation from the centre was the District Decentralized Budget, which came into operation in 1974. Basically, it represents an attempt at directing a part of the national budgetary resources to the district to be allocated as decided by the local authorities to meet the capital needs of a local nature. The funds were to be utilized under the direction of the District Political Authority, which was comprised of a senior Member of the National State Assembly appointed by the Prime Minister together with other Members of the Assembly from the district.

The Decentralized Budget has undergone many changes in its size, objectives, procedures since its inception in 1974, but has become a permanent feature of the national budget exercise. At the beginning, the allocation was to be used exclusively for promoting food production, but later on, the possible activities were widened to encompass virtually all capital needs of a local nature.

Officially, the Decentralized Budget operates on a district basis but it has evolved in actual practice to be an allocation at the electorate level for the Member of Parliament directly subject to political concerns. The decision-making process is thus simple, quick, straightforward and flexible.

In summary, developments during the 1970-1977 period noted above had both positive and negative effects. On the positive side, these developments contributed to putting into effect of the concept of decentralization in Sri Lanka in three ways:

a) It was the first attempt in Sri Lanka to view a specific subnational land area, an administrative district as an intersectorial planning unit and to provide specific staff to undertake the task.

b) It was the first attempt to provide an institutional base (i.e. the District Political Authority) for interaction between sdministrators and non-administrators in planning, implementation, monitoring and evaluation.

c) It was the first use of a District Budget as distinct from a district allocation of sectorial budgets.

Nevertheless, the larger share of the funds for development work in the districts was still being channeled through the sectorial departments in an equally uncoordinated manner. It was also these departments which had to execute virtually all the work financed under the Decentralized Budget.

Decentralization 1970-1977

From the decentralization point of view, the establishment of District Development Councils and Divisional Development Councils could be viewed as a delegation of responsibility to area-wide authorities. During this period, establishment of Public Corporations in the industrial sector was very evident. Agricultural Productivity Committees established under the Agricultural Productivity Law also constitute a delegated body to promote and coordinate all the agricultural services in the Division and implement provisions under the Agricultural Productivity Law. The Department of Agriculture strengthened and intensified its activities under the roof of the Agrarian Service Centre. Other departments such as the Agrarian Services also operated from this centre. Branches of such para-statal bodies as the State Banks also operated at divisional level, often at the Agrarian Service Centre itself. Thus services extended to farmers, i.e. supply of seed, fertilizer, credit and technical advice, were all delivered from a centre which became the hub of development activity at the divisional level. Though politicized, the Agricultural Productivity Committees (APCs) and the field units of the central government departments offered a satisfactory service to the rural farmers.

Another important delegation of a function of national importance was the Land Reform Commission established under an Act of Parliament in 1972 to nationalize all lands in excess of 50 acres as well as foreign company-owned plantations. During this period, a large number of business enterprises were nationalized and delegated to new para-statal corporations or companies. Some examples are the State Graphite Corporation, the State Gem Corporation, the State Plantation Corporation and the Ceylon Petroleum Corporation.

The Period 1977 - 1987

Most institutions established by the government of the 1970-1977 period were disbanded after the change of government in 1977. Significant changes that were put into effect were:

a) Removal of District Political Authority with the appointment of a District Minister under a constitutional provision in 1980 with the role specified as;
i) formulating, monitoring and evaluating district development plans;

ii) identifying bottlenecks and initiating corrective action;

iii) supervising inter Departmental activities.

b) Establishment of District Development Councils (DDCs) under the Development Council Act No. 35 of 1980 and incorporating amendments made by Act No. 45 of 1981 to replace the earlier District Development Councils (DDCs). The new councils consist of Members of Parliament from the district plus representatives elected to the council by direct vote. The main functions to be performed were:
i) formulation and implementation of development projects;
ii) preparation of annual development plans.
A noteworthy feature of the legislation providing for the establishment of the District Development Council was the provision under which the Executive Committee (headed by the District Minister) was required to prepare the Annual Development Plan. In addition, the council was allowed to make by-laws and was to decide on the investment of its own revenue for development purposes.

c) Establishment of Gramodaya Mandalayas (a new village level institution) with a membership of the leaders of non-governmental organizations in its area of authority. These might be either state-promoted local organizations, local subunits of national voluntary organizations, independent local community voluntary organizations and other societies with specific purposes such as death donation societies and temple societies.

d) Establishment of Pradeshiya Mandalayas (a new divisional level institution) with the chairpersons of all the Gramodaya Mandalayas in the respective Divisional Government Agent division.

A feature of this structure was the operational guideline for District Development Councils, which theoretically provided for a broad base for people's participation. Some guidelines follow: "All projects should be based on the felt needs and priorities as identified by the village level Gramodaya Mandalayas and their development plans." "Special consideration should be given to projects satisfying the basic needs of the community, serving the many rather than a few". "Preference should be given to projects based on encouraging self-reliance and community participation".

This system with its mixture of organizational forms and membership criteria was made more intricate by the formal maintenance of the administrative and technical branches of the former Village Councils. In the view of most observers and involved persons: the performance of the District Development Councils was on the whole very poor; most Pradeshiya Manadalayas hardly functioned at all; functioning and roles of Gramodaya Mandalayas varied greatly. When they were active, they were often dominated by scions of the Member of Parliament.

In spite of the restructuring of the institutional framework, it seems safe to conclude that the changes made between 1977 and 1987 did not reflect any important new thinking with regard to regional and rural development on the part of the national elite. While the greater attention that had been paid by the preceding Government to broad-based development at sub-national levels was on the whole maintained, the new round of institutional re-organization in magnitude masked that of the previous seven years. When looking for explanatory factors for the unsatisfactory performances of promoted local institutions, two issues pose themselves for attention directly: Members of Parliament appear to have only marginally changed their role; their concentration still is upon dominance within their electorates has not diminished. Likewise, Central Government and Members of Parliament are reluctant to surrender control of any development work at the local level.

Review of the Period 1977 -1987

Open economic policies were introduced during this period and there was a shift from a closed and controlled economy to an outward looking economy with a market orientation. Removal of price controls and import restrictions, exchange rate reforms and limitation of the public sector were some of the reforms that were brought about. Thus, the reforms and the subsequent changes that were brought about primarily envisaged an export led growth through reorientation of the Sri Lankan economy towards the export sector. In addition, the huge capital investment programme, which was the Mahaweli Accelerated Development Project, was launched during this period through the newly established Mahaweli Authority. No remarkable service depletion took place in the rural sector during this period except the restructuring of the main welfare programme and the Food Subsidy Programme which was converted to a more selective and target oriented Food Stamp Scheme for the poorest segments of the population to assure their food security.

The already existing decentralized planning-administrative structure was further strengthened by the new Constitution. The Decentralized Budget was further expanded. The Department of Agriculture under the Ministry of Agriculture was regionalized on an Agro Ecological Zonal basis especially with respect to Research functions, in addition to its District level structure pertaining to Extension and Seed Supply functions. Field workers in Agriculture were remarkably increased in number. Extension/Research priorities were decided at the district/regional level at a joint forum entitled the Regional Technical Working Group (RTWG).

Although the economic activities were significantly increased and the decentralization process continued during the period under the open economy, the poorer sections of the population and the more vulnerable groups faced considerable hardships. The open economic policies could not benefit the poor and the incidence of poverty grew in the country after the liberalization of the economy.

The Poverty Line (based on the Food Consumption Poverty Line) which was declared by the Central Bank of Sri Lanka in 1968 indicates that nearly 28 percent of the households live below the Poverty Line. The incidence drops to 24 percent when the Food Consumption Poverty Line is defined to allow calorie consumption to be between 80 percent and 100 percent of the norm. The GINI Coefficient of income distribution increased from 0.37 in 1973 to 0.42 in 1979 and to 0.53 in 1982, indicating increased income disparity between the lower income and high-income groups.

In 1980-1981, the lowest income earning 20 percent of the population received 8.8 percent of the GNP and the highest income earning 20 percent received 41.2 percent of the GNP. By 1985-1986, the above figures changed to 6.2 percent and 52.3 percent respectively. According to the Consumer Finance Survey for 1986-1987, the unemployment rate in the urban areas was 17.2 percent, and in rural areas and the estate sector, it was 15.9 percent and 9.6 percent respectively. In magnitude, the problem was most severe in the rural areas, which account for 73 percent of the overall unemployment.

Consumer prices have increased by 200 percent between 1977 and 1984. Price increase of food became a normal day to day experience during this period. Government expenditure on food stamps was reduced from 10.4 percent of the total expenditure in 1978 to 2.9 percent in 1987.

Social mobilization for self help activities were prominent at rural level especially under the Village Reawakening (Gam Udawa) Programme, (which was based on the Semaul Undong Programme in South Korea) initiated to assist the rural poor in low-cost house construction. The other community participatory activities were limited to small-scale community initiatives. It can be concluded that dramatic changes were visualized from outside because it was the first experience of a liberalized economy by the people. However, the short-term grievances experienced by the poorer sections of the populace were substantial.

The Period 1987 Onwards

The above-mentioned local government bodies were maintained up to 1987. The government has since 1987 introduced a number of new administrative, budgeting and institutional changes with the intention of promoting decentralization and people's participation in planning and development interventions. The district with the Government Agent was being virtually dismantled under the Provincial Councils Act of 1987 and with the 13th Amendment to the Constitution in 1987, Provincial Councils were established. With these changes, three formal levels of state administration operated i.e. the Centre - with the President, Prime Minister and Cabinet of Ministers; Province - Provincial Councils; Divisions - Divisional Secretary, Produce Sabhas, Urban Councils & Municipal Councils.

There are nine provinces in Sri Lanka but the Northern and Eastern Provinces (areas of conflict) have been administered under one provincial council. Each province contains two or three districts. A governor appointed by the President is at the apex in each province. The Provincial Council is elected through general election and is headed by a Board of Ministers with the Chief Minister in charge supported by Provincial Secretaries headed by the Chief Secretary. The executive administration of the Provincial Council is divided into five technical ministries for devolved subjects. i.e. agriculture, irrigation, industry, roads, transport and health and education.

The Provincial Council supervises divisions and local authorities. At divisional level, there is also an elected Pradeshiya Sabha operating under the Pradeshiya Sabha Act of 1987. Administration at Divisional level is by a Divisional Secretary (DS) in charge of the Divisional Secretariat. The Divisional Secretary reports to the Chief Secretary on devolved subjects but maintains the functions of Assistant Government Agent (AGA), representing the Government Agent (GA) for non-devolved subjects.

Division of power and responsibilities between Central Ministries, Provincial Councils and the Government Agents and Divisional Secretaries has been a subject of conflict at initial stages.

Government has decided that administration should be decentralized to divisional level. The objective of this proposal is to ensure that delivery of services to the people is undertaken at the level closest to their place of living. This is to ensure that all operational activities presently performed by line ministries of the central government, provincial councils and the district Administration which directly affect the people are carried out at the divisional level. The functions of line ministries, departments and provincial councils in respect of these activities will be confined mainly to planning and policy making.

Review of the period 1987 to present

Despite the change in government in 1989 and 1994, the policy of a liberalized economy and commitment to implementation of the IMF/World Bank designed Structural Adjustment package remained unchanged. Thus, with close to two decades of experience in implementation of structural adjustment policies, Sri Lanka could count itself as one of the first among the developing countries to implement such a package and remain faithful to it. This in spite of various social adjustment problems - including a widening gap between the rich and the poor. There is a common agreement on the issue of how the poor can be protected during the period of adjustment and how the SAP can be designed in a way that allows integration of the poor into the productive economy. This will be briefly discussed under poverty alleviation.

Arising from the same institutional and economic reforms undertaken during this period i.e. removal of subsidies on agricultural inputs, i.e. fertilizer, lowering/removal of import duty on food commodities (particularly cash crops of small farmers), privatized seed production and imports came into place. Intentionally or unintentionally, the above changes adversely affected small farmers and economic activities of the rural poor, groups that earlier may have contributed positively to Sri Lanka's once positive trend in social development indicators. On the other hand, decentralization under the 13th Amendment to the Constitution could be considered a major transfer of responsibilities in the form of devolution from the central government to the provincial level. The operational units are the district, divisional and the village level. Participation of the community in the development is guaranteed under this provision and the system is being established.

Provincial Councils can levy and collect taxes, receive revenue from licenses, fees, etc. Moreover, Provincial Governments receive unconditional grants from the Central Government to offset the costs of administration of the subjects devolved on them. Sectorial programmes of the Provincial Ministries are also the responsibility of the Provincial Councils.

Decentralization in the form of privatization at the national level is presently taking place under the name of "peoplisation" of commercial public enterprises. With the government commitment to the concept of direct employee ownership of the peoplised ventures, finding its expression in 10 percent of the shares in all peoplised state enterprises being gifted to employees.

The Integrated Rural Development Approach

Sri Lanka has over the years adopted a series of different development approaches, particularly in rural areas, to correct regional imbalances and alleviate poverty. Failure of one approach led to experimentation with a different approach. Initially, efforts were directed at implementing a number of independent rural development projects in more or less randomly selected areas. A renewed attempt at improving coordination of regional development interventions was made when the district administrative unit (district development council) became the focus for development approaches.

During the early 1970s, the district emerged as an important sub-national unit for administration and development. At the same time, the idea that the district also forms an appropriate unit for project planning for rural development emerged. Recognizing the inadequacy of the many development efforts, which had been made for solving the poverty problems, the government introduced during the 1970s the idea of a more comprehensive thrust in some districts. This soon came to be known as the Integrated Rural Development Strategy operationalized in selected districts under the name of Integrated Rural Development Projects (IRDP).

The main objectives of the national Integrated Rural Development (IRD) efforts WERE to widen economic opportunities and enhance the general standard of living in rural areas; focus development efforts, especially to meet local needs and to encourage local institutions; reduce inter- and intra-district disparities and thereby promote balanced growth; encourage quick response, mutually supportive low-cost productive investments along with necessary institutional improvement; assist in removing constraints, thereby contributing to better utilization of district resources; improve the planning process in districts.

The IRDP introduced a whole new planning concept into district development. It has also been able to mobilize and divert substantial resources into local development. The concept of the Sri Lanka IRD, as outlined in the guidelines, is determined by the rural scenario with its population characteristics and structural poverty problems. The basic elements of the concept are: a) Rural development through social change; b) Human development, people's participation and institution building; c) Poverty alleviation; d) Resource and economic development; Mitigating disparities between groups, genders and potential entrepreneurs.

IRDP experience in Sri Lanka

Incorporating nine donors and 18 projects over the years, Sri Lanka IRD Programme today encompasses a wide variety of concepts, strategies and procedures. These vary considerably within the IRD programme and reflect more donor priorities and policies. It has been suggested in an evaluation of IRDP performance in Sri Lanka that no project can fulfill its ultimate objectives unless it operates coherently in regard to macro-economic and political realities, i.e. taking such factors into account when designing strategic development interventions intended to achieve practical results.

This unfortunately is not the case with regard to IRD in relation to strategies implemented for rural development in Sri Lanka today. Serious questions can be raised with regard to the roles of the IRD programme, its donors and the practical consequences of continuing the programme in a macro-economic and political environment which results in widening the gap between the poor and the non-poor.

However, district IRDPs have in quite different degrees and ways, signified reorientations in public development work in Sri Lanka. It even appears correct to state that some have, in some important aspects, presented a break with conventional approaches. Firstly, varying degrees of bottom-up planning have been achieved in some programmes, thus representing a break with the top-down perspective which has characterized public planning in the country. Secondly, through concerted efforts in some IRD programmes, a process approach to societal planning has for the first time been put into operation in substantial detail.

Present trends in decentralization

Since independence, the process of decentralization has been taking place at a varying pace with the change in local conditions. This was revealed from what might be considered tactical developments of the process at different times. It is also evident that no medium term institutional framework or policy development took place until 1987. The root causes are evident and some of them were discussed earlier in this study. However, for decentralization to be successful, a host of necessary and facilitating factors are needed, i.e. willingness of the centre to share political, economic and administrative authority; willingness to commit a share of Central Government financial resources to the periphery; capacity of the periphery or the local level to use authority and resources; a well developed bureaucracy; a multi-level institutional framework which permits the local politicians, leaders, officials, community representatives and people to work harmoniously.

Clearly, with the experience gained so far, Sri Lanka has fulfilled some of the major conditions. The present decentralized model came into effect under the 13th Amendment to the Constitution in 1987 as a measure to settle the country's grave ethnic-political conflict. This has been by way of establishing the province (as a sub-national unit of administration) which had long ago lost virtually all-administrative significance.

The Provincial Councils Act No.42 of 1987, together with the 13th Amendment to the Constitution in 1987, was passed under the pressure of the ethnic conflict in Sri Lanka's Northern and Eastern provinces. This legislation devolved considerable autonomy regarding several important subjects to Provincial Councils. The other legislation was the Pradeshiya Sabha Act No.15 of 1987 at divisional level, providing for establishment of Pradeshiya Sabhas (divisional-level councils of people's representatives) through general election.

It has been emphasized that national development efforts will be organized at national, provincial and divisional level. At the national level, there will be a National Development Policy and a Strategy dealing with different sectors under subjects and functions reserved for the Central Government. At the Provincial level, there will be Provincial Development Policy and a Strategy setting out the provincial development priorities on a sectorial, spatial (divisional/local authority) and group basis.

The divisional level takes on a new meaning and significance in the scheme of decentralized administration. It constitutes a focal point between National Development Strategy moving down through provincial level and the community needs moving up from village level organizations. With reorganization of the village level Gramodaya Mandalayas, these village level organizations will become the focal point for identifying community needs and organizing the community for development work.

The major components of the decentralized planning and coordination are found at four levels:

a) Provincial Development Policy, Strategy and Programme - This will set out priorities in the province on a sectorial, area and group basis. It will lay down the policy framework within which planning activities at divisional level will take place. The strategy will be in the form of five-year rolling plans with annual programmes for implementation.

b) District Development Programme - This will coordinate government programmes and provincial programmes, bringing together government activities regarding national programme and provincial activities planned at divisional level. The District Development Programme will work toward balanced development of the district, in the form of an annual programme.

c) Divisional Development Plan - This plan will consist of village development plans coming from village organizations, divisional level projects and village development efforts funded from the Decentralized Capital Budget. It will be a three-year rolling plan with an annual implementation programme, incorporated in the District Development Programme.

d) Village Development Plan - This plan consists of village level projects and activities to be identified through direct consultation between the village level organization and the community. They will be drafted with an assigned order of priority assigned to meet the felt development needs of the village. The Village Development Plan will be a three-year rolling plan.

In order to coordinate decision-making at the above levels, three bodies have been set up, i.e. Provincial Planning Councils; District Coordinating Committees; Divisional Planning Councils.

Non-government organizations and decentralization

Non-government organizations (NGOs) have operated in Sri Lanka for several decades. They were initially few, but in the late 1980s began increasing in number with varied objectives, capacities and organizational structure. There are over 6 000 registered NGOs operating in various geographical areas and at national, provincial, district and below district levels (Perera, 1995).

Voluntary organizations in Sri Lanka for example have come to play an important role in delivering services to meet basic human needs. VOs run day care centres, nursery schools, health clinics, homes for destitute children and homes for the elderly; they also provide vocational training, non-formal education and sports and recreation programmes. They operate rural development projects and community self help programmes providing social overhead capital, i.e. roads, water tanks, irrigation canals, sanitation facilities and wells. Many provide working capital for local small-scale agriculture, handicraft projects and market outlets for goods produced in villages (James 1982). Such private groups either supplement or exclusively provide services offered in other countries by government agencies. NGOs are legally recognizing when registered under Act No. 91 of 1980. They may raise funds locally or abroad for the activities identified under the organization's objectives.

One significant recent development was the recognition of national/divisional level NGOs to be entrusted with the implementation of National Development Trust Fund programmes. These programmes aimed at functioning on a non-profit basis to identify, promote and support sustainable income generation opportunities among the poor and the unemployed youth and women and to improve the nutritional status of children under five years. The National Development Trust Fund is a parastatal body and it transferred the responsibility to the divisional level organization through delegation without intermediary interventions. This is a clear example where NGOs play a definite role in the decentralization process through delegation.

Poverty alleviation, social welfare and decentralization

Government policy states that "While committed to implementing an ambitious structural adjustment programme, the country is attempting to preserve a balance between the objectives of both growth and equity. To achieve this dual objective, the policy encourages people's participation in productive economic activities. Those who do not benefit through these policies are supported through welfare safety nets. In the overall development strategy, while maintaining the gains achieved so far, an attempt is being made to consolidate them and to improve the quality of life of the people".

One important aspect implied in the above is the inability of structural adjustment programmes to address poorer segments of society. As such, the Poverty Alleviation Programme (Janasaviya) originated in the emerging awareness of the aspirations of the poor and social tensions which arise from their not being fulfilled. In a wider perspective, Janasaviya was a people-based programme which intended to put people first; considered human beings as a primary resource; depended mainly on self-reliance and bottom-up approach in decision-making; it was culturally harmonious; and it could be realized truly island-wide.

The method suggested to improve the quality of life of the poor has been the enhancement of their capabilities through providing food security for the household during its two-year period of operation.

The Janasaviya Trust Fund, the other counterpart programme which had a holistic approach to poverty alleviation included: Social mobilization process; Training process; Credit component; Community project component.

The two programmes were the main poverty alleviation programmes that came into operation in the late 1980s. Their impact on rural families could be assessed in the following categories: self development orientation; access to basic needs; participatory decision-making; village level group formation; access to formal credit; access to technical/vocational training; participation in community infrastructure development. Since 1994, they have been replaced by the Samurdhi programme, also aimed at the rural poor, but more specifically targeting rural unemployed youth.

Impact of decentralization on rural development

In Sri Lanka, the process of decentralization or the transfer of responsibilities from the central government to the institutions described above (2.2) took place during different central governments. Some units or lower level institutions did not exist for long, but the impact of their developments or their effects have sustained hope, to some degree, in the rural sector. For example, a short-term credit facility given to a farmer could yield a sustained impact on his socio-economic life.

Due to the complexity of factors affecting decentralization, quantifiable assessments are difficult to achieve. Intended policy changes brought in later, as well as any other developments, may reverse, promote or weaken a sustained change that occurred previously. Therefore, the impact of decentralization in this study will be presented by referring to the particular period, the type of decentralization that had taken place and the nature of the impact that occurred on selected rural development components, elements and processes which have some direct relevance to the scope of this study.


i) Arising from our definitions and the types of decentralization used to review the process in this study, it can be concluded that there is a gradual trend, starting from de-concentration and moving towards devolution and privatization over time. This may be due to changing macro- economic policies with the change of governments.

ii) It is evident from the findings of this study that the two sectors which were subjected to the least degree of decentralization were health and education. The critical importance of these two sectors to all governments irrespective of political differences may have contributed to this situation.

iii) It could be concluded that no new institution or local authority sustained itself to function over a considerably long period and achieve the intended objectives except the District Level Coordinating Committees. This is in view of the general acceptance of the District as a convenient functional unit for most purposes.

iv) From this evidence, it could be concluded that changes in Central Government bring significant changes to the decentralized structures in operation. This may be due to different party politics and also for attaining the political objectives of the ruling party.

v) As changes in the approach to decentralization are relatively frequent, in most instances the rationale for such changes is not known to the public as there is a lack of clearly expressed policy on decentralization in the manifesto of each competing political party.

9. Recommendations

The following recommendations are based on the aforesaid conclusions.

i) Inasmuch as there is common agreement among the major political parties for an open economic policy framework, there should likewise be consensus on the approach to decentralization for it to be sustainable and be of benefit to the country.

ii) There should be no variation in the decentralization approach, structure and procedures based on ethnic consideration or issues and there should be uniformity among the units of decentralization by way of the powers devolved.

iii) Resource allocation from the central government to the devolved structure should be based on socially and economically justifiable criteria.

iv) FAO/donor/funding agencies could assist in in-depth studies to develop resource allocation criteria and investment strategy for the devolved structure.

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