The previous chapter examined different views of decentralisation and presented a framework of de facto decentralisation. The present chapter turns to the policy question of how governments go about implementing decentralisation.

How did India implement its decentralisation policy? In the conventional narrative, following the crystallisation of policy intent in the 73rd and 74th constitutional amendments (CAs), state legislatures enacted accompanying legislation and state executives implemented the new laws. Two aspects of policy intent were implemented in a robust manner: regular, competitive local government elections organised by independent State Election Commissions (SECs); and transfer of funds from the state government to local governments using transparent formulas devised by independent State Finance Commissions (SFCs). On paper state governments ‘devolved’ several important functions (street lighting, water supply, urban planning, and so on) to city governments. Do these developments – regular elections and funds transfer as well as de jure transfer of functions – make for de facto decentralisation? Much of the literature has implicitly concluded that de facto decentralisation did happen. But in Kerala and Tamil Nadu, water supply, sewerage and other services continued to be provided by the state government, as revealed by the detailed examples in Parts II and III. Since decentralised governance is at the heart of decentralised service delivery, the chapter examines the implementation of the policy to decentralise governance.

The first section develops a framework to explain policy implementation in the Indian context. The key actors in the policy process are the state bureaucracy, the state political executive and the state legislature. The key elements in the policy process are state laws, rule-making authority, the rules themselves and oversight over all these elements. It turns out that, across states, decentralisation policy was implemented in a centralised manner. State legislatures and executives consulted neither local governments nor the public regarding how to implement decentralisation.1 This is particularly odd in Kerala where a large literature emphasises the important role of local agency and community organisations in shaping public action for development outcomes in past decades (V. K. Ramachandran 1997; Tharakan 1997). The second section discusses policy implementation in Kerala and how ‘policy drift’ emerged. The state's decentralisation policy in the 1990s prescribed that most local initiatives, and much of local change, must hew to narrow, inflexible, non-contextualised parameters set by the state government – giving a very small ‘decision space’ to local governments.