This book documents the effectiveness of decentralization on health and education service delivery in India. The core objective of this book has been to broaden the focus of decentralization away from the restricted debates within the public finance principles of fund function and functionaries. This book broadened the boundary by focusing on the impact of decentralization on public service delivery for two key services, viz. education and health. In a way this book is an attempt to examine the link between decentralization and human development. A study of this category is rare even across countries. The analysis of this book is carried out by distilling the existing studies in this area and the analysis of public finance data at three levels of governments in India. We have also used household survey statistics of consumption expenditure in understanding the utilization or incidence of the public spending on health and education in a decentralized governance system of India.

While comparing across states, it is clear that local democracy and institutions of decentralization differ widely across states. The analysis of intergovernmental transfers with a focus on third tier has revealed that multiplicity of channels of fiscal transfers has complicated the transfer system and the untied nature of funds to local level is not adequate enough for local governments to undertake spatially required public spending programme. The commissioning of State Finance Commissions (SFC) though had put an end to the adhocism and arbitrariness in the fiscal transfers to the local bodies in a technical sense, the functioning of SFC and their recommendations in terms of quantum and criteria of devolution is still in a state of flux across most states.

The book highlighted that the ‘decentralization’ would be effective only when the principles of public finance are harmonized with the principles of accountability in the design of the decentralization strategy itself. The book further highlighted that increasing participation of the users (‘voice’) and enhancing monitoring by the community or the user group at the service provider level (‘client power’) are the two core ingredients of improvement in service delivery with decentralization.