Power to the People? Decentralisation in India and Indonesia

Decentralisation is considered a potentially effective strategy for participatory development and delivery of assistance, particularly in the context of rural development. It contributes to reduction of inequality and poverty and, thus, promotes local democracy. India and Indonesia have considerable social and economic inequality and poverty. Though both countries have opted for devolving power to local governments, they differ in their approaches. India went in for 'gradualist approach' emphasizing Panchayati Raj Institution, whereas Indonesia chose 'big bang approach' emphasizing the ideology of svadaya gotong royong (community self-help). This has resulted in a more efficient delivery of public services in Indonesia, but at the cost of democratic freedom. In both the countries there is an urgent need to improve the mechanisms for adequate and equitable fiscal transfers, thus enabling the poorer regions to fully utilize their growth potential. This would have a positive impact on poverty.