Course Tittle: Local government and Development Management.

Report on: Assessing Decentralization in Rural Local Government Institutions

in Bangladesh: Functional Assignment and Financial Management Perspective.

Prepared By: Supervised By:

Aaqib Zahid

Name: Md. Toufiquzzaman Lecturer , Department of Public

Administration, University Of Dhaka.
Roll No: ZH:139-106

Session:2020-21
Email: aaqibzahid@du.ac.bd
1st year 2nd semester

University of Dhaka

Department of Public Administration

Date of Submission: 02/11/2022

Presentation link: https://youtu.be/inMr6u1WLqk

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 Introduction:

Every government must incorporate local government. It is essential for

implementing national government policies at the local level. The typical
purpose of local government is to meet the requirements of the
neighbourhood by offering and delivering basic services.A public body with
the power to make decisions and manage a specific set of the
implementation of governmental policies within a relatively small area that
is a split of the regional or national authority (Siddiqui, 2014).

As previously noted, local government has occasionally been confused with

local governance, which refers to the use of several governance standards
(accountability, openness, efficiency, involvement, equity, etc.) to all
significant and related local initiatives focused on development groups or
initiatives like local NGOs, local government agencies, or local
administration cooperatives, regional media, unofficial community events,
etc. (Siddiqui, 2014).

In contrast, Decentralization, on the other hand, refers to the transfer of

planning, decision-making, and administrative the delegation of authority
from the central government to regional bodies, local government NGOs,
which are independent and para-statal organisations (Cheema and
Rondinelli, 1983).

In Bangladesh local government we mainly see three levels. 1. District, 2.

Upazila, 3. Union Parishad. Mainly regarded as Rural Local Government.
Here the district is the highest level of field administration. And Union
Parishad is the lowest level. Local government is basically a combination of

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these 3 departments. Decentralization of power and budgeting to local
governments to facilitate delivery of public services and to address local
problems with the participation of local People.

The main aim of this report is to better analyse what decentralization is and
how effective it is at the local level, a critical analysis of local government
functions and economic management issues as well. This paper has been
created to assess the progress of the decentralisation process through
functional assignment and financial management. And this is a primary
report based on data from LGIs.

Combining a team we went to Union Parishad, Upazila Parishad and

District Commissioner's office to inquire about decentralization and fiscal
management issues. There we made conversation to Union Parishad
Chairman, UP Secretary, Upazila Chairman, UNO and District
Commissioner and recorded some information. This report has been
prepared in accordance with this information.

Here the report is prepared based on 4 basic theories of decentralization.

1. Deconcentration;
2. Delegation ;
3. Devolution ;
4. Privatization/Deregulation

In fact, Bangladesh has Deconcentration and Delegation. However, local

development through devolution is more effective. Local development is

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 the demand of present time. But Bangladesh is going through numerous
problems in terms of decentralization and fiscal management.

This report has been made through considering some steps as follow,
mainly regarded as the roadmap of the report. And this is a primary report

ROADMAP :

• Local Government and Local government in Bangladesh ;(int)

• 4 theories of Decentralization ;(int)
• Three tires of local government and their
interconnectedness(LGIs); (Findings)
• Functional Assignment of LGIs;(Findings)
• Financial management of LGIs; and(Findings)
• The barriers or problems in terms of revenue collection or
taxation that means barrier to their own source Mobilization.
(Discussion)
• Conclusion

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 Theoretical Framework :

This paper is made on Decentralization in RLGIs and the functional

assignment and fiscal management focusing on the 4 theories of
Decentralization given by Rondinelli. And this is a primary report.

A. Deconcentration: De-centralization is more common in unitary

regimes, when decision-making is decentralised. Creating power at
multiple levels, as well as financial and managerial responsibilities
The Central Government It mostly delegated authority from higher-
level authorities. Authorities on the ground. Centralization establishes
a strong field administration that is overseen by central government
departments. As a result of this provision, decentralised governance is
less effective. Here decision making authority is central. All LGIs are
accountable to central.
B. Delegation: Delegation is the transfer of responsibility for decision-
making and administration of public duties to semi-autonomous
bodies, which is a broader sort of decentralisation. The central
government would supervise but not fully control these semi-
autonomous groups.

C. Devolution: Devolution is a popular type of administrative

decentralisation. When governments devolve activities, they provide
quasi-autonomous local government groups with corporate status
responsibilities for decision-making, finance, and administration.
Devolution frequently distributes service responsibilities to
municipalities, who elect their own members, generate their own
revenue, and make their own investment decisions.

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 Devolution allows local governments to use their power and authority
to fulfil public tasks within visible and legally recognised geographical
boundaries. It is the most effective type of administrative
decentralisation.

D. Privatization: Another type of decentralisation is privatisation, which

refers to the transfer of a business or industry from the public to the
private sector. Meaning to delegate responsibilities of producing
goods and services from public to private. Here decision making
authority is market. Accountability should be to the customers. Market
is responsible for financial management. And public participation is
responsive.

Method:
We visited a number of local government institutions in order to write
a report titled "Assessing Decentralization in Rural Local Government
Institutions in Bangladesh: Functional Assignment and Financial
Management."
We go to Bawishona Union Parishad and talk to the secretary and
chairman about the functions and various sources of income of the
lowest institutions of local government and record the information.

We discussed the report with UNO and the Chairman of Gopalganj

Sadar Upazila Parishad and took notes. They informed us about
various aspects of their functional assignment and income sources.

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 In the District Council, I only met with the District Commissioner. As
a result, the report is written based on the information provided to us
by the Deputy Commissioner. During our information search in
Gopalganj district, the District Commissioner told us only about the
legal works and did not specify the source of income. All functional
assignment and financial management issues have been discussed in
the discussion report based on the information received.

Findings

Interconnectedness of three tires of LG:

We can find three tires of LG(Local Government) - District (Zilla),

Upazila and Union Parishad are interconnected maintaining a hierarchy.
Because Union Parishad is the bottom level of Local Government relying
on Upazila Parishad but not on District directly.

The list of various tasks of Union Parishad is mainly presented by all UP

Chairman in the presence of UNO and Upazila Chairman in Upazila
Parishad. Then the budget is passed from there.

Generally, there are 9 Union Parishads under an Upazila and Zilla

Parishads are formed with two or more Upazila Parishads. Here every
unit is interdependent and helps and coordinates the work. Structurally,
all members of Union Parishad are members of Upazila Parishad. Again,
in the Zilla Parishad elections, Zilla Parishad members are elected by the
votes of Union and Upazila Parishad members and chairmen.

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A portion of the budget is allocated directly from ADP to the upazila level
for various development projects. Based on the calculations provided by
the Union Parishad Chairman, the budget is distributed from upazila to
unions based on their needs. The chairman receives the union's accounts
through his subordinate members. A final calculation is made for the
construction of any bridges or culverts, editions, road side planting, and
so on in the village area. Furthermore, Union Parishad level employees
receive VGD and VGF benefits. The chairman of the area is the one who
deposits the estimated amount. After that, the integrated budget is
presented to the upazila. The UNO and the Upazila Chairman agree on a
certain amount of service. Later, it is implemented by the UP Chairman.
So there is a direct relation between these two lowest LGIs Upazila
Parishad and Union Parishad.

Again Upazila Parishad and Union Parishad are not directly related to the
district, but they do have a close relationship in some cases. First, the
Union Parishad Secretary is directly appointed by the Zilla Parishad.
Again, when the ministry decides to implement an agenda from top to
bottom, these agendas are gradually implemented from the district
council at the upazila and union level. Finally, in another case, the Zilla
Parishad is closely related to the other two local government institutions.
Corrections to voter ID cards and birth certificates must be made through
the Union Parishad. It is then delivered to the Upazila Parishad. The UNO
office completes the verification and selection and sends it to the district
level. Final corrections are made by the district, and new information is
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recorded. It is later returned to the Union level. In this case, the three local
government institutions rely on one another and they are interconnected.

Functional Assignment /De jure:

We know about the three tires of LGIs. District or Zila Parishad is the
highest tire of LG. Zila Parishad is vested with numerous activities
dividing 2 categories (Ahmed,2014) :

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Compulsory Tasks

1. Review of all district development

activities, including provision and
maintenance of public libraries,
construction of public roads, culverts, and
bridges, maintenance and development,
planting and maintenance of trees along
roads, support, cooperation, and
encouragement to upazila’s and
municipalities, and implementation of
government-assigned development plans.

Optional Tasks

1. Activities for education (Scholarship for

education, Establishment of school or
College , Activities for social welfare
Economic well-being work.

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Functional assignment of Upazila:

All upazila level functions are divided into two categories: reserved and
devolved.

The Reserved responsibilities: The Devoled responsibilities:

Formulation and implementation of a five-
The maintenance of law and year planning and development plan, the
order, civil and criminal justice, construction and maintenance of inter-
revenue administration control, the upazila roads, agricultural expansion and
supply of agricultural materials and
supply of essential commodities, irrigation system, ensuring health and family
large-scale industry, mining, and planning service system, ensuring supply of
clean drinking water and sewage disposal
mineral resource development. system, and so on.

For the smooth operation of activities, the Upazila Parishad established

Standing Committees on 17 issues. These are as follows:

Standing Committee
1. Committee on law and order

2. Development of Communications and Physical Infrastructure Committee

3. Committee on Agriculture and Irrigation

4. Education Committee for Secondary and Madrasa Schools

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 5. Committee on Primary and Secondary Education

6. Committee on Health and Family Welfare

7. Committee for the Development of Youth and Sports

8. Committee on Women's and Children's Development

9. Committee on Social Welfare.

10. The Freedom Fighters Committee

11. Fisheries and Animal Resources Committee.

12. Committee for Rural Development and Cooperation

13. Committee on Culture.

14. Committee on Environment and Forests

15. Monitoring and Control Committee for Market Prices

16. Committee on Finance, Budget, Planning, and Local Resourc

Development.

17. Public Health, Sanitation, and Clean Water Supply Committee.

Functional Assignment of Union Parishad: Union Parishad is

Bangladesh's lowest administrative unit in rural areas. Union Parishads were
established by the Gram Chowkidari Act of 1870. Under this Act, a union is
formed with several villages with the goal of implementing a guard patrol
system in each village.
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But there has been some changes. Now a days Union Parishad is vested with
numerous activities. Sections 30, 31, 32, and 33 of the Local Government
(Union Council) Ordinance 1983 describe the Union Council's functions.

For the smooth operation of all its functions, the Union Parishad shall form
a Standing Committee.

Standing Committee
1. Finance and organisation

2. Auditing and accounting

3. Tax assessment and collection

4. Education, health, and family planning are all important factors to

consider.

5. Agriculture, fisheries, livestock, and other forms of economic

development.

6. Development of rural infrastructure

7. Maintaining law and order

8. Birth and death registration

9. Sanitation, water supply, and sewage disposal

10. Social welfare and disaster relief

11. Environmental advancement

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 12. Resolution of family disputes, etc.

The Union Parishads Standing Committee is responsible for the following

tasks.

Administration and organisational issues: In this case, the village

police are formed to be administratively well organised.
Keeping the peace: The village police, chairman, and members play
an important role in keeping the peace.
Social welfare: Under various committees, it carries out activities
related to education, health, rural development, sanitation,
environmental conservation and development, and so on.
Adoption and implementation of plans for local and social
development.
All these are the list of deeds recorded in the book of law. Hence they
can be called De Jure. It is the responsibility of the LGIs to carry out
these functions.

De Facto:
In fact, we find differences with Sections 5(1,2), 18,42,45,76,57,58 of
the Union Parishad Act 2009.
The Union Parishad is supposed to hold two ward meetings per year,
but this does not occur. Similarly, appointing administrators,
organising monthly meetings, and forming 13 standing committees ,
presenting income and expenditure accounts to the public, or preparing
budgets 60 days before the start of the fiscal year, holding public

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 budget sessions, etc.mentioned in the Union Parishad Act 2009, but
Union Parishads do not do these things at all.

Upazila Parishad, like UP, disregards sections

24,29,30,34,35,38,39,42,69 of the UPZ Act 2009.
As Chairman of the Standing Committee, the Vice Chairman will
convene a meeting every month and supervise their work (29, UPZ
Act2009) In fact, these are not visible, and they have no idea whether
or not the local committee functions.
The Upazila Parishad does not post the fund notice board 15 days in
advance, and it does not send people copies of annual income-
expenditure accounts and development plans. It is disheartening that
the Upazila Parishad does not prepare a budget, fund, or annual income
expenditure account for themselves As a result, the budget is prepared
by the central government.
We also see a lack of accountability at various levels of LGIs. Various
tasks are postponed or never completed due to apathy, lack of self-
interest, or other factors. This is a threat to local development. Local
leaders can be seen using a small portion of the development budget
to keep the rest in their own hands. Unwanted political interference
can stifle development. These are impediments to people, local
development, and problem solving.

Financial Management:

Fiscal decentralization is the devolution by the central government to the

LGIs specific functions with the administrative Authority and fiscal powers
to perform those functions. (Ahmed, 2020).
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For the purpose of giving full effect to the provisions of article 59 parliament
shall, by law, confer power on the local government bodies referred to in
that article, including power to impose taxes for local purposes, to prepare
their budgets and to maintain funds.

Local governments require funds to carry out various activities. The elected
bodies in LGIs contribute money to local government in a variety of ways.

Income sources include ,

Own source Revenue: Taxes, specially Holding Taxes, Rates, fees and
others charges imposed by the LGIs. And

Intergovernmental Fiscal Transfer: Revenue sharing by the National

Government since all the potent sources of revenue are controlled at the
central level -these include 1% of land transfer tax and 2% of land
development tax ;grants from the central government.(Ahmed, 2020)

Latest data (Ahmed,2020), for example, shows that Ups received more than
75%of their funds from central government transfer and they mobilized
only 14% in FY 2012-13, which has a cascading effect on service delivery.

The Zilla Parishad derives its revenue from the following sources:
Taxation the toll; the fee; property income; and donations made by
individuals, governments, and other institutions Investment income; Hat-
Bazar, Ferighat, and Jalmahal will increase their contributions to Zilla
Parishad.

The Union Parishad earns money through taxes on houses and buildings,
as well as fees on births, marriages, and feasts. Taxes on cinemas, theatres,

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rides, circuses, and fairs, among other things; Vehicle tax; licence and
permit fees; Fees for special welfare works in the public interest; Hat-bazar,
Jalmahal, ferry ghat lease, toll collection; Grants and other government
assistance.

Upazila Parishad also earns money from a variety of sources. Upazila

Parishad, on the other hand, has no source of income significantly . Some
fines and tolls are collected here using mobile court . Also receives 1% of
the land transfer fee, which is sent to Central. All other sources of income
are the same as the Union Parishad's.

As we can see, the Zilla Parishad is a completely different entity. Their

income is essentially within that range. Union Parishad's source and amount
of income are supposed to be the highest here. However, due to a variety of
obstacles, UPS is unable to realise it. Essentially, the Union Parishad
manages finances in accordance with the central government's budget.
Again, neither the Upazila nor the Union Parishad rely on the District
Parishad. There is only a formal relationship. The Union Parishad, on the
other hand, is reliant on the Upazila Parishad. Because, as previously stated,
the demand budget is sent to the upazila and from the upazila to the central
government. The central allocation of funds for each union follows.

The Upazila Parishad submits its demand budget for the fiscal year to the
central government. The budget is then passed, and the allocated amount is
sent to the upazila from the centre to be used for various developmental
activities. Furthermore, their ability to generate revenue from their own
sources is very limited.
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After the investigation of three LGIs and the above discussion, it can be
said that every institution in the local government of Bangladesh is
financially weak and they are very dependent on the central government.
And the main reason for this dependence is that even though they are
authorized for their own source revenue, they cannot collect it properly.
And despite this dependence, the amount of allocation from the central
government is very insufficient compared to the requirement. As a result the
local people are not getting the desired services.

Discussion

In fact, what is said legally contradicts reality. We discovered significant

weaknesses in LGIs by not conducting field research. Even various officials
and political figures associated with the field administration are reluctant to
provide us with accurate information.

Let us now present some findings that contradict the decentralisation theory:

1. Better Policies Through Participations: Even though bottom-up

decision making is mentioned in this case, it is not possible due to a
variety of constraints. Rather, the centrally issued decisions are
partially implemented. It is stated here that people's participation will
help to develop local democracy. However, the de-facto mentioned
earlier has demonstrated that, even if a regular courtyard meeting at
the marginal level (Union Parishad) is supposed to take place, it is not

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 seen to take place. As a result, there is a huge mismatch between the
budget and the needs of the people, which is far from democratic.
2. Improve Quality Of Public Services: Although there is talk of
spontaneous participation of the people and policy formulation and
implementation based on their views, this is not possible in practise.
Due to riots at the village level, the chairman's indifference (especially
at the union level), and the people's inability to unite, policies are not
formulated in accordance with the needs. As a result, service quality
is supposed to improve, but it does not.
3. Driving Force of Development: Service quality remains subpar
because public participation cannot be guaranteed. The idea of a
budget, people's income, and taxation are still unclear due to their lack
of participation. Upazila and union locations both exhibit it. Fiscal
decentralisation is therefore cited as the main driver of development,
despite the fact that it is actually very erratic.
4. Maintenance Of Political Stability: When local service quality is
poor, the entire blame is placed on the government, and there is
widespread dissatisfaction with the chairman. People are not
participating properly once more. However, they are very active in
causing chaos. Then there's political disorder.
5. Importance of Political Leadership: Decentralization is important in
the development of local leadership. This aspect has been viewed
positively at the local level. Because, if nothing else, people are
politically aware. As a result, the union Parishad or upazila parishad
election has a lively atmosphere.
6. Collaborative Development: Despite the talk of collaborative
development, people are not very involved at this point. As a result,

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 local government representatives must develop development plans
based on assumptions. Aside from that, LGIs' income suffers as a
result of non-accounting of people's income. As a result, development
is hampered. So, while joint development appears to be very effective
in theory, the reality is quite different.

Mainly weak own source revenue makes these LGIs very much
dependent on central. Specially in Union Parishad the Chairman
cannot collect the taxes and revenues from public because of the fear
for losing popularity. Lack of staffing and accountability mechanism
in LGIs (District, Upazila, Union), weak and ineffective budget
consultation process and the old system of taxation are responsible for
the effective fiscal decentralization in Bangladesh. (Bhattacharya,
Monem, Rezbana,2013; World Bank, 2019)

Now we will discuss which form of decentralization is best for local

development and the reason behind it. According to my opinion
Devolution is the best form of decentralization. We described earlier
what decentralization is and what devolution is. In term of devolution, it
devols authority of decision making and financial management to quasi
autonomous units from central to LG. Here, the LG is given the authority
to decision making along with financial independence. If it can be
implemented properly there will increase public participation meaning to
better policies through better participation and collaborative
development. The representatives will be stable in their position that will
bring the local political leadership. Hence, decentralization will be
considered as the driving force of development.

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On the other hand, privatization will not be effective for the developing
countries like Bangladesh. Because developing countries are
infrastructurally not so high. So it is impossible to transfer the authority
to the market specially in Bangladesh.

Again, Deconcentration and Delegation are almost same. Because in

this case ( Both Deconcentration and Delegation) responsibility and
decision-making authority are delegated from the centre to the local level.
However, financial management or freedom is still implied. But
Bangladesh has the two – Deconcentration and delegation. As a result,
the local government must continue to rely on the central government.
This creates a lot of uncertainty. As a result, local development suffers.

From the above discussion we found only devolution exists with

responsibility, decision making authority and financial independence
which is not possible in other types. That’s the reason why Devolution is
the ideal type for local development.

Conclusion :

We are now familiar with the terms local government and

decentralisation. In addition, we learned about financial management.
Decentralization is crucial in our developing nations, like Bangladesh,
but we also need to provide financial independence. Local development
will then accelerated.

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References :

1. Ahmed (2014). THE LOCAL GOVERNMENT SYSTEM IN

BANGLADESH
2. Bhattacharya, D., Monem, M., & Rezbana, U. S. (2013). Finance for
local government in Bangladesh: An elusive agenda. CPD-CMI
Working Paper Series-6.
3. Cheema, G. S., & Rondinelli, D. A. (1983). Decentralization and
Development: Policy Implementation in Developing Countries.
Beverly Hills, CA: Sage Publications.
4. Fox & Monem,( 2008), Decentralization in Bangladesh:
Decentralization in Bangladesh.
5. Siddique, K. (2014). Local Government in Bangladesh. 3rd ed. The
university press, pp.63-67
6. Union Parishad Act, 2009.
7. Upazila Act, 2009.
8. Zila Act, 2000.

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