Democracy and Fiscal Functions - Approaching a New Conceptual Framework

The 73rd and 74th Constitutional Amendment Act (CAA) of 1992 imparts on local government a constitutional status by introducing new institutions into the deepening of Indian democracy. Several significant innovations in existing functions were introduced through decentralization in order to promote local democracy. By enactment of CAA, Indian Government has extended a discourse of democracy at local level in India through strengthening of third tier of local institutions by means of fiscal devolution and decentralization for creating inclusive cities. But would the above initiative be sufficient for creating more inclusive democratic institutions? Or does it need further restructuring for building a synergy between people, civil society and institutions? Extending devolution of fiscal functions to the third tier necessarily calls for extension of effective working of democracy in plural society. In this context, this paper tries to develop a new conceptual framework for democracy and fiscal functions of local bodies in lagging states of India