Democratic decentralization, microcredit, and the workings of local government in rural India

Abstract

While democratic decentralization in India has commonly been studied as a project of deepening democracy, this article discusses decentralization as a form of state spatial restructuring in the epoch of market reforms. Drawing upon ethnographic fieldwork, I trace the shift in the nature of elected local bodies and their retooling to deepen financial markets in rural India. The case of the Swarnajayanti Gram Swarozgar Yojana, the Indian state’s largest microcredit program, reveals the rise in the salience of local governments as the site of state spatial policy in the 21st century, and the restructuring of decentralized local governance to deepen financial institutions’ penetration in rural areas. Local governments called panchayats have emerged as state organizations of microgovernance as capital moves to new scales in search of value. Findings from Gujarat, India’s leading state of pro-market reforms, reveal panchayats’ role in metagovernance—the governance of government, and the ascendance of information and communication technologies in panchayat practice to annihilate spatio-temporal barriers for the circulation of financial and material capital.