Nagar Panchayat Hospital Case

The case discusses the issues of autonomy and accountability in the healthcare division of a local self-government. It highlights the underlying tension between the elected rep-resentatives' need to control the division and the executive's need for basic functional and financial autonomy in developing and maintaining the division as a useful and responsive facility to the public. It raises questions as to the concept of cost and responsibility centres in local self-govern-ments and what happens when one of the responsibility centres starts generating reve-nue and becomes a truly profit centre. Since the basic nature of the service is more of a responsibility — do the surpluses gen-erated by the new profit centre get ploughed back to the same facility or should it get into the general pool of the Panchayat? If the argument is that it should be ploughed back to the responsibility centre to improve the overall facilities of the division, then should the objectives of the division be redefined and what should be the most appropriate institutional mechanism to grant autonomy for a division that is doing well? How would these mechanisms work in the long run? The case tries to sensitize the discussants to the issues and tensions that emerge in a well-managed division of a local-self-government. It also raises the larger issue of autonomy and accountability in democratic institutions