What solutions can you offer for the states and the Centre to work well together to achieve India’s developmental goals?
I would propose three solutions. First, one main problem is an imbalance between revenue and expenditure in regional states. The states implement programmes related to health, education and other public services, but are unable to collect their own revenue for these public services. One solution would be for the Central government to allocate more revenues to the states and also allow states to collect more revenue. For example, states cannot collect service tax. More revenue should be internally generated within states, and the Centre must transfer more money to the states. But the Central government does not want to do this.
The second solution: Evidence has shown that states are important repositories of innovation and change. For example, under the digital service reform, state governments initiate public service delivery through electronic means. Today, for instance, you can get a birth certificate quickly because of computerisation. For example, Chhattisgarh has a very strong e-governance system. So, states should be encouraged to introduce such innovation and there should be incentives for such knowledge about new initiatives to diffuse across states. Maybe, the National Development Council can create some mechanism for diffusing innovation.
The third solution in developing more productive Centre-state relations is to create linkage institutions. There are forums where state-level and Central-level officials can talk to each other and work together by sharing information. Though some institutions like the Inter-State Council and the National Development Council have become quite active of late, they lack enforcement power. But their recommendations must be respected.
Conflicts occur between the Centre and state when these linkage institutions don’t work well.
These three solutions to improve Centre-state relations are critical in achieving India’s development goals. But at the same time, it must be said that India has excellent Centre-state relations, which has ensured democratic stability and has the potential to become a model for other countries.
The most positive aspect of this relationship is the multi-party system, which allows different parties to be represented at the Centre. In fact, coalition governments have created stability for Centre-state relations. All conflict is mediated by political representation at the Central level. I would say this is why most movements for secession have been muted.
Some of the weakness is that because of this political representation, every small party has veto power, which slows down the policy process. There is a one step forward and two steps backward kind of feel to India’s polity. While there’s a lot of flexibility in the system, it comes at the cost of policy consistency. Take, for example, the recent rollback in allowing FDI in the retail sector. It shows that the Central government did not introduce the idea in the right manner. They thought they would be able to push it through because the current ruling party has more parties than the previous government. But the Indian experience shows that you have to consult your partners before making such an announcement. In India, a consensual model works better than a purely majoritarian system.
It is true that extreme flexibility in a coalition government has a negative impact. There were instances when the regional DMK and AIADMK parties have blackmailed the Central government by withdrawing their support. This leads to a trade-off between flexibility and consistency in policy, that is, flexibility and autonomy of all voices can be at the cost of policy consistency, a virtue necessary for good developmental outcomes.
Going forward, strong regional autonomy can offer good examples for Central government policy. Privatisation of ports is one such example. Gujarat privatised a lot of minor ports and entered into joint ventures that became a good model for Central port policy. Another example is how several states including Tamil Nadu, Andhra Pradesh, Gujarat and Rajasthan successfully implemented full literacy programmes for girl children. Both are strong examples of how different states introduced different policies to suit their local conditions and then the Central government took over some of those policies and implemented them at a Central level. That should be the tone of Centre-state relations.
India’s model of Centre-state relations is asymmetric. Different states have different relationships with the Constitution and the Centre. But asymmetric federalism works. So overall it’s a positive model. The problem is it leads to policy paralysis, which can only be handled by effective linkage mechanisms.
(As told to Sujata Srinivasan)What needs to be done
☛ Centre should allocate more revenue to the states.
☛ Innovations at the state level should be shared among others to aid development.
☛ Centre-state institutions like National development Council should be given more enforcement powers.Aseema Sinha is a Associate professor of political science at Claremont McKenna College in California.
(This story appears in the 03 February, 2012 issue of Forbes India. You can buy our tablet version from Magzter.com. To visit our Archives, click here.)