COOPERATIVE FEDERALISM AND CENTER-STATE RELATIONS
By Engr K Vijayachandran F.I.E
The Left had looked at India as a multinational country: A federal Government at the Center, decentralized administration and real autonomy for state governments were the core part of their political ideology. But they have been compromising on this fundamental after the collapse of USSR and, ever since the economic and structural reforms got initiated in the country, in early nineties (1).
Pandit Deen Dayal Upadhyaya and his philosophy of Integral Humanism (ekaatma maanava darsanam) had visualized for India ‘a decentralized polity and self-reliant economy with the village as the base’: A concept which, according to him ‘was deeply embedded in the Indian Psyche.’ This was very close to the Gandhian view: Both had rejected capitalist globalization on moral grounds but did not have a chance to look at the possibility of socialist a globalization as Einstein did, and using the framework of United Nations, founded on the principles of peaceful coexistence of diverse cultures, an altogether new historical experience. (2)
BJP had, in the past, mostly stuck to the one-nation theory of RSS and like Congress had looked at a Strong Central Government as the panacea for the under-development at national level. However, elections for the sixteenth Loksabha were a watershed in BJP policies: Its election manifesto had explicitly accepted the need to revamp Central-State relations. And the views of Modi Government on the re-defining of Central-State relations were reflected in the Presidential speech of Pranab Mukherjee; he had commented, “India is a federal polity. But, over the years, the federal spirit has been diluted.”
In order to correct this distortion from the past, the President had promised to “re-invigorate fora like the National Development Council and the Inter-State Council” and introduced a novel concept of Cooperative Federalism, possibly intended to deepen the economic relationship between State and Central Governments. However, he did not elaborate on how the concept will translate itself into reality and help to rectify the distortions.
Our constitution makers had looked at the development and upkeep of basic infrastructure, physical as well as social, including language and culture, as the joint responsibility of Central and State Governments. For a newly liberated multinational country of continental proportions federal type governance was no doubt, most appealing as well as practical.
However, role of state level and lower level governments, as well as those of Inter-State Council, National Development Council, Planning Commission and other policy making institutions at the national level, built up during the early years of national independence, as well as that of even Loksabha and Rajyasabha, were drastically eroded in more recent years, thanks to the highly authoritarian economic reforms. It appears the trend continues even under the new regime of the new Prime Minister.
Central Government, along with its elaborate Committee of Ministers and PMO, had virtually taken over the sole responsibility for infrastructure development, with the help of foreign and Indian monopoly capital, leading to numerous scams of national shame. Even the Planning Commission was charged of breeding crony capitalism. And, despite massive doses of privatization and foreign direct investments and experimenting with PPP concepts, Indian reforms have so far failed to deliver positive results from a patriotic perspective.
Experience of India’s Power sector, where structural reforms had an early start, is typical: Indiscriminate import of equipment and systems are causing costly breakdowns in our national and regional grids. Reforms have inflated capital costs and further increased the financial losses of State Electricity Utilities. They have turned totally dysfunctional: Uninterrupted quality power, at lowest possible costs to the consumer, is not their motto anymore.
Electricity generation using imported fuel is on steady increase, while our own fossil fuel reserves remain under-utilized. Role and functions of Central Electricity Authority (CEA), the federal organization that was in charge of power sector as per the 1948 Electricity Act, was virtually taken over by Power Ministry and re-assigned to international consultants in the pay role of global capital and MNC monopolies. (3)
A World Bank study of June 2014 has admitted the near-total failure of power sector reforms of early nineties and the new electricity act, in meeting their own declared objectives: Debts of electricity utilities have ballooned to Rs. 3.5 Trillion or five percent of GDP by 2011, the target of full electrification by 2011 was miserably missed with some 300 million households remaining non-electrified, and the objective of an integrated all India power grid remains a pipe-dream, despite massive investments in T&D gear (4). Solution lies in reversing the reforms initiated in the early nineties for force-opening up of the national market for electricity as well as power equipment. Federal character of the power sector needs to be urgently restored in national interests.
In the telecom sector, the two legged policy of having state-wise circles and centralized technology development by Central Public Sector Units was given up, in order to force open the national telecoms market. Net result is abject dependence on imports in the telecoms sector, not only for hardware and software needed for modern communication systems but even their maintenance. The only silver lines in our communication system are the great achievements in space communication technologies developed by ISRO.
Reforms had struck the telecoms sector, when ICT revolution based on microchips and Internet technologies started its sweep. Instead of mobilizing the technology resources of central and state public sector organizations as well as academic and R&D institutions, market oriented solutions like state-wise auctioning of spectrum rights was resorted to by the Center, leading to massive scams and corruption. It is time to restructure India’s telecoms sector on a federal basis with an expanded role assigned to central and state public enterprises. Will this fit in with the concept of Cooperative Federalism of Modi Government?
Indian Railways is, possibly, most suited for exploring and enriching the idea of co-operative federalism, suggested in the Presidential speech: IR is a leviathan, an insensitive bureaucratic organization presided over by a cabinet minister, supported by one or two ministers of state, and then the Railway Board, its Chairman and half a dozen board members etc etc, and all connected up in series and in parallel.
There are fifteen zonal railways, each administered by a General Manger, who looks after the construction and operation of rail lines and related systems of the zone. The nature and number of complaints with regard to their performance indicate that they will perform far far better, if IR is organized state-wise, as in the case of P&T, BSNL, DD, CEA and the good old Electricity Boards, and several other central government functions (5).
It will be even better, if these state-wise zonal organizations are converted into public sector undertakings, with equal shareholding by IR on behalf of Central Government and then the other half by the concerned State Governments, as in the case of Delhi or Chennai Metro. A full fledged rail minister and a skeletal rail department or even a rail board in every state, for servicing and supporting this joint enterprise will greatly enhance the policy planning and management capabilities in the country with regard to rail development.
This sort of structural reforms will bring the administration and management of our on-rail resources closer to the people, and their elected Governments at the state as well as lower levels. Rail penetration continues to be very low in our country and hardly two percent of the 598,110 census villages and towns are connected to the rails: there were only very few additions after national independence. (6)
Food Corporation of India (FCI) owned and operated by the Central Government is best reorganized and operated as a federal entity. The State Warehousing Corporations could also be reorganized under a federal umbrella, brought closer to the users and managed more effectively. There is an urgent need to improve the performance of these public sector undertakings and it is best done by reorganizing them on a federal basis. There is an urgent need for a federal set up for promoting modernization of agriculture: The Indian Council for Agricultural Research (ICAR) intended to support agriculture development and food security programs in the country will perform better with the support of their state level counterparts. (7)
Water tight division of responsibilities between Central and State governments and the three lists annexed to Indian constitution, viz Central, State and Concurrent are a colonial legacy, inherited from imperialists. An earlier article of mine ‘Third Front and RE-Envisioning of Indian Unity’ ( 8) had examined the several areas, where economic relationship between Central and State Governments could be deepened within the existing constitutional framework, by taking the route of cooperative federalism.
Cochin International Airport Ltd (CIAL) virtually owned and managed by GOK, erroneously quoted as an ideal PPP model, is a splendid example for the potential of Co-operative Federalism. Air Kerala the dream project of State Government and a project of great relevance to the regional economy could take off instantly, provided it is promoted as a subsidiary of Air India. And the much talked about Palghat Rail Coach Factory will roll out immediately, if it is re-envisioned as a JV of Kerala Government and the Indian Railways.
Like the Indian Railways, there are several CPSEs and Central Government organizations which have distinguished themselves as technology generators for the country, who could join hands with state governments in industrial development. I had the good fortune of brokering a deal in 1987, between GOK and ISRO: The Kerala High-Tech Ltd (Kel-Tech), promoted with Dr, Kasturirangan as Chairman, is today a proud partner in BrahMos Aerospace, an Indo-Russian Joint Venture (www.brahmos.com).
The CSIR, ICMR, ICAR and other all India institutions were formed on the basis of the British model, which had nothing to do with the Indian reality. The same could be said about all India institutions in the social sciences as well as art and literature. These organizations could have performed far better if they were organized on a federal principle with their autonomous State-level counterparts functioning under the patronage of State Governments. Instead, we see that individual institutions or even head offices of central agencies are farmed out to different states on some consideration or other but mainly for appeasing public opinion in different states. (1).
State level offices of ESI and EPF offices could be easily converted into autonomous state level units under the state governments and better managed with the participation of the elected representatives of employees and employers at the board level. These state level boards could then be federated under the central government.
Participation of state governments in banking, insurance and investment industries through appropriate participatory mechanisms could substantially cut down on the investment requirements and also improve the quality of economic management in the country which is now entirely left to the whims and fancies of RBI bureaucrats and their global mentors.
Why not put the concept of co-operative federalism and deepening of economic relationship between Central and State Governments as well as institutions under them on the fast track, instead of PPP that has proved to be a virtual non-starter or even FDI for the development of physical, social and fiscal infrastructure?
This is the need of the hour: building a strong Centre based on the capabilities of the constituent states and not their disabilities, so that Indian people could unitedly stand against neocolonial exploitation in the rapidly globalizing international market.