On the eve of Independence day, I came across a blog which was discussing flexible federalism a reference to a Brilliant Ambedkar speech on the day, Our constitution was supposed to be adapted.
The crux of that speech was that, India does have a President, but, It does not follow a presidential form of governance. Therefore, it was pretty much decided that, by philosophy, the Indian constitution, was meant to be federal by nature. History tells us that, India , has prospered , economically, only when different regions enjoy relative economic independence. This was why in The Medieval period, India , had the best time during the Mughals. The Mansabdari system, create a system of governance, which defined standardised tax collection[designed by Great Raja Todaramal, who of course, adapted this from Sher Shah].
Now, when the future beckons to us, we can understand, that even in 60 years, we keep repeating slogans which was there in 1950's , or in 1971 with Indira Gandhi saying 'garibi hatao' and Rahul Gandhi saying similar things ,40 years later,in the UP campaign trail in 2011.
So, why have we failed? Let us understand this better.
a) India was designed to be a federal state.
b) But, the Planning Commission and 5-year plans defined a centralised system of planning , where one size fits all.
c) This resulted in a system, where, implementation, by it's very nature should be at the Grass roots, but, the purse string are present in the hands of the Central Government.
d) This results in Politically, stronger states, getting disproportionate share of funds, but weak states like Odisha, did not have a Political influence, to get help when required.
e) The end result is a situation, where, the intent of the constitution , and it's structures were federal. But, the succeeding policies have been inherently, centralised.
This leads to creation of personality cults, and inefficient systems, which lead to certain states, blaming the centre for their problems.
Look at any opposition ruled state, they all blame the center. Their reasons do have a strong chord, since, fundamentally, the finance/ purse strings are controlled by the center, but, they handle implementation.
What are the by-products?
a) States dont have options of talking to each other. So, Grain rots in Punjab, but, there are starvation deaths, in Odisha.
b) States start charging business transaction taxes. This is defined as VAT, state excise. Where does this figure most? Look at your diesel and petrol prices. The states dont have a choice, but, to tax, since,their sources of revenue is extremely limited. The silver lining[a very weak one] is that, the state has an incentive in promoting economic activity.
c) When we talk about increased Diesel and petrol prices, obviously, this affects inflation. Today, every small chai wallah knows it.
d) Royalty for ores , mined in a place is supposed to be decided by central Govt's. So, if you find an oil well, in Godavari, it is Govt. property, not yours. Do I have any incentive in selling you the land? hell, No. So, a singur and Nandigram happens. What do you do? You take the money and give back 25% to the community. How, via the same Govt, again.
e) Today, if you want to construct a Metro in bangalore, some babu , in delhi, who has never seen MG road will approve it, according to his own time frame. Until, let inflation increase costs.
Then we have Gods from Delhi coming over and telling us, we will save you. We will give special packages.
Doesn't this sound all wrong? .. Lemme know.
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