By S. Sivathasan –
In the evolution of Indian unity, there has been a quantum leap in 2015. Through a strengthening of the states, Modi has set the pace for meaningful national integration. Not spending time playing on patriotic fervor, he has put his finger on the correct lever to move the economy and to touch on people’s materialistic aspirations. Investment of local financial resources further augmented by foreign inflows is the strategy. Such a mode was not unknown to his illustrious predecessors. Then, wherein lies the difference? Identifying the most sympathetic chord that resonates with the states, distinguishes his uniqueness. With a sense of pragmatism he seeks to add verve to it.
In the last century and more the flow of thought and insights was that India’s downfall came through her political disintegration. This in turn it was perceived, derived from weakness at the centre at varying times in her history. The years preceding independence were plagued by unmanageable religious conflict. Partition of India heralding her independence was a traumatic experience. Princely fiefdoms, 563 in all tore at the seams of the Indian fabric. The iron hand of Vallabhai Patel was needed to keep India together. Nehru had the intellectuality to know it all. Historians and men of learning provided the academic back up to political leaders. The result was a single India. The casualty was a unified India.
Intra-state economic disparities however fueled stress and promoted separatism, though within the ambit of the state and of the Indian Union. In consequence the number of 14 states in 1956 escalated to 29 by 2014. Bombay state was among the first of the major states to be bifurcated into Maharashtra and Gujerat in May 1960. With discontent out of the way, both states have prospered. The timely splitting has bonded India better. These two federal units have never clamoured for separation from India; nor will they.
The last state to be split up was Andhra Pradesh in June 2014. The two new states of Seemandhra and Telengana are now set for accelerated development. Telengana has inherited Hydrabad as its capital. Andhra is planning out a greenfield capital named Amravati with Chandrababu Naidu, the Chief Minister giving the lead. His thinking is large while being futuristic and modern. A proactive Modi has pledged a huge sum in 2015 itself as central contribution to developing the new capital. A cordial political engagement in centre-state relationship has brought this about.
How Federal Is India?
It’s a well-known axiom that no two federal constitutions are alike and no two federal states are similar. In the fifties Dr. Colvin R de Silva dinned this in and solicited from the Federal Party its own conception of federalism in Ceylon. He also invited an outline of the Federal constitution envisaged by the party. It is further said that federalism is a matter of degree. The range is from confederal to near central. In between are; federal and quasi-federal. Where does India stand in theory and practice? How do features differ from 1950 – the year of the Republican constitution – to 2015, Ie an year after new thought processes came into action?
Dr. PC Alexander IAS, one time Secretary to Prime Minister Indira Gandhi and later Governor of Tamil Nadu has this to say in his book ‘The Perils of Democracy’:
“India has a federal constitution in theory, but in practice it’s hardly federal. The vast powers which are exclusively assigned to the centre by the constitution and the large area of concurrent jurisdiction, virtually make the government a unitary one and the centre’s position extraordinarily strong vis a vis the states.”
From what I have studied for 60 years in English coupled to reading in Tamil publications from Tamil Nadu, I hold the writer’s summation as absolutely correct. Another great writer from West Bengal, an intellectual holding a Ph.D, drew a very discerning conclusion from his studies. He made bold to say in his book that the objective of a united India will be defeated by the very strategy of the centre throttling the states. While agreeing fully may I add, one cannot be more correct. I have observed for far too long the high visibility paralytic spell that the centre had cast upon the states.
Financial restraints and administrative controls from Delhi have simply suffocated the states, killing initiative and thwarting innovative spirit. Adding insult to injury, states are hamstrung and then are blamed for under performance.
Modi Initiative cuts the Gordian Knot
With three terms as a dynamic Chief Minister of a leading state Gujerat, Modi knew exactly where and how the central shoe pinched the states from Delhi. In less than a year in central governance, he had developed enough confidence to smash the shackles. He also built up the verve for the unconventional mode. In this endeavor he is staunchly assisted by Finance Minister Arun Jaitley, courageously advised by economists and boldly buttressed by top officials. Fiscal Year 2015 April to 2016 March is the first year of operation for this liberalized environment.
Ostensibly to give credence to a change of such magnitude as flowing from a technocratic operation, it is highlighted that the 14th Finance Commission made this recommendation for substantial financial devolution. One may observe that a great reform measure had either bypassed 13 Finance Commissions or had gone by default with all previous governments. It had failed to fructify even with greats like Nehru, Indira Gandhi, Vajpayee and Manmohan Singh.
Central Contribution to States Increased by 10%
Modi called this shattering change, “Unprecedented and historic”. He calls this new regime of centre – state relations, “Cooperative Federalism”. Reason behind the euphoria is rationally explained by facts and figures. Beginning 1st April 2015, increased allocation to States will be 42% from the ‘Divisible Pool of Central Taxes’. In contrast to 32% in the previous fiscal, it is a quantum leap by 10%. In implementing this decision, the Ministry of Finance is obliged to give to the states Ind.Rs. 5.239 trillion in fiscal 2015 – 2016. The share retained by the central government is Ind. Rs. 9.198 trillion. With a single stroke, the stunning shift of momentum to states is now a reality. The revitalization of states is only moments away.
To make financial devolution work, the centre’s vise-like hold on the states’ jugular has been done away with substantially. This too without any demur. The states will now receive the grants as untied funds. Henceforth states will have full freedom to invest on projects deemed best by them and through strategies of their own formulation. This is a radical departure from the practice of tying more than 50% of funds to centrally determined projects and priorities.
The most lamentable resultant of these controls was under performance in states flowing direct from the central grip. A case study on controls revealed thus: For 6 full financial years, only 69% of allocation was spent by a major ministry. Delhi’s stifling hand is now taken off the neck of the states.
Devolution in Sri Lanka
To make sense, financial devolution should be real and substantial. More so for capital expenditure. What is the current picture? For Sri Lanka, tax revenue, non-tax revenue and grants add up to Rs. 1.629 trillion. Provincial Council revenue totals Rs. 60 billion, 3.68% of national. A mere trifle. Allocation for capital expenditure is miniscule. Provincial Councils do nothing. The Central government has merely changed the locations for accounting, little besides and trumpets it’s so called decentralization.
If the Provinces do not come into their own, Western Province will have a flashing Megapolis served and serviced by an impoverished countryside of 8 provinces.
Task Before TNA
UN, War Crimes, Self-Determination and Opposition Triumph apart, is the imminent need for financial devolution. In this alone, post April 2015 India is a worthwhile model. Not without reason have Maithripala, Ranil and Chandrika made Delhi their first port of call. TNA has a grave responsibility by the Tamils at this hour to solicit intercession.
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