There is a village named Inroak/Chinlak in Nancowry tehsil, Nicobar district of the Andaman and Nicobar Islands. It is unusual because the Census 2011 tells us this village has only one resident. Sparse populations are normal in that part of the country. East Island village in Diglipur (North and Middle Andaman district) has 16 residents. The numbers may not be as low as this, but villages with small populations (say, less than 200) are found in other parts of the country too. The aggregate of such villages is around 90,000, with large numbers concentrated in Himachal Pradesh, Uttarakhand, Rajasthan, Uttar Pradesh, Jharkhand, Odisha and Madhya Pradesh.
Over time, such villages disappear; they grow uninhabited. Residents migrate to larger villages. What is the government’s responsibility? We may quibble about the definition of core public goods and services. Whatever be the definition, it is the government’s responsibility to ensure every citizen of the country, wherever he or she happens to reside, obtains that core template of public goods and services.
There is a village named Malacca, also in Nancowry tehsil, with a relatively higher population of 158. The resident of Inroak/Chinlak can be told — the government can’t provide goods and services for a single individual in your village; migrate to Malacca. This may be a logical proposition. But it can’t be a moral one and it also violates the government’s constitutional obligations. It is like saying, the government, with its limited resources, will develop enclaves like Delhi and Mumbai, with better physical and social infrastructure; those who wish can migrate there.
In the 2014 elections, polling stations were set up for only two voters in some parts of Arunachal Pradesh — it’s no
different for the core template of public goods and services. Article 280 of the Constitution is about the Union Finance Commission. Article 280(2) states, “It shall be the duty of the Commission to make recommendations to the President as to (a) the distribution between the Union and the States of the net proceeds of taxes which are to be, or may be, divided between them under this Chapter and the allocation between the States of the respective shares of such proceeds; (b) the principles which should govern the grants in aid of the revenues of the States out of the Consolidated Fund of India”.
There is a difference between (a) and (b). The Constitution doesn’t define grants in aid. But we do get some idea of the rationale for grants in aid from Article 275(1): “Such sums as Parliament may by law provide shall be charged on the Consolidated Fund of India in each year as grants in aid of the revenues of such States as Parliament may determine to be in need of assistance, and different sums may be fixed for different States: Provided that there shall be paid out of the Consolidated Fund of India as grants in aid of the revenues of a State such capital and recurring sums as may be necessary to enable that State to meet the costs of such schemes of development as may be undertaken by the State with the approval of the Scheduled Tribes in that State or raising the level of administration of the Scheduled Areas therein to that of the administration of the rest of the areas of that State”.
Notice the expression “costs of such schemes of development”. Perhaps the Constitution felt no need to define grants in aid, because the idea was implicit in Article 142 of the Government of India Act of 1935 and in a now-forgotten 1936 report titled the Otto Niemeyer Indian Financial Enquiry Report. On tax devolution, this stated, one should “fix the scale of distribution partly on residence and partly on population”. But also, “Some Provinces are intrinsically better off than others and at the moment less urgently in need of additional resources; and it is both fair and inevitable that a certain measure of corrective should be applied, even if it means that Provinces which have been able to attain higher standards of administration should now to some slight extent have to progress more slowly.”
In Article 280(2) of the Constitution, there is (a) and there is (b). Conceptually, (a) is formula-driven, but (b) is about grants in aid. Through a formula and its weights, every Finance Commission tries to “reward” and incentivise good performance by a state, based on indicators like tax effort and fiscal discipline. But it also tries to factor in deprivation through indicators like population, geographical area and distance of average income from mean — this is like splicing together two separate objectives. Though I mentioned Finance Commissions, this was also true of devolution through the historical Planning Commission, formula-driven as well as discretionary. But that’s history. With the plan versus non-plan distinction gone, all Union-state devolution now devolves on the Finance Commission, apart from restructured Centrally sponsored schemes, which no longer have a discretionary template, apart from some special dispensation for Northeastern and Himalayan states and Union Territories.
A Delhi mindset is deeply entrenched — how do we know states will be responsible and not profligate? It is this controlling mindset that led to the proliferation of Centrally sponsored schemes since the late 1960s. I have resisted part of my impulse to quote George Santayana. Here is what he says in The Life of Reason: “Progress, far from consisting in change, depends on retentiveness.”