The debate on federalism should not be just about the size of states.
The democratically deficient manner in which the Telangana bill was passed in Parliament speaks volumes about the ineptitude and poor handling of a long-standing federal issue by the UPA 2 government at its departing moment. When placed in relation to its predecessor — the NDA— which was quite adept at creating three new states in 2000, UPA 2’s score is dim.
That said, credit is due to the Congress party for successfully redrawing the political map of India through the right-sizing of states in many phases since the early 1950s. The Indian Constitution (Articles 2 and 3) contains rather liberal provisions that empower the Union government in this regard. Language was the most emotive factor in such right-sizing drives. Ruefully, neither language nor underdevelopment (going by the Srikrishna committee report) is the factor that has been stirring political emotion behind the Telangana imbroglio. The issues are more deeply rooted in history and culture, and politics of a certain kind.
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The Congress government led by the late Narasimha Rao was the main architect of India’s post-1991 reforms, which radically changed the direction of Indian federalism. Although one hardly finds the term “federalism” in the Constitution, a minimalist version of federalism is embedded in it — more than two tiers of government with well-defined jurisdictions; a written Constitution with a detailed list of powers and functions for each tier of government; and an independent judiciary with the Supreme Court as the final arbiter and guardian of the Constitution.
The third tier refers to the autonomous district councils to be governed by the Sixth Schedule of the Constitution. Such bodies are considered part of asymmetric federal arrangements, which are also found in many other federations. Post-1992 structural reforms that institutionalised local self-government, rural and urban, have added a systemic third tier to the Indian federal model of governance.
Since the Rao government’s term, two very distinctive changes have determined the tenor of India’s federal politics and governance. First, the economy overall has been liberalised — the market has been provided with greater space and autonomy relative to the state. Today, only about one-fifth of India’s GDP is produced in the public sector, compared to the mid 1980s when the private sector’s share was only about 15 per cent. Second, since the mid 1990s, the states have been involved, through various means, in the reforms process for strategic reasons. They also compete to attract foreign and domestic investment, trade and commerce. Inter-state cooperation, which the founding fathers of the Constitution designed as a cementing bond for building a federal (read: national) loyalty, has given way to inter-state “jurisdictional conflicts”. That is to say, Indian federalism now has to operate in the overall climate of market freedom and the diminished public role of the state.
The new directions in Indian federalism have served to produce a class division among the states. Measured by various human development indicators, such as per capita income and expenditure, female literacy, infant mortality, infrastructure development and so on, regional imbalances, though not something unknown to India during the British Raj, have sharpened, giving birth to “forward” and “backward” states.
Consider what was officially conceded by the UPA in its Common Minimum Programme: “The UPA government is committed to redressing growing regional imbalances both among states as well as within states, through fiscal, administrative, investment and other means.” Easier said than done — one estimate shows that the top-six Indian states (Maharashtra, Delhi, Karnataka, Tamil Nadu, Gujarat and Andhra Pradesh) accounted for 70 per cent of all foreign direct investment in India between 2000 and 2012. In 2008-09, the shares of some of the states were: 45.5 per cent of the total for Maharashtra, 26.8 per cent for Delhi, 1.8 per cent for West Bengal.
Most of the remaining states got below 1 per cent. Bihar, for example, received no FDI. Significantly, the Backward Regions Grant Fund identified 147 districts out of 250 as backward, in 27 out of 28 states. The question that is not answered is: How do the states that are beyond the pale benefit from the reforms when there is so much inequality in their social, economic and geographical situations? The UPA leaves behind a legacy of unequally “competitive” states with sharpened regional and ethnic tensions, along with unhappy states.