Try this tight rope

The inevitable has happened. Laloo Prasad Yadav has picked up the gauntlet that Chandrababu Naidu threw down in calling a meeting of the chief ministers who feel that the eleventh Finance Commission has discriminated against reformist states. And so the battle lines are drawn yet again between the tired old categories of backward and forward. This thing has the potential to explode. Two mutually reinforcing things are at work which can make things get seriously out of hand. One is the obvious erosion in the Centre8217;s authority over the states that has gone on for some years for different reasons and been reinforced by the strength of regional parties in Parliament. The other is the drastically lopsided pattern of development across regions which accentuates strains and tensions between them and needs the Centre to sort them out.

The Centre cannot do this without displaying both political sagacity and firmness. Naidu8217;s action is unhappy in its likely fallout, of which more in a minute. But it is not hard to see his reasons. He is entitled to demand a better cut for his state. Andhra Pradesh, albeit a reforming state, has long been in a fiscal mess and Naidu has faced public resentment for sharply upping power tariffs. Little wonder that he resents not getting even more money from the Centre, though it should be remembered that in absolute terms the state will still get more than it used to. Further, he has scrupulously avoided saying that poorly performing states should be penalised and said only that the performers should not be hurt. For their part, Laloo Yadav and the poor states cannot be expected to take an implicit attack on the Finance Commission8217;s equalisation recommendations lying down either.

The point of this long preamble is that such tensions are inherent in a federal polity that is seeing accelerated development and competition between various states. They are nobody8217;s 8220;fault8221;. Managing them well is the Centre8217;s job. The only way it can do this for its own future peace is by ensuring that the Finance Commission is not politicised and is left to do its non-partisan job. If proof were needed that the body has indeed done its job fairly it is amply available in several non-BJP states doing very well for themselves under its recommendations. As far as the equalisation criteria are concerned, these are based on the weightage given to a series of factors and changing the weightage in any direction would be as contentious as the present one has become. So far the situation has been as well handled by the central government as can be expected under the circumstances. It cannot ignore Naidu8217;s demand politically. Yet it cannot be told by some of the federating units what it should be doing vis-a-visother states. Yashwant Sinha has done well to state that the devolution criteria will not be reopened. But the government has reassured the complaining states that their demands will receive some consideration in a further report due shortly. What this will be cannot be said now, but offering some sort of a bonus to reforming states is a good idea. Most important, it is one that keeps intact the principle that the Centre can do what it sees fit to help laggard states.