As the BJP acquires political dominance in more states, a question arises: will there be a transformation in the nature of federalism in India? In a conventional narrative, states had progressively become more significant as a result of three developments. The rise of regional parties, often on a local power base, was seen as a bulwark against a dominant Centre. Second, liberalisation meant that the states had, in theory, more room to compete with each other. Third, coalition politics gave the states a lot of leverage, and some states that were critical partners got undue leverage. How will this dialectic of centralisation and decentralisation change?
The conventional narrative was often misleading because it did not sufficiently distinguish between different vectors of centralisation. To see how this plays out, we need to make a distinction between several kinds of centralisation. All these different forms do not track each other. Indeed, some political centralisation may create the conditions for forms of decentralisation.
The first is political centralisation where chief ministers don’t just belong to the same party that is in power at the Centre, they often depend on the Central leadership for their power. Single-party dominance at the Centre always increases this tendency. The Congress adopted it with aplomb, by and large reducing the power of regional leaders. This was not just under Indira Gandhi. Even under Nehru, chief ministers like K.N. Katju could practically be imposed on states. At the current conjuncture, this risk exists: the BJP will be riding to power in several states on the coat tails of the Centre. So, much will depend on the practices and conventions it evolves for selecting chief ministers and giving them free rein. But the risk that they will be seen to be depending on the pleasure of the central high command is higher with one-party dominance.
The second dimension is what you might call identity decentralisation. This is where states acquired an “ethnic” political identity that defined the basis of politics: the DMK in Tamil Nadu, the Shiv Sena in Maharashtra, arguably even the CPM and Trinamool Congress in West Bengal occupied that space. This politics has run its course. First, it was actually successful in pushing back what many feared would be the Centre’s cultural dominance. And, notwithstanding some exaggerated fears about “north Indian” dominance (allegedly and somewhat ironically created by a state in western India), any half-smart political party will recognise that the agenda of linguistic and regional domination will not fly. Second, ethnicity based political movements also have to transcend into issues of governance at some point. Third, in some states, including Maharashtra, the dynamics of sub-regionalism are going to be increasingly prominent. The BJP’s expansion into Maharashtra, Tamil Nadu and West Bengal rides on these conjunctures. Identity politics in states will not disappear, but the time is ripe for a fundamental mutation in its form.
The third dimension is constitutional centralisation, where the Centre uses or abuses constitutional instruments to keep states in check. Here, the story is complex and likely to remain so. Thanks to the Supreme Court, it is not that easy to abuse constitutional instruments: the power of the Centre to dismiss state governments has been disciplined after the Bommai judgment. The courts check Central exercise of power: arguably, even the coal judgment has a strong dose of federalism in it. But this will be tested, as the case of Delhi is demonstrating. Elections are long overdue in Delhi. Yet, even during decentralisation, more items were moved to the concurrent list. But in an era of globalisation, it needs to be asked whether the distinction between the state and Central lists, as conventionally understood, even makes sense. For example, if India were to make some commitments on agriculture at the WTO, it would be using the Centre’s treaty-making powers to impinge on federalism. Legal globalisation may have an impact on the nature of our federalism.
The fourth dimension is administrative decentralisation. One of the great ironies of political centralisation was that it was often accompanied by greater administrative decentralisation. The Planning Commission had usurped the states’ right. The design of centrally sponsored schemes, even though implemented by the states, was dictated by the Centre. So one interesting development to watch will be the degree to which states now get administrative flexibility and exercise it. The government made some promising moves in this regard, but with schemes like the Adarsh Gram Yojana, signals are now more mixed. It is likely that in this incarnation, political centralisation might be accompanied by more administrative decentralisation.
The fifth dimension is fiscal decentralisation. This will partly depend on two developments: what the next Finance Commission report recommends and whether the tendency to increase allocations that were not Finance Commission-based is checked. The second is the shape of the eventual compromise on the GST and the states’ share in it. The good news is that more funds will be allocated to states as block grants. But the other dimension of fiscal decentralisation is the state’s own capacity. We forget that what we think of as the “rise” of the states was facilitated by Central restructuring of states’ debt in the late 1990s, which allowed them some fiscal space. The issue has always been that states don’t use their existing powers or put in enough of a resource effort. The condition of state electricity utilities is a case in point. How much power a state has is a function of whether it chooses to beg or be creative.
The sixth dimension is competition. It is a myth that states could compete with each other only during the last two decades. Even in the 1960s, Kerala had a different social-sector model, and Partap Singh Kairon would always tout the Punjab model. How much states innovate is a function of their capacity, fiscal space and political creativity. The one thing hugely disappointing about the phase of political decentralisation was, apart from a few exceptions, how little the states innovated on their own. Variation in implementation is not the same thing as genuine creativity.
The final dimension is more participatory and multilayered governance. The real test of inclusive governance will be whether structures become more participatory: in cases like Uttar Pradesh, by creating more states; in other cases, by having more meaningful city-level politics; in others still, by strengthening panchayati raj. This decentralisation has been largely incremental, and may remain so. But the story of the multiple dialectics of centralisation and decentralisation is about to get interesting.
The writer is president,Centre for Policy Research,Delhi, and a contributing editor for ‘The Indian Express’