Opinion Federal freeloading
Why does the Centre foot most of the welfare bill,even when states might be willing to pay?
While there is a stand-off between Sonia Gandhi-led National Advisory Council and the government over the extent of coverage of proposed food security legislation,the governments of Tamil Nadu,Chhattisgarh,Orissa and Andhra Pradesh are going ahead with a food security programme that offers more than what the government is holding out,one largely similar to what the NAC wants. While the prime ministers panel cites subsidy burden as one of the reasons against the NAC recommendations,these states are relying on their own resources.
Here lies the message for the rights-based welfare regime that the UPA is trying to impose. Though these states are continuing with their food security schemes,they are watching the outcomes of the stand-off between the NAC and the government. And given an option,these states,irrespective of their political dispensation,would support the NACs suggestion. They are guided by cold fiscal calculations that the burden of running their expensive,cheap foodgrain scheme would shift from their shoulders to the Central government. A senior bureaucrat from Orissa once told me how Naveen Patnaik decided to launch this cheap foodgrain scheme less than a year before the assembly elections. He enquired about the fiscal burden on the state,and decided that he was ready to bear it,given that the Congress and BJP governments in various states have launched similar schemes,and he anticipated that they would promise something similar at the national level. Irrespective of who came to power,he expected it to be launched from the Centre,and he was right,though he may have to bear the burden for longer than he thought. Ashok Gehlot also announced a similar food security scheme anticipating that his burden would be transferred to the Centre.
Leave aside the question of whether the Rs 2/kg rice scheme in these states was guided by politics or by an appreciation of the food policy challenge it is clear that they would like to shift the bill to the Centre,the sooner the better. But the question is: to what extent should the Centre take the financial stress of these welfare schemes? And why is it taking the burden away from state governments even when some states are willing to foot it? So,if Rajasthan was running a safety net for the drought years from its own resources,with some supplementary aid from the Centre,the Centre took on the entire burden through NREGS. Similarly,Maharashtras employment assurance scheme has been taken over.
The one puzzling thing about this entire aam aadmi discourse is why the Centre does not consider partnering with states for these welfare measures. It may mean more untied funds to the states under finance commissions,perhaps,but it is certainly imprudent not to rely on the state at all for welfare provisions. With NREGS,states have been asked to only contribute a part of the material expenditure with overall material expenditure ceiling at 40 per cent,states are supposed to contribute a maximum of 10 per cent.
Probing deeper,one finds that most clever states do not even take up projects under NREGS that require material expenditure. Studying the expenditure patterns of Tamil Nadu,Kerala,Rajasthan,Maharashtra and others suggests that these states,by and large,incur minimum expenditure on material components,avoiding even contributing 10 per cent.They live off Central funds,with little incentive to plug the leaks in money that isnt theirs anyway.
The Centre is voluntarily bearing the welfare burden even when the state in question,like Rajasthan,needs these welfare measures created out of its own budget. India must learn from the ongoing experience of countries like France and Italy,where their centralised welfare schemes have taken away their flexibility,sinking them into a morass. As India gets to the point where these Western nations now are,it should ponder how much flexibility it wants to keep as it legislates and builds welfare provisions before it faces the same moment of reckoning that continental Europe is now going through. Sharing welfare responsibilities with states is the best way to retain some flexibility in the system,for rainy days in the future.
The right to education act offers one such framework. Why not make the state a partner in the NACs formulation of food security? The Centre can bear the safety net component,for BPL or priority categories and leave the welfare part,APL or general category,to be served by the states. Why not ask states to share a part of the burden of NREGS wages? It will also make states responsible in how they use the funds,plug the leaks,etc.
It is often argued that only the Centre can take an ambitious leap for welfare,states cannot be expected to. However,it is belied by experience states have always been more innovative,be it Tamil Nadus mid-day meal scheme,drought relief and Antyodaya from Rajasthan,the job guarantee scheme from Maharashtra or most recently,giving bicycles to girl students (Bihar) and the right to health in Assam.
It would be wrong-headed for the Centre to legislate a scheme that would take away the burden of providing bicycles to girl students away from the Nitish Kumar government,or the right to health burden away from the Tarun Gogoi administration. In the long run,it will take the national economy towards gridlock,and take it towards the same stifling conditions that now confront Italy and France.
ravish.tiwari@expressindia.com
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