The Rs 1.54-lakh crore Vedanta-Foxconn semiconductor project has become a political lightning rod in Maharashtra with the ruling coalition and the Opposition accusing each other of failing the state. On Tuesday, the promoters announced that the project, originally mooted by the Devendra Fadnavis government in 2015, will be set up in Gujarat, forcing the ruling coalition in Mumbai on the defensive. Shiv Sena leader and industries minister in the Maha Vikas Aghadi government Subhash Desai has said the project went to Gujarat “under pressure from the Central government”. Chief Minister Eknath Shinde said he called up the Prime Minister and got an assurance that the Centre would help “big projects” come to the state. Clearly, the Centre is the elephant in the room as states compete for investment. This has implications for the federal pact between the Centre and states given the BJP’s political refrain of a “double-engine” and how it pulled the rug from under the MVA feet.
This isn’t the first time a party at the Centre has been accused of disfavouring states that vote Opposition parties to office. CPM-led governments in West Bengal and Kerala used to accuse the Congress government in New Delhi of “step-motherly treatment” in allotting resources and projects. The Sarkaria Commission (1983) investigated a gamut of issues related to Centre-state relations, including financial powers, and made recommendations. The Centre and opposition parties are not on the same plane in the ongoing freebies debate. In Maharashtra, the Vedanta-Foxconn case has threatened to reopen an old faultline that dates back to the 1950s, when the Samyukta Maharashtra Movement realigned politics in the region around linguistic identity. It gained traction as the metropolis of Bombay, the capital of Bombay State, became a bone of contention between the emerging states of Gujarat and Maharashtra. Linguistic identity has since been a powerful strand in Maharashtra politics with the Shiv Sena weaponising it to establish itself as a regional party that spoke up for the local manoos. However, the administration and capital negotiated their way out of the nativist trap; Sena too realised that it was in the party’s self-interest not to frame capital and investment in ethnic colours. The Sena-BJP alliance that came into being in 1989 privilleged the Hindutva agenda over regional-nativist impulses and a political consensus seemed to have emerged on nurturing Mumbai as the business capital of the country. That consensus seems to have fractured with Ahmedabad emerging as a competitor for attracting capital in the 2000s, when Narendra Modi became the chief minister of Gujarat.
There is no reason why cities or states within India must not compete among themselves for investment and industry. In fact, they should. At the same time, the political gloves are off, Centre-state chill is deepening, many MLAs have become fungible assets, making for tricky terrain when it comes to who decides to invest where. The stakes are high when the faultlines run deep, watch this space.
