The dynamics of centre-state relations form an interesting portion of post-independent Indian history. In 1957, EMS Namboodiripad of CPI formed the first non-Congress state government in India, thus marking the moment from which, the Union and the states would be pitted against each other for sovereign power, which is going on ever since. Today, we witness non-BJP ruled states batting for federalism under CMs like Stalin, Pinarayi Vijayan, Arvind Kejriwal, Uddhav Thackeray and Mamata Banerjee. Prime Minster Narendra Modi was once upon a time, a vocal defender of state autonomy when he was the Chief Minister of Gujarat.
The foundation of federalism is rooted in the principle of self-determination, a first principle in human rights law, according to which every community should have its right to decide its political destiny. Our founding fathers have given effect to this idea by making states sovereign entities in their own right, that derive power from the constitution itself. In fact, Indian constitution doesn’t stop with just creation of States and Union territories. There are other mechanisms like schedule-5, 6 areas, special treatment under Part XXI (Temporary, Transitional and Special Provisions) for Maharashtra, Gujarat, Assam, Nagaland, Manipur, Andhra Pradesh, Sikkim, Mizoram, Arunachal Pradesh, Goa, Karnataka and Jammu and Kashmir (now abrogated). In this way, Indian constitution has devised numerous options to facilitate multi-tiered governance, to respond to the needs of economic backwardness, unique history, culture, strategic reasons. This grandiose constitutional scheme has prompted some to call Indian federalism as asymmetric federalism. India is too large and diverse to have a one size fits all policy. Various states and regions are in different levels of economic attainment/standing, warranting a differential treatment, in line with the principle of equity. A certain policy working for Muslim artisan community in Hyderabad need not work for tribal farmers in Chhattisgarh. Hence, “One nation, One policy” approach might not yield the best possible outcome. Today, we notice a proclivity to come up with a new "One nation, one something" phrase persistently, following every new centralisation move. Some of them such as “One nation one grid” and “One nation one ration” though are laudable initiatives – resulting in more benefit and convenience to citizens. But, even in these areas, Karnataka might want to include millet in PDS basket, while Punjab might want more wheat. Similarly, Tamil Nadu might want to have a special policy to promote wind energy, while Himachal Pradesh might want to tap its hydroelectric power. Does our present polity permit this kind of diverse policymaking by states?
Let us pick an example to help our analysis. Today we see a tendency to criticise free ration, free school meals, free school uniform, free school books, free bus tickets, free electricity, free laptop for students, free TV – generalised as freebies that makes people lazy. However, evidence shows that Tamil Nadu, known for its social welfare centric governance has historically done very well in most of the parameters like per capita GDP, life expectancy, higher education enrolment rate, industrial base, exports, IMR, MMR, and evidently HDI. So, are subsidies and freebies inherently bad? This article is not about that. The question instead is: Why seek a single binary answer for entire nation for a significant public policy question like this one? Why can’t we give more policy space to states to innovate and experiment?
The centre-state fiscal relations are extremely skewed in centre’s favour. GST subsumed many taxes, taking away a lot of policy autonomy from the states. Centre pockets all the Cess and Surcharge collection. States can’t collect direct taxes. Taxation in residual matters is vested with the Union. Further, with a multitude of recent parliamentary legislations & Union executive actions in areas that fall under concurrent & state lists (such as – Electricity Amendment bill, Labour code, cooperative sector reforms, NEET, CUET, Dam safety bill, Motor Vehicles Amendment, now repealed Farm bills), there is a sea change in centre-state power equation. This calls for an extensive study of extant centre-state relations and identify new ways to strengthen the federal fabric. One crucial area is to review the 7th schedule, which currently has 99 subjects in union list, 61 subjects in state list and 52 subjects in concurrent list. How should the new 7th schedule look like?
In the new scheme, I propose to have more autonomy to states that are “well-performing”, in addition to the existing paradigm of keeping subjects of national importance & uniformity in Union list, keeping subjects of local significance & development in state list and the remaining in the concurrent list. How do we identify “well-performing” states? We know that the ultimate measure of success of any political system is prosperity of the masses. Accordingly, based on national consensus, we can consider an objective parameter to grade all states and UTs. My suggestion is to use State wise scores of Human Development Index (HDI) as reflective of standard of living – grouped into three categories as Low HDI, Medium HDI and High HDI states. Rewarding “well-performing” states with more power and resources is in fact an existing mechanism in our polity. Demographic performance of states is rewarded in the manner of allocation of parliamentary constituencies to states and also horizontal devolution of Finance commission grants. In a similar fashion, we can extend this idea to reward states that perform well in HDI, with more autonomy. To implement this logic, my proposal is to convert the current threefold enumeration of 7th schedule into a fivefold one – namely A) Union list, B) Concurrent list, C) State list, D) list of additional subjects for Medium HDI states, E) list of additional subjects for High HDI states. Here, the list-C is to have the list of subjects assigned to all states, irrespective of HDI. Now, medium HDI states would have legislative and executive authority over list-D in addition to list-C, with no central interference (neither Parliamentary act nor executive action). Similarly, High HDI states would have total authority over lists-D and E, in addition to list-C. Some items from the current concurrent list can be distributed to list-D and E. Centrally sponsored and central sector schemes in these newly devolved subjects can be slashed with respect to Medium & High HDI states, as applicable, giving well preforming states full autonomy. This way, centre would practice a more hands-off approach with respect to higher HDI states.
This entire scheme is based on the understanding that sovereign political autonomy needs to be given a paramount position to achieve prosperity of the masses. Vladimir Lenin had once remarked, "Politics is the most concentrated expression of economics." In addition to the fact that states are more informed of the local problems, why should the business of running a state government need to be boring and mundane, with states acting as mere appendages of the centre, implementing nationally tailored policies? States must be allowed to be inventive and enterprising in problem-solving. The 2019 Nobel Prize in Economics was awarded to Abijit Banerjee, Esther Duflo and Michael Kremer for applying randomized control trials to development economics. They have worked with multiple state governments in India, leading to evidence-based policymaking that incorporates behavioural economics. The scope for such experiment-based policymaking is diminishing rapidly in the current centralising trend. In addition to amending the constitution’s 7th schedule, our leaders should cultivate the constitutional morality so that this new bargain works unhampered despite a future “act of god” type situation.
Looking at Indian history, one can see that the process of giving autonomy and devolution has not happened due to benevolence of the Centre. The creation of Santhal Paraganas district and enactment of Chota Nagpur tenancy act in the British Raj to the creation of India’s youngest state Telangana to the most recent strengthening of Bodoland Territorial Region – everything was done mainly to address expressions of rebellion, anger and deprivation, with each instance characterised by the reluctant centre eventually awarding the demanded autonomy after prolonged agitations by impatient communities. Now, it is time for centre to devolve power in explicit, planned and orderly manner for the purpose of furthering good governance to enable prosperity to the masses.