R Jagannathan: Renewing the Indian Union

MICROVIEW

If global Cassandras are to be proved wrong, Indians have to find a way to revitalise their nation. Most foreign experts believe that India""with its caste, ethnic, and religious faultlines""is too diverse a nation to stay in one piece over the long term. Our history tends to support this view.

From ancient to medieval India, this country has had interludes of unifying central rule, followed by bouts of regional rule. We have also had a mixture of the two, where the centre is the nominal power and regional powers function largely independently while paying formal obeisance to the centre.

Our experience in post-independence India has not been substantially different. For around 40 years (1947""1989), we have had one-party, dynastic rule (barring the 1977""80 Janata Party interlude).

Till 1989, the centre wielded enormous political power over states, barring the odd state or two (mostly West Bengal). After 1989, though, political power has decisively shifted to the states.

Economic power has not, and the resultant tensions have made it impossible for India to advance at a significantly higher pace. The power structure has reached stalemate, and nobody can move fast in any area without a fundamental rearrangement of the centre-state relationship.

As things stand today, most outcomes are perverse because the politicians who join together at the central level are essentially people with state-level agendas. They have banded together at the centre because they want to protect power bases in their own states.

The reverse is equally true, too. A state-level political party may have a good agenda, but since economic power is substantially with the centre, no state can progress unless it can get a central government to its liking.

Since it is virtually impossible for all states to have equal power at the centre, most state-level initiatives also end up in zilch. Chandrababu Naidu may have got a lot of help from the centre during the NDA regime, but this equation would have changed if the NDA didn't need his MPs to survive.

The main reason why reforms have got stuck""or are moving at a snail's pace""is this unhealthy power equation between the centre and states. While coalition politics has been widely blamed for slow movement on reforms, the truth is slightly different.

The truth is that all parties (by and large) want reforms, but it is the power imbalance between the centre and states that makes forward movement difficult. Let's take the example of the Left.

They want reforms in West Bengal and not at the centre. Since the Left MPs are crucial to the UPA government, they can block critical decisions at the centre even while going ahead with the same ideas at the state level.

On the other hand, the centre can cussedly stall state-level projects as a kind of bargaining counter. The net result: Slow progress, since any power bloc can veto the moves of every other power bloc.

India clearly needs a new constitutional arrangement that will give more power to both the centre and states""though in different spheres. Broadly speaking, the centre needs more political power to further the national agenda, and the states for theirs.

This means we need to move towards a presidential form of government at the centre and states, which will help cut out regional agendas in national elections. We also need a devolution of all but the most vital of economic powers to the states. This way, states can focus on development without having to seek power at the centre.

It is in the interests of every major political party""barring forces inimical to the nation""to amend the constitution to this effect. In this new arrangement, the centre would focus on critical national issues like defence, currency, stability, external trade policy, and other areas that are not specific to states. States would thus impose all taxes, barring customs.

The job of the finance commission would be the opposite of what it is today: it will have to see how much of state revenues should be shared with the centre, and not the other way around.

We still need a national judiciary overseen by the centre, but most intra-state cases should end with appeals to state high courts. Only inter-state and state-versus-centre cases and broader constitutional issues should be lobbed up to the Supreme Court.

Politically, the national interest would be best served by having a directly elected president with wide powers similar to that of the US president. Maybe we need a French-style, two-round election where everyone can stand in the first round, but the last round will be only between the top two contenders.

This way, the duly-elected president would have more than half the vote and command greater legitimacy than a president elected on a minority of votes. India's political parties can choose to muddle along as they are doing now, or choose a better option that benefits everyone.

  rjagann@business-standard.com