The importance of EQ over IQ for politicians

Last month saw the rise of a new star among state finance ministers, Palanivel Thiaga Rajan (PTR) of Tamil Nadu. For his erudite and forceful interventions at the recently-concluded Goods and Services Tax Council (GST Council) meeting on May 28, he has been widely hailed by the English-speaking media.

His GST Council speech was bang on. Among other things, he pointed out that GST has not lived up to its promise and now needs a root-and-branch overhaul. He called for more fiscal powers to states and said that the money devolved through the reports of finance commissions had been quietly neutered by the levy of cesses and surcharges, which are not part of the divisible pool. He also called for new forums in which Centre and states, and states among themselves, can interact over a longer period of time in order to create a truly federated republic.

As an ardent supporter of greater fiscal and other powers to states, this writer hopes that PTR succeeds where none others have in the past. But does the Tamil Nadu finance minister have the necessary emotional quotient (EQ) to get this done? Is IQ good enough when we need more EQ in our public lives? If anything, he has proved to be abrasive, having riled a Goa minister at the GST Council meeting (and compounding that by calling him an “empty vessel” whose “noise” he had to endure). He blocked a fellow Tamil Nadu MLA, Vanathi Srinivasan, on Twitter, saying he did so to “avoid a bad smell”. Was blocking not enough? Earlier, he upset a lot of followers of Sadhguru Jaggi Vasudev by calling him “a publicity hound.”

The new TN finance minister may win plaudits from the English-speaking elite for his MIT Sloan credentials, but he isn’t exactly about to win friends and influence people. This suggests that he may fail in his objective of shifting the national discourse towards greater state autonomy, which is the need of the hour. In fact, he went out of his way to rile the Centre too, by claiming that there is no such thing as the Union, which is essentially a derivative of states. While the Constitution defines India as a “Union of States”, PTR claimed “there are no Union voters.” This is rich, since every voter is an Indian citizen, and not merely the citizen of the state he is domiciled in. Long after someone may cease to live in Tamil Nadu or West Bengal, she will remain an Indian citizen. In any case, the “Union of states” mentioned in the Constitution probably refers to the 562 princely and other states that existed in British India, and not the linguistic states that got created after independence. Modern day Tamil Nadu is itself a creation of the States Reorganisation Act, 1956.

There are also good reasons to question the commitment of regional parties like PTR’s DMK to fiscal autonomy. They had at least three opportunities in the past — when the central government was propped up by regional parties — to get more fiscal powers devolved to themselves, but they didn’t. The best opportunity came in 1996-98, when the United Front government under H D Deve Gowda and IK Gujral was essentially an aggregation of regional parties. But none of them even sought the needed constitutional changes. Then we had A B Vajpayee’s coalition of 1998-2004, and Manmohan Singh’s (2004-2014). In each one of them, the DMK was a major partner, apart from other regional parties. But did they demand their pound of flesh by asking for a resetting of Centre-state relations? Not quite. Instead, most of them, including PTR’s DMK, sought “ATM ministries”, and we know what we ended up with. If regional parties put their narrow political interests above that of their states’ need for more fiscal autonomy, they have themselves partly to blame.

Illustration: Binay Sinha

Worse, under the UPA, the regional parties actually consented to devolving more power upwards, by agreeing to central laws like the Right to Education Act, the Land Acquisition, Rehabilitation and Resettlement Act, and the Food Security Act.  Each one of these made the Centre more powerful in terms of law-making on behalf of states, but the regional parties acquiesced.

PTR also needed to have thought through his demand for a shift in GST voting rules and the share of taxes given to states through various finance commissions. He said: “Successive Finance Commissions since Independence have continuously perpetrated an injustice upon developed states by totally ignoring the proportion of ‘taxes-originated’ as a factor when recommending allocations as shares of the pool of divisible taxes. In a similar vein, the ‘One State, One Vote’ basis (with no consideration of either population, or GSDP, or proportion of national production or consumption) for the GST Council, perpetrates an injustice on larger, well-developed states in multiple ways.”

This is strange logic, for one could equally argue that Lok Sabha votes should be proportional to population, which would benefit Uttar Pradesh at the cost of Tamil Nadu. Surely, PTR knows that the reason why votes are weighted in favour of the small (even tiny US states get two senators each). This is to ensure that the bigger, richer and more powerful states do not trample on the interests of smaller states. They have to buy their loyalties by promising the minnows a share of the spoils. If PTR wants more fiscal powers for states, he has to build a coalition of smaller states rather than fighting only his own cause.

It cannot be anyone’s case that greater devolution can happen without the Centre’s concurrence, just as the GST law did not happen without the states being brought into the picture. Most of the GST’s backers were consumption states, who were told that as GST was a destination-based tax, they would get better revenues.

If PTR wants root-and-branch overhaul of the GST and federal system, he has to carry people along, and not pretend that his verbal brilliance will carry the day. He could ask a fellow Rajan, a former governor of the Reserve Bank of India, who despite his brilliance thought it was part of his job to rub the Centre the wrong way by peppering his speeches with references to Hitler (but not Stalin) and “one-eyed kings”. Humility, not hubris, should be the middle name of any Indian politician who wants to achieve his goals.   

The writer is a senior journalist