It is time for India’s second liberalisation. Allow the states to grow as they will

Representational image | Children running with Indian flag | Commons

The singularity of Indianness is that it works in the plural: You can be a good Muslim, a good Keralite and a good Indian all at once.

Last month I discussed, in ThePrint, the issue of the controversy that had arisen among southern Indian states about the new terms of reference of the Finance Commission, which they felt unfairly rewarded those states that had failed to improve their governance, empower women and curb population. An even bigger danger, I pointed out, looms if the same logic prevails when the current arrangements freezing political representation at 1971 population levels expires in 2026. If at that time, new population figures are used, the south would face political disenfranchisement to go along with its sense of financial victimisation. This would have serious implications for national unity.

Already some hotheads are calling for serious consideration of secession, and some in the environs of Chennai have begun reviving the case for a ‘Dravida Nadu’. Such an idea may have little appeal beyond a few limited circles in Tamil Nadu, but that does not mean the underlying concerns behind such an idea should be ignored.

In my piece, I had suggested that the only remedy for the pervasive southern disquiet would be to acknowledge that we need a more decentralised democracy, one in which the central share of tax resources is not so crucial, and the political authority of New Delhi not so overwhelming. That could make the concerns raised by the more recent population figures less relevant.

How can we flesh out what a decentralised democracy would mean? Karnataka chief minister Siddaramaiah has argued that India is evolving from a “union of states” into a “federation of states”. This may, to some degree, be wishful thinking for now, in an era in which a glib phrase like “co-operative federalism” masks a reality of over-centralisation; but there is no reason for us not to consider how to take India in that direction, even though we are not there yet.

In our “quasi-federal” system, there is no doubt that the Union currently enjoys the upper hand. After all, in India, the Union created the states, rather than the states coming together to create the Union, and new states have been created in recent years by Acts of Parliament. But that does not mean that the dominance of the Union need extend to the point where the states have little or no autonomy and feel themselves the playthings of New Delhi. It is that perception that has stirred the current unrest and made the seemingly technical correction of the Finance Commission’s terms of references such a major political issue.

But what would a more federal India look like? The first fear to set at rest is that a more substantive federalism would loosen the bonds that tie all Indians together in a shared nationality. When Karnataka approved its own official state flag, alarms went off, and the cry arose that such a flag would constitute a de facto challenge to the Indian flag. But many other federal nations have state flags and state symbols without their national governments feeling in the least threatened. Indeed, recognising strong regional identities is a mark of a strong and confident state. It’s only the weak who are reluctant to empower their subordinates.

India has also been distinguished by its capacity to promote and celebrate multiple identities. The singularity of Indian-ness is that it works in the plural. You can be a good Muslim, a good Keralite and a good Indian all at once, and take pride in each of these labels without feeling that one undermines another. The great Malayali poet Vallathol wrote: “Bharataam ennu kettaal, abhimaana pooritham aavanum antharangam; Keralam ennu kettalo, thilakan choara namukke njerambaglil.” (“If one hears the name of India, one’s heart must swell with pride; if one hears the name of Kerala, the blood must throb in our veins.”) Similarly, the Kannada poet Kuvempu composed “Jaya Bharatha Jananiya Tanujathe”, hailing Karnataka as the daughter of Bharata, the Indian nation.

So, the southern states are not really interested in secession; they want a more genuine federalism. Chief minister Siddaramaiah has argued the case for a system where states receive a larger portion of the taxes collected from them; this would permit the relatively well-developed southern states to retain a larger portion of what they currently contribute to the Centre. The difficulty with that suggestion, of course, is that it reduces the quantum of funds available to the central government to subsidise India’s poorer states.

Chief minister Siddaramaiah argues that “the share of centrally sponsored schemes must go down”. That could be the answer: Yes, take some revenues from the more affluent states to finance central schemes in the poorer states, but apply those schemes more flexibly so that each state can judge whether it needs them, and also be empowered to tailor these schemes to their needs. This, in turn, would free more funds to be allocated to the states’ own priorities rather than to the Centre’s.

Chief minister Siddaramaiah also laments that “the states do not have a say in making of the country’s economic policy”. He cites the example of the import of cheap pepper from Vietnam through Sri Lanka as the result of a Free Trade Agreement that states like Kerala and Karnataka had no say in negotiating, though it was their pepper farmers whose livelihoods would be most seriously affected. He proposes a body “on the lines of the GST Council” to discuss “trade policy and agrarian issues so that we have a better say in making policies that affect our farmers… We urgently need a mechanism where the states get a greater say in [the] making of the nation’s policies.”

This proposal is worth considering. It is time for a second liberalisation. Just as the original liberalisation of 1991 set Indians free from the restrictions of the license raj, so also we need to liberate the states to grow according to their capacity and through good governance. “The states need greater autonomy to run their economic policies,” writes chief minister Siddaramaiah.

“Borrow internationally as long as they convince the lenders of their creditworthiness, build the infrastructure of their choice without depending too much for licenses from the Centre, and design programs of their choice.”

This may sound like a radical idea to those who have been working in recent years to pursue “Hindi-Hindu-Hindutva” as India’s Volksgeist. But for the rest of us, in Manmohan Singh’s famous phrase, it is an idea whose time has come.

 Dr. Shashi Tharoor is a Member of Parliament for Thiruvananthapuram and former MoS for External Affairs and HRD. He served the UN as an administrator and peacekeeper for three decades. He studied History at St. Stephen’s College, Delhi University and International Relations at Tufts University. Tharoor has authored 17 books, both fiction and non-fiction; his most recent book is An Era of Darkness: the British Empire in India. Follow him on Twitter @ShashiTharoor