NDTV.com Exclusive: PM's Cooperative Federalism is Mere Rhetoric

While cooperative federalism has become a popular chant, it is ironical that the honest views of the States are yet to be articulated or given due space on the important subject of resource-sharing with the Centre. There are many reasons for this.

One, right after accepting the recommendations of the 14th Finance Commission, the Central Government went on a communication overdrive declaring it as a victory of the States. If the States had been won over by the Centre, why were they not celebrating? Yes, one can also turn the tables and ask why States did not protest if they had lost resources under the new financial arrangement with the Centre. Either way, it shows that the honest view of the States is yet to be articulated. Such a scenario raises fundamental questions about the idea of Cooperative Federalism.

Bihar was the first State to openly raise pertinent questions and pursue a policy dialogue with the Centre. I was surprised that the Centre went into a high-pitched communication overdrive immediately after accepting the recommendations of 14th Finance Commission that the share of States in tax devolution be increased from 32% to 42%. I wondered why States were not informed in right earnest about the implications of these decisions. And these implications are not merely financial. For poor States like Bihar, where millions of families depend on several welfare schemes to be able to merely survive, the implications of changes in tax devolution are vastly social. With the Centre not forthcoming with details on the implications of its decision, I immediately sensed something was not right and therefore cautioned the Centre right away against the loss that Bihar will incur under the new arrangement. Further, I immediately met Union Finance Minister Arun Jaitley to discuss the implications and present the stand of the Government of Bihar.

However, Bihar was an exception. Many affected States did not raise questions. In the high-command culture of the new BJP, many leaders including Chief Ministers consider it risky to question or debate a policy where the Prime Minister and his Government have taken a point of view. Also, it is convenient to look at the response of Bihar through the political prism and discount it as the criticism or opposition of a political opponent. However, one must be able to distinguish policy, politics and the opinion of States from that of the Centre, independent of the ruling dispensation. This is necessary for India to become a more vibrant and resilient democracy with a federal structure. So, in this spirit, India needs an open dialogue between the Centre and the States on the implications of the new devolution regime ushered in by the recommendations of the 14th Finance Commission.

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I met the Prime Minister to represent the interests of Bihar. However, one State cannot articulate the collective viewpoints of all States with respect to sharing of resources between the Centre and the State. In the spirit of cooperative federalism, the Central Government should consider an open meeting comprising Chief Ministers and key officials of all States. In such a meeting, the Centre must explain the new provisions, while each State should be given an opportunity to present its stand on sharing of resources, and the same should be heard and valued with an open mind.

With verifiable facts and figures, the Bihar Government has apprised the Central Government about a significant decrease in funds. A detailed analysis of the recommendations of the 14th Finance Commission, the Economic Survey of India 2014-15, and the Central Budget 2015-16 has revealed that while on one hand, tax devolution to the States is being increased, on the other hand, the budgetary support by the Central Government to States for the implementation of welfare and other important schemes is being significantly reduced. Several schemes earmarked under the state plan have been dropped, and funds have been cut for most of the centrally-sponsored Schemes.

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Bihar faces extra-ordinary socio-economic challenges which cannot be confronted without adequate resources. Yet, the State will lose in a big way as per the new mechanism. Based on the recommendations of the 14th Finance Commission, Bihar will get only 9.665% share in tax devolution as compared to 10.9% that was earmarked for the State in the 13th Finance Commission. As per preliminary calculations, Bihar will lose more than Rs. 10,000 crore in 2015-16, alone when the share in central taxes plus the cuts in various schemes are considered. This will obviously handicap the State from enabling better education, health, skill development, infrastructure development and much more.

Bihar is already faced with uncertainty in the release of more than Rs. 8200 crore allocated under the Special Plan for Bihar. The Central Government has worsened the scenario by closing other channels such as the Planning Commission and the Backward Region Grant Fund. The Central Government has not adhered to the suggestion of the 14th Finance Commission that "to the extent that formula-based transfers do not meet the needs of specific States, they need to be supplemented by grants-in aid on an assured basis and in a fair manner." Even the announcement of Special Assistance to Bihar and West Bengal on the lines of Andhra Pradesh by the Finance Minister in the Budget Speech has not fructified in any affirmative action.

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Policy and not politics is the answer. At a time when even a simplistic analysis reveals that Central Government has handicapped Bihar through severe and inexplicable reduction of resources, the politics of BJP is on a different plane. The BJP is advertising that in less than a year, the Central Government has doled out a bonanza of more than 1 lakh crore to the State. Such packaging of half-truths is a cruel joke on the people of Bihar.

What is the model of Cooperative Federalism that the BJP Government envisions? Where is the voice of States individually and collectively in this vision? When the Planning Commission was disbanded, the collective voice of the States was inaudible. This was the forum that used to enable engagement between the Centre and the States related to resources, knowledge and coordination. So far, no institution or process has filled this space. The story is repeating with respect to the new resource-sharing mechanism initiated by the 14th Finance Commission. Once again, the voice of the States is not audible in shaping the policy approach. Instead, what stands visible is a massive Public Relations overdrive by the Centre and a packaging of a one-sided narrative of the policy.

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Can such contradictions continue with the rhetoric of Cooperative Federalism? I don't think it should? In the interest of Bihar and the voice of States, I will continue to engage, take a stand and call for action so that the Centre does not forget that while the power lies with the Centre, the People of India live in the States. And the interest of the People is supreme.

(Nitish Kumar is Chief Minister of Bihar.)

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