Sunday, August 25, 2002		Books

Federalism Without a Centre: The Impact of Political and Economic Reform on India’s Federal System
by Lawrence Saez. Sage Publications, New Delhi, Rs 440.

FEDERALISM as a formal institution—enshrined in the Indian Constitution—has remained the most distinctive feature of the Indian polity as well as a subject of intense debate. The introduction to new economic policies (NEP) has given a whole new dimension to the debate about ‘the optimal level’ of centralisation and decentralisation in the Indian polity.

Tracing the life and times of Indian federalism at work, Saez takes it almost for granted that the first irritant erupted in fifties. This irritant was in the form of popular demand for the reorganisation of states on the common linguistic basis. In 1969, the Rajamannar Commission constituted by the ruling DMK in Tamil Nadu recommended reworking of federal relations by transferring some union subjects to the state list—the abolition of articles providing for the extension of the executive power of the Union government, the vestige of the residuary power of legislation and taxation solely to state legislatures. Memorandum on Centre-State Relations in 1977, submitted by the Left Front government in West Bengal, was in the similar vein.

Reflecting on the decline of the dominant model of ‘patrimonial federalism,’ Saez observes that the "hyper accentuation of the centralist character of the Congress" eroded the ability of the state-level leaders to "effectively articulate regional sentiments and aspirations within the party," thus weakening the party in the process. Moreover, the breakdown of the social coalition so assiduously built up over the first three decades of Indian independence meant that the Congress despite remaining in power, both at the Centre and in most of the states in the subsequent years, no longer remained the natural party of governance. The greater participation and empowerment of hitherto excluded groups, along with the emergence of the neo-rich intermediate peasant castes, paved the way for the regionalisation of party politics; growth of new social constituencies; and the changing terms of political discourse—a process aptly called ‘Indianisation of India.’

The rise and growth of regional parties paved the way for the formation of a federal governmental commission, called the Sarkaria Commission in June 1983 to investigate the state of Centre-State relations. The commission in its report submitted in 1987 recommended an informal convention of consulting the state governments whenever the Parliament intended to enact on a subject in the concurrent list. It also recommended that the Governor appointee should be an eminent person from outside the state. The commission also sought to curb the political abuse of Article 356. Ironically, only two out of 247 recommendations have so far been actually implemented i.e. the Constitution of the Inter-State Council (ISC) itself and the other being the introduction of local self-governing bodies vide the 73rd and 74th Constitutional amendments.

Saez holds that the failure of inter-governmental bodies like the ISC should be explained in terms of the NEP. While effecting a series of incremental fiscal reforms the emphasis since then has been on increasing Foreign Direct Investment (FDI) by resorting to the neo-liberal policies of privatisation, deregulation and decontrol. In the process, as the different states vie against each other for FDI, the original model of co-operative federalism based on the idea of inter-governmental cooperation has increasingly given way to inter-jurisdictional competition.

Drawing upon the data from energy, banking and telecommunications sectors, Saez shows how the states like Maharashtra and Andhra Pradesh, with developed infrastructures and ‘good’ governance, have become magnets for all forms of investment, whereas BIMARU states have lost out as not only did they fail to attract any investment but also suffered due to dwindling central grants. What is needed, according to Saez, is to constitute the inter-jurisdictional institutions "to attract foreign investment into a number of regions" by promoting certain sectors like telecommunications, oil production and consumer non-durable. Moreover the states should be given more financial power to collect corporate, land usage and sales taxes.

The book, which covers wide spectrum of literature and data relating to the study of evolving nature of party systems, federalism and economic reforms in India, can be useful to the students of Indian political economy and constitutional law.