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     Iamim Side Hero Username: Iamim Post Number: 5382 Registered: 03-2008 Posted From: 117.216.214.216 Rating: N/A |
Carving out Telangana: New states may not mean good economic governance By Avinash Celestine, ET Bureau | 4 Aug, 2013, 04.37AM IST New states may not necessarily mean fiscal independence. States are now more dependent on the Centre than ever before for resources Quite apart from the political rationale, the economic case for smaller states seems clear-cut. Carving out Telangana from Andhra Pradesh, so the argument goes, can facilitate better economic governance. A smaller and more compact state will ease administration and improve the delivery of services. With reduced ethnic and regional tensions (such as those in Telangana), bureaucrats and politicians have more bandwidth to focus on growth and governance. But ironically even as, in political and administrative terms, India has become more decentralised in recent decades with the creation of new states, all states have become more dependent on the Centre for funds. A big chunk of such funds is collected by the Centre and transferred to states under the provisions of the Constitution. But a significant amount of funds are also transferred by the central government outside state budgets, directly to district-level institutions, under various schemes. "States have become increasingly dependent on the central government for funds," says DK Srivastava of the Madras School of Economics. Under the Constitution, states and the central government have the right to collect different types of taxes. The central government collects corporate and income taxes, but is required to share a part of such tax revenues with the states (currently slightly less than a third). In addition to this, the central government transfers funds to states to support statelevel development programmes and schemes. And finally, the central government also transfers funds to the state government to enable it to implement specific plans and schemes developed by it. Currently, the total volume of all such funds transferred by the Centre to the states comprises 74% of the revenue collected by all states put together, on their own. This is at its highest level since at least 1991. During the 1990s, the states went through a serious fiscal crisis. In recent years, state finances have improved, but even this has been at the behest of the Centre. An annual Reserve Bank of India review of the finances of states pointed out that the improvement of state revenues in what it calls the 'consolidation phase' (2004-08, when state finances improved), "was largely attributable to an increase in central transfers, although the states' own revenues also increased over the same period". And after the financial crisis of 2008, states' own revenues fell, but their budgets were propped up by an increased volume of central transfers. "Over the past 10 years, the buoyancy [the extent to which tax revenues rise as economic growth improves] rose faster for the taxes collected by the central government than those collected by states," points out Srivastava. States vary widely in the extent to which they are dependent on central funds to prop up their budgets. States like Andhra Pradesh for instance are better off with central funds accounting for less than half of taxes or other revenues they themselves have mobilised. At the other extreme is a state like Bihar, where central funds to the state are more than 2.5 times the size of taxes that the Bihar government itself manages to raise. Effectively, the state government, large and politically important that it is, is hugely dependent on central government funds for its survival. Bihar ironically, is even worse off than Jharkhand, its 'daughter' state where central transfers are 1.5 times the size of the funds it is able to raise on its own. And Madhya Pradesh, where central transfers account for 96% of the resources it is able to raise on its own, is worse than its 'daughter' state, Chhattisgarh, where central transfers account for 80% of its own revenues. Little wonder then, that states like Bihar and Odisha have demanded what is called special category status. Special category states, including those in the Northeast but also J&K, Himachal and Uttarakhand, are states which are entitled to preferential treatment in the distribution of central funds because of what are seen as inherent disadvantages that they have - difficult terrain, low population density, or because they have strategic importance and have international borders with unfriendly neighbours. "Special category states are especially highly dependent on central transfers," says Srivastava. | ||
| Iamim Side Hero Username: Iamim Post Number: 5381 Registered: 03-2008 Posted From: 117.216.214.216 Rating: N/A |
For every Telangana, a dozen seeds are being fertilized MJ Akbar 04 August 2013, 06:39 AM IST The relationship between change and economic growth is often logical, but can occasionally lapse into paradox. The history of revolutions suggests that radical change is more likely to emerge from economic collapse, which is common sense. The Russian Marxist theorist Leon Trotsky, who had the gift of rephrasing common sense in an uncommon manner without sacrificing logic to phraseology, noted that people did not change governments, and consequently their own lives, when they had found an alternative; they did so when they were fed up. Nearly a century after the Russian Revolution, change has expanded its contours. In some parts of the post-colonial world, a sharp rise in resource wealth and government spending has not followed conventional wisdom and led to societies fashioned around the western-liberal-democratic template. Instead, such governments often use corrosive ideas to incubate deeper levels of conservatism through a state-financed propaganda narrative. They encourage their people to sink into identities that seem stagnant and immutable, abetted by a school curriculum that indoctrinates generations. India has had a radically different experience. One remains uncertain about whether this is due to the impact of democracy upon India, or India upon democracy. History’s jury could deliver a verdict either way, and the judgement will be hotly debated. But one thing is clear. In its search for change India has opted for insurrection as its primary instrument, rather than revolution. A revolution does not pause once begun, even during its phases of retreat in the course of a long struggle. An insurrection builds momentum in bursts, and ebbs from the surface during fallow spells. This can easily mislead an establishment, which quickly tends to believe that it has either managed to defeat or purchase a passing upsurge. But such ash is not dead. Its spirit smoulders, waiting for the moment to resurrect. Insurrection is perfectly suited to the practicals of democracy, whose inbuilt valves release intense pressure — most notably in an election, and also outside the electoral structure as well. The challenge of an Anna Hazare, therefore, cannot be banished into the doleful exile of yesterday’s headlines. It will find a place in the events of tomorrow, not merely in crucial votes picked up by the Aam Aadmi Party in the tiny enclave called New Delhi, but also in the nationwide anger against outrageous corruption. Similarly, the demand for Telangana can burst and wither over six decades, and then suddenly get traction in politics. The strength of democratic insurrection lies not in the commitment of politicians, who can be easily diverted by the promise of co-option, and its complementary rewards of hard cash, but in the fact that it is people-driven. Gandhi, being a Mahatma, was the only Indian leader who could straddle the chasm between revolution and insurrection. That was because he kept them on a parallel course, with different objectives. He offered a revolutionary prescription for social ills, in particular the malpractice of religion, but understood that the cure would take time far beyond the limitations of his own life. His politics, driven by the need to remove foreign rule, was the sum total of three insurrections, each separated by a decade: non-cooperation between 1920 and 1922; the brief Salt Satyagraha ten years later; and then the final push that began in 1942, the Quit India movement. He moved forward in quantum leaps, but realized that the Indian people should be prevented from over-reach, leaving his followers perplexed and opponents mystified. His politics achieved supreme success; his revolution demanded supreme sacrifice. We have abandoned ideology, Gandhian or Communist, but political insurrection is the ghost that will not be interred. Decisions such as the creation of Telangana need the framework of composite control, or they can degenerate into nihilism. For every Telangana that emerges, a dozen seeds are being fertilized in the womb of time. It is not easy to lecture Gorkhas in Darjeeling that they do not deserve what the old domains of the Nizam of Hyderabad have got. Troubled spirits in our tribal regions, led by quasi-Maoists, believe that geography is only another illusion encouraged by a rapacious ruling class. They want to shatter the economic needlework of our democratic system. Facile answers do not work, and even they do not seem to be on offer. The greatest irony of contemporary India is that something did work in Andhra Pradesh. Y S Rajashekhar Reddy, a Congress chief minister, was able to eliminate the substantial threat of the country’s oldest Communist insurrection, and where else but in Telangana itself. In the process, he also marginalized the demand for a separate state. Within four years of Reddy’s death, appalling administration has undone Reddy’s finest achievement. He healed wounds that had become chronic. There was a cure in the clinic of a Dr Reddy. But in the workshop of a Dr Frankenstein, problems have again begun to magnify in the waiting room. |
