Federalism, Populism And Policy Making

India like the US has a federal political structure with significant powers vested in state governments. To read more about it, please see my earlier post (from July) on Goods and Services Tax.

The Union (Federal) government run by the United Progressive Alliance (UPA) has been facing a lot of political heart-burn related to the subdivision of the southern Indian state of Andhra Pradesh into smaller states (referred to in the media as the Telangana statehood movement). Recently, Ms.Mayawati, chief minister of the India's most populous state Uttar Pradesh (and arch rival of the UPA regime), tabled a proposal in the state legislature to divide the state into four smaller ones creating a political storm in the process.

India's intelligentsia has been in a furore over this in recent days. I thought that I should share my perspective on this.

Views of those AGAINST smaller states (not exhaustive and in random order)

  • Sardar Vallabhbhai Patel, the iron man of India, achieved the unachievable by uniting 560 princely states and the British Raj into the Union of India during independence. Smaller states will splinter the country
  • The above concerns have been aggravated by a recent leaked Chinese intelligence report that states China's strategy to weaken/defeat India by breaking it up into a hundred different pieces.
  • With the kind of corruption in India, more states and more legislatures will lead to more expenses and more corruption
  • More states will lead to fragmentation of political power at the union or federal level and policymaking will become impossible
  • More states will lead to increased populism as local governments hand out more largesse to appease fragmented voters
  • Indians don't care about local self government. They are not able to run even their cities, townships and building co-op socieities for mutual gain. To trust smaller states to fulfill aspirations of local people is foolish.
Views of those FOR smaller states (not exhaustive and in random order)

  • Smaller states lead to better administration and better representative democracy
  • Gandhi founded India on the ideal of local self government. Larger states impede self government
  • More federal powers at the expense of state and local government leads to a version of the imperial concept of the white man's burden (we know what is good for you and you don't know what is good for you ... because x,y,z ...)

My perspective
I recently visited Sri Lanka to learn about the economy there. I met with a minister in the current Sri Lankan administration. Among other things he vented his frustration at the current president of the country. He said that the president has been creating ministries and departments at a furious pace and giving ministerships to his partymen and colleagues in return for their support. He keeps all powers with himself and the ministries are largely ceremonial in nature. Sri Lanka already has nine provinces. The president is, however, creating more bureaucracy and more ministers and official even in the smaller subdivisions and districts. I his opinion, this will only cause increased expenses and waste and will not lead to better administration.

It sounds like India will be headed in the direction of Sri Lanka if it starts creating smaller states.
Let us look at the facts. India has a population of 1.2 billion people. Sri Lanka has a population of 20 million people. India has 28 states and 7 union territories. That would give India an average population of 35 million people per state and union territory. However, the distribution is not equal. Andhra Pradesh has a population (Telangana movement) of 85 million people and Uttar Pradesh has a population of 200 million people. If Uttar Pradesh was a separate country, it would be the 5th most populous country in the world above Brazil.

On the subject of populism, larger states create more incentive for 'robbing peter to pay paul' syndrome than smaller states. In smaller states, the administration will have to raise resources from its population before it can distribute it in largesse.
On the subject of federalism. I believe that most of us who live in urban India have no clue about the needs and aspirations of rural India. To call their aspirations wrong or misguided and to believe that they don't know what is good for them does make us imperialists in some way.

India, if it has to be built to last, has to be built bottom up. It has to be run for the needs and aspirations of its people in their current stage of economic evolution. Any move that empowers the franchise of an individual is the right move for India.
So, I am in favor of smaller and better administered states, even if that means consensus building becomes that much harder.