State of the states
Next phase of growth needs local leadership
The India of tomorrow cannot be built from Delhi alone, said Prime Minister Manmohan Singh over the weekend, the country needs a forward-looking and development-oriented leadership at state and local levels to go forward. This observation could not have been more timely. In one state after another, irrespective of the political stability of the party or parties in power, there is a woeful lack of focus on governance. Political stability did not give Maharashtra a good government, and despite a good result, the ruling coalition continues to quarrel about ministry formation, with no focus on what it will do with the renewed mandate; in Karnataka, the government is being destabilised by a couple of influential businessmen and their cronies; in Andhra Pradesh, a party that received an overwhelming mandate is fighting itself; in Tamil Nadu and Kerala, octogenarian chief ministers are out of synch with the world outside; in West Bengal, the government has gone into hiding and in Uttar Pradesh, the government is busy building statues! Time was when the national media celebrated the likes of Chandrababu Naidu, Digvijay Singh, SM Krishna and even Narendra Modi and Buddhadeb Bhattacharya. Most of them seem to have lost their shine and sheen, with no new inspirational state-level leaders rising in their place.
The prime minister is right to underscore the fact that it is the state governments that have to implement infrastructure and social sector programmes launched by the Central government. The citizen, at any rate, deals only with the state government, apart from when s/he pays an income tax. In fact, more often than not, the citizen deals with the local government. Unless the quality of governance improves here, there is nothing much that the Centre or the national leadership can do to push growth forward. Increasing the savings rate could be a function of macroeconomic policies, but increasing the investment rate is more a function of governance, especially at the state level.
Apart from the problem of leadership, there are larger policy issues. Many state governments have been unable to find the resources for development and after a couple of years of generating revenue surpluses, the states have slipped back into running revenue deficits. Here the Centre has not set an example to follow. In fact, when states follow the Centre’s example on the implementation of the Pay Commission recommendations, their financial position will get worse. To an extent, competition between states has helped contribute to better governance. Policy conditionality-based lending by the Central government has also helped shape state and local government policies. But at the end of the day, there has to be more public and media pressure on state level leaders, and general condemnation of the kind of political blackmail witnessed in Karnataka last week, to force state governments to establish better records of governance. Since we expect policy to take precedence over politics in the next few months, with no elections due, can we expect political parties at the Centre and the states to work together for better governance and reform?