NITI Meet: Modi Gets An Earful From State CMs, But They Do Have A Point

The Narendra Modi government would be making a serious mistake if it were to dismiss the opposition critiques of its economic policies as merely politics. While some of the criticisms are certainly about politics in a polarised pre-election atmosphere, a lot of the carping is valid. The Centre should not be dictating the direction of state economic policies at the micro-level.

Consider what various opposition parties said at yesterday’s (17 June’s) meeting of the NITI Aayog Governing Council, which was attended by 23 chief ministers.

Mamata Banerjee, the West Bengal Chief Minister, criticised the Centre for setting the NITI Aayog meeting agenda without consulting the states. She said states should be doing most of the agenda-setting, given the bigger role allotted to them in implementation of policies. She is bang on. In future, agendas should be circulated by the Centre in advance, and state requests for changes should be accommodated.

Chandrababu Naidu, Andhra Pradesh Chief Minister and a recent exit from the National Democratic Alliance (NDA), said that the Centre must formulate macro strategy, and not micromanage schemes at the state level. He said the Centre should focus on building large scale infrastructure – roads, railways, ports, airports, coastal economic zones, et al – and not try to dictate which schemes states must dedicate themselves to. He also criticised demonetisation and the poorly drafted Financial Resolution and Deposit Insurance Bill. While we can take criticism of the last two measures as substantially political in nature, there is no getting away from the fact that most centrally-sponsored schemes (CSSs) ought to have been drawn up at the state level. One-size-fits-all schemes drawn up in Delhi may not work in all states. This is as much true for food security and land acquisition, as for Ayushman Bharat and Swachch Bharat Abhiyan.

Kerala Chief Minister Pinarayi Vijayan complained that the changes in funding patterns have forced states to pony up more money for centrally-sponsored schemes, resulting in a shrinking of fiscal space for his state. Again, this is what others have been saying, but we need to emphasise one point: states do not have to buy into CSSs. They can opt out if they want to – but at the cost of losing money in the process.

The only demands that were out of sync with the idea of cooperative federalism were the ones made by Punjab Chief Minister Capt Amrinder Singh and Karnataka Chief H D Kumaraswamy. While the former wanted a national blueprint for a farm loan waiver, the latter wanted 50 per cent central assistance for his state-level farm loan waiver. You can’t demand more money from the Centre and national schemes for farmers and yet retain freedom to do your own thing on farm loan waivers. What we need is a national consensus on how farming can be made more viable, and how to get marginal farmers out of farming and into productive jobs. And loan waivers have to be selective, and not universal, applicable equally to those who can repay and those who can’t. Unfortunately, no state CM spoke about this.

A surprising element missing in the state CMs’ demand is this: while all of them sought money from the Centre to do what they wanted with it, no one raised the demand for a reworking of the Constitution so that they can make policies for their states that are more relevant to their needs. It seems they only want the money.

For the Modi government, this meeting should be a wake up call. To eliminate Centre-state conflicts in future, it should devolve not only more money, but large parts of the responsibilities in the concurrent list to the states, so that Centre can concentrate on what it does best, and states on what they do best.

If Modi wants to counter state demands for more funds, including special status (demanded by Nitish Kumar and Chandrababu Naidu) he should throw them a challenge: take the funds, and also more of the responsibility for growth and jobs.

He should have used the NITI Aayog meeting to set the devolution agenda, instead of allowing states to get away with painting the Centre as a meddlesome entity.

He could have set up a committee of CMs to work out optimum ways to do the following:

One, rescue farmers, by finding resources for investment in farm infrastructure as well as dos and don’ts for farm loan waivers.

Two, whittle down central schemes. The panel could identify schemes which should be disbanded, and which ones handed fully to states, and which ones funded jointly by both.

Three, suggest constitutional amendments to make the new power-sharing deal between Centre and states tilt more towards state autonomy.

We heard more speeches than solutions and the way forward at NITI Aayog’s meeting.