JULY 05, 2009

By TIOL Edit Team

THE sports reforms, goods and services tax (GST) and the naxalites have brought to focus the role of Centre-State relations as the mega stumbling block in the accelerating various reforms and national development.

On 2 July 2009, the Union Cabinet admitted the Centre had failed to generate consensus among the States over the constitutional route to reforms after 20 years of confabulations. 

The Union Cabinet has thus approved withdrawal of the Constitution (Sixty First Amendment) Bill, 1988 proposing transfer of the subject ‘Sports’ from the State List to the Concurrent List of the Constitution of India.

An official release says: “The main objective behind the proposal was to ensure effective implementation of the National Sports Policy, 1984, especially broad-basing of sports, to regulate the conduct and management of sports and to achieve all round excellence in sports.”

It is clear that the States do not want to share the levers of controls over sports with the Centre. It does not matter to the States that the nation has to live with national shame of pitiable performance at Olympics and other international sports events decade after decade.

And if sports cannot unite the political masters, one cannot even consider in one’s dreams at the prospects of the States ever agreeing, for instance, to transfer the subject water including hydro power from State List to Concurrent List. The Centre’s role in water is comes into play in the case of inter-state river waters.

Here too the Centre has found itself helpless as the losing States often resist or spurn the awards of river water dispute tribunals and indulging in protracted litigation.

The monsoon brings in plenty of water for all, for each and every Indian. All the country has to do is to adopt a common approach to harvest, store and conserve and share water for drinking, irrigation, sanitation and commercial uses.

This common approach cannot be created without declaring rivers and other water bodies as national assets that are vital to the interest of security and integrity of India.  

Apart from water, core sectors such as agriculture and power ought to be ideally under the exclusive domain of the Centre to ensure uniform crop support prices, power tariff and regulations.

One reason why the power sector reforms, started over 20 years back, have failed is the State’s reluctance to honour basic consensus on electricity subsidies. States have also levy different taxes on generation and transmission of power. Many of them are going slow on implementation of open access system transmission and distribution of power.

The country is wasting tonnes of money on State electricity regulatory commissions and on the consultants that they hire for helping them formulate separate regulations for power generation, distribution, transmission, consumer dispute settlement, etc.

Why can’t India have one common electricity law and regulations for the benefit of economy and above all, Aam Aadami?

What applies to water, power also applies to GST. It would have been ideal for the industry, trade and the public to have a single, federal GST for the entire country with tax sharing between the Centre and the States. It would have brought under its ambit the entire value chain of economic activity say from mining to manufacture to retail. It would transformed the country into a single market.

This would, however, remain a dream if the recent speech of Finance Commission Chairman Dr Vijay Kelkar on GST is any indication.

Addressing an Assocham-organized conference on GST on 29 July, Dr. Kelkar listed a whole lot of concerns of the States on the forthcoming tax. He said: “The GST will be a dual tax with both central and State GST component levied on the same base. Thus, all goods and services barring a few exceptions will be brought into the GST base. Importantly, there will be no distinction between goods and services for the purpose of the tax with a common legislation applicable to both.”

In the political arena, the Centre and the States often adopt conflicting postures whether it concerns regulating religious conversions or tackling terrorism. It was thus not surprising to find that Left-governed West Bengal is dragging feet over implementing the Centre’s decision to declare naxalities as terrorists.

We hope the Commission on Centre-State Relations (CCSR), which was constituted in April 2007, would take into account these and other recent instances of Centre-State litigation such as the one over regulating natural gas.

Prior to setting up of CCSR, several commissions and committees have made various recommendations to iron out the Centre-State relations. These include the National Commission to Review the Working of National Commission, Sarkaria Commission and First Administrative Reforms Commission.
The Centre should bring out a white paper on the Status of the recommendations of these panels. More important is the need for the Prime Minister to activate two Centre-State forums that he chairs. These are National Development Council and the Inter-State Council.

Can the common man readily recall when these forums met last time and on what issues they agreed?

India is a young and evolving country but its politicians are short-sighted and always give precedence to parochial local, regional and State issues. There are hardly any politicians who put national interest above all issues.

It is thus doubtful whether the Centre-State relations would ever turn conducive enough to usher in a new era of socio-economic prosperity and well-being.