Tag: federalism

Centralised and decentralised parties

In the spirit of the just-concluded Assembly Elections in Bihar, here is my attempt at political theorising, which Nitin Pai classifies as “political gossip”.

During the ten years of UPA rule at the Union government, the opposition BJP lacked a strong centre. The central leadership was bereft of ideas following defeat in the 2004 General Elections, and this was badly shown up in the 2009 General Elections when the BJP put in an even worse performance.

All was not lost, however. The lack of strong political leadership at the centre had meant that BJP units in different states managed to thrive. Narendra Modi became Chief Minister of Gujarat in 2002 (albeit following a directive by the BJP central leadership), and won three consecutive elections there. His track record as Gujarat CM was pivotal to him getting elected as Prime Minister in 2014.

Around the same time, Shivraj Singh Chouhan emerged as a strong leader in Madhya Pradesh, and Vasundhara Raje, who had once before been chief minister in Rajasthan, came back with renewed strength. Manohar Parrikar was a strong Chief Minister in Goa. The period also saw the BJP forming its first state government in South India under BS Yeddyurappa.

This state-level buildup of strength was key in driving the BJP (and Modi, who had managed to appoint himself leader) to success in the 2014 parliamentary elections. Modi brought on his trusted aide from Gujarat Amit Shah as the president of the party.

While the objective of capturing the Union Government had been met, this created a new problem for the party – it had a strong centre once again. And the strong centre has meant that regional leaders now have less chances to thrive. After Modi and Parrikar moved to the Union government, relative lightweights have been installed as chief ministers of Gujarat and Goa, respectively.

Chouhan and Raje have been implicated in scandals (related to the Vyapam recruitment and Lalit Modi, respectively). Yeddyurappa has been kicked upstairs as National Vice President of the party. Elections are being fought in the name of Modi and Shah rather than projecting a strong state leader. No chief ministerial candidate was projected in the recent Bihar poll debacle. The Haryana chief minister was a nobody when he was installed. Lightweight Kiran Bedi was projected in the Delhi polls, which ended in a massacre for the party.

 

In other words, ever since Modi and Shah came to power a year ago, the  BJP has been showing promise towards becoming a “high command driven” party, like the Congress before it. The Congress, which has looked rather clueless since the last days of its 2nd UPA government, should serve as a good example to the BJP in terms of what might happen to an over-centralised party.

The BJP has its own template on how strong state level leadership can lead to success, yet it looks like it’s in danger of discarding its own successful formula and following the Congress path to failure.

The Catalan Referendum

The results of the Catalan “informal referendum” are in, and show that over 80% of the respondents in the referendum have indicated a “Yes, Yes”, which means they want an independent Catalunyan nation. Of course, as pointed out here last weekend, this referendum doesn’t mean a thing, for there is significant selection bias in voting – for people in favour of secession would have had a much higher incentive to turn up on Sunday compared to those that were against.

So what does the Spanish PM Mariano Rajoy do now? Though this vote means nothing, one thing the “massive majority” does is to strengthen the case for the Catalans to press for a more formal referendum, one that is recognised by the Spanish Parliament. What this “massive majority” also does is to embolden the leaders of the Catalan independence movement towards becoming more hardline in their demands.

Spain can ill afford to lose Catalunya, for that is one part of the country whose economy isn’t as badly wrecked as that of the rest of the country. In fact, given complications in terms of membership of the EU, it may not actually be in Catalunya’s interest to be an independent nation – though that is another story. The best solution going forward would be what a referendum would have termed a “Yes, No”, that is to give Catalunya more autonomy as a “state” (right now it’s an “autonomous region”) within Spain.

Other regions of Spain such as the Basque Country have much more control over their finances than Catalunya does, and the Spanish government would do well to make such federalism uniform and give Catalunya similar powers. This would help maintain status quo over national identity, while conceding to the Catalans their biggest demand which is that too much of their tax money is going to fund the rest of Spain. Of course the rest of Spain will take a hit in terms of finances, but it can be worked out so that it is a gradual process and not sudden.

It is also worth examining the reasons behind the current wave of Catalan nationalism. There are two factors – firstly the Catalans resent that their tax money is being spent on the rest of Spain. When this combines with the fact that Catalunya is culturally different from the rest of Spain, and harbours an anger towards Madrid for what can be described as three centuries of “Castilian imperialism”, this leads to secessionist tendencies.

There are important lessons to be learnt from this for other countries which are also multicultural, and where one part (which represents a “different culture”) is significant superior to the other economically. There can be only one solution to keep such countries united – greater federalism, and to give the culturally-different-economically-superior regions belief that they are not being controlled by the “centre”. It is time for multicultural countries to embrace this rather than pretending to rule under the assumption that they are monocultural, and with an iron fist.

Bonuses and federalism

I spent a couple of years working for an investment bank, and the way they would distribute (the rather hefty) bonuses in the organization was rather interesting. Each manager in the firm would receive two sums – the first was his own bonus, and the second was the bonus to be distributed among all his subordinates. If any of the said subordinates were managers themselves, they would similarly receive two sums – separately for themselves and for their subordinates.

This is pertinent in relation to the devolution of power between the states and the third level of government. Even though district, taluk and city governments have been empowered by the 73rd and 74th amendments, they don’t have much real power because their finances are controlled by their respective state governments. In banking terms, this is like giving a manager one pot, and asking him to divide it between himself and his subordinates. The incentive is obviously to distribute the minimum amount possible to keep the subordinates happy. And this is exactly what is happening to federalism in India today.

What we need is a strict rule-based formula of distribution of central government revenues between the central governments, states and the next level (rule can be made based on populations, etc.). What we also need is a requirement for states to enact similar rules to divide revenue between states, districts and sub-districts in a rule-based manner. Until this happens, true federalism will remain a pipe dream.