CURRENT STATUS OF INDIAS POLITICAL ECONOMY The 14th Lok Sabha is in position with the Government as a coalition of several

regional parties, led by the Congress party, called United Progressive Alliance. The preceding NDA Government was also a coalition. Earlier, five minority parties tried to run Government, with the support of major political parties from outside; but they failed. The trend seems to be that India has to live with coalition governments in future. No National parties When India became Independent, the Congress was an all India party, which ruled the Centre and all the States. But the prospect of such an all-India party emerging in future is bleak. The Centre today consists of a national party in collusion with several regional parties that form the Government. Unlike in the past, when India had several national level leaders, the system is not throwing up leaders of all India standing. India accepted democracy and secularism as cardinal principles of governance. However, the experience for the last 50 years has shown that the consequent trends are not conducive to the countrys unity and integrity. It is not that the leaders during the last 30 to 40 years were not nationalminded, as we had prior to, and a few years after, Independence. But the political system compels them to rise in regional forums, appealing to local interests, which are sometimes at the expense of national interests. Fragmentation of parties The political system, which we adopted for ourselves, is responsible for the present fragmentation of the Congress party into 100 or more parts. Some intellectuals argue that emergence of such regional parties may be good for a federal polity in our country. But it is very difficult for coalition governments to rule such a large country of diverse culture. Mr Atal Behari Vajpayee did a fair job of carrying with him the coalition partners. It is hoped that the present P.M. will also be able to do the same. It is strange that our intellectuals and political pundits have not analysed the reasons for this phenomenon of fragmentation. To them, regional aspirations are inevitable. But it should not be at the expense of unity.
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Western Model India adopted the British Parliamentary Democracy (PD) model, since our leaders were familiar with it. PD functions well in Britain and some countries in Europe, since they are mono societies, with single religion, language and culture. We are a highly plural society, divided along religion, caste, language and other divisive factors. Moreover, Governments in the US, UK and European countries do not participate directly in economic and social development. Under the model evolved during Nehrus time, Government took on the direct responsibility for economic and social development in many capacities, such as facilitator, promoter, manager, banker, insurer, entrepreneur and finally, controller. Multiple role of Centre We have a strange situation, where the Central Government is functioning as an active player, regulator, controller and arbitrator - all concurrently in the same sector. This is obviously a contradiction even in theory, not to talk of practice. Outside the Communist countries, no other country has governments with so much of power and responsibilities. All empires collapsed as a result of such centralisation. The present situation is like European nations being ruled from London. Central allocation of resources Central Government allocates resources to the States, based on population, collection of central revenues, level of development, etc. In addition, large grants are given to the States, on a discretionary basis, for drought, famine and special situations. Also, huge investments are made on PSUs and other projects, which are often on political considerations, disregarding merit. When the Centre is ruled by one party, and States by other parties, such allocations are often dubbed as partisan. In such a situation it is convenient for the States blame the Centre for their poor performance. States blame Centre Most States spend 90% of their revenues on salaries to their employees, leaving very little for development. States depend on the
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Central Government for their statutory entitlements and discretionary allocations. It is difficult for the Central Government to observe a non-partisan attitude in all cases. Even if they do so, the States blame the Centre from the political point of view. This naturally creates Centre-State tension. Leaders, who are in power in the Centre, appease the States for getting political support. We are not likely to have tall national leaders as before. The present political economy system does not encourage emergence of national level leaders. We have observed that, for the last 50 years, many Ministers, and MPs too, managed to divert funds and Projects to their home States. Even now, regional leaders want plump economic portfolios so that they can enjoy money power and use Central funds to help their States. Politics has, in fact, taken precedence over governance. Nursing the constituency really means getting large financial allocations and projects for the region. Often this is done purely as a populist measure to nurture ones popularity in the constituency or in the State. Smart MPs and Ministers somehow manage to get disproportionate allocation of funds for their pet projects. This creates not only inter-State jealousy, but also Centre-State relational problems. Our bureaucratic system, with its complicated method of file notings, kept out of public gaze, enables leaders to get away with illegitimate allocations. The obvious solution is to take away, or reduce, this responsibility from the Centre. The States should be more self-reliant. The Planning Commission was expected to look into their merits and needs. But often, it is used for blocking legitimate demands, rather than ensuring merit and equity. Linguistic States The States are organised on the basis of language, which is a highly emotive factor. European nations, though all Christian, with Greeco-Roman culture, are formed on language basis. They fought many wars, because of inter-linguistic conflicts. Soviet Union and Yugoslavia, even after 90 years of political indoctrination, broke on language. In spite of the strong bond of Islam, Pakistan split into two, based on language. Many disputes are still going on in India, in which language is the emotive factor. Centre is allocating to States
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thousands of crores of rupees for economic and social development plans. The responsibility for implementation is with the States. Some are not utilising funds allotted, while others misutilise funds for populist measures. In the May 2004 election, one major reason for failure of some State Governments was peoples discontent that they did not have elementary needs, such as, power, water and roads. The Electorate showed their anger not only against the State incumbents, but also at the Centre. Regional identity and power Centre has tremendous money power. The dependence of the States on the Centre for development resources creates constant Centre-State problems. Present State leaders have emerged using one emotive factor or the other, such as Telugu pride, Dravidian identity, etc. State leaders owe their loyalty to their region Laloo, Mulayam, Paswan, Jayalalithaa, Karunanidhi, Naidu, Thakeray, Naveen, Badal, etc. National issues rarely appeal to the imagination of the voters. The educated and the middle classes, who are the major beneficiaries of development, do not vote. The poor do, induced by campaigns and inducements. In a situation, where strong regional leaders do not accept the decision of the Central Government, there will be great embarrassment. In the present Lok Sabha, Congress has only 145 seats. RJD, DMK, NCP, SP, Left and others have as many seats, which make them so powerful that they dictate terms regarding cabinet berths and other financial allocation. The Centre will be a hostage to such regional parties, which will create continuous tension and instability. This is dangerous for unity and stability. Even theoretically, it is not easily possible for the Central Government to make equitable distribution of resources and projects, since considerations are numerous, which cannot be optimised. In this sort of situation, regional Satraps make hay, success depending on their ability to muster support, organise violent agitation, bully the Centre, etc.

Centre for governance The primary function of Government is governance - Defence, Internal Security, Foreign Affairs, Public Finance, Regulation, etc. If we look at the Central Governments responsibilities, we find that more energy and time are spent on development issues. It is agreed that, for a poor country like India, it is certainly necessary that the Centre and States should take on development responsibilities as well. Democracy has to cater to populism. But there should be a limit to all discretionary decisions. Non-organised Sector In our country, 22 m Government employees, forming 2% of the population, forming two-thirds of the organised sector of 30 m, are highly paid, with small workload. And yet, all Governments have been repeatedly pampering these Government employees. The Fifth Pay Commission did a disservice to the country by increasing salaries substantially. Even recently, the Central Government increased the emoluments of Government employees, who work only for 200 days a year and 6 hours a day. 300 m non-organised labour work for the whole year for earning a meagre income. In some Public sector companies, employees, even at the lowest level, are getting about Rs. 30,000 a month. When such lavish salaries and privileges are given to the organised sector, how can India take care of the 200 m people below the poverty line. In the days to come, it is going to become more difficult, since the coalition partners are bound to ask for more from the Centres cake in order to pamper their constituency or region. China and India China and India started development together in 1950. But China is 20 or 30 years ahead of us. Neither policy makers nor the media compare India with China in economic and social development. They argue that India is a democracy and China is a dictatorship. The whole world is admiring us for our democracy. We are also admiring ourselves that we have succeeded as a democratic nation, which was described by Galbraith once as a functioning anarchy. A great deal of intellectual discussions are held on strategies and policies. Some leaders appeal to the people to appreciate their policies. But we have also leaders who wish to get votes based on a wave. Chandrababu Naidu wanted people to
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elect him because he was physically attacked. Ajit Jogis followers appealed for votes on the ground that he was involved in an accident. Thus we have democracy, of course, but not a decent living for millions. This situation is not the fault of democracy. We have not adopted an appropriate political economic model suited for our condition. We appeal for a review of our systems Electoral and State systems. Money Power Corruption at the political and bureaucratic levels is widespread. A large number of persons with criminal records enter into politics. Statesmen, scholars, administrators and intellectuals cannot get into the political system, since the cost of fighting an election, in many cases, runs into crores of rupees. There was a time when even a lamp post could get elected on a Congress ticket. The rise of money power in elections is entirely due to the fact that the position of an MLA, MP or a Minister gives ample opportunity to earn crores of rupees, and, therefore, there is tremendous competition to get into power. We do have many distinguished leaders of integrity, and members of certain families whom the electorate adores. They are not in politics for money making. Criminals and mafia But a large number of criminals and mafia dons also have entered into politics, using black money and intimidation. They are able to do so because, when they come to power, they are able to recover 10 times the amount spent on elections. Such people use their power to dispense privileges. Some Ministers simply appoint hundreds (Railways), as a return for the favour received from them during election, or for political considerations. Some businessmen also invest in political parties knowing that they can take back their money when the party comes to power. After liberalisation, such sources of funding have come down. In order to remove most of these evils, Government should reduce their economic responsibilities by disinvestments and joint partnership, whereby the power of the Government and its functionaries would come down substantially. Money power corrupts governments. We had scandals in every Ministry. Our moral fabric has been torn.

Opulent life Let us look at the farcical situation in India. In Europe, Ministers live in apartments. They drive their own cars. Our MPs and MLAs live in opulence, all in the name of serving the poor people. Our Ministers move around with gun totting guards. Cavalcades of cars follow Ministers. They live in palatial bungalows, with many cars and servants, which is a mockery of democracy. Power of the Government in economic development functions is so high that membership of the legislature becomes so attractive that criminals invest crores of rupees to get into the system. Good people, with service orientation, credibility, integrity and professionalism, can enter into the system, only if the system is changed, retaining the essentials of democracy. Caste System The caste system, which is a curse on India, is perhaps 5000 years old. We were hoping that, with the emergence of freedom, caste conflicts would be removed. The less privileged castes certainly need help by way of preferential treatment. In an unequal situation, we cannot have uniform policies, as they would only increase inequality. Therefore, reservations, of one kind or other, are required as an affirmative device. But what has happened is that caste has become a vested interest. Caste has been perpetuated by the reservation system. Great harm has been done to society by Mandalisation and many such measures. There is severe competition to get a tag of backward status in order to qualify for advantages and privileges. There is not even a remote possibility of caste going out of our system, since the political system is reinforcing caste affiliations and prejudices. It is a pity that all secular parties are shouting about the virtues of secularism; but caste itself is a communal aspect. IUML is considered as a secular party. Appeals for votes are based on caste basis. Most of our regional leaders are getting followers entirely on caste. Caste equation is more important than any other criterion, as is amply shown in the staying power of some regional leaders. Some intellectuals claim that our Indian electorate is so intelligent that they know how to vote intelligently. But we have seen, even in the recent election, that caste, liquor, money and such allurements played an equally important role in the electoral process. An oft express cynical
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comment, though not fair, is that some leaders wish to keep the people so poor that their votes can be purchased cheaply by appeals to the caste factor, money etc. In spite of all these undesirable tendencies, India has survived for 57 years as a democracy. But it is time we make changes in our systems to remove ill-effects and to preserve the unity of our country. Demoracy An ardent protagonist of democracy once said, Democracy is the worst form of government till somebody discovers something worse. By adopting the British model, which is totally unsuitable to our condition, we have unwittingly landed ourselves with the worst form of democracy. It was made further worse when India went for a highly controlled economy with an all-pervading government entering into all economic and social life with monopolistic control. This generation cannot forget the quota, licence, permit-inspector raj, which prevailed for 40 years. British Model The British model works extremely well in Britain, since that country is a mono-culture (same religion, language and ethnicity), while India is the most pluralistic culture in the world. A system of single member, simple majority, concept has divided the Indian electorate along caste lines. The caste factor, which has been there for two millennia, has been reinforced with this single electoral mode. Fragmentation of Parties The greatest damage has been the fragmentation of political parties. The monolith Congress in 1950 has been split into 100 parties, centered round individuals with a caste or regional tag. For democracy to succeed, we need three or four political parties to rule the Centre. 40 party coalition cannot be sustained for long, particularly when parties, of all India stature, are not likely to be there in future. Corruption We are all aware that corruption today pervades all walks of life, from top to bottom. One reason for such degradation in public life is that the political system itself needs huge amounts of money for
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managing the Party apparatus and to win elections which have become tremendously costly. Since the election expenses for one Lok Sabha seat would be Rs. 5 to 10 crores, ordinary citizens, who are capable and service conscious, are unable to enter politics. But a large number of criminals and mafia are entering into the system and also succeeding. Such unsocial elements are able to come in because they know that, once in power as MP, MLA or Minister, they can earn that money within a few months. Therefore, politics has become a business proposition, almost as a career to make money for unsocial elements. Decent people cannot do whatever the mafia does; and so they keep away. Right People The way out is to make the Membership of Parliament a prestige position, where only service oriented persons would aspire for it, and not a position where fortunes can be made. Such a situation would come if the Government does not involve itself in business in such a big way. This would mean that Government should privatize all non-essential economic functions. Railways should be made a Corporation. PSUs should be given full autonomy for enabling them to compete with the private sector. Also, role and intervention of bodies like CVC, CAG, PSEB, CBI, should be reduced, and the management of PSUs should be given full freedom. PSUs fail due to interference from politicians and bureaucrats, which should be eliminated. Then PSUs can survive. After privatization, there is no corruption or scarcity of the commodity. Even now Government owns Rs. 300,000 crores worth of assets. It is easy to make money in most transactions. Therefore, we should privatize or corporotise everything except essential industries, where security consideration is involved. In European countries, Government hardly participates directly in economic and social development. In India, every little thing is done by the Government, which is patently absurd. When industrial and infrastructure development and management are given to the private sector, Government can concentrate on genuine conventional functions of the Government, including Public Finance, Law and Order, Defence and inter-State and Centre-State relationship.
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Government can also keep to itself activities which help the poor. In such a situation, a position of MP, MLA or Minister will be for genuine social purposes and not for money making. This will enable intellectuals and others to fight elections and serve the country. We propose changes in the Electoral and State systems. ELECTORAL SYSTEM The Electoral system be changed to: Party to be voted on, and not individuals, as at present. Each Party can nominate upto three names for each constituency, which for the whole country would form the LIST for the Party. People to vote for the LIST as a whole of each Party. Proportionate representation. Depending on the percentage of votes obtained, each Party can nominate as many to the Parliament from the LIST. To begin with, this system may be tried only for the Lok Sabha. The PM to be elected by the majority Party.

The Members in the LIST will be the Partys Parliamentary Council. They can choose anybody from the LIST to be sent up to Parliament. Nominee can be withdrawn by the Party, and replaced. This system will ensure political stability, and will ensure unity and countrys development. Indias current electoral system is a copy of the Westminster model. This has led to numerous anomalies. The present single member, simple majority system should be replaced by a multiple (say three) member per constituency. The aggregate of nominees of all the constituencies of each political Party would form a LIST. It is easier to choose three candidates for the party ticket for each constituency, instead of one at present. Most of the interest groups based on caste, religion, language, charisma, money, etc can be accommodated in the constituency and in the all India LIST. In the individual constituency itself, usually there are three serious candidates, competing for the Party ticket. Most of the ills and their ramifications, now taking place immediately after the Party ticket allocation is announced, can be eliminated in the proposed system.

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At present, aspirants, who are denied a party ticket, gang up against the political party, and also later work against the candidate chosen (at the time of election). Smart leaders, who are denied tickets, form new Parties. Thus we have 100 political parties. Except the Left parties, all others are based on personalities. When three serious candidates are accommodated in the LIST, such party squabbles can be pre-empted. The political parties can ensure that all interests are represented in the LIST at the constituency and national levels. In the LIST, each political party will have ample elbow - room to give representation for all the interest groups. The electorate can judge the merits of political parties by the weightage they have given to their interests an index of the fairness of the political policy. Illiterates (who actually vote in large numbers) would still look for the symbol only. The educated and discriminating voters now keep away, since they find that all political parties are partisan and there is nothing to choose amongst them. The LIST will be welcomed by them. Intellectuals, scholars and professionals in various fields can be accommodated in the LIST, who otherwise would not be able to enter the system. At present, when the political party has put up a candidate of one communal or caste group, other dominant groups keep away. In Kerala, Christians, Muslims, upper caste and backward class Hindus are the major communal/ caste groups. Where the candidate is from one of these groups, others keep away or work against him. The merit of the candidate evokes very little emphasis. Partisan considerations predominate. In the new system individualism is thus suboriented to group interests, which would promote national integration. The system would enable scholars, technocrats and professionals to enter the political system, as they can be included in the LIST. Representation can be given to all regions and segments of the society. The best candidates can be chosen from the LIST to be nominated to the Lok Sabha, which would represent all regions and sectors. Nominees can be withdrawn for poor performance and new nominees can be sent. Also, in case of special interests, nominees can be given shorter terms and rotated. All-India Parties would develop. Smaller local parties will be eliminated. The Lok Sabha would truly represent all interests.
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SMALL STATES India can be compared to Europe in size and population. Our large States are as big, or bigger than European nations, such as Britain, France, Germany and Italy. UP, with a population of 166 m is the 7th largest nation in the world. 90 nations in the world have less than four million population, while many of our 540 districts have the same population. Our Districts are governed by a Collector, with 3 to 4 years of experience. New Zealand, Belgium, Denmark, Norway, Albania and 50 others are administered by a Prime Minister, supported by a Cabinet. Moreover, in most of the nations in the world, except Communist countries, economic and social development is carried out by the private sector, while the Government is mainly concerned only with Foreign Affairs, Defence, Public Administration, Finance and some regulatory activities. In India, however, the Centre and the States are involved in almost every economic activity, which imposes a heavy burden on the Government. Conflicts Further, we are still economically and socially backward, with one third the population poor and 40% illiterate. They have to be brought up, which is another burden on the Government. Private sector will not be able to deliver services to them, as they are not profitable ventures. In addition, conflicts based on religion, caste and language cause law and order problems. Also, insurgency and separatist movements are a source of tension for the Centre. Pakistan, Bangladesh, Ayodhya and such other conflict areas require attention. Government cannot handle such complex problems easily, if the Centre has to also shoulder Development responsibilities on such a large scale. Size of States Such inequality in size and population and development levels means in great difficulty for the Central Government. UP and Bihar, with 140 MPs, have been dominating the political central stage. Though the Constitution is federal in spirit and structure, in practice, it is more unitary. The Centre allocates bulk of development funds to the States. Equitable distribution of funds is not that easy, particularly
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when the political party ruling in the Centre will be different from those ruling the States. Nation State Though India was a cultural entity for 5000 years, it was the British conquest and rule that enabled India to become a modern nation State. As a nation, we are still young, compared to the European nations. Therefore, we have to foster unity through an appropriate political economy system. Linguism Unfortunately, after Independence, India was divided on linguistic basis. Language is the greatest divider of peoples all over the world. Language is highly emotive, which can bring in conflicts and confrontation. European nations are formed on language basis, though they are all Christians. Soviet Union, Yugoslavia and Pakistan broke on the basis of language cum other divisive lines. In order to gain popularity, Indian politicians whip up parochial feelings among their followers, based on language. This is a potential danger to Indias unity. Split the 10 large States It is proposed that the ten large States be split into 27 smaller States, all uni-lingual, with 15 to 30 m population each. Such a division may entail large direct administrative expenditure. But that is nothing compared to enormous benefits that would accrue. BJP has all along been in favour of small States; so too the Congress. Smaller States are easier to govern and to develop, as has been proved by Punjab, Haryana and Himachal Pradesh. The proposed set-up is given in the end. Decentralise Development One major advantage would be that Central Government, which is heavily burdened now with developmental responsibilities, can decentralise most development work to the States, by giving autonomy to the States for development. Centre can retain those functions which are inter-State in character. At the moment, it is not prudent to decentralise, because the large States, such as Tamil Nadu, Andhra Pradesh, West Bengal and Maharashtra, led by local leadership, may not listen to the sage advice of the Centre. A stage
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may come when some of the States may refuse to attend NDC meetings or implement what the Centre wants. At present, they are dependent on the Centre for development funds, and so they obey. Centre-State relations Also, it is difficult for the Central Government under one Party to maintain good relationship with those States, which are ruled by other political parties. The natural tendency of the States is to plead for more money and to blame the Centre all the time for their poor development. Inter-State disputes Another advantage would be that inter-State disputes, such as Belgaum, would be between South Maharashtra and Northern Karnataka. Cauvery will be between Tamil Nadu-B and Karnataka-B and not between Tamilians and Kannadigas. City States Disputes would transcend linguistic loyalties. Also, Mumbai, Kolkata, Hyderabad, Bangalore and Chennai should be made City States, adding on to them the surrounding areas. These metro cities have been developed with resources from the whole nation. The present tendency of the local people claiming all the benefits may lead to tension, as it happened in 1969, when Shiva Sena resented the presence of south Indians. After leaving responsibilities to the States, Centre can concentrate on governance of the country, which is not receiving sufficient attention now due to preoccupation with development problems. One third of India is still very backward. When Telengana and Vidarbha are formed, they will have more motivation in developing their States. Inequality Inequality in size of States will only bring tension, particularly in respect of Centre-State and Inter-state relationships. One major reason for the backwardness of some districts is that development effort does not reach areas far off from the capital. In erstwhile Madras and Bombay Provinces, backward districts were those which

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were away from the State capitals. Small States will ensure more equitable development. They can be better managed too. Sub-regional Loyalties Smaller States would satisfy sub-State regional aspirations, as in Telengana and Vidarbha. Linguistic parochialism will be reduced. Small States can be easily disciplined by the Centre, which would become a real arbitrator in Inter-State disputes. Centre-State relations will be smoother. Development responsibility can be decentralised to States, and Centre can concentrate on governance. There will be room for 20 more CMs. Twenty more capitals will come into being, thus reducing congestion in the present capitals. Legislatures will be more compact. The extra cost of administration will be more than offset by the enormous economic and social benefits. Finally, Indias unity will be strengthened. Both BJP and Congress have accepted this idea in principle. A new Commission has to be constituted to make recommendations.

PROPOSED STATE REORGANISATION

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The 10 large States are to be split into 27 smaller States, taking into account sub regional identity and aspirations, such as Telangana, Vidarbha, Marathwada, Magadha, Mithila, Mahakosal etc. Present population (in millions), number of States proposed and the average population (in millions) of the split States are given below: A.P Gujarat M.P Rajasthan U.P

3 = 26 51 2 = 26 50 2 = 25 57 2 = 29 166 5 = 33
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Bihar Karnataka Maharashtra Tamil Nadu West Bengal

83 52 97 62 80

3= 2= 3= 2= 3=

28 26 32 31 27

There will be no change in the other 18 States and 3 Union Territories. Population (in millions) is given below:
Haryana . Jharkhand . Orissa . Assam . Kerala . Punjab . 21 Chatisgarh . 27 Delhi . 37 J&K .. 27 Uttaranchal . 32 H.P . 24 Tripura . 21 Nagaland .. 2 14 Meghalaya . 2 10 Manipur .. 2 8 Mizoram . 1 6 Arunachal . 1 3 Sikkim .. 1 Lakshadweep (U.T)

Pondicherry (U.T) . 1

Andn & Nicr (U.T)

Thus we will have 34 States with population ranging between 21 and 37 million, which together would form 80% of the total population of 1014 million. The rest 9 and 3 U.Ts will have a population of 20%.

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