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FIFTH
COLUMN
Rewarding
the Brats
The
11th Finance Commission has a message for states: good governance doesn't
pay
By
Tavleen
Singh
 Imagine
for a minute a school that decided that students who worked hard and got
high marks would be punished and those who failed their exams would be
rewarded. Well, strange as it may sound, something similar was being attempted
by the Eleventh Finance Commission (EFC) when it recommended that states
that were governing themselves well needed to have their Central funds
cut so that states who were doing badly could be given more money. Bizarre?
Insane? Yes, but so accustomed are we to patronising the poor and glorifying
poverty we would probably have gone along with this foolishness had Chandrababu
Naidu not decided to make a big noise.
 Naidu
called a meeting in Delhi last week of chief ministers of states that
will lose money if the EFC's proposals become a reality. It could become
an Indian version of the G-7, a grouping of our richest states unless
the Central Government stops this kind of nonsense in future. The states
represented at the meeting were Maharashtra, Gujarat, Tamil Nadu, Andhra
Pradesh, Punjab, Haryana, Assam and Manipur. Together they will lose more
than Rs 20,000 crore over the next five years if the prime minister accepts
the EFC's recommendations.
Mistakes
typify Indian economics. I.K. Gujral, whose government pushed through
the Fifth Pay Commission, now admits it was a serious mistake. His admission
was made to me in an interview on national TV. He accepted responsibility,
he said, for a decision that had bankrupted states and it would not have
happened if he had not succumbed to the trade unions.
But at the
time, only one major Indian politician opposed the move: P. Chidambaram.
Every other politician went along because when it comes to economic matters,
borrowed ideas from failed ideologies usually cloud judgement. Economics
is such a confusing thing for the Indian politician he tries to stay away
from it. If you require proof, observe how finance bills worth thousands
of crores of rupees get passed in Parliament without a murmur every budget
session.
Naidu though,
belongs to a new breed of Indian politician. He may not be an economist
but he is street smart enough to pay attention to changes taking place
in the world. He realised that he needed professional help to articulate
a new idea for Andhra. He turned to consultancy firm McKinsey. They started
off by refusing help because they had prepared, for free, a survey of
Maharashtra that had been totally ignored by that state. So the story,
as I was told it by someone in McKinsey, was they told Naidu he would
have to give them evidence of his sincerity by attending a weekly meeting
with their people throughout the preparation of the survey.
Not only
did Naidu do this but once he had their report in his hands he set about
ruthlessly changing the agenda for Andhra. He reversed the populist decisions
of daddy-in-law NTR, which had bankrupted Andhra, and told the people
that they did not need subsidised rice if they could get prosperity instead.
The fact that he won the last election means that ordinary people are
getting the message.
In direct
contrast we have states like Bihar and Uttar Pradesh. These are states
that are poor due entirely to bad governance. Uttar Pradesh could, if
it had one decent government, make all the money it needs solely from
tourism. It has the Taj Mahal, Benares and more.
But it hasn't
had a chief minister who has thought of tourism as a possible means of
strengthening the economy. So nobody has built roads, hotels and other
infrastructure like telecom and electricity which benefit not just tourists
but people too.
In 1947,
Bihar was considered our best governed state. If today the very idea of
going to Patna strikes terror in the heart it is only because it has been
ruled by men-and one obedient wife-who consider governance, economics
and infotech as irrelevant to "social justice". In pursuit of
this elusive goal Bihar's villages have become battlefields for caste
armies and its cities have become ugly, unstoppable slums. Patna is about
the only state capital in India which does not have a single, decent hotel.
All in the name of "social justice".
It is in
this context we need to think of the EFC's proposals. Do we need to condone
what Uttar Pradesh and Bihar have done to themselves by giving them more
money? Do we need to punish states that have worked hard to provide decent
governance and decent standards of living?
The answers
should be obvious, Naidu has done us a favour by drawing attention to
a problem that could turn into a rich-poor division among our states that
would be more dangerous than the secessionist movements in our border
states. The chief ministers who met in Delhi last week should now concentrate
on evolving a new way of looking at Centre-state finances. A development
fund is one good idea that came from the meeting. Let us have more.
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The
stock markets are humming, and it's feel-good time once again, writes
INDIA TODAY Associate Editor V. Shankar Aiyar in 
