Friday, September 17, 2021

Centralisation of power

Centralisation of power has been the main theme of Raghuram Rajan’s 9th November, 2018 address at the University of California in Berkley. He spoke in critical terms of the practice of centralization, much in vogue in Indian nation state. Raghuram Rajan has served a term as Governor of Reserve Bank of India, the country’s central bank. His view could thus be taken as an insider’s account. He places excessive centralisation of power in the political decision making, as one of India’s main problems. What Raghuram Rajan pointed to has been a knotty political proposition from the times, Indian nation state emerged in its present independent garb, following independence from British Raj. Centralisation of power remained the main plank of All India Congress Committee (AICC) the party that led the struggle for independence. It continues ever since, irrespective of the political party holding the reins of power. The present power dispensing with BJP in lead has in fact strengthened the political plank of Congress. Narendra Modi is as much for centralization as Indira Gandhi or her father Pandit Nehru. In fact ‘Akhand Bharat’ united India has remained the slogan of Sangh Parivar, with RSS in lead. The slogan of ‘Akhand Bharat’ includes, what is otherwise Pakistan – a separate nation, Bangladesh as well. It can be recalled that Pandit Nehru was leading the interim government before the dawn of independence. It was a coalition of AICC and Muslim League (ML). The coalition was supposed to be a prelude to working out a federal structure with powerful provinces, with the union having just enough powers to hold together the Indian nation. The power sharing was worked out by Pathick Lawrence led British cabinet mission that included Stafford Cripps and Alexander. The power balance was group based with group ‘A’ including Hindu majority states, group ‘B’ including north-western Muslim majority provinces, and group ‘C’ north-eastern Muslim majority states. It was meant to work out a power balance between two major communities of the subcontinent. Interim government proved to be the arena, where power sharing was played out. It didn’t play, as it was intended to. With Sardar Patel insisting on holding home portfolio, Liaquat Ali Khan of ML held finance. Liaquat used his portfolio to great effect. Congress ministers, Patel included felt that financial concurrence wasn’t easily coming their way for running their ministries as they pleased. And, Liaquat Ali’s tax imposition was affecting Hindu business, while ML contended that tax impositions worked across communities, Muslim businesses were as much affected as Hindu businesses. In this melee of mistrust, Pandit Nehru while in Bombay/Mumbai on July 10, 1946 implied that the agreement on provincial groupings and power sharing would be revisited in constituent assembly. Mohammad Ali Jinnah took it as breach of trust and called for direct action. It translated to open demonstration for Pakistan. The widening gulf acted as a precursor for congress leadership consenting partition. The leadership was not inclined to share power; they wanted unbridled power in what remained of India, after partition. The constitution was thus framed, where the federal government was destined to have a finger in every pie. Despite law and order being a state subject, federal home ministry became the most sought after portfolio. Tax structure gave the federal government a greater say than warranted, while leaving the federating states dependent on central levies. “India can’t work from the centre. India works when you have many people taking up the burden. And today the central government is excessively centralised,” so said Rajan in his address. Rajan made light of the much propagated 7% growth, taking it as inadequate given India’s infrastructural deficit and growing unemployment. A growth rate of 7% per year for 25 years is “very very strong” growth, said Rajan, but in some sense this has become the new Hindu rate of growth, which earlier used to be three-and-a-half per cent. Rajan took demonetisation and GST as blows to the Indian economy. He asserted, “because of these headwinds we have been held back”. Comparing it to global economic trends, he says, “What happened in 2017 is that even as the world picked up, India went down. That reflects the fact that these blows (demonetisation and GST) have really really been hard blows.” Reflecting on what the future holds, Rajan took the issue of oil prices to be a stumbling block, whilst the growth picking up. To this may be added the propensity of Narendra Modi to take centralization to new heights.