Return of regional parties may smoothen Centre-State relations

While some experts said this might cause greater friction between the Centre and states, others saw it as a positive development, and more in line with inclusive development of the country.

Prime minister Narendra Modi had started off on a cordial note in 2015, calling for the states and the central government to work as “Team India". One of the objectives of setting up NITI Aayog was to promote competitive and cooperative federalism among states and Union territories.

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Despite these initial efforts, friction has periodically been seen between the Modi-led central government and several states, especially those ruled by opposition parties, largely in terms of financial or fiscal relations. States like West Bengal and Karnataka have time and again blamed the Centre for allegedly withholding funds.

Unhappy states

This February, West Bengal chief minister Mamata Banerjee led a protest against the Centre over its delay in releasing financial wages under the flagship Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) and the Centre's housing schemes.

The southern states of Karnataka, Kerala, and Tamil Nadu, where the state governments are led by the Indian National Congress (INC), Left Democratic Front (LDF) and Dravida Munnetra Kazhagam (DMK), respectively, also protested at Jantar Mantar this February against the Centre's alleged fiscal biases.

However, the stance of the central government may be different and much more amiable this time, given that the new NDA government would be led by a BJP that does not have a majority of its own.

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N.R. Bhanumurthy, vice-chancellor of Dr BR Ambedkar School of Economics University, was of the view that states will have more heft in terms of getting their demands met.

"States will have more bargaining power now. There are two major partners of the government, Andhra Pradesh (Telugu Desam Party) and Bihar (Janata Dal-United). They would be really looking forward to further discussions on this. There would be some reworking of Centre-state relations. It all depends on how these two political parties are going to bargain with the Centre and see how they improve their transfer of resources from Centre to state. Whether it is going to be benefiting all the states or only these two states, we will have to wait and see."

Former vice chairman of NITI Aayog, Rajiv Kumar also was of the view that the significant numbers of TDP in the NDA may help it get more attention from the Centre for its longstanding demand of special status for the state.

At the same time, he said that given the numbers for the NDA are not as robust as in the past term, and with states having more bargaining power, Centre-state relations may even take a hit, mostly in case of states governed by opposition parties.

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“Centre state relations may turn more rancorous," Kumar said. “With a weaker central government, states may be more demanding in their approach and the Centre may not be able to meet these demands."

Greater say

A former bureaucrat in the central government, who did not wish to be named, said that a coalition government would enable the states to have greater say in matters of fiscal importance as well as in legislative matters, whereas in the past bills have been passed without much discussion.

Pointing out that a broad-based inclusive government will be good for India, the person said, “I'm looking forward towards rationalisation of GST, more inclusive social security net and better agricultural reforms. There was unnecessary intrusion by the Centre into fiscal (issues) of states and there was reduced discussion on these issues. With a coalition government, both issues will be addressed. I expect that the agricultural bill, land acquisition bills and CAA will come up for discussion again." CAA refers to Citizenship Amendment Act.

The former official further said that there were still a number of structural and substantive reforms that had to be done, which need backing of states and people, and cannot be done with a top-down approach.

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“Now, there will be a more inclusive approach. This will help the greater economic momentum, irrespective of the party that comes to power. The election results have shown that unemployment and inequality have become central issues, that's why regional parties coming in will be a good thing," the person added.

Stronger federalism 

Neeraj Hatekar, a developmental economist and a professor at Azim Premji University said: “Federalism will be stronger now. India needs diffused leadership like this to function smoothly. It is like we are back to the correct equilibrium that we have been having since the 90s, with the regional parties that joined the Congress."

He said better Centre-state relations would help local businesses. “Regional political centres disappeared because you could only negotiate with Delhi, and the ones in Delhi had already selected a few champions to run everything. That's why local businesses fell flat. Now they might get more leverage to negotiate with the government because they will have state representation at the Centre."