The new NDA government is flexing centralizing muscles

The government’s governance structure, despite hopes springing from the return of coalition politics, could lapse into its default mode of overt centralization. Sample statements from two freshly-anointed senior ministers.

Diplomat-turned-politician Hardeep Singh Puri, appointed petroleum minister, said on his first day in office that petrol and diesel should be brought under the goods and services tax (GST) regime, something that states have been opposing. 

Currently, alcohol and petroleum products—such as, petrol, diesel, natural gas and aviation fuel—are subject to state-imposed and collected value-added and sales taxes, which differ from state to state. States are reluctant to cede taxation control over petro-products and alcohol because these remain key revenue sources.

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This assumes importance because many states, especially those with non-BJP governments, have been complaining of the Centre’s discriminatory treatment. These states have been protesting that their share in the divisible central tax pool does not reach them on time, or their dues from central schemes (such as the Mahatma Gandhi National Rural Employment Guarantee) have been held back or sometimes even denied outright. 

Dissatisfaction has also been expressed over tighter limits on state borrowing or tardy central support during times of disaster. Any attempt to reduce a key source of state revenues under such circumstances is bound to face antagonism.

The second indication came from Arjun Ram Meghwal’s federalism-busting statements on his maiden day in office as law minister. Meghwal, dashing hopes that coalition pressures would restrain the new government, emphasized that it would continue to pursue not only one-nation-one-election, but also a uniform civil code. 

Pushback from ally Janata Dal-United was instantaneous, with a spokesperson clarifying that such a decision could be implemented only through discussion with all stakeholders and not pushed through unilaterally.

There could be many reasons for the government’s apparently continuing insistence on adopting unilateralism and a centralizing tendency, but worse-than-expected election results for the BJP might be key here.

Whichever way you slice it, the BJP’s final tally of 240 seats—after claiming it would get 370 seats, against 303 last time—is a clear message from the electorate that the ruling party has been put on watch. Yet, the BJP, on the surface, seems to be disregarding these signals and trying to portray its return to power with the support of allies as a sign of its invincibility and proof that it has been redeeming its pre-electoral promises. 

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This message has been echoed multiple times by various party functionaries and supporters in the media and civil society, perhaps in the hope that repetitive iterations will convert it into an irrefutable truth.

Attempts to project a muscular image—by adopting what seem to be decisive postures on unilateral issues—may be viewed as the party’s bid to depict itself as having emerged unscathed from the polls and show that the results have not dented its core priorities of driving cultural, political and social homogeneity—or centralization in decision-making, resource pooling and power dispersal.

Another reason could be the party’s seeming difficulty in shedding its feudal trappings, under which patron-client relationships form the bedrock of its political network.

If the government insists on pursuing centralization, the first casualty is likely to be federalism. Two challenges lie ahead.

The first test for federalism concerns new labour legislation under which a raft of old labour laws were consolidated under four regulatory codes on wages, industrial relations, social security and occupational safety, health and working conditions. Parliament passed these four bills in 2020. 

However, implementation is stuck at the level of states; labour is part of the concurrent list in the Constitution, allowing both the Centre and states to enact laws. The government’s ability to reach across political fences, remove some of the contentious rigidities (such as barring civil courts from hearing labour-related disputes) and accommodate state-level concerns will test its federalist chops.

The second concern relates to fraught revenue sharing between the Centre and states, in both the mandatory as well as discretionary verticals. In the first, tax devolution from the central pool to states has been falling, even though states are supposed to get 42% of the divisible pool; this is because cesses and surcharges now comprise a sizeable chunk of the pool but are kept out of states’ reach. 

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The other statutorily mandated transfers, grants-in-aid, have also been shrinking. This is in addition to states being asked to shoulder a larger share of expenditure on central schemes, over and above the Centre often delaying fund transfers for centrally-sponsored schemes.

If ‘double engine’ is to be the driving force behind federalism and economic growth, then implicit in it is the assumption that the Centre must maintain equitable and non-partisan relationships with all states, and not just with BJP-run or allied governments.