By Engr K Vijayachandran F.I.E

Views of Prime Minister Modi on the re-defining of Central-State relations are seen reflected in the presidential speech of Pranab Mukherjee: “India is a federal polity. But, over the years, the federal spirit has been diluted.”.

In order to correct the situation the President had promised to “re-invigorate fora like the National Development Council and the Inter-State Council” and introduced a novel concept of Cooperative Federalism, possibly intended to deepen the economic relationship between State and Central Governments. He did not elaborate on how the concept will translate itself and help to rectify the distortions.

Our constitution makers had looked at the development and upkeep of basic infrastructure, physical as well as social including language and culture, as the joint responsibility of Central and State Governments. For a newly liberated multinational country of continental proportions a federal type governance was most appealing.

However, roles of state and lower level governments, as well as those of Inter-State Council, National Development Council, Planning Commission and other policy making institutions at the national level, built up during the early years of national independence, as well as that of Loksabha and Rajyasabha, were drastically eroded in recent years, thanks to the highly authoritarian economic reforms.

Central Government, along with its elaborate Committee of Ministers and PMO, had virtually taken over the sole responsibility for infrastructure development, with the help of foreign and Indian monopoly capital, leading to numerous scams of national shame. Even the Planning Commission was charged of breeding crony capitalism. And, despite massive doses of privatization and foreign direct investments and experimenting with PPP concepts, Indian reforms have failed to deliver results.

Experience of India’s Power sector, where reforms had an early start, is typical: Indiscriminate import of equipment and systems are causing costly breakdowns in our national and regional grids. Reforms have inflated capital costs and further increased the financial losses of State Electricity Utilities. They have turned totally dysfunctional: Uninterrupted quality power at lowest possible costs is not their motto anymore. (1)

Electricity generation using imported fuel is on steady increase, while our own fossil fuel reserves remain under-utilized. Role and functions of Central Electricity Authority (CEA), the federal organization that was in charge of power sector as per the 1948 Electricity Act, was taken over by Power Ministry and virtually re-assigned to international consultants in the pay role of global capital and MNC monopolies.

Prices of electricity are increasing all over the country and its quality deteriorating: Solution lies in reversing the reforms initiated in the early nineties for force-opening up of the national market for electricity as well as power equipment. Federal character of the power sector need to be urgently restored in national interests.

In the telecom sector, the two legged policy of having state-wise circles and centralized technology development by Central Public Sector Units was given up, in order to force open the national telecoms market. Net result is abject dependence on imports in the telecoms sector, not only for hardware and software needed for the modern communication systems but even for their maintenance. The only silver line in the cloudy communication system are the great achievements in space communication technologies developed by ISRO, despite imperialist boycotts.

Reforms had struck telecoms sector, when the ICT revolution based on microchips and Internet technologies started its sweep. Instead of mobilizing the technology resources of central and state public sector organizations as well as academic R&D institutions market oriented solutions like state wise auctioning of spectrum rights was resorted to by the Center leading to massive scams and corruption.

It is time that we restructure India’s telecoms sector on a federal basis with an expanded role assigned to central and state public enterprises. Does it fit in with the concept of Comparative Federalism of Modi Government?

Indian Railways is, possibly, most suited for exploring and enriching the idea of co-operative federalism suggested in the Presidential speech: IR is a leviathan insensitive bureaucratic organization, presided over by a cabinet minister, supported by one or two ministers of state, and then the Railway Board, its Chairman and half a dozen board members etc etc, and all connected up in series and in parallel (see- ).

There are fifteen zonal railways, each administered by a General Manger, who looks after the construction and operation of rail lines and related systems of the zone. The nature and number of complaints with regard to their performance indicate, that they will perform far far better, if IR is organized state-wise, as in the case of P&T, BSNL, DD, CEA and good old Electricity Boards etc etc, and several other central government functions.

It will be even better, if these state-wise zonal organizations are converted into public sector undertakings, with equal shareholding by IR on behalf of Central Government and then by the concerned State Governments, as in the case of Delhi or Chennai Metro. A full fledged rail minster and a skeletal rail department in every state, for servicing and supporting this joint enterprise will greatly enhance the policy planning and management capabilities in the country with regard to rail development.

This sort of structural reforms will bring the administration and management of our on-rail resources in the country closer to the people, and their elected Governments at the state as well as lower levels. Rail penetration continue to be very low in our country and only very few towns and villages were connected to the rail system after national independence.

Water tight division of responsibilities between central and state governments and the three lists annexed to Indian constitution, viz Central, State and Concurrent are a colonial legacy, inherited from imperialists. An earlier blog of mine, ‘Third Front and RE-Envisioning of Indian Unity’ ( ) examines the several areas where economic relationship between Central and State Governments could be immediately deepened within the existing constitutional framework, by taking the route of cooperative federalism.

Cochin International Airport Ltd (CIAL) virtually owned and managed by GOK, erroneously quoted as a PPP model, is a splendid example for the potential of Co-operative Federalism. Air Kerala the dream project of State Government and a project of great relevance to the regional economy could take off instantly, provided it is promoted as a subsidiary of Air India. And the much talked about Palghat Rail Coach factory will roll out immediately, if it is re-envisioned as a JV of Kerala and Indian Railways.

Like IR, there are several CPSEs and Central Government organizations which have distinguished themselves as technology generators for the national economy. I had the good fortune of brokering a deal in 1987, between GOK and ISRO: Kerala High-Tech Ltd (Kel-Tech) promoted with Dr, Kasturirangan as Chairman is today, a proud partner in BrahMos Aerospace, an Indo-Russian Joint Venture ( (3).

Why not put the concept of Co-operative Federalism on the fast tract, instead of PPP that has proved to be a virtual non-starter?



Notes and references:
1. Power situation worsens, Government looks helpless: page 139, article by author, Perestroika Glasnost and Socialism ISBN 978-1-4828-1353-1, Partridge 2013
2. Today, India is mostly dependent on imports from China for its telecoms hardware and software Indian telecoms industry has virtually lost its lead to the Chinese thanks to our mindless reforms.
3. This totally non-conventional project was the brainchild of Engr. Sudhakar and a dozen of his ISRO colleagues. It caught the imagination of the Communist leader KR Gowri, the then industries minister of Kerala. With the color of Government changing the project did not have a smooth sail but managed to survive several layers of pettiness spanning over a quarter century thanks to its technological relevance.