India’s states and the national government are at growing odds

FOR THREE weeks farmers in colourful turbans pitched camp atop the train tracks that stitch the paddies and wheat fields of Punjab. Brewing chai, roasting chapatis, playing cards or simply dozing, the protesters froze traffic across the state’s entire 2,000km rail network. Their rail roko ended on October 21st, after the state legislature voted to resist a barrage of controversial farm reforms that India’s national parliament had passed in September. Yet the trains still did not move. The central government’s rail ministry has held back goods traffic, blocking deliveries of coal to Punjab’s power plants, sprockets to its bicycle factories and fertiliser to its farms.

The centre, as Indians commonly call the federal government in Delhi, cites security as the reason for the stoppage, which began to ease on October 28th. But with tension on a range of issues mounting in recent months between the national capital and India’s 28 states and eight “union territories”, it is not just prickly Punjabis who suspect other forces are at play. Their state happens to be governed by the Indian National Congress, the staunchest foe of prime minister Narendra Modi’s Bharatiya Janata Party (BJP), which rules at the centre as well as in 17 states. Just as Mr Modi has brought a new style of hardball politics to Indian elections, complete with sectarian incitement and online trolling, his government has taken a tougher line with disobedient states. In case Punjabis were in doubt that they were being punished for rejecting the farming reforms, the centre announced it would no longer give the state an annual $135m earmarked for rural development.

In theory, responsibilities are neatly divided between the different levels of government, but in practice there are inevitable, contentious overlaps. Farming is ostensibly a state subject, for example, but in practice Punjab in particular has profited mightily from the centre’s investment in irrigation and subsidies for grain. Hence its farmers are less keen on reforms than others across India, a resentment Congress is happy to stoke.

When provoked by states in earlier decades, the centre frequently responded by invoking a constitutional clause that allows it to declare a state government unable to function properly, and so to disband it and impose direct rule from the centre temporarily. That sort of disruption, typically made following an indecisive election or internal unrest, has grown rarer with time. But with covid-19 deepening an economic slump, frictions have inevitably grown. On issues ranging from taxes to the increased meddling of state governors (who are appointed by the centre but whose role is meant to be largely ceremonial), relations between the two levels of government have soured.

“This is the lowest ebb of federal relations in this country,” asserts Haseeb Drabu, a former state finance minister who once worked closely with the BJP. “Never has the central government been so repressive, never so brazen.” Mr Drabu should know. His state, Jammu & Kashmir, no longer exists. In a series of moves that showed a breathtaking disregard for states’ rights, Mr Modi last year in swift succession imposed direct rule on the state, sliced it into two parts, demoted each half to the status of a union territory, and placed dozens of local politicians under house arrest. On October 27th the centre announced a stunning set of new measures for the rump territory of Jammu & Kashmir, unilaterally revoking a dozen local laws and modifying another 26.

For most states, money is the main bone of contention. The signal achievement of Mr Modi’s first term in office was the replacement of a hodgepodge of local sales taxes with a national goods and services tax (GST). In agreeing to it, states largely gave up their right to impose taxes in exchange for the promise of full compensation from the centre. But as GST revenue has plummeted—the economy shrank by an alarming 24% in the second quarter—the centre has grown reluctant to pay. Meanwhile, because public health and income support are largely state rather than federal responsibilities, it is the states that have had to boost spending the most.

It does not help that the centre has resorted to threats, bluster and parsimony, insisting, for instance, that for every small increase in the limit on what states may borrow from the central bank they must implement a new reform imposed from Delhi. At the same time the centre has pushed states to borrow commercially. The central bank projects that state borrowing is likely to surpass the centre’s this year, leaping from an expected 2.8% of GDP to over 4%.

Money squabbles are bad enough, but several states are also bridling at overbearing political interference from Delhi. After police in the state of Maharashtra launched a probe into the alleged manipulation of ratings by a pro-BJP television channel, the Central Bureau of Investigation, a federal agency, abruptly launched a similar probe in a different state. Fearing its probe would be subsumed, the government of Maharashtra, where the BJP is in opposition, abruptly withdrew consent for the CBI to operate in the state. Four other states have already erected similar barriers, and more are threatening to. Several may also follow Punjab in blocking federal laws, such as the farm reforms, that they don’t like.

Such churn and agitation is part of the normal political back-and-forth in a huge, wildly diverse country. But the BJP’s fondness for subterfuge and coercion, instead of persuasion and consensus-building, is making that process more turbulent than it has been in decades. ■