Has Manmohan Singh altered the Centre-state equation?

Addressing the nation after taking some controversial decisions last week, including the one to allow foreign direct investment (FDI) in multi-brand retail, prime minister Manmohan Singh sought to defend that decision on the ground that it will lead to a “better life” for farmers, youth and consumers. Side by side, he tried to defuse the political fallout by declaring that every state has the right to take its own decision with regard to FDI in retail, meaning that this is only a policy prescription by the Centre.

Obviously, Singh is anxious to placate the opponents of FDI in multi-brand retail, be they political parties or state governments.

But, in his anxiety to contain the fallout, the prime minister may have propounded a thesis that could alter the constitutional balance between the Centre and the states.

His claim that the entry of FDI in multi-brand retail will lead to a “better life” is being seriously contested by economists and political thinkers and even by those who swear by market economics. Hopefully, Indian consumers will not be taken in by all this government-sponsored hoopla and will respond responsibly to the arrival of these new mega stores. While the market will give its verdict on whether we will be better or worse with the arrival of Wal-Mart and the like, the FDI in multi-brand retail decision could bring in a bigger problem.

If we examine the splintering of the polity over the last 15 years, the growth of regional and sub-regional parties and the steady erosion of the powers of the Union government, it is evident that the unitary tilt that is there in the Constitution is being seriously challenged.

Slowly, but surely, the Centre is yielding to the states. “We recognise that some political parties are opposed to this step. That is why state governments have been allowed to decide whether foreign investment in retail can come into their state” is how the prime minister explained the Centre’s approach to the problem. In his anxiety to save his government and the major policy which he announced, Singh may have willy nilly weakened the Centre. The prime minister’s argument that his role is merely to propound policy could come to haunt the Union government in the future, irrespective of who is running it. States could cite this formula and claim the right to accept or reject national policies, thereby making India much more ungovernable than it is today.

The Constitution delineates the powers of the Centre and the states, and the fields assigned to each of them is clearly demarcated in the first and second lists in the Seventh Schedule. There is also a third list of items on which both the Centre and states can legislate, with the rider that when the laws overlap, the law made by Parliament shall prevail over that made by the state legislature. If allowing entry of multi-brand retail companies like Wal-Mart is within the power of the Union government, one would presume that the power to execute the decision would also lie with it.

Let us not forget the agitations like the one near the Kudankulam nuclear plant and its implications for governance in the country. Let us also not forget the solid phalanx of chief ministers who opposed the idea of establishing a National Counter Terrorism Centre (NCTC) earlier this year. Although there is a national consensus on the need for coordinated action across all states to prevent terrorist acts, the Union government was forced to eat crow after it unilaterally announced the creation of NCTC. As anyone can see, this ought to be high priority for us, but the move, so critical for India, floundered because of the ham-handed manner in which the Centre tried to impose itself on the states. Commenting on the NCTC fiasco, BJP leader Arun Jaitley had said, “Statecraft and statesmanship have become alien to this government.”

Considering the fact that at least a dozen chief ministers said “No” to NCTC six months ago and many states are now putting up No-Entry signs to Wal-Mart et al after the Centre’s announcement, there can be little doubt that statesmanship is in short supply. But, is the lack of statesmanship effecting de facto changes in the constitutional scheme?

That is the worrying thought.

The writer is a senior fellow, Vivekananda International Foundation