Modi has a point

Times of India Column
Last year, a prominent leader of Singapore gave Gujarat chief minister Narendra Modi some audacious advice: "Keep aside your preoccupation with selling India. You will be better off marketing Gujarat." Contrary to what simple-minded nationalists may feel, this was not a coded signal for secession. Why, the Singapore leader was asking, should Gujarat compromise its comparative advantage as a centre of entrepreneurship and prosperity for the sake of that India which doggedly refuses to enter the 21st century? Should the brightest student in a class be forced to dumb down to accommodate the dullard? The essence of democracy prevents Indian politicians from giving honest answers to such questions. Ever since "equitable growth" and "inclusive development" became consensual buzzwords, India's policy framework has been geared to target the last person in the last row. On paper this sounds noble but the reality is less appetising. In the guise of giving a leg up to the needy, we have punished enterprise, rewarded criminality, indulged mediocrity and brutalised the vulnerable. The Incredible India of smiling peasants and the Fab India-kitted woman prancing about on a Rural Employment Guarantee picnic — a la the ads during the IPL telecasts — exist entirely in the imagination of demented propagandists. The mindless attachment to failed mantras has blunted the politicians' capacity for innovative thinking. This may be a reason why Modi's plea to the Centre to let Gujarat enjoy complete fiscal independence for one year has been met with incomprehension or drawn a hysterical response — including the silly assertion that he be charged with sedition. The chief minister's demand that revenues from Gujarat be largely spent on Gujarat is a radical departure from existing federal norms. At present, the Centre collects the lion's share of all major taxes, including income tax and customs and excise duties, leaving the states with the crumbs from stamp duties, irrigation cess, tax on liquor and VAT on consumer sales. A percentage of the central revenues are ploughed back to the states under the Finance Commission's guidelines. But the returns are never proportionate. Additionally, the Planning Commission doles out the capital expenditure on approved schemes. The present system was centred on two principles: the government in New Delhi should be a redistributive Centre and development should be centrally planned and not left to the market. The system worked without major hiccups as long as the Centre played the role of a neutral arbiter and until the public sector occupied the "commanding heights" of the economy. Both assumptions are no longer valid. While the market economy has ushered rivalry between states for private investments, fiercely competitive politics has forced ruling dispensations to be more responsive to voters. At the same time, the growing mismatch between those who pay taxes and those who benefit from government expenditure has produced strains in places as far removed as Darjeeling and Mumbai. There is a feeling that revenues generated in the region are inadequately ploughed back and that the present system favours the inefficient. Likewise, there is dismay over the culture of non-accountability that governs grandiose schemes such as the loan-waiver and the NREGS. Some people, it would seem, pay their hard-earned money in taxes while a small, privileged minority squanders and loots it recklessly. Most important, the system is not geared to apportioning accountability for expenditure. A politician in, say, Jharkhand doesn't give a damn for fiscal rectitude because he knows that the funds at his disposal have actually emanated from somewhere else. In saying that Gujarat should have a greater say in the money it gives to the Centre, Modi is not seeking sops and handouts. Shorn off its polemical flourish, it is a call for a new mindset that treats those who pay for nation building with respect