Coalition politics has been good for India, says Orissa MP Jay Panda

Biju Janata Dal MP Panda argues for special category status for Orissa

MK Venu, Managing Editor of The Financial Express and host of Rajya Sabha TV interviewed Biju Janata Dal MP Jay Panda. Excerpts from the interview:

What exactly is Orissa’s thinking on special category for poor states?

Orissa has been asking for special status for many decades now starting from Biju Patnaik onwards. The fact is let’s consider the criteria on which the special status is granted. This started with North Eastern states, Jammu Kashmir and hilly states and all of that. The idea was to give a leg up to those states which are far behind the national average and there are certain criteria such as hilly states, scattered population, having a border. If you look at Orissa’s condition, we have a large part of the state mountainous with a huge tribal population, which is exactly another of the criteria. Apart from that we do not have land border with another country but we have a very long sea coast line and we have had illegal infiltration from neighboring countries for several decades now. So we have the same problem that a North Eastern state or Kashmir has. And ironically some of these states that have special category status, today have much higher national average in terms of income states like Orissa and Bihar, and are well behind the national average and they do need a leg up.

There are two reasons why state like Orissa deserves it. Number one, over the last 20 years, a lot of the funding that gets transferred from center to states has shifted away from plain transfer of funds into central sponsored schemes. Sixty percent of transfer of funds center to states is from central sponsored schemes. The problem is that you have one size fits all policy for all the states whether they are very advanced like Punjab, Maharashtra, Karnataka or very backward states like Orissa or some of other states. In theory, our state gets x amount of money, but in practice we have to deposit about 25 or sometimes 35% in education. The problem is that the poor states have a very tight budget and they are not able to put in that 25% or 35%, so that money from center remains in theory, we are not able to draw and implement it. Whereas the richer states, they have much bigger cushion. They are able to deposit their state component and draw the money. If we are in the special category state, we will be depositing 10% and will be able to avail of the funds. Now Orissa was not growing for decades and was far behind the national average. Over the last 10 years, we have been growing nearly 10%.

How is this better growth rate coming?

By better governance; very simple. The beauty in all of this is those states which are governing better and are delivering better economic results like Orissa, Bihar, Madhya Pradesh, Chhattisgarh are even seeing the political benefits because these regional leaders are getting re-elected again and again which is beating the anti-incumbency which is there in India. Even this year our run rate is almost nine and a half percent growth rate which is more than double of the Indian average. But the problem is that we have been backward for such a large time, our base is low that even if we are growing by double the national average, it take us many decades to catch up and that is simply unfair.

So, you want to have a leap frog strategy?

That was the intention. The intention was to give a helping hand to the poorer states to at least to come up to the national average. But I also want to give you another reason why this is such a critical issue particularly in a state like Orissa. The center gets huge revenues and does not plough it back into the state. So there is a feeling of extortion. Over the decades, minerals of Orissa have been taken out of Orissa, central investments in Orissa have been limited to one in Nalco and one in Rourkela, not the dozens of plants that other states have seen which do not have the resources. The local people have not been benefited; in fact the people are exploited in many areas. But even if you take away the minerals, let’s take the example of railways. Now the Railways earn Rs. 14000 crores of gross income from Orissa. We expect at least Rs. 1000 crores to be ploughed back. But that does not happen. So, this extortionist mind set is being resented by the local people and it is also creating political tensions. The railways thrives on the mineral movement from Orissa and yet where they are making money in a state like Orissa, they are not investing because other states have more political clout. The freight corridor which is coming down from Delhi to Bengal, by all logic should be extended to Orissa. But this is not being done. In terms of national average of railway track density, we are almost 30% below the national average.

How much below is Orissa now in terms of national average?

In terms of almost everything we are about 25 to 30% behind the national average. We were 50% behind but through our own efforts we have come up to this level

Recently the Finance Minister conceded this point that the present criteria should be changed; so do you have any idea or is there any idea shared how to review this criteria?

As I have earlier said that even if the criteria do not change, we qualify. So our point is that whether you redefine the criteria or not but you should not deny something that is due to us. As far as the criteria change is being considered, I am not sure what they really mean, because no consultation has taken place. But I suppose they mean that if a state has already succeeded the national average in terms of per capita income, perhaps they need to be looked differently.

In India, in last 15 years there has been tremendous political decentralization. The coalition form of government has come to stay and regional parties are growing. It is understandable that as you said for decades center has been talking about this. But now why cannot four, five regional parties get together and just put their weight behind some of these issues and just push it through?

In terms of numbers in Parliament, I do not think that regional parties put together can be considered the tail any more. I think it’s the certain so called national parties who have actually now become the tail but continue to wag the dog because they have grown up in the mindset over the decades that sitting in Delhi thousands of kilometers away from remote villages and different parts of India, they know best that they can prepare the policy which is one size fits all and that does not work well any more. It was never logical to begin with and this has found political expression over the last particularly two decades.

And how much is this electorally relevant now?

One of the arguments made that is made against coalition politics is that it is bad for governance because there is too much dialogue. But I wish to point out that every single government for the last 24 years, even including PV Narasimha Rao’s government was a coalition government and nobody will dispute that in this quarter century. India has done significantly better than the previous quarter of the century, when you had the single party rule. My point is this: you cannot run India in a centralized remote manner. It is too big, too diverse and contrary to some opinion, this regionalism has actually been largely very good.

But why do businesses constantly express a phobia of coalition system of government?

Now if you talk to the businesses about coalition, you asked them why they are excited about Bihar which is a part of coalition and Orissa which is growing at nearly 10% which is not a part of this government. Why are they excited about Gujarat? So, businesses are actually upset with center not with some of the states which are allegedly run by the coalition partners, who do not understand economics. That’s not true because these states are doing much better than the Indian average. I will tell you what it is. Nobody complained much about coalition government when India grew, it went form 5% growth rate to more than 9% under coalition government because coalitions were managed better at least under Mr. Vajpayee.

In the last several years coalition management has fallen out of way. Many of the top leaders today cut their political teeth before 1991, before the coalition era and the mindset seems to be ok we have won the elections and we are not answerable, we can do whatever we wish for the next five years. That does not work anymore in any modern democracy and in a coalition era in India, it does not work. When President Obama has to announce a new policy or Chancellor Angela Merkel or (British) Prime Minister David Cameroon, they have to do lot of work behind the scenes to sell their policies to allies and also to opponents and to the public. Now, the government for many-many years have forgotten this basic Rajdharma that just because you win an election, you cannot just impose your policies. You have coalition partners, opponents and public to sell your ideas too. The communication (between parties) has collapsed. I think some efforts are now going on to revive this. The fact is politics requires constantly selling your ideas. You cannot do that if the top leadership is mum, if they do not speak to media, if they don’t speak to public.

Do you agree with the cash transfer idea in schemes? Do you want to implement it in Orissa?

In principle, we are agreeable with it but we need certain building blocks to be in place. You know the problem is Orissa has very-very poor banking network. Now entire blocks do not have banks at all. Now if you are going to distribute cash with the officers’ hands, local touts are going to take over. So micro-ATMs which are talked about still are in preliminary stage. Either you need to have bank branches which are easily accessible or you need to have mobile micro-ATMs very robust and working at every place.

Nandan Nilekani told me that millions of micro-ATMS will be ready to be taken to villages by the end of 2014?

So we will be very happy with that. So, I have talked to Nandan Nilekani about this and this is exactly what he has told me. We support that. Like as I said that these building blocks need to have building blocks in place because otherwise it remains in theory that the benefits will directly go to citizens and in practice it will not happen. Because as I said that in principle we support it but you do need to have that in place. Now if you say that is going to be ready by the end of 2014, then you should not be talking about cash transfer in 2013. You should wait until the end of 2014 to make it happen properly and not just make it a political gimmick. It is a real game changer; treat it as a real game changer with no political gimmickry involved.

What is the tribal population in Orissa and how much of this has banking access?

It’s about 10 million; it’s about 25% of population and very-very minimal have banking access.

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