Saturday, October 25, 2008

SHOCK THERAPY



On August 9,1965 Malaysia’s parliament expelled Singapore from its federation. Does this expulsion by a republic, of a state that once belonged to it, hold any lessons for us? India too is a federal republic, and crucial areas of governance – such as law and order, agriculture, trade and commerce, transport and communications, public health-fall within the state list. The Center could well devise ambitious plans for economic progress, but they will fall through if states don’t implement them. Let’s take two examples-UP and Bihar. Politically they are blessed states, close to the epicenter of power. They do not lack in arable land or water resources (except, perhaps, some parts of southern UP that are dry). Bihar is also rich in mineral resources. Despite being so well endowed the two states score low on economic growth and human development, and are slipping further behind. During 1992-98, when economic reforms unleashed high growth across India, Bihar’s economy actually contracted at an average annual rate of 0.2 percent. UP accounts for a staggering 26 percent of infant deaths in the country.

There’s only one explanation for their being in a tailspin despite favorable conditions: Utterly criminalized political and executive classes have let them down. It’s futile threatening to cut off central funds to states that under-perform- that means very little to a state government that chronically mis-utilises them. One needs to hold out a more drastic threat- to cut them off from the republic. Lalu Prasad is reported to have advised Biharis to migrate to other states, after having helped create the conditions that make them migrate. This is too easy an escape hatch. There is no reason for the rest of India to subsidize this mode of functioning by throwing him a lifeline. Cut off that lifeline and the rulers of UP and Bihar would soon be facing rebellion from their subjects, as Nepal’s monarch did. What if India commits the same error as Malaysia, and UP and Bihar became new Singapores after expulsion? At least India would have succeeded in rousing UP and Bihar by administering shock therapy, and having a couple of economic powerhouses in its midst isn’t too bad.