The Regional Roundtable, Goa, fourth in the series of Roundtables was held as a precursor to the 4th International Conference on Federalism on 30 - 31 July, 2007. The objective of the Roundtable was to identify cases and Case Presenters for the Work Sessions in the main Conference to be held between 5 - 7 November, 2007. The Roundtable was attended by civil servants and policy - makers from Departments of Finance, Home, Panchayati Raj, Rural Development, Water Resources and Urban Development from the Western States of Goa, Gujarat, Maharashtra, Rajasthan and Central States of M.P. and Chhattisgarh and experts and academicians.

·    Mr. Amitabha Pande, Secretary, Inter - State Council Secretariat in his introductory remarks said that India’s plurality contributes to its unity. He urged the Chairman, Administrative Reforms Commission to recommend and promote federal processes in the interest of vibrancy of country’s democratic traditions. The re - emergence of federalism is the most powerful strategic means of deepening democracy. The Inter - State Council (ISC) has to play a pivotal role in this process. He further enumerated the efforts of the ISCS to position itself as a “hub for policy and strategy making” through the practice of completely federal, participatory and consensus - building processes. He emphasised the need to reverse the present process of consensus building after the formulation of policies, and to work for attainment of the Gandhian vision of autonomous village – level governance units.
 

·    In his welcome address, Mr. J. P. Singh, Chief Secretary, Goa underlined the need for revisiting the Gadgil Formula whose application comes in the way of the progressive States’ getting their due share in revenue resources. Rationalisation of the present formula is required to meet the aspirations of the States which have moved on to the next trajectory of growth. The acid test of good governance lies in the extent to which it makes a difference to the quality of life of a common man. Recognition of this fact demands a judicious blend of strong Centre and equity and fairness in resources allocation to States. Offering perspectives from the Forum of Federations, Dr. Rupak Chattopadhyay traced the historical background of the Forum which came into being to contain the secessionist tendencies of the Quebec Province of Canada. The Forum had come a since then. Mr. A. Sengupta, Principal Adviser, Administrative Reforms Commission flagged the need for increasing empowerment of third level of governance i.e local bodies as also about the need to re - organise megacities.
 

·    Mr. M. Veerappa Moily, Chairman, Administrative Reforms Commission spoke about federalism being a strategic tool to keep the countries united. Counties like India, Belgium, Canada and Spain have conceded special rights to some territories to keep the provinces concerned within the federation. The setting up of Second Administrative Reforms Commission and the Second Centre-State Relations Commission is intended to suggest ways for strengthening of cooperative federalism. He asserted that there is no such thing as ideal model of federalism; each country has to devise its model, depending on its socio - economic conditions, history and genus of its people. He noted that Russia, which calls itself ‘federal’, is actually ‘unitary’, India is ‘federal’ while it does not use this word in its constitution. Continuing further, he said that the district planning has to be much more participatory. The message that should go down the line is that autonomy pre-supposes maturity, responsibility and accountability. He cited the need for dispute - resolution in water sharing , and halt to internecine competition in offering incentives to industries by States as some of the challenges in federal system. The subject of crisis management should be in Concurrent List as it often requires trans - boundary management. In order to be sustainable, the prosperity of nation has to be equitous and inclusive. If the strengthening of federalism requires revisiting our constitution, we may as well be prepared for it since the constitution of a nation is, and should be, a dynamic document.

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Session 1: How does the economy move ahead towards a Harmonized Goods and Services Tax System without impacting on State autonomy and sensitivity to diversity?

·    Dr. Pulin Nayak, Delhi School of Economics said that with the share of services sector in GDP rising from <19% to 54%, and a substantial accentuation of incomes in services sector, taxation of services has become imperative in our battle against poverty. While agriculture accounted for less than 19%, the population that still depended on agriculture was about 60% or more. The other issue of concern was the persisting problem of poverty, with about 27% of the population in the country living below the poverty line. Continuing he further said that the percentage share of direct and indirect taxes in central revenue is 15% and 85% respectively. Although Raja Chelliah Committee had recommended in its Report of 1993 that the share of direct taxes (income tax, corporation tax, etc.) should increase, the Goods Tax has remained the mainstay of Central Government revenue. Therefore the principal role Public Finance must be towards addressing these problems and reducing income disparities. Prof. V. N. Alok, Indian Institute of Public Administration observed that the target year of 2010 set for introduction of harmonized GST (HGST) by the Finance Minister appears to be too ambitious. The scenario of revenue - sharing between Centre and States is marked by sharp vertical imbalance. Simultaneously there is an acute horizontal imbalance i.e. inter-State variations in the economic conditions of various States e.g. per capita income of Goa being ten times higher than that of Bihar. While HGST is welcome to the industrial sector as it implies its having to deal with one agency, it amounts to erosion of States’ autonomy. He underlined the need for invoking Article 307 which relates to appointment of authority for carrying out the purposes of Articles 301 - 304 which deal with freedom of trade and commerce, and imposition of reasonable restrictions on the same among States. While harmonizing the tax rates, there was need to consider introduction of the concept of rate bags i.e. tax ranges which specify floor and ceiling rates.
 

1.  Ms. Jeejabai Mane, Deputy Commissioner, Commercial Taxes, Karnataka said that Indirect taxes in India constituted about 84% of total tax revenue, of which the States’ share is about 50%. The complexities in the taxation of indirect taxes give rise to the need for harmonization. In the process of such harmonization, it is important to recognize regional diversity and local autonomy. The design of a harmonized tax system in a federal country therefore should show both the principles of a sound tax system and that of fiscal autonomy to the states. She made out a case for levy of concurrent GST by Centre and States, consistent with the Quebec Model. Under this model the GST is collected by the State, and a share of it is remitted to the Centre. The pre-requisites for implementation of the GST comprise deciphering the value chain from the point of manufacture to the point of consumption and therefore has to be done sector - wise and industry - wise; and working out an input – output ratio of both goods and services, among others. She underlined the need for appropriate constitutional amendment, if necessary, strong administrative structures at State level, training of man-power and computerization to enable the States to discharge the widened role. Mr. A. P. Srivastava, Secretary, Finance, Madhya Pradesh was of the view that it is appropriate that Centre collects the GST and remits to the States. He made out a case for compensation for resource - bearing States. Mr. T. R. Raghunandan, Joint Secretary, Ministry of Panchayati Raj was critical of the erosion of the autonomy of local bodies by States which is evident when taxes and surcharges which / the share of which flows to local bodies are altogether dropped / substantially reduced e.g. surcharge on Stamp Duty and Octroi unilaterally. Prof. Pulin Nayak, Delhi School of Economics observed that the GST should be redistributive in nature and part of it should also flow to the local bodies.

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Session 2: Maintenance of economic stability and state autonomy within Constitution framework, and potential for conflict in fiscal arrangements at policy and administrative levels.

·    Dr. B. K. Joshi, former Director, Giri Institute of Development, Lucknow, in his presentation pointed out that the number of items figuring on Union List stands at 100 while those on State List are 62. The number of items on Concurrent List at present stands at 52 and has shown a trend for continual increase. The recent additions to Concurrent List relate to forests, deployment of armed forces and levy of tax on Services. It is notable that the Planning Commission, which does not owe its existence to Constitutional provisions dictates the size, scale and constituents of the various development programmes of the States. The significant increase in the number of CS and CSS Schemes (there are at present 150 such schemes in Uttarakhand) is a cause of worry. There are two distinct features that detract from the State’s autonomy namely centralization in favour of centre and decentralization in favour of local bodies. Continuing further he said that federalism is like Work in Progress and is not a finished product; it is, therefore, ever-evolving. Mr. K. P. Srivastava, Secretary, Finance, Madhya Pradesh, expressed the view that grant of incentives to SEZs tantamounts to development of already developed areas. The predominance of CS / CSS Schemes also implies that States which perform better under these schemes continue to benefit from these schemes while other States continue to lag behind.

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Session 3: Functioning of Local Governments and their relationship with upper levels of Government.

·    Ms. Meenakshi Dutta Ghosh, Secretary, Ministry of Panchayati Raj said that India is one of the few countries which empowered local bodies through constitutional amendment, Sweden being the other such country. Many countries have done so through legislative means; the Republic of China has done so through executive order. There is a wide difference between China and India in terms of percentage share in consolidated / expenditure through Panchayats (China’s being 51% and India’s 3%), and as percentage expenditure of GDP through local bodies (China’s being 10.8%, and India’s 0.75%). She spoke of the reluctance on part of both Centre and States in empowerment of Panchayats. She said that the 73rd Amendment in the Constitution leaves the entire process of devolution to the States. Thus, the greater responsibility may, therefore, vest with the States. However, the Centre also has its obligation to discharge. Following the Xth Finance Commission’s recommendations, the States are expected to pay a penal interest of 6% to rural local bodies (RLBs). However, the quantum of allocation under Central Sector and Centrally Sponsored Schemes continues to be as high as Rs. 81,000 crores. Much of it should go to the State Sector and RLBs. Mr. T. R. Raghunandan, Joint Secretary, Ministry of Panchayati Raj informed that India has 2,33,913 Panchayats, having 26,56,476 elected representatives, of which 38 % are women. The real empowerment of rural local bodies will be achieved by having a grid of activities which can be entrusted to the panchayats. The decision as to which agency should collect taxes should be based on factors of economy of scale, equity and heterogeneity of demand. The mindset of the District Collector has to change; he has to accept the fact that he is not the hub from where all funds flow to the grass - root levels. Citing the example of Kerala, he said that the funds to the Panchayati Raj Institutions (PRIs) flow directly from the Treasury to the PRIs. The State of Kerala has implemented the instructions on decentralized planning in the light of the provisions of Planning Commission’s instructions contained in circular dated 25.8.06 the fund allocation should be made in a two - pronged manner, tied funds as per the basic capacity of the receiving entity, an untied funds as per the innovations and initiatives. The real challenge lies in ‘making democracy work for the people’, to quote Dr. Amartaya Sen.
 

1.  Dr. G. Palanithurai, representing a Voluntary Agency from Madurai said that although China has empowered the local bodies through executive order, the extent of empowerment that has taken place in China is much more wide and deep than in our country where the empowerment has taken place through constitutional provisions. The situation has led to an attitude of indifference on the part of civil society, particularly the youth. The attitude of political leaders and civil servants was rather feudal and not that of a leader or a motivator. The precise contours of relationship between the State Governments and local bodies, and between the Block and local bodies need to be studied at length as also the relationship between Line Departments and rural and urban local bodies. Prof. Vinod Vyasulu, Centre for Policy Studies, Bangalore, flagged the need for mapping of Gram Panchayat - wise resources. Prof. Balveer Arora, JNU observed that though the constitution provides for triple tier of federalism, there is an asymmetrical federalism in the country. He said that it would be preferable to catalogue the distortions and minimize them rather than revisit and undertake amendments of constitutional provisions. The remedy lies in tweaking the Constitution’s provisions, and making them work. Prof. Akhtar Majeed, Director, Centre for Federal Studies, Jamia Hamdard, favoured amendments in the Constitution. There is a need to provide for a separate cadre of services for local bodies. It was informed that the Administrative Reforms Commission was contemplating the merger of the affairs of urban local bodies and rural local bodies into one Ministry.

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Session 4: The Role of the States in the light of increasing emphasis on Police Reforms.

·    Mr. Ved Marwah, retired Police Commissioner, Delhi noted that there is a total unity between Union and State Governments to block police reforms. No recommendations have been implemented in the last sixty years regarding police reforms. Some small States have implemented but the large States are protesting against the directions of the Supreme Court. The small States in the North-east are simply not bothered about police reforms at all. Police forces are highly polarized on ethnic grounds. The rule of law has completely collapsed. The flaw lies in the way the external elements have interfered in the command and control structure of the police, and most of the time, with mala fide intentions. Police postings and promotions are political in nature while these should be professionally handled, and as such should be based on performance, experience and seniority. Corruption and nepotism also has its role to play in recruiting police staff at every level. This violates the very structure of police force because police force is supposed to enforce the law, and law means that the Constitution is supreme, which guarantees fundamental rights to every citizen in the society. If police force is discriminated on the basis of caste and class, then there is a huge problem that needs to be addressed. Continuing further, he said that the common man does not have a very good experience upon visiting a Police Station. This is an area where the process of public complaints should not only be dealt with by internal mechanism but also external mechanism. This is one of the recommendations made by the National Police Commission and also by the directives of the Supreme Court. He referred to increase in crime having inter-state dimension, international dimension, the problem of organized crime, international criminal syndicates, international terrorism, and rise of various fundamentalist and extremist groups. On top of it, the States do not take responsibility of dealing with law & order problems resulting from Maoism, Naxalism and insurgency and expect the Central Government to take the lead role. He referred to the constraints imposed by the tendency on the part of various political leaders to use Police for political and personal agenda. He suggested that Inter-State Council can undertake study in inter-state cooperation in handling crime.
 

1.  Mr. Praveen Dixit, Additional DG Police, Maharashtra outlined the steps taken by his State in dealing with law & order situation. The Maharashtra government is the only government in India which has special detention provision called MOCA and is serving quite well. Unfortunately, Mumbai police is not the best police as it used to be earlier. The manner in which situations are dealt with by the police leaves much to be desired. The police force should function in a professional manner and address the needs of the citizens in that manner.

He said that there was a case for reviewing the percentages of All India Service Officer taken on the rolls of the State Government from the insider and outsider quota; for changes in the assessment system; for increasing practice of e-governance in the interest of transparency and accountability; and for greater inter - state cooperation.

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Session 5: How can challenges caused by Climate Change, specially to agriculture, water resources and power (primarily State subjects) be handled in a coordinated manner in a federal system?

·    Dr. Prodipto Ghosh, Distinguished Fellow, TERI and former Secretary, Environment & Forests pointed out that Climate Change by broad scientific consensus results from emission of gases mainly carbon dioxide, methane, and nitrogen oxide and from various economic activities. These economic activities impact on the entire range of human activities and consumption. The forest has a major role with respect to climate change that is green but not matured forest. The fall - outs of Climate Change are manifested through a number of phenomena namely increase in temperature, the sea - level rise, the changes in levels of precipitation, rains, snow, ice. It may impact health parameters and particularly weather - related mortality, infectious diseases, and various air quality respiratory diseases may increase in frequency and intensity. It will have impact on agriculture especially crop yields and demand for irrigation. It may also impact forest composition and the geographic range of forests, forest health and productivity. It may impact water supply, water quality and competition for water. It can impact heavily on coastal resources and may result in ecological changes with loss of habitat and species. It can also impact on the snow / ice cover on the earth which in turn will have tremendous fall - out on the earth’s climate. The first thing that climate change does is that it changes the mean. When it changes the mean, a significant area comes under the definition of extreme weather event. However, the distribution becomes flatter, in other words the variance increases and these two have a significant impact on the occurrences of extreme events. If put together, i.e. a shift in the mean and a shift in the variance may increase the probability of two hundred kilometer cyclone many times over.
 

1.  On the possibility of further global warming, Dr. Ghosh said that continued emissions at or above current levels would continue further warming. It may induce many changes in the global climate system. In this century larger variations than what were observed in the 20th century would be evident. And, in the next two decades a warming of 0.2 degrees per decade is projected. A comparison of what actually happened in the past several decades with the earlier projections by the Inter - governmental Panel on Climate Change (IPCC) corresponds very closely with the range projected by the IPCC earlier. Referring to the future scenario, Dr. Ghosh said that there is a likelihood of increased instances of flooding. There would be reduction and greater variability of yields in kharif crops, which are the crops of the monsoon season. Increase in the yield of rabi crops is possible primarily due to greater water retention and silt deposits due to increased flooding. The yield of irrigated crops may decrease owing to reduced water availability and elevated temperatures. The immediate effect would be that farmers’ income would fall sharply. Therefore there is a need to enhance measures for flood abatement, regional planning to avoid increased settlements at flood plains and interference with natural drainage patterns. Flood control measures will need to be synergistic with enhanced reservoir capacity. Inter - basin river transfers may involve large net power requirements because it is not all gravity flow. And adaptation in all cases will need to be regulated by tariff and regulatory reforms.
 

2.  For many decades we have had many large nationally funded programs to deal with climate variability. There has been an effort to identify the various Plan Schemes that will address climate variability. There are 22 schemes in respect to crop improvement and research, 19 schemes in respect to drought - proofing and flood control, 19 schemes for health improvement and prevention of disease, 6 schemes with respect to risk financing, 6 schemes with respect to disaster management and 12 schemes with respect to forest conservation and 30 schemes with respect to poverty alleviation and livelihood preservation. Nearly, 10.8 % of total fiscal expenditures in the last financial year were spent on adaptation to climate variability and this amounts to 2.17% of GDP spent on climate variability. It is comparable to spending in other social sectors like health and education. While there are a number of schemes aimed at adapting to climate change, the percentage of budgetary resources allocated for forestry remained as low as .97% of the budgetary allocation. This needs to be substantially enhanced. The most effective response to adverse climatic condition is economic and livelihood diversification - if people are less dependent on agriculture, they will be less vulnerable. And to enable this to happen, there are other indirect measures such as universalization of education, access to health care, extension of infrastructure namely roads and electricity, connectivity, and access to financial services such as credit, debit and insurance. These would enable vulnerable communities to move out of the vulnerable sectors to less vulnerable sectors. Poverty alleviation is the best adaptation strategy.
 

3.  Ms. Ligia Noronha, Fellow, TERI said that a great deal of adaptation against climate change needs to be practiced at the local level. Dr. R. K. Midha, former Adviser, Department of Science & Technology spoke about the need for compatibility between natural resources and farming pattern, including agriculture practices. He also flagged the need for capacity building at village level for data collection on meteorology. Agriculture can become more efficient and precise in the use of resources if we can find our agricultural system on more scientific moorings. There is a need for better decision support models which can be used at the district and reach the farmers with better communication tools. In all, there is a need in saving the cost borne by the farmers as a result of climate change.
 

4.  Winding up the discussion on the subject, Dr. P. Ghosh said that there is too much politics involved in removing the subsidies and reducing the pressure on the use of systems. India is not giving sufficient attention to lands which are vulnerable to sea level rise. Second, regarding efficiency of water use, 80% of the water resources are used for irrigation. If we have to really reduce the flow of water resources we have to make our irrigation / cropping system much more efficient. Third, we do not need incentives to manage our own resources. Constantly asking the centre for incentives will centralize the entire process rather than decentralizing it. Fourth, cars on the roads are creating much more pollution than domestic fuels in rural areas. Much of the climate change can be attributed to pollution caused by the number of cars driven on roads rather than fuels burnt in villages. The move to clean bio -mass only adds to other problems and adds on the problems of climate change. Fifth, beyond a certain point, green house emissions abatement will involve significant economic costs. How significant are a matter of debate and the whole question of climate change negotiations is about sharing of this particular burden. India has substantially delinked its growth rate from the increase of its primary energy use. Dr. P. Ghosh also spoke about the vast scope for carbon trading under Clean Development Mechanism (CDM Projects). There are more than six hundred projects in the pipeline and 60,000 crores investments made.

Session 6: Role that the Inter - State Council can play in policy making / strategy planning in a federal system and in improving inter -governmental interactions.

Mr. Amitabha Pande, Secretary, Inter-State Council said that the General Elections held in 1967 marked the emergence of regional parties on the Indian political scene. It was followed by the Administrative Reforms Commission, 1969 recommending constitution of Inter-State Council, and by Rajamannar Committee (constituted by the State Government of Tamil Nadu) reaffirming the same. The Sarkaria Commission went a step ahead and recommended setting up of the Council under Article 263 of the Constitution. It led to the setting up of the Inter-State Council on 28th May, 1990 by Presidential Order. Amongst the new directions for the Council are preparation of agenda items for the Council through consensus-building, facilitating research papers and getting them peer-review, and preparation of policy papers with inputs and participation from multiple stakeholders. The future areas of activity include, among others, National Centre for Good Governance and stepping up the pace of Good Governance initiatives. Continuing further the Secretary said that the issues for consideration were as to where to place the ISCS (at present it is with the Ministry of Home Affairs), identification of State-level nodal points (in some States they are in General Administration, and in some Home, and rarely in the CM’s Office where they should rightly be), and structure and frequency of zonal meetings for inter-state cooperation.
 

1.  Tracing the historical background, Prof. Balveer Arora, JNU recalled that CPI (M) had wanted the Commission on Centre-State Relations in 1977 but the same had not been agreed to at that point of time. The Inter-State Council is intended to provide more space and voice to the States. The proposed National Centre for Good Governance should be looking at the areas of Centre-State and inter-state cooperation. The Centre should also be disseminating good practices on subjects like climate change and disaster management as these transcend inter-state boundaries and impinge on the working of multiple Ministries. Prof. M.P. Singh, Department of Political Science, Delhi University, expressed the view that ISCS should strive for autonomy on the lines of the Election Commission of India. Mr. S. Lakshminarayanan, former Secretary, ISCS suggested that the ISCS should service the Interlocutors appointed to look at the Special Problems e.g. J&K Issue, Insurgency in North-Eastern Region and problems of Naxalism-infested areas. Dr. Rekha Saxena, Centre for Federal Studies, Jamia Hamdard, proposed merger of Inter-State Council and National Development Council.
 

2.  Mr. Pradeep Dixit, Additional DG (Police), Maharashtra, suggested that the Council may undertake documentation of the best practices of the States and put them on the website for dissemination. Ms. Veena Upadhyaya, Additional Secretary & Adviser, Inter-State Council Secretariat said that there ought to be an organic link between the ISCS and other Commissions and entities looking at the whole gamut of Centre-State issues namely National Development Council, Disaster Management Authority, Finance Commission and other such bodies whose mandate transcends state boundaries. The Council’s role as an alembic for presenting the States’ viewpoint to the Cabinet Secretariat and Prime Minister’s Office should get strengthened. The nodal points for interaction between the Council and the State Governments should be located in the offices of Chief Ministers of the States.
 

3.  Mr. Amitabha Pande concluded the discussion by calling upon the participants from States to share the perceptions articulated in this forum with the Chief Ministers’ offices of their respective States and share the States’ response on these issues with the Council.
 

The Regional Roundtable, Goa ended with a Vote of Thanks to the Chair