Finance minister Arun Jaitley’s call on Monday for states to compete for investment is a worthy sentiment. And it is in keeping with the government’s devolving a greater share of tax revenue and responsibility for social schemes to state governments as well. But the anodyne justice Vishnu Sahai Commission report on the 2013 Muzaffarnagar riots—just tabled in the Uttar Pradesh Assembly—highlights the spoiler role local politics can play.
Economic reform and competitiveness require political stability and predictability. Those are qualities often lacking in the states that require that reform most—due in large part to parties of every hue using lowest common denominator tactics to build and cater to voter bases split along caste and religious lines. As the Uttar Pradesh polls draw nearer, for instance, this is likely to be in ever greater evidence. It remains to be seen how economic competition and the exigencies of local politics will arrive at a modus vivendi.