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Ourview | The more the merrier?

Ourview | The more the merrier?
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First Published: Wed, Nov 16 2011. 10 12 PM IST

Jayachandran/Mint
Jayachandran/Mint
Updated: Wed, Nov 16 2011. 10 12 PM IST
There is nothing new in the demand for new states in the country.
The original demand made soon after independence was based on creating linguistically homogeneous states. Today, however, most of such demands are self-serving. The plan to divide Uttar Pradesh (UP) into four separate states falls in this class.
The UP cabinet on Tuesday approved a plan to split the state into four: eastern, central, western and Bundelkhand provinces. After the state assembly passes a resolution recommending this step, Parliament has to give its seal of approval.
Jayachandran/Mint
The case for small states in this age rests on two linked arguments. One, that smaller states are better administered. And after a divorce from their big parents, leaders and administrators in the new entities can focus their energy on development and related issues. Nothing can be farther from the truth.
In reality, most new states—at one point also called special category states—are hobbled from the start. To start with, their revenue base is so weak that without fiscal transfers from the Union government, their existence would be in doubt. Then, the bulk of the financial support they receive is used up in trying to build the new capital. Whatever little remains is then gobbled up by administrative services. There is virtually nothing left to spend on “development”.
Even a cursory look at what is being planned in UP will show this to be true. For example, the proposed state of Bundelkhand is bereft of any resources required to run a viable state. It is not clear if a “feasibility study” has been conducted to find out if this state can be run on sound principles at all.
One could, conceivably, argue that these new states can attract private investment with generous tax breaks. That road, too, is blocked for most new states. In the first place, many of them hardly have the kind of resources that would attract investors. Even mineral rich states such as Chhattisgarh and Jharkhand are having a difficult time trying to keep financial order. If one is realistic, the other extreme—that of new states taxing whatever they can lay their hands on—is more likely. The panic among big companies and investors in Hyderabad is driven by the fear that if Telangana comes into existence, they will be squeezed hard.
The fact of the matter, however unpalatable it may be, is that the movement for new states is motivated by people who find the competition—in politics, in administration and in the job market—in existing states to be too hard. The prospect of a brand new legislature, new jobs and new sources of rent-seeking is too tempting to give up.
Does India need new states? Tell us at views@livemint.com
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First Published: Wed, Nov 16 2011. 10 12 PM IST