No state is special
Competitive federalism will be a non-starter if states don’t wean themselves off central largesse
The Andhra Pradesh (AP) government has been demanding a special category status (SCS) for the state, and Congress president Rahul Gandhi has lent support to the cause. But AP is not the first state asking for the status; Bihar and Odisha have done so earlier. This shows the perverse demand for central government sops .
Special, area-based sops were introduced by the Fifth Finance Commission to share the development cost of economically disadvantaged regions; hence the inclusion of the north-eastern and northern hilly states. But there is no substitute for good development policies, which large states such as AP have failed to institute. For instance, most job opportunities are located in Hyderabad, as a result of highly centralized development. The state government should move forward by implementing wider reforms and more equitable investment throughout the state.
To its credit, the 14th Finance Commission has already blunted the benefit of the SCS tag. Competitive federalism will be a non-starter if states don’t wean themselves off central largesse.
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