Externalising federalism: Need a greater role for states

Systemic changes that facilitate the ability of states to engage on external trade and investment issues in a more autonomous manner should be open for negotiations as we head towards delimitation in 2026.

ByVijayalakshmi Balakrishnan

Published Feb 20, 2023 | 1:36 PM Updated Feb 20, 2023 | 1:36 PM

A poster titled 'Invest in Tamil Nadu: India's only advanced manfucturing hub' at Davos 2023. As delimitation 2026 nears, states should be given more autonomy to engage in external trade and investment issues

The Ministry of External Affairs has had a states division since 2014. A decade later, it is certainly time to consider states’ desks within India’s diplomatic missions

Davos 2023 saw competitive federalism, in spades. Punjab’s delegation was shepherded by Rajya Sabha MP Raghav Chadha, on his second outing at the gathering. As he explained to more than one television channel, everyone is trying to get a larger slice of the investment pudding on offer.

Tamil Nadu offered free Wi-Fi and south Indian food, also free, to those who dropped by at their space. Telangana and Maharashtra were not far behind.

Unease over 2026 delimitation in South India

The PM, an early votary of the concept of competitive federalism, has in recent months, sought to dial back the competitiveness.

In his Independence Day address last year, he spoke of “cooperative, competitive federalism”, underlining the cooperative nature of India’s federalism and eulogising the coming together of the country in the time of Covid. That shift in focus is related to the looming shadow of 2026, when the next delimitation of political constituencies has to be done.

Population growth in India has been uneven, with the northern states having grown faster than the rest of the country. In the context of India’s federal structure, this potentially means that one-third of all members of Lok Sabha would represent only three states — Uttar Pradesh, Bihar, and Bengal — a scenario that generates unease in many parts of the country, particularly south of the Vindhyas.

Learning from friends

“What do a Geraldton fisherman, a Perth university vice-chancellor, a Pilbara mining executive and a Margaret river winemaker, have in common?” That’s the opening sentence of a LinkedIn post, by the deputy premier of the state of Western Australia

The answer, they were part of a 100-people-plus trade and investment delegation that travelled to India. Western Australia’s delegation was on its way in summer 2022, a good five months before the India-Australia free trade agreement was inked.

Western Australia was the vanguard — the state led and the national government followed.

Australia and Canada, fellow members of the Commonwealth, have federal structures — with regular friction between the Centre and states, a scenario familiar to all Indians.

Both countries are also favoured destinations, for Indians, seeking home and fortune overseas. A principal reason is the quality of life provided to their citizens— something India today can only aspire for.

Despite their many similarities, institutionally, both countries have chosen to take a different path on trade and investment decision-making compared to India. Provinces in those countries have always had a greater external role, with the trade and investment offices of state governments dovetailing with national diplomacy.

Role of states

India’s states have taken steps, some boldly and others hesitantly.

Tamil Nadu has had an externally focussed investment promotion hub, Guidance, established in 1992.

Neighbouring Kerala has had a department of non-resident Keralite affairs since 1996. Norka, was needed, as over 20 lakh Keralities, work overseas, and faced a series of small and large issues, both in the countries where they work and when they returned. Norka though was not directly mandated to facilitate trade and investment.

Dr Manmohan Singh, a long-term critic of India’s inward-looking trade policy, had established the Trade and Economic Relations Committee to refashion trade relationships.

During his state visit to Bangladesh in 2011, Singh’s delegation included the chief ministers of Bengal and the four Northeastern states that share a border with Bangladesh. That focus would be deepened by the next prime minister, who set up the states division within the MEA in his first year in office.

In May 2015, Prime Minister Narendra Modi signed a record 24 agreements with China, widening and deepening economic ties. Less noticed was the significance of an earlier visit by then Andhra Pradesh chief minister Chandrababu Naidu, who had visited China a few months prior, pegging his visit to the World Economic Forum-Asia gathering.

With a mandate to bring states and India’s external missions closer, to facilitate tourism, exports and investments, the states division is able to open doors and forge connections. This has benefitted many states, particularly in the Northeast, through a Northeast Round Table.

The larger states that have been externally focussed for a longer time have in-house expertise and significant networks, such as Guidance Tamil Nadu. These have been built over decades and could add depth to India’s economic diplomacy, if allowed to.

Reimagining 2026

Thinking and ideation on federalism have focused on the political, with representation being a potential friction-point. Delimitation in 2026, according to estimates, would mean that the number of seats available to the five southern states in Lok Sabha would drop from 129 to 108, reducing even further the role and influence of these states in national affairs.

Systemic changes, which facilitate the ability of states to engage on external trade and investment issues in a more autonomous manner, should be open for negotiations.

The Ministry of External Affairs has had a states division since 2014. A decade later, it is certainly time to consider states’ desks manned by state-professionals within India’s diplomatic missions. Davos, where the states led the charm offensive for investments, could become a metaphor for reimagining federalism within the idea of India.

(The author lives in a village in south India, and looks at the rest of India and the world from that perspective. She has been a journalist, a development worker, and a writer and podcaster over the years. She is author of ‘Growing Up And Away, Narratives of Indian Childhoods’. Email: baroquepodcast@gmail.com. These are the personal views of the author)