This Article is From Sep 08, 2015

Must Bihar Pay For Nitish Not Dining With Modi?

Narendra Modi's opening salvo in the forthcoming Bihar elections, which will determine whether his government is merely in difficulty or in free-fall, has been to make a nasty remark about his rival, Nitish Kumar's DNA. This follows Nitin Gadkari's "quip" that "casteism is in Bihar's DNA". Little wonder Nitish is incensed. He has retorted that his DNA is the same as every true Bihari's DNA and that this is the DNA of the cradle of India's civilization, home and workplace of both Gautama Buddha and Asoka, home to India's long history from Nalanda to Champaran. What Nitish did not add is that DNA, in India, stands for Dharma, Niti, Acharan (Righteousness, Right Policy and Right Behaviour) - and that what Modi and his cohort have demonstrated is that Modi and they lack altogether any such DNA.

Modi sought to sweeten the pill by promising Bihar not only "3.45 lakh crore rupees in various schemes" but also a "big economic package". The Centrally Sponsored Schemes are, in any case, for all States, so it is quite fraudulent to pretend that this is something special for Bihar. And as for the mega-package, which Modi's men say could amount to as much as Rs. 50,000 crore, that should have nothing to do with who wins the Bihar elections - for if Modi means the package would be available only if the BJP wins, the Election Commission should examine whether this does not amount to bribing the electorate. 

The crux of Bihar's present problems is the way Modi's claim of "cooperative federalism" has been playing out for Bihar. The essence of that claim is that his government have accepted in toto the recommendation of the 14th Financial Commission (FC) to increase the share of States in the net revenue pool of the Centre from 32 per cent to 42 percent. This has resulted in total funding for the States from the net Central revenue pool rising from Rs. 14 lakh crore in the previous five-year period to Rs. 40 lakh crore over the present five-year period, 2015-2020. While this has translated for Bihar into an augmentation in its share from Rs. 1.5 lakh crore to Rs. 3.75 lakh crore, the fact is that, in percentage terms, Bihar's share of the pool has declined from 10.92 percent under FC 13 (2010-15) to 9.67 per cent under FC 14. This implies that Bihar will be losing over Rs. 60,000 crore in the coming five years compared to what it would have received had Bihar's share been maintained at the FC 13 figure of 10.92 per cent.  

Moreover, if the percentage of total tax devolution to the states is compared to Bihar's entitlement, it is found that because Bihar's entitlement is below average, there is a further notional loss of more than Rs. 45,000 crore over the five-year period. Therefore, Modi's "promise" of a mega-package of some Rs. 50,000 crore adds up merely to partially returning to Bihar with the right hand what has been snatched from it by the left hand. 

Besides losing some Rs. 61,000 crore because FC 14 has changed FC 13's basis for determining entitlements, Modi's decision to replace the Planning Commission with a NITI Aayog means the "additional central assistance" that Bihar has been traditionally receiving to compensate for its economic backwardness will no longer be available. Over and above this loss, the termination of the Backward Regions Grant Fund, initiated by UPA-I, of which Bihar was the biggest beneficiary, means that such extra funding also goes. Altogether, Modi's version of "cooperative federalism" is depriving Bihar of about one lakh crore rupees a year. That is a pretty high price Bihar is being made to pay for Nitish not inviting Modi to dinner because he did not want his tablecloth stained with the blood of Gujarat's pogrom of 2002.

Anticipating the financial crisis that Bihar (and a few other states) would face as a result of the basis on which FC 14 calculated its allocations, Abhijit Sen of the Planning Commission submitted a dissenting note to FC 14's recommendations arguing that "Odisha and Bihar will be allocated lesser amounts as they are not even included in the list of states deserving grant-in-aid for a revenue deficit".

All this could and should have been anticipated by Arun Jaitley when he was presenting his Budget after accepting FC 14's recommendations. Instead, he rode roughshod over Bihar's concerns by way of wreaking vengeance on Nitish for his having snubbed Modi. This is the real character of Modi's "cooperative federalism". The muted response of the Bihari voter to Modi's inducements shows that the Bihari voter is not willing to be fooled a second time round.

When Nitish Kumar found that the net consequence of Modi's financial games was that Bihar would, at a very conservative estimate, be losing at least Rs.10,000 crore in fiscal 2016 alone, he tried to get to get together an all-party team to register Bihar's needs with the Prime Minister. Initially, the Bihar branch of the BJP cooperated - for this was not a party matter, but concerned the economic development of all Biharis and all of Bihar. Then, at the last moment, doubtless because of Amit Shah-style arm-twisting from above, the Bihar BJP contingent withdrew from the joint Bihar initiative. Expressing his "sadness" at the BJP not making common cause with other Bihar parties, Nitish Kumar said: "There was no reason for their not coming. What they did was completely inappropriate. I am sad because party-based division should not be on such an important issue. It is a question of the welfare of Bihar and its people...The BJP should not adopt such a stubborn and negative approach. We are not going to criticize or accuse anybody. We are demanding our rights."

This sets the real theme for the coming elections. The outcome will not be determined by the calculus of caste, but by whether the current slowdown in Bihar's spectacular growth can best be reversed by Modi's financial antics or by sound governance under Nitish Kumar. The Bihar electorate knows that notwithstanding their having been the bulwark of Modi's spectacular Lok Sabha victory in the state, everything that has happened since Modi's ascent to the Dilli gaddi has been to the detriment of Bihar. Where Nitish took his charge from 'failed state' status to the fastest-growing economy in the country, outclassing (among others) Gujarat in terms of State GDP growth, the past year has been Centre-induced slowdown. While drastically slashing Central government grants for social sector schemes, the Centre has also been squeezing Bihar's finances while pretending that allocations have risen. 

The allocations nation-wide for "schemes fully supported by the Union" have been reduced by some 65 percent. For "schemes to be implemented with a changed sharing pattern", Central outlays have been cut to a half (e.g. Integrated Child Development Scheme) and even to a quarter (e.g. elementary education). And as many as 26 schemes, accounting for over Rs. 67,000 crore, have been terminated altogether, while Normal Plan Assistance has also been ended. How are states like Bihar to take on huge new unprecedented financial obligations with no increase - indeed some pruning - of the finances at their disposal?

All this is going to figure in the coming Bihar elections. And in Nitish Kumar's powerful oratory, Modi is going to discover his match. The BJP's 'jumlas' worked once. They are not going to work again. While Nitish will probably not be able to match Kejriwal's thrashing of Modi's men at the polls, there is little doubt that Modi's fading sheen will suffer further loss of shine come the Bihar elections, probably in October-November. It is an election that could sound the knell for the four years that remain for Modi.

(Mani Shankar Aiyar is a Congress MP in the Rajya Sabha.)

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