Inter-State Cooperation : Problems and Imperatives

COOPERATION AMONG THE NORTH INDIAN STATES: LESSONS SO FAR AND ROAD AHEAD

ABSTRACT

The paper attempts to address the question of cooperation among the Indian States with particular focus on the north Indian States. It briefly deals with the existing platforms for centre-State and inter-State cooperation and analyses the mechanics of such cooperation. It attempts to capture the changed political scenario at the Centre and in the States which calls for a greater harmony in cooperation. It analyses the experience of Himachal Pradesh in the context of regional cooperation and specifically points to the problems encountered by Himachal Pradesh in furthering the cooperation within the northern region. It deals with the future possibilities of cooperation in specific sectors and also suggests the broad framework of enabling environment. It also underlines the institutional mechanism necessary for enabling cooperation among the States in the northern region.

PRELIMINARY

As the world keeps getting smaller metaphorically as also in real sense, it is almost impossible to imagine that individuals, states (in the Indian context), nations or any geographical entity could survive and sustain itself on a “stand alone” basis. The underlying idea is that there is a definite and very high level of inter-dependence emerging in the modern times which would force the players to get together, think and act together and prosper together by a certain well understood system of “give and take” under which the outcomes would lead to a larger collective as also individual benefit. This statement is easily made but requires a massive effort to be realized. Another important aspect which needs to high-lighted in the beginning is that too much emphasis on the past history of success or failures of the past bilateral or multilateral collective efforts or cooperation, if one may like to call it so, would not let any new ground to be broken, and thus jeopardize the possibility of cooperation into the future.

A quick jibe at the concept of cooperation is also interesting to be mentioned here. In the history of cooperatives in this part of the country, we have a massive graveyard of failed cooperatives’ initiatives vis-à-vis success stories. The colloquial wisdom enlightens us that we have an overwhelmingly large number of failures than successes in the cooperatives because of a singular fact. The fact is that most of the cooperatives in this country are ab-initio a collective effort involving eleven individuals – one wolf and ten sheep. As the game of “cooperation” goes on, the wolf inevitably eats the sheep one by one and finally walks away to form another cooperative on the same premise and with the same ulterior objective. If one is to talk about such a concept of cooperation among Indian States, the idea starts off with negativity. Therefore, the talk of cooperation among the Indian States should build upon cooperation among sheep necessarily where no sheep is in the danger of being eaten away by a wolf or in some cases, a pack of wolves! A quote from the greatest minds of our times, Albert Einstein, sums up the spirit of cooperation and how it could become possible: “In order to form an immaculate member of a flock of sheep one must, above all, be a sheep”.

EXISTING PLATFORMS FOR CENTRE-STATE OR INTER-STATE COOPERATION

There is a whole host of platforms available in India which have been created or launched with the underlying assumption of eliciting inter-State cooperation or Centre-State coordination. These are of both kinds – statutory as well as non-statutory. These include the Zonal Councils and the Inter State Council; the National Development Council; the North Eastern Council; and the National Capital Region Planning Board, to name some prominent ones. With the exception of the Inter State Council and the National Development Council which have all the States on board, all other known examples comprise of the regional or inter State initiatives for cooperating with each other. The history of functioning of these platforms does not reassure us that such initiatives work with a high degree of efficacy towards enhancing the larger good and benefitting all. Other than these, there is a plethora of inter-State bilateral arrangements, especially on exploitation of water resources, which despite the legal enforceability having been endowed upon them, have suffered from some limitations of implementation. Details of these would be dealt with in the subsequent text, bringing out the problems and possible ways to deal with such problems.

Examples are also available where two or more States have formally joined hands to cooperate with each other to the mutual benefit. But such initiatives have not traversed long distance of cooperation on account of factors like loss of interest, extinguishment of individual initiative, opposing political ideologies coming to power in different States or a shift in the priorities among the participating States. One example which immediately comes to mind is the bipartite memorandum of understanding between Himachal Pradesh and Uttarakhand which was entered into in the year 2006. This was initially sought to be forged between the States of Jammu and Kashmir, Himachal Pradesh and Uttarakhand a couple of years ago. This did not reach finality due to inadequate response from all the participants and finally a Memorandum of Understanding was inked between Himachal Pradesh and Uttarakhand in 2006. This has not made any perceptible headway in realizing its agenda primarily due to the fact that the individuals involved in the agreement moved on and their successors did not find it interesting enough to pursue it with the required vigour. Another factor responsible for the arrangement to become a non-starter is duality of the coordinating secretariat for the agreement. The ethics of coordination demand that there should be a singular focal point for coordination to eliminate any haziness in ensuring this function. In the case cited above, the memorandum of understanding envisaged that there would be two coordinating points, one in Himachal Pradesh in the State Planning Department and the other in Uttarakhand in the Department of Forestry and Rural Development. As a result of this and the frequent changes of officials on both the ends, the intra-State coordination became a casualty leading to the inter-State MOU becoming a non-starter. Ideally, one coordinating point in either of the two States could have served the ends better because distributed responsibility is nobody’s responsibility.

Briefly reflecting on the efficacy of the existing mechanisms for inter-State cooperation, the experience with the working of the zonal councils is not something to write home about. The experience with the Northern Zonal Council reveals that some of the items have been on the agenda for over two decades without any movement in the direction of meaningful resolution. The small road link from Baddi to Chandigarh has been hanging fire for a long time and is a typical example of the desired cooperation not being achieved despite repeated homilies to agreement on its significance. This link on completion can give long term spin-offs not only to Himachal Pradesh and to the neighbouring States but also to the national economy and regional environment by saving on fuel and time besides the wear and tear of vehicular traffic. If cooperation on such small projects is not easy, how can the cooperation on larger issues like hydro-electric projects or water sharing be arrived at.

The avoidable cost and time over-run on the Shahnehar medium irrigation project in Himachal Pradesh has resulted from the Punjab Government dithering from its written commitment to finance it and the delay has resulted in depriving the farmers in Himachal Pradesh of their legitimate water access to irrigate their crops. Punjab delayed the initiation of implementation by raising several questions in contravention of the agreement for nearly a decade. The matter became embroiled in this see saw battle and ultimately the issue was referred to an Arbitrator. The Arbitrator’s award became a ruling of the court because the State of Punjab could not contest the award as it had no such ground available to it. The delay on the part of Punjab in this case seems to originate from perpetuating the wrongful claim and use of the water share of Himachal Pradesh and expeditious completion of the Shahnehar Project will put an end to this wrong use by Punjab. A project of this type could be completed in a space of five years after the agreement was signed in 1983. Depriving over 20,000 farmers in Himachal Pradesh of their legitimate access to assured irrigation for such a long time has led to loss of productivity and livelihoods. Such a non-cooperation in neither justified nor in the overall interest of intra-regional inter-State cooperation. Punjab has at no stage denied that it would not fund the project as initially agreed to. In fact, Punjab has always promised to release its share for funding the project whenever a dialogue has taken place between the two States but when it comes to expeditious actual release of funds, these come in trickles on the pretext that the financial position of Punjab was precarious. So while the agreement stands, the implementation lingers on to the detriment of the farmers and the economy of Himachal Pradesh.

Talking about the Inter State Council (ISC), as is common knowledge, this platform became active after the Sarkaria Commission report was put under the scanner by the Government of India. The ISC since its constitution in 1990 has largely deliberated upon the recommendations of the Sarkaria Commission and the attempt in its deliberations has been focused on finding as large a commonality as possible on the recommendations for their implementation. This platform has so far deliberated on the Centre – State issues as emerged from the recommendations of the Sarkaria Commission. The permanent secretariat of the council classified the recommendations of the Sarkaria Commission into three categories: ones which already stood implemented; ones which could not be implemented; and ones on which consensus among the States was necessary for implementation. This was done after a comprehensive examination and consultation at the Central Government level initially and the States were taken on board later on. The follow up by the Secretariat of the council led to deduction of consensus on a wide range of issues. The original provisions in the Constitution do not limit the role of the Council only to this function. The provisions envisage the Council to be a trouble shooting forum for contentious issues between the States, investigating and discussing the subjects in which some or all States have a common interest and making recommendations for better coordination of policy and action with respect to such subjects. Its functioning as an efficient body to take up and resolve such issues has yet to be put to test or proven because the Council has so far been occupied with the gigantic task of the follow up work on the recommendations of the Sarkaria Commission. Only time will tell if the larger role of securing inter-State coordination by the Inter State Council would be realized.

National Development Council is the highest policy planning body in India in regard to all developmental issues. It is not a statutory body and therefore, all decisions of this council are by consensus. One who has seen the functioning of the National Development Council from close quarters for nearly three decades in the past would stand testimony to the fact that prior to 1990; the National Development Council functioned largely to impose a consensus which the Centre wanted the States to carry through. But post 1990, the States have become more vocal and powerful in the context of national governance as a result of the monolithic edifice of the Central and State governments giving way to plurality of political ideologies coming to centre stage as also in the regional arenas. There was time in the earlier decades of the Indian federation when with the exception of one or two States, one political outfit held power in the States as well as at the Centre. Times have changed drastically over the last decade. It has become almost unimaginable for a single political party to come to power at the Centre. On the contrary, the whole question of governance at the Central Government level has become a tight rope walk for the major political parties leading the coalitions since they have seek cooperation from a wide range of political ideologies and regional political outfits which at times could have pursued diametrically opposite political agenda. As a result of this changed scenario, the functioning of the National Development Council has paved the way for a greater and more appreciative Centre – State intercourse on developmental issues. Same also holds true for the Inter State Council for a much larger canvas of activities outside the developmental issues.

The story of North Eastern Council to ensure coordination between the north eastern States in regard to socio-economic development does have some element of achievements in the initial years but collective or cooperative effort to harness the water and power potential to the benefit of the entire region and subsequently the country have not materialized. Even on the critical issue of environment, the north eastern States have not been able to pursue a common agenda. This is despite the existence of a dedicated secretariat for the North Eastern Council whose prime responsibility is to oversee and coordinate inter-State projects in critical sectors which are vital to the objective of mainstreaming the north-eastern States with the rest of the country.

This section will be incomplete without a reference to the whole range of inter-State water agreements which have been signed over the last one hundred odd years. Many of the agreements today constitute a major bone of contention between the signatory States because lot of changes have taken place in the intervening period which result in one or the other State infringing upon the provisions of these agreements. The long standing water sharing dispute between Tamil Nadu and Karnataka is a classical example of this genre of inter-State irritation. With the water becoming an extremely critical commodity, the need for effective cooperation between the upstream and the downstream States hardly needs to be overemphasized.

Why is it so difficult for the States to cooperate with each other in areas of common interest? The problems arise when one of the participants takes or attempts to take undue advantage of its position, the power of bargaining and not treating all participants as equal. As and when one participant tends to assume the status of being “more equal than the others” or behave in that manner, the cooperation arrangements fail. As has been mentioned in the beginning, for cooperation to succeed, it is necessary that all are “Sheep” and no one attempts to be a “Wolf”. When powerful States in the Indian context assume the “Big Brother” attitude and treat the smaller or weaker States as children of the lesser God, the chances that cooperative endeavours will succeed become remote. The axiom that a State is a State and all States are equal, irrespective of their size, political clout or economic well being merits to be honoured in the interest of furthering the cause of cooperation.

COOPERATION AMONG THE NORTH INDIAN STATES

Coming to the question of cooperation among the north Indian States, one needs to appreciate the constraints imposed by history, geography, location, natural resource endowments, status of development and possibilities of growth. The northern Indian region comprises of the States of Jammu and Kashmir, Himachal Pradesh, Punjab, Haryana, Delhi, Rajasthan, Uttar Pradesh and Uttarakhand and the Union territory of Chandigarh.

Delhi is a State which has an unquestionable advantage of being the Capital State and therefore, has a position of advantage to seek and/or get cooperation from the States in the region in many ways. Jammu and Kashmir has a special strategic location and a distinctive position in the Indian Federation. It is also governed slightly differently as compared to most other States of the Indian Union. Still these States also can not do without eliciting cooperation from the States in the region due to the complexity of the linkages their economies have with the States in the region.

The States of Himachal Pradesh, Punjab and Haryana and the union territory of Chandigarh are, as a matter of fact, part of the erstwhile State of Punjab and thus carry a commonality of history. This could be a source of strength for forging inter-State cooperation but at the same time can have the inherent elements of discord. Similarly, the States of Uttarakhand and Uttar Pradesh also share common history but the basic reason for creation of Uttarakhand was the perpetuation of backwardness in that region by the Lucknow regime. The history of most of these States thus becomes an impediment in forging cooperation.

Talking of location as a condition imposing constraints on the possibilities of cooperation, the States in the northern India could be grouped into two categories : the States located in the hinterland like Jammu and Kashmir, Himachal Pradesh and Uttarakhand; and the mainstream States like Punjab, Haryana, Delhi, Uttar Pradesh and Rajasthan. The hinterland States are necessarily mountain States and the mainstream States are the plains. The hinterland States have certain natural resource endowments like water, forests and environment; and have the status of the “Giver” States whereas the mainstream States are the “Recipient” States or the beneficiary States. The hinterland States have a visible lack of self sufficiency in the matter of foodgrain output whereas the mainstream States are the food bowl of the country. The hinterland States are industrially underdeveloped but the mainstream States are highly industrially developed. Some of the examples given here indicate the direction which the cooperation among these States could take place by mutually benefitting each other. These converse situations provide an excellent platform and opportunity for intensive cooperation to enhance the mutual good.

A condition precedent for cooperation into future in any area of common interest or activity would be to remove the historic irritants. The unresolved issue of the share of Himachal Pradesh in the power generation of Bhakra Beas Management Board system is a typical case in point where missing one action by the Central Government at the given or required time has resulted in perpetual loss of Himachal Pradesh and the States of Punjab and Haryana have continued to benefit at the cost of Himachal Pradesh. Himachal Pradesh ultimately had to seek a legal remedy and file a case in the Supreme Court for obtaining its rights. Such a situation becomes detrimental to the scope of future cooperation. Another example is the intended delay in implementation of Shahnehar medium irrigation project in Kangra district as elaborated earlier as also the Changar irrigation project in Bilaspur district because the delay means continuing the utilization of the water share of Himachal Pradesh by Punjab. There may be many such instances in the case of other States but these have been mentioned to underline a point for resolution of past irritants towards paving the way for future cooperation.

A question thus arises as to where and how one could begin to further the cause of inter-State cooperation because the future belongs to cooperation and not isolationism. The areas which come into the radar would include water, environment, transport, tourism, agriculture and law and order. The last one becomes an important matter in the wake of terrorist activities, drug trafficking and general control of law and order.

COOPERATION POSSIBILITIES

Optimized exploitation of water resources in the face of rising concerns for water sufficiency both for life systems and farming systems on the one hand, and for power and industries, on the other, should become an area of high priority States which contribute to water availability will happily cooperate if the consuming States are willing to recompense the provider States. A mechanism of compensation should be adequate and enrich the otherwise poor financial resource base of the hinterland States towards neutralizing the locational disadvantage of industry. Exploiting water resources for hydroelectric generation through the cooperative mode could only make headway if the downstream participants are willing to not only agree to the principle of free power but also contribute to the equity share of the upstream States. The principle of free power needs a bit of elaboration here. The States which were endowed with enormous hydro-electric potential became sufferers of the developmental process when very large multipurpose river valley projects were implemented in the early decades in independent India. These projects led to submergence of vast areas of habitation and economic activity besides disruption of the developmental infrastructure. Relocation and resettlement of such populations and rehabilitation and reconstruction of the disrupted infrastructure have posed very cumbersome and difficult problems to the sufferer States. Towards working out a reasonable compensatory mechanism besides the instant costs being projectised from installation of such power generating utilities, the Government of India enunciated the principle of free power in September, 1990 to be made applicable to all new generation installations which came into commissioning after 7th September, 1990. The operative part of the principle dealing with free power states as under:-

“(b) 12 per cent of the power from the energy generated by the power station would be supplied free of cost to those States of the region (including the State where the hydroelectric project is located) where distress is caused by setting up the project at the specific site, like submergence, dislocation of population; the allocation being made in proportion to the extent of such distress. The energy generated figures for the purpose would be calculated at the bus bar level, i.e. after discounting auxiliary consumption but without taking into account the transmission line losses. The extent of distress caused would be assessed for purposes of allocation of 12 per cent free power by the Central Electricity Authority in consultation with the concerned States”.

Whereas the principle of free power is now an accepted situation for exploitation of the hydro-electric potential, the idea of contribution to the equity share of the upstream States by the downstream States could be tried to enhance the scope of cooperation. The equity share of the upstream States as agreed upon may be contributed by the downstream States initially and then recovered against the future sale of energy to these States by the upstream States. The economics of hydroelectric energy generation is lucrative enough for such an arrangement. If the private sector can come to Himachal Pradesh and provide competitive financial portfolios to the State for putting up hydro-electric projects, why can not the States of the region join hands to mutual benefit? The safeguards for payments should be strong enough to ensure that the State offering its water rights should be compensated a priori on a year to year basis and in the case of non-payment, it should have the unfettered right to suspend the supply of power. For this to happen, it would be necessary to have an agency which is superimposed on all the States and can adjudicate if required.

Cooperation in environmental issues is emerging as a sunrise activity. If the downstream States need sustained and clear water, they could choose to invest in the conservation and creation of more forest cover in the upstream States. If buying carbon credits can be practiced in the developed world, a similar mechanism could also be put to practice here. This would be a cooperation initiative for sustainability in the immediate context and for the very survival in the long term context. The incentive to Himachal Pradesh and Uttarakhand, for instance, for increasing the forest cover as also the density of forests needs to be appreciated by the downstream States and mechanisms for monetizing it need to be developed. The upstream States which are fiscally poor have a ready resource in forests and could exploit this resource to meet the developmental aspirations of its people. Symbiotic existence of these States demands that the downstream States pay for the developmental costs so that the forest cover is not only protected but also intensified. The principles of carbon credits or carbon sinks have come to be recognized as accepted methodology for environmental protection by the user States or downstream States or the polluters for compensating the upstream States which create, conserve and intensify the forest cover.

A mention of the inter-State cooperation in the tourism sector is necessary. It may be one of the easiest areas of cooperation especially in the mountain and pilgrim tourism in the hinterland States. The cooperation with the mainstream States could be on an integrated basis where all modes of transport also enter the cooperation network. A tourist could be picked up from anywhere and brought to Delhi before being taken to Uttarakhand, Himachal Pradesh and Jammu and Kashmir and then returned to Delhi. The diversity of activities is such that it could cater to all kinds of interests. Today, the tourist and specially the international tourist demands a very high degree of fastidiousness and needs it on a hassle-free basis. Cooperation among all the States of the region would be a gain: gain equation to all the participants; the States, the transport entities, the entertainment industry, the hoteliers, and above all the tourist. The tourism departments of the States could enter into an agreement whereby a central coordination entity is set up and located, say, in Delhi and it plans the detailed itineraries of the tourists visiting these States depending upon the time available with the tourist and the specific interest of the tourist. The tourism agencies of various States involved in implementing the plan would receive and hand over the tourist to the next in itinerary entity avoiding all the hassle for the tourist.

One of the sectors mentioned above where cooperation among the States could unleash a massive surge in the economic activity is agriculture. Each State should focus and identify its niche advantage in the farm sector and then all the States in the region could agree to utilize the natural advantage each has for producing foodgrains, vegetables, fruits, medicinal and aromatic herbs, dairy products, fisheries, etc. The cooperation should also include a common platform for farm research so that the limited available resources are used for pushing research in a mutually exclusive manner rather than being repetitive. Himachal Pradesh has the potential of producing about two million tones of vegetables and a million tones of fruit of various kinds. Vegetable production in Himachal Pradesh is, by and large, offseason and thus it can an important supplier to the large north Indian market. It is implicit that the local farmers, who are vastly a majority of small and marginal farmers will greatly benefit from such an arrangement and have sustainable livelihoods. It could be implemented by detailing the cropping pattern to be followed at the regional level under which the States compliment or supplement the output to meet the regional demand and also plan surpluses to be exported to the national markets.

Cooperation in the education sector could also efficiently prevent wastage of precious resources. All the States could cooperate in setting up institutions of excellence in medicine, engineering, pure sciences and commerce and management rather than replicating these institutions in every State leading to wastage of resources and sub-optimal outputs. Regional medical and engineering colleges with excellence could be planned and put up to cater to the regional needs and the intake to these institutions could be in proportion to the population of the participating States.

Inter-State cooperation for smooth and healthy functioning of the trade and commerce is a must. The rate wars on taxation among the neighbouring States in a region have often led to diversion of trade and intensification of unfair practices. The States could cooperate by agreeing to uniform rate of the Value Added Tax (VAT) to prevent diversion of trade, stoppage of illegal trading practices and prevention of smuggling of goods. The agreement should be to have floor rates of taxation for various commodities throughout the region. The States could have higher rates if they so wished but there should be no lowering of rates below the agreed floor levels.

INSTITUTIONAL MECHANISM

The possibilities are endless. The need, therefore, is to create an institutional apparatus which could foster such cooperation among the States. For this to happen, the model of the European Union could be adopted to start with and then modified and refined to suit the local conditions and needs. The mechanism should not become a parking place for the outdated politicians and the bureaucrats but should be in the nature of an ex-officio arrangement in which Chief Ministers of the States take chair by rotation for tenure of say, three years. It should have a slim and trim central secretariat and the chairpersonship should rotate on a fixed term basis. Such an arrangement could provide a level playing field to all the participants entering the arena of cooperation. It could be given the statutory status by incorporating it in the Constitution of India. A word of caution needs to be added here post haste that all mechanisms are prone to succeed or fail depending upon the honesty of the participants as also the honesty of purpose.

COOPERATION : CENTRE-STATE OR STATE-STATE OR AMONG INTRA-REGIONAL STATES?

The National Development Council, the Inter State Council and the Planning Commission could continue to foster and strengthen the Centre-State cooperation in the manner as heretofore. The possibilities of bilateral cooperation among the States should be best left to the States. However, given the need for trans-State cooperation being an imperative for future, the best model could be developed on a regional basis. Does it mean that the existing mechanism of Zonal Councils could deliver? The answer to this could be yes if an experiment on the model suggested above is tried out. Apart from the spatial specification of the cooperation, there is also need to identify and prioritize the activities and sectors which should be in the arena of cooperation. The list should not be large and exhaustive but brief and region specific.

CONCLUDING REMARKS

Cooperation among the Indian States is an imperative for future growth. In the context of the northern region, the past does not hold a bright perspective. However, the past experience should not deter the future from making a serious effort to reach where the past could not. It is in this scenario, some suggestions are being made for cooperation among the States. There shall be areas where all the States will need to come to a common platform for unified action. Such a platform can be easily provided by the Central Government through its constitutional or executive entities like the Inter State Council or the National Development Council for the respective issues. There shall be certain areas or issues on which two or more States in a particular region would need to get together to maximize the benefits. In such cases, if it happens to be a bilateral issue, this could be best left to the bipartisan participants. However, if the issues involve more than two States in the region, an alternative like the European Union headquarters in Brussels could be tried out. The suggested model implies that there should be a central secretariat for regional cooperation as a permanent body. It should have a thin and lean bureaucracy and be answerable to the Chairperson of the regional council. The chairperson of the regional council should be from among the chief executives of the participating States and be appointed by rotation so that each State heads the regional council for a fixed term. The term could be limited to three years. Such an arrangement will afford a level playing field for all the players in the region and resolve the grouse of being discriminated against. The envisaged role of the Central Government, if any, should be restricted to only facilitator or advisory.

DK Sharma

Devinder Kumar Sharma, a former Principal Adviser and Secretary Planning, Government of Himachal Pradesh, is a visiting professor and an economist. He lives in Shimla.