Wednesday, July 31, 2013

We need smaller states…..US/Europe/China and even our own experience shows that….

There is some degree of panic that various statehood demands are likely to be made as a result of Telegana getting formed. History tells us that when new states get formed, they get formed in a bunch, the last three being Chhatisgarh, Uttarakhand and Jharkhand in 2000. So if a few more states need to be created now (or in the near future), why does there have to be any panic at all? Some cynic actually said something like “soon we will again have 530 princely states”. This kind of panic is completely unfounded as this post will show.

It’s common sense. The smaller the administrative unit, the more the focus it gets from its rulers. That’s why we have the whole jingbang with districts, and talukas and village panchayats and all. Unfortunately, the quality of leadership, the amount of accountability that leaders have towards their people and the extent of media scrutiny all dip when we go down from a state to a district level and onwards. For example, we are far more focused on how a state like Bihar is faring (very well), but have no clue about what its various districts are doing. This is one reason why dividing the country into more number of states, rather than merely having more number of districts, is so much better.

Smaller administrative units have been proven to be better around the world. Take the United States. The largest state there is California, which has a population of some 38 million. That’s just about 12% of the total US population. The 2nd biggest is Texas with 26 million (8%) and the 3rd, New York with 19.6 million (6%). Take the entire continent of Europe, which is divided into so many countries. The biggest country is Russia with a population of 143 million, and its biggest “Federal subject” as they call it is the Federal city of Moscow with a population of some 11.5 million (8% of total). The 2nd biggest is the Moscow Oblast, which is some 7 million (5% of total). This is a separate administrative region from the city of Moscow. Take even China. The biggest “administrative division” as they call it is Guangdong which has a population of 104 million (huge), but which is just under 8% of the total population of China. The 2nd largest is Shandong with 9.5 million (7%). Go lower down the list of most populous countries and we find that even if the % of population of a region is high, its absolute size is small and manageable. Indonesia’s largest province is West Java with 18% of the country’s  population (huge) but is only 43 million people in absolute numbers (small). Ditto with Brazil’s largest state – Sao Paolo 22% of the country’s population (huge) but with just 42 million people (small). It’s only in India that we still have states as large as UP with 200 million people (massive) and 16% share of India’s population. Or Maharashtra with 112 million population, Bihar with 104 million and WB with 91 million.

Of course, a small size doesn’t automatically guarantee good governance or faster growth. There are many small countries and even smaller states which are not doing well. But there are almost no examples of larger provinces or states (in terms of population + share of the country’s population) which are examples of good governance.

The Indian experience also has been that when large states are carved up, the smaller ones do better. Take the example of Chhatisgarh, which has grown (in GSDP terms) at an average of 8.6% between 2001-2 and 2011-12 – after its formation – compared to just 3.1% per annum during 1994-95 to 2000-01, when it was still a part of MP. Take Jharkhand, and though its growth rate since formation at 6.3% is lower than the frenetic pace that Nitish Kumar’s Bihar has achieved (11.4%), it is still way higher than the 3.6% the region saw between 1994-5 and 2000-01, when it was still part of Bihar. Maybe the splitting up helped Bihar itself. Ditto with Uttarakhand, which grew much faster at 12.3% compared to UP (6.8%), and also much much faster than when it was part of UP during 1994-5 and 2000-01 (4.6%). Again, UP’s own growth rate increased from 4% earlier to 6.8% post the split. The source for all this data is There are other socio-economic variables, most of which show that once a smaller unit is carved out, its growth improves dramatically.

It’s logical right? Smaller states means that the leaders come far closer to their people. They become more accessible, more answerable to them. The Constitution also gives far more financial and administrative independence to states than it gives mere districts. So if all of this is true, why not happily concede the demands of the other regions? Why panic? Mayawati may well be right in demanding that UP be further divided into 4 parts. Maybe Maharashtra should spin off Vidarbha and Mumbai into separate states. Ditto with Assam (Bodoland….earlier Meghalaya and Nagaland were separated from it), West Bengal (Gorkhaland) and Gujarat (Saurashtra). In this context, “division” of the country is actually good!

In a good editorial in today’s TOI, Kingshuk Nag writes about how langauages cannot be the sole criterion for forming states. While Telengana and Andhra both speak Telugu (with variations of course), the culture is vastly different. In the same manner, maybe its time for us to look at statehood demands in the above states, since all of them represent different cultures, even if they have common languages.

The real truth is that rather than panic, we should initiate a definitive program to have 35-40 states in the next few years. We need to be careful about not increasing bureaucracy. But fundamentally, we cannot deny that smaller states leads to more prosperity….

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