Centre and states must work together
Coordinate on finance, procurement and supply chains. Activate inter-state coordination systems
As the crisis faced by India’s migrant workers has shown, the Union government’s centralised, command-and-control approach of managing the coronavirus pandemic (Covid-19) will not work. Recent steps, from the poorlyplanned lockdown to the decision to shut down borders and use brute force against those wanting to go home, reflect an approach focused on controlling people, rather than developing systems, to control the spread of the virus.
Once it became evident that migrants were leaving inhospitable cities and going home, crossing multiple state borders, we needed rapid coordination to enable movement, manage communication, and design processes to ensure safe passage, including building a contact database for testing and tracing. Coordination is the role that the Centre should have played. Instead, it chose to use the Disaster Management Act, command border closures without warning, and police those who didn’t comply. The inhumanity of these actions have been devastating.
India needs to move away from commandand-control to coordination and genuine Centre-state collaboration. States are at the frontlines. Many have also been quick to respond and innovate. But, as the handling of migrant movement shows, states will also face collective action problems, for which central intervention will be essential. Cooperative federalism is imperative in this coronavirus war. States must be taken into confidence before major decisions, and responsive mechanisms for cooperation must be put in place. Going forward, three specific areas of cooperation are critical: Finance, procurement and supply chains.
First, finance. While states have been quick to devise substantial relief packages, they lack financial resources. The Centre’s response was to link finances to its own specific schemes for states to implement rather than buttressing state efforts. However, implementation capacity varies widely across states and schemes. And the relief needs of states will differ. Thus the Centre ought to use its fiscal powers to ease their fiscal constraints. The states have already asked for the Centre to ease fiscal deficit targets. But more must be done.
In particular, the Centre’s relief package (the Pradhan Mantri Garib Kalyan Yojna) ought to be redesigned and enhanced as a block grant to states. The grant should have two windows: One for health care system preparedness, linked to the National Health Mission formula, which prioritises funds for poorer states with weak health capacity. The second should be for relief measures. This can be financed by bundling all central schemes for social protection into a untied emergency fund, which states can draw on to top-up their own relief programmes. The cost-sharing formula should be abandoned for the next three months, with the Centre providing 100% funding, freeing up state funds to be used for health-related activities. This must be adopted for the National Health Mission as well, where states are expected to contribute 40% to the budget.
Second, financial management and procurement. One of the biggest inefficiencies in the administrative system is the inability to move funds, procure goods and make payments, at speed. The public finance management system relies on a labyrinth of paperwork and enforcement of audit queries that can be paralysing and leaves little discretion at the state and local level. Given the scale of infrastructure needed — personal protective equipment (PPE), ventilators, isolation wards — smoothening procurement and financial transfers is essential. This, as former Indian Administrative Service officer Santhosh Mathew argues, needs the Centre and states to work in tandem. The Centre can take charge of discretionary functions where leakages are high — standard-setting, price determination and supplier identification. But to procure fast, States must have full control over the actual transaction, including placing orders directly with vendors , quality checks at the point of receipt, and making direct payments.
Finally, supply chains for essential commodities. While the focus thus far has been on smoothening movement for transportation of essential goods and services, it is important to recognise that the lockdown has affected all systems of production, circulation and distribution across the economy. For agriculture, April to June is a critical period both for rabi harvests and marketing, but also for next season’s kharif sowing. Labour, seeds, machinery, vehicles, storage, credit, markets — uncertain at the best of times — are now in different degrees of peril. As the lockdown progresses, local production and manufacturing units will need urgent economic assistance. This will require the Centre to make dedicated supply chain financing available. States will need to work with the Centre and with other states to identify mechanisms to extend and inject credit and ensure cross-border supply of labour and inputs before units and nodes shut down.
Robust and responsive mechanisms for inter-state coordination are critical. Last week, for instance, Kerala sought urgent help from the Centre when Karnataka sealed off its border, cutting off essential supplies of food and medicine for the people of north Kerala. It is perhaps inevitable that the impulse to cutoff and isolate specific units (slums, districts and entire states) affected by an outbreak will override all other concerns. But leaving these zones to fend for themselves cannot be an option during their greatest distress. We urgently need an inter-state coordination mechanism. This can be done by reviving the now moribund inter-state council and using its secretariat to coordinate between states and the empowered action groups that have been set up by the Centre.
Overcoming the extraordinary challenges ahead is going to need the government to put both faith in people and processes that support decentralisation and a greater commitment to collective action. This requires the Centre and the states to genuinely work together. It is often said that India’s future lies in getting federalism right. If there is one thing that the coronavirus pandemic has taught all of us, it is that the future is already here. Yamini Aiyar is president and chief executive, Centre for Policy Research. Mekhala Krishnamurthy is a senior fellow and director of the State Capacity Initiative, CPR, and associate professor, Ashoka University The views expressed are personal