AP-based Lok Satta coordinator Jayaprakash Narayan (JP) is a leader of citizen campaigning in the state and nationwide on governance and electoral reforms. He is an informed observer of Indian elections and political party responses to large scale citizen expression. In a recent article, he assessed the stunning 2004 Lok Sabha verdict in the following manner (edited for brevity with permission):

The Prime Minister and his political managers ignored a fundamental reality of Indian politics. After the stunning and emotional verdict of 1984 following Mrs Gandhi's tragic assassination, there is no longer a national verdict. The result of Lok Sabha polls over the past 15 years has been an aggregate of state verdicts. In each state, the people were responding to the local situation. In fact, even the 1999 verdict was a slight aberration as the surge of nationalism following the successful Kargil war. The anger against the non-NDA parties for foisting an election without providing a viable alternative helped Mr Vajpayee obtain a relatively strong mandate.

The remarkable victory of Congress and allies, left parties, and other non-NDA parties now once again proves that the states are where the action is. People are responding to their state government's performance because that is what really matters to them in daily lives, and that is what they see as 'Sarkar'. For the bulk of Indians, the Union is an abstraction, and its policies and actions - except on matters of war and peace - are far removed from the realities of life and death. Three major states are an exception to this rule - West Bengal, which created a stable political equilibrium based on ideology, cadres, land reforms, and rural base; Bihar, which created an unstable equilibrium based on a seemingly permanent, immutable political coalition of social groups unrelated to governance; and Uttar Pradesh, where each social group finds its niche in one of the four parties, leading to a lasting deadlock.

But elsewhere, there is generally a two-party or two-alliances system operating, and the verdict reflects public support for, or outrage against, the party in power at the state. The intensity of the anti-establishment feeling is in general directly proportional to the length of tenure of the state government. Local arithmetic did lead to some variations in Maharashtra, and Gujarat is at last swinging against the politics of hate. Orissa responded to Navin Patnaik's transparent sincerity and honesty, and decided to give him another chance. We can clearly see the pattern everywhere, which underlines the message:

It is the states, stupid! Our polity is shaped by what happens in states.

And yet, our elections are only bringing about periodic change of players, but the rules of the game and nature of power are unaltered. Elections only act as safety valves to let off people's anger and resentment, but do not help improve governance. Because of the vast sums of money spent by major parties and candidates, most of it illegitimate, for vote-buying, hiring hoodlums and bribing officials, no matter who wins, the imperative to get back multiple returns on investment dominates the behaviour of legislators. The result is that governance in states is the real casualty. And bad governance impedes growth, and aggravates the distortions of the market economy. While several state governments - of various parties - have been trying valiantly to improve things, they have lost the capacity to deliver services to people. The failure of public education and health care, for instance is felt disproportionately by the poor and the weak, undermining their productivity and incomes, and fueling anger.

INTERVIEW

India Together (IT) invited JP's assessment of the verdict in terms of people's perceptions of state government failures versus the Centre's failures in the context of federalism and the reforms process.

IT: Can this verdict be viewed as a reflection of peoples general view of the Centre's performance itself, in addition to disappointment at the state governments? After all, while the state governments have ownership in many areas, the Centre is still involved in some way or other -- agricultural (credit delivery), greater funding for education, health care and poverty alleviation, etc. Perhaps voters have consciously or unconsciously absorbed the fact we are currently still in a more Centralised (less federal) setup.

JP: The quality of delivery and accountability in our social services are unrelated to budgetary expenditures at the Centre. These are essentially local and state issues which state governments have not addressed.

But the nuances of federalism and the union’s role in agricultural credit, education and health care budget etc. have never been issues of public discourse. There are a couple of issues of budgeting we have to consider in this regard. One, the union is already transferring a total of 43% of its revenues to states - 29.5% as constitutional transfer of resources and about 13-14% towards plan assistance and centrally sponsored schemes. The room for manoeuvre is limited when we consider that 50% of total revenues go toward interest payments.

Secondly, the tax to GDP ratio in India is very low and is at about 15% (all union and state taxes - both direct and indirect). With a fiscal deficit of about 10% (Union + States combined), the public expenditure in India is about 25% of GDP. This compares very unfavourably with modern economies. The US government spends about 33% of GDP, and in much of Europe above 40% of GDP. In India, we have serious problems of raising tax resources in the face of poor quality services and ubiquitous corruption. The real answer lies in greater citizen-centred administration, decentralization and devolution, so that the link between taxes and services is established firmly in citizen's mind.

On those issues, the Central government has been guilty of two omissions: One, failure to articulate these issues and give leadership, and promote serious debate. Two, not being able to define economic reform in a way that people can see the links between their day-to-day lives and the reform process. Despite moderate to high growth, there is an ever-increasing gulf between expectation and fulfillment. The anger is directed against 'reform', when such reform does not encompass delivery of education, health care etc. The collapse of public education and health care hurts the poor disproportionately, and fuels anger.

To that extent, the verdict must be seen as a rejection of skewed 'reform' process, and parties must come up with a creative response without undermining the foundations of economic liberalization.

IT: What lessons does this verdict offer on the real fiscal decentralization and further enabling institutional reform within central and state agencies for bettering delivery of public services? Is there visibility into these issues and consensus among the national parties at this level at all?

JP: The quality of public discourse on these three types of institutional reform is very weak. Some of the issues, like corruption, may be visible, but discourse lacks depth. Other issues like education may be fashionable, but there is no insight into mechanisms to improve the system. About political and electoral reforms, there is a considerable amount of cultivated ignorance. In general, there is quite a lot of inertia in addressing these issues.

It is easy to label verdicts as 'anti-incumbency', and get on with life. The truth is more complex. We (the analysts and pandits) see the improvements brought about by a government from 10% to 20% (on a scale of 100) as significant and positive. But citizens measure the government by unmet expectations, and a government would be seen to have failed in 80% of the area, even if it brought failure down from 90% to 80%. That is why some of the verdicts seem stunning. The challenge in the next few years is how to bring rational public discourse to centre-stage.

The real answers to our crisis in service delivery at the states lie in fiscal decentralization. Taxes can be raised only when people see the benefits directly. Subsidies reduction may be effective only when the savings are put to alternative use locally in a way that people can see the benefits. Employees will perform only when they are held to account locally. Sadly, despite routine sloganeering, the parties have not yet grasped the criticality of decentralization.

Partly this is because of the intellectual failure; partly a product of the patronizing, arrogant culture of leadership; and substantially because of the political compulsions in a decrepit electoral system which thrives on centralization, patronage, corruption and abuse of power. Further enabling institutional reform is clearly necessary - this should be of three kinds:

a. Sector specific reforms - particularly in education, health care, justice delivery etc.

b. Changing the nature of incentives in politics - which means far-reaching electoral systemic reforms: Some form of proportional representation (a mixed, compensatory system) coupled with party democracy in choice of candidates; and direct election of the executive in states with clear separation of powers between the executive and legislature. These will significantly alter the nature of politics and bring in the best talent, and make honesty compatible with political survival.

c. Accountability measures to improve transparency and accountability, and curb corruption - including right to information, citizen's charters, independent crime investigation, independent and effective anti-corruption agencies etc.