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It may not happen. But growing inter-state diversities on multiple fronts can become unmanageable, if ignored.

People in the rich states of Kerala & TN earn 4 times more than the our friends in the poorest state of Bihar. Inter-state income disparity is rising.

Disparity in natural resources, like water for example, have ensured continuous inter-state disputes like the contentious water-sharing agreements between Karnataka & TN. Such disputes show no signs of abating.

State governments often pursue unique social welfare, industrial and other policies suited to local needs. But the implementation of these policies & the benefits realized are so uncertain & volatile that inter-state diversities are only bound to grow.

A natural outcome of a vast & growing diversity is a tendency towards self-protection. Why should TN endorse GST when it thinks it will lose more than it gains? Why should Karnataka share water with TN when its own people & farmers are facing severe drought? Why shouldn’t a state continuously increase job quotas for its own people? Will migrants from poor states be looked down upon and be relegated to low-income jobs not being taken up by the locals of richer states? Is the slowly escalating inter-state rivalry for investments healthy or will it distort incentives and become messy?

We shouldn’t be surprised if a few intractable inter-state or centre-state issues come up in the next 5-10 years.

Prime Minister Narendra Modi at the eleventh Inter-State Council Meeting

Source: PTI

How to improve our cooperative federalism? Should we revisit the union, state & concurrent lists? The central government has little say in critical subjects like water, education, law & order etc., which require standardized national policies & implementation drive. The state governments want more financial & administrative autonomy and hate interference from the centre.

The GST idea was mooted more than 10 years back and the bill has taken so long to be approved. Its full implementation will take another 2 years. That’s the state of our cooperative federalism.

Despite increasing inter-state and centre-state dialogues, if the rules of the game (aka constitution) are not changed, we should brace ourselves for some fantastic fireworks.

The gap between rich & poor states

Inter state council