Divergence, and its enquiry, is the centre of the Ferris wheel, that is economics and policymaking. Last time, the wheel was spinning with the Sen-Bhagwati debate on the growth models of Kerala vs Gujarat. It may have started centuries earlier, with Adam Smith’s book, An Inquiry into the Nature and Causes of the Wealth of Nations (1776). South vs North: India’s Great Divide (Juggernaut, 226 pages, Rs 416) by Nilakantan RS, is a plus one.
The start of South vs North
In 2016, two events sparked discontent among southern states. First, the Fifteenth Finance Commission suggested the devolution of tax revenue based on population, counted according to the census 2011. Second, the arrival of GST. It scattered the chess board on which states and union governments pushed pieces to balance the politics of tax-sharing.
From that point on, newspaper op-eds screamed at the unfairness of winners compensating losers. The reward of doing well on governance, and improving social indicators, cannot be a stick. Takings from southern states for the benefit of northern states, who don’t do well to control population, teach children, and create jobs for their youth, is the start of the end. It’s a problem that needs a fix for the survival of the union, said newspaper stories.
In three different parts of the book, the author brings out how northern states are behind, how southern states have to forgo their rightful share of the money, and what a new model of democracy for a stable nation may look like.
Part one: How far is the north from the south on health, education and economy?
Written by a data scientist, the book fits the development economics pigeonhole. Pages go on to establish why health is important, and infant mortality rate (IMR), that is the number of infant deaths for every 1,000 live births is the strongest measure for judgement. India fairs worse on IMR than most South Asian countries. Kerala, however, has an IMR of 7, as good as that of the US at 6. Tamil Nadu has an IMR of 15. Northern peers, Madhya Pradesh and Uttar Pradesh (UP) at IMR 48 and 43, respectively, are close to the rates of Niger and Afghanistan.
To improve IMR, building health infrastructure and focusing on women and child medical care is important. These efforts require a commitment that goes beyond political cycles, something the southern states have strived for but the northern states lag at. Where and how to spend on healthcare is now controlled by the Union more and more than by state governments. Central government programmes like the Integrated Child Development Scheme, exist keeping northern states in mind, even when their focus is redundant for the south. Southern states have already achieved the scheme’s target of bringing down IMR.
This situation also spills over to education. Getting children to attend school and feeding them to defeat hunger is stage one. Improving their learning outcomes is stage two. Northern states are on stage one, southern states are on stage two. The centrally sponsored National Education Policy prevents state governments from tailoring education policy to their requirements.
How dependent a state’s GDP is on agriculture is a sign of how its economy fairs. Overall, northern states have a higher share of farm income than the south, which has a larger share of manufacturing that brings higher wages with it. From the author’s perspective, disbursing large shares of consolidated funds towards farmer welfare by central schemes like PM Kisan Yojana is unfair to those performing non-farm activities.
Part two: Flaws in the union of states, centralisation and population divergence
The book suggests that India is in the Malthusian trap. Exponential fertility rates put pressure on available resources, to make the economy, which is not industrially developed, worse off. From this foundation, the author launches the woe of population divergence. The sentiment is captured with numbers such as this: In 1971, Rajasthan and Kerala had the same population, in 2011, Rajasthan had more than twice the number of Kerala.
Population numbers grant democratic control. As a result, India’s federal system is vertically imbalanced. The union at the top has more money, more power, and more discretion, than state governments, combined. There is a horizontal imbalance, too, with the Finance Commission devolving funds based on newer population estimates, for the first time. The outcome is, “what most of the richer states pay into the federal system is going to Uttar Pradesh".
Part three: Gamified democracy, a blue sky model of government
The book leads up to a solution. It shows the many flaws of the first-past-the-post electoral system that is used in India. Its outcome is like that of general elections in 2014 when BJP won 51 per cent of parliamentary seats but got just 31 per cent of the popular vote. The Westminster model fails in representative democracy. It can make a candidate who isn’t the choice of the majority of voters, win from a constituency. Constituencies as large as small European nations have just one representative. And a vote in India is insignificant with no impact whatsoever on governance.
The author proposes a model of “gamified democracy”, that comes across as a complex solution to a complex problem. Its explanation, unfortunately, is a house of cards. To simplify, in the model a group of citizens are selected using sortition, a method similar to drawing lots. This selected group gets to make laws. An expert panel is also selected to compose all laws that this group wishes to make. All citizens then vote for each law made, like in a referendum. Instead of one vote for one person, each citizen gets N votes, a number arrived at by thoughtful math. Citizens can use any number of votes, say X, out of the total N votes given to them. If the vote wins in the favour of a citizen, they’ll have N-X votes left for the rest of the tenure. If the citizen’s vote loses in the outcome, the vote is restored to go back to N.
Slips in the book
The first two parts of the book feel like a lengthy op-ed. And unlike a good op-ed, it does not anticipate and address counterarguments. There are three main counter-views.
One, population causes prosperity. UPs total population may be six times larger than Kerala’s, but the population density of Kerala, at 860 persons per sq. km is higher than UP's at 829 persons per sq. km. This is also true for India’s large cities, packed with high populations that make them engines of growth. They substitute the lack of capital with an abundance of labour. In the long run, a larger population also brings with it a division of labour, exchange of ideas, and change in habits. These are some of the reasons why southern states do better than the north. How the population is put to use causes prosperity, not controlling it.
Two, the role of migration. How the moving of populations from one region to another affects the political economy of sharing tax revenue is absent. Large numbers of migrants from northern states into Maharashtra, Karnataka, and Tamil Nadu take up a bulk of odd, low-paying, informal jobs that offer domestic population surplus time to add value through productive work, making their economy what it is. As a political constituency, migrant labourers have no representation in either state. While Kerala’s economy gains from a high share of remittances from its residents migrating abroad, northern states don't.
Three, local governments and the importance of empowering them. What is true for the troubled relationship between the centre and state governments, is true for the state and local government. Mumbai is an advantage for other districts in Maharashtra, just as other districts of Tamil Nadu take advantage of Chennai. To be consistent, decentralisation will have to start at home for southern states. State finance commissions don't devolve money and resources like the central finance commission does. The disparity and divergence within districts of Tamil Nadu and Maharashtra, couldn’t be starker. The importance of carrying out this reform, which is in the hands of state governments, completely, is a big miss in the book.
There is also an implied assumption that constant growth and prosperity are now a given for southern states. However, growth trends are fickle and can never be taken for granted. To quote the ex-governor of RBI, Dr Duvvuri Subbarao on the role of growth in the South vs North divide, “eventually, a rising tide will lift all boats, and it will lift all boats, equally”.
The south vs north issue will deepen. This book is a magnifying glass, making what is already out there, bigger for the reader to notice.
The author is an associate at Artha Global, a policy-research organisation. Views are personal.
