Dangerous liaison: N Chandrababu Naidu crosses Lakshman rekha in federal fight

This is not the first time, Andhra Pradesh Chief Minister and Telugu Desam supremo N. Chandrababu Naidu has gone after the Modi government on issues of taxation. A few months ago, he played the federal card and accused the Centre of diverting tax revenues collected from southern states for the development of northern states. This time, however, he has taken it to the next level. 

Mr Naidu has asked why the state governments should pay taxes to the Central government when the latter is not releasing funds for various projects, particularly the new capital Amaravati.

This is not only a controversial, but also a problematic stance. Mr Naidu with his remarks and threats joins the ranks of chief ministers who attempt to treat the states as their personal fiefdom.

Continuing his tirade against the Centre, Mr Naidu, speaking at the event ‘People’s Capital Amaravati Happy City’ said, “Amaravati can generate a lot of revenue for the Centre in the form of income tax, corporate tax, and GST once it is developed into a big and planned city.” And then came the barb: “But the Centre is reluctant to help us to build the capital. When they are not giving us funds, why should we pay taxes?”

By threatening to stop paying taxes Mr Naidu is expanding the horizon of regionalism, fast spreading across the country and becoming a dominant feature in the Indian political scenario. By exhibiting his militant attitude towards the Centre, Mr Naidu is playing to the domestic gallery at the cost of the nation.

In an essay on Centre-State relations ‘Concept of Federation and Centre-State Relations’ it has been clearly stated that the “Indian Constitution provides for a federal system of government but the term ‘federation’ has nowhere been used in the Constitution. On the other hand, Article 1 of the Indian Constitution describes ‘India, that is Bharat’ as a ‘Union of States’, an expression which implies two things. Firstly, unlike the USA the Indian federation is not the result of an agreement between the units. Secondly, the units have no right to secede from the federation. In fact the states of the Indian federation have no independent existence of their own. Parliament can alter their names and territories without their consent”.

The article then goes on to quote author and eminent jurist D.D. Basu: “The Constitution of India is neither purely Federal nor purely Unitary but is a combination of both. It is a Union or composite state of novel type. It enshrines the principles that in spite of federation the national interest ought to be paramount”.

There have been many instances in the past of chief ministers from the Opposition locking horns with the Centre over funds. Even Mr Modi during his stint as Gujarat chief minister had strongly opposed the GST, which the then UPA regime had tried to push through. Even the other regional satraps ranging from Naveen Patnaik, to Mamata Banerjee, to Arvind Kejriwal to Akhilesh Yadav and Nitish Kumar have time and again crossed swords with the Centre on various issues.

Regional politics at its worst was witnessed in Maharashtra when the local people targeted the north Indians and people from Bihar.

Militant regionalism was witnessed in Assam when the insurgent outfit ULFA attacked non-Assamese and non-indigenous communities. It has been observed that “demand of separatism and autonomy is another aspect of regionalism”. While Andhra Pradesh under Mr Naidu cannot be viewed as practising militant regional politics and in fact he had opposed the division of the state, the threat to stop paying Central taxes could have far-reaching consequences.

In an essay ‘Regionalism in Indian Politics: Role, Causes & Impact’, Christopher Muscato, who teaches at the University of Northern Colorado, writes: “In Indian states where regionalism is strongest, state politics are dominated by regional political parties. These political parties are generally only found in that state, only deal with issues of that state, and advocate for the state to find its own solutions to political problems rather than dealing with the national government”.

If the states under the garb of federalism threaten to toe the Naidu line, national interest could easily be hurt. The government at the Centre needs to collect tax for the benefit of the country. These benefits range from welfare schemes, subsidies, schemes for the empowerment of poor and payment of salaries to the security forces, which include the Indian Army. When the states pay taxes, they are strengthening the government’s hand to carry forward these developments required for nation building. Then there is “progressive taxation” under which the government taxes the rich to empower the poor.

With taxes shared with or collected from the states and various others sources, the Centre invests in infrastructure, which at the basic level includes bijli, sadak, paani. If the Centre does not do it, who will?

As for Amravati, the Union government claims to have sanctioned nearly Rs 2,500 crore so far. Opposing the government is an essential part of democracy. But opposing it to a level where the economy and welfare of the country is threatened could just be crossing the Lakshman rekha.