Abishek Choutagunta on Federalism, President’s Rule, and Constitutional Design

SHRUTI RAJAGOPALAN: Welcome to Ideas of India, a podcast where we examine academic ideas that can propel India forward. My name is Shruti Rajagopalan, and this is the 2024 job market series, where I speak with young scholars entering the academic job market about their latest research on India. 

I spoke with Abishek Choutagunta, who received his Ph.D. in economics from the Institute of Law and Economics, University of Hamburg. He is also an Emergent India fellow at the Mercatus Center. We discussed his recent paper “President’s Rule in India: State Emergency or Political Capture?” with Christian Bjørnskov, Stefan Voigt and myself—yes, you heard that right. We talked about the centripetal federalism in India, state and local government finances, emergency powers, the S.R. Bommai judgment, constitutional design and much more. 

For a full transcript of this conversation, including helpful links of all the references mentioned, click the link in the show notes or visit mercatus.org/podcasts.

Hi, Abishek, welcome to the show.

ABISHEK CHOUTAGUNTA: Hi, Shruti. Thank you. Thank you for having me here.

RAJAGOPALAN: This is so weird to talk to you about a paper that we’ve actually co-authored, and I feel like we’ve been talking about this for years. We have a couple of other co-authors: Stefan Voigt, who’s also your adviser, and Christian Bjørnskov. They came into the piece really because they are studying emergency provisions in constitutions. But I don’t even know where to start with you on this. What is a good way to describe our work on president’s rule, Abishek?

Article 356 and President’s Rule

CHOUTAGUNTA: President’s rule is essentially an article in the Indian Constitution which allows the central government to dismiss democratically elected state governments because of many reasons, because of what they think is an emergency. Essentially, elected state governments were getting dismissed by the central government and the central government was taking over the government machinery in a state because the central government thought that the state government could not carry out their agenda as outlined by the constitution.

RAJAGOPALAN: This has a little bit of background, because, again, I am a little bit older than you. Growing up years were just rife with governments getting dismissed and dissolved. This Article 356 power is pretty important. It’s a very, very significant power in the hands of the central government. Again, like all the baggage, it comes from a colonial history. It comes from the history of India going through partition, Sardar Patel and Nehru trying to stitch together a union of princely states, and British India and so on so forth.

There were genuine fears that state governments or provincial governments will not be able to maintain law and order or actually have proper constitutional governance. They might go rogue, they might have revolutions, they might cede. This is the context in which this particular provision comes in. Now I’m getting into also our history personally.

I’ve been a little bit obsessed with this constitutional provision, and I remember this is when you were still a master’s student. This was constantly done for political reasons, but we weren’t able to prove that it is done for political reasons. It is difficult to show what is a genuine emergency and what is not. 

Also, when you’re looking at the question empirically, you have to show much more than these six cases were politically motivated. You have to actually look at the entire set of all emergencies ever invoked, whether they were politically motivated or not, and also, what is unseen, which is, what are the cases where a genuine emergency happened and maybe they didn’t invoke these cases. This is basically like the Godhra riots or more recently what happened in Manipur. Basically, 356 is not invoked. I came to you and you’re this young, brilliant master’s student, and you’re like, “I think I can build this dataset.” Tell us about this dataset that you built out for us.

CHOUTAGUNTA: I don’t know. I quite enjoyed the whole thing, actually. I think when we spoke, you had a list of president rule imposed in different parts of India over a time span. I think that’s where we started this whole thing.

The paper is about how democratically elected state governments can be dismissed by the union government in India, and once this dismissal happens, the union government can institute fresh elections in the state. The paper is about political capture and how this could be potentially used for political opportunism, and we test for that in the paper. 

Essentially, we form a number of hypotheses on the likelihood of president’s rule being imposed based on Tsebelis’ veto player theory and based on a number of theories which were drawn out by scholars of Indian politics. Essentially, we ask under what conditions are president’s rules imposed? What leads to the imposition of president’s rule? To test this, we have the dataset which we created.

It’s a very extensive dataset. The dataset is on state and union governments from 1952 until 2019. The data is on the legislative positions of the state and union governments. The data is on whether they’re in coalitions, what kind of coalitions they’re in, the strength of the coalitions, and the strength of the opposition, and whether the opposition as in coalition and the strength of the opposition coalition. We merge all of this with data on the occurrences of president’s rules, occurrences of riots and occurrences of natural disasters.

That now we have this full system through which we can actually test whether any of the determinants of president’s rule actually does influence the imposition of president’s rule. 

RAJAGOPALAN: The Sarkaria Commission tells us when it should be imposed, which is breakdown of law and order, riots, and constitutional emergencies, natural emergencies, versus what the Sarkaria Commission found which is that when it is actually used it is usually a form of political opportunism or political abuse.

CHOUTAGUNTA: Yes, exactly. I think the Sarkaria Commission in that sense was quite good because they also did show that a lot of the president’s rules that were imposed, there are clear instances of political opportunism.

RAJAGOPALAN: At least a third that they said.

CHOUTAGUNTA: Yes, exactly. They said a third, and it is quite there on the report and anybody could see it. It’s quite jarring. 

RAJAGOPALAN: We also had our co-authors, who are experts on emergencies and they look at comparative constitutions across the world. Christian and Stefan talked about how we need to look at riots data and integrate it, because there’s this section in Sarkaria Commission where it talks about communal riots as a breakdown in emergency, and that famous Varshney-Wilkinson dataset, which has now been extended multiple times had to be integrated.

Similarly, any natural emergencies, floods and droughts and famines, things like that where large numbers of people die. We had to actually piece together this puzzle. A big part of this was just figuring out what are the political variables and what are the emergency variables.

CHOUTAGUNTA: We just didn’t know how many more, and what is the exact likelihood of a state being hit with a president’s rule? For that, we use a conditional logit model with state-fixed effects and president-fixed effects so that we can actually estimate the likelihood of a president’s rule being imposed based on various political and nonpolitical factors that we spoke about. That’s essentially how this whole story builds up.

Essentially, what our analysis does taking into account all of Sarkaria’s points, as well as Tsebelis’s theory, our analysis accounts for the seat shares of the ruling parties, so the strength of the government in the union and the state, the presence of coalition governments, the role of the president of India because the president’s rule is named after the president of India, even though the president is a nominal actor. 

We also take into account the role of the governors of the state, because the governors are the agents of central government in the state. They’re appointed by the central government in the state. They’re the ones who write a report to the central government recommending a president’s rule that a certain situation has happened in the state, which has led to the breakdown of governmental machinery within the state, and that, “Hey, central government, please take over the machinery of the state and run it until fresh elections can be instituted.”

The governor becomes a key part of this story. We take into account the role of the governor: when the governor is in place, whether that governor was appointed during the term of the central government that is in power, and whether that governor has had any previous political affiliations. We take into account all of what we can when it comes to how the political environment of the state is.

What we find is broadly our regression results tell us a story of clear political opportunism. This can be broken down into five main findings. I think you know this, but I will repeat this for the sake of your audience because I think it is quite revelatory in that sense. We find that for a given union government, a 5% smaller seat share in a state government leads to a 10 percentage higher probability that president’s rule will be invoked in that state. Essentially, the weaker the state government, the more the likelihood that a president’s rule will be imposed.

Second, we find that coalition governments in states are about three times more likely to experience president’s rule than state governments formed by a single party. Again, if you are in coalition, you are not safe. That’s essentially what our regression results tell us. A third finding is that emergencies such as communal riots and natural disasters are not predictors of the imposition of president’s rule at all. We try this in many different ways. We have different lag lengths that we use. We’ve done it in many ways and all of that shows that exogenous events, emergencies, real emergencies are not predictors of a president’s rule.

Our fourth finding is that the only exogenous shock that influences the likelihood of imposing a president’s rule is the death of the incumbent state chief minister. The associated odds ratio of this is like 37 times higher likelihood of president—

RAJAGOPALAN: Which even shocked all four of us.

CHOUTAGUNTA: A 37 times higher likelihood that a president’s rule will be imposed is just crazy when there is a death of a state chief minister. Essentially, this again indicates that when the incumbent chief minister has died in office, then it is very, very, very likely that a president’s rule will be imposed. 

S.R. Bommai is a supreme court case that happens because multiple state governments, which got dismissed, their chief ministers of that state, go to the supreme court. It’s quite the thing which happened in India in the ’90s, I think. A lot of state governments were being arbitrarily dismissed, at least that was common knowledge. S.R. Bommai went to the supreme court and said, “Hey, we are being dismissed, but we are not being asked to prove our majority in the floor of the house. As long as you don’t do that, you don’t know whether we hold majority or not. You just can’t dismiss us like that.”

The supreme court said, “Yes, from now on, every time there is a president’s rule imposition that needs to happen, there needs to be a floor test, where the government in power needs to prove that majority.” That is a requirement now which increased the cost of imposing a president’s rule after this judgment. 

Our last finding, again, is in a way, one of our most important findings that reinforces the political opportunism story, and that is that none of the results except the death of the state chief minister result holds after S.R. Bommai’s case was judged in 1994.

After 1994, none of the determinants except the death of the state chief minister predicts president’s rule in India, the imposition of president’s rule. Essentially showing that this is a cost of imposing president’s rule for the union government is what determines the probability of a president’s rule. It is not anything else.

RAJAGOPALAN: Even in S.R. Bommai, that opinion is pretty long and talked about a lot of different things. One thing specifically it mandated was that there should be a floor test before the assembly is dissolved. If the floor test is not correctly conducted, to test for majority, then president’s rule can actually be reversed. 

That’s where our first two results, which are these governments which are just marginally holding on to power but aren’t very strong, or coalition governments which are quite fragile in terms of the bonds of the coalition, those things, if they can pass the floor test, then you can’t actually dismiss those governments. Again, tells us that, as you said, basically makes political opportunism a little bit costlier, at least when it comes to using the emergency provisions, but not for other things.

CHOUTAGUNTA: I think that is the whole story here. I think the political opportunism is front and center, in placed front and center, which a lot of people have tried doing. I think empirically showing this and putting it out there is the real contribution of this piece, even though people suspect, “This is how it is.” Once you show it with numbers and you show it with detail that this is how it’s going on, then I think it adds up.

RAJAGOPALAN: I don’t know if you remember this from our many conversations. I was looking at notes before chatting today, and you know this about me since we’re co-authors. At various points, I write down my hunch for a particular paper when we are putting together the hypotheses. My hunch was that communal rights, natural disasters will be used ostensibly to invoke an emergency, which is also what Stefan and Christian were telling us about what they find in other places.

What ends up happening in terms of misuse of emergency provisions in different constitutions is there’s an emergency and people use the emergency to ostensibly gather more political or constitutional power and authority. I had expected that there would be some effect of riots and natural disasters. My sense was when it’s an opposition party, you dismiss the government in case of an emergency. If it’s your own party, then you look the other way and you figure out some other way of managing that emergency. What knocked me off kilter when we ran the results and our findings is that actually, riots and natural disasters are not predictors of likelihood of president’s rule at all.

CHOUTAGUNTA: We checked this quite extensively.

RAJAGOPALAN: Extensively, exactly.

CHOUTAGUNTA: The amount of stuff we did to see if your hunch holds was a bit hard. In whatever configuration we tested this, it wasn’t showing up.

RAJAGOPALAN: It just didn’t work. Like you had mentioned, we did this with lags. When the flood or natural disaster is happening, a little bit after, a little bit before riots, because riots can also be endogenous. We tried every combination for this, and it just didn’t hold, which was quite remarkable. 

The other thing that I find quite heartening is that now we know why S.R. Bommai worked. Because there were so many other competing theories that it’s not actually S.R. Bommai, it’s because of subnationalism, it’s because of state parties getting stronger, it’s because of more and more like the era of coalition governments, though we tested 2019 when that era also reversed. That was the other interesting result, that this is not about particular parties or about an entire era, or about particular prime ministers. It is entirely about the calculation or the arithmetic of how strong a state government is and whether you can get away by dismissing that government and dissolving the legislature. It’s amazing.

CHOUTAGUNTA: Exactly. I don’t know if you remember this but we did this before Bommai, during Bommai and after Bommai results. We also tried to incorporate other ways in testing it if we were to shift the S.R. Bommai decision a few years before. There the results would still be a bit messy because, again, it is clear that S.R. Bommai is a judgment which changed the calculus of imposing president’s rule. It was nothing else. It was not coalition parties that were forming, it was not regional parties that were coming into play. None of those really mattered. It was only the political arithmetic that was in play at that point in time.

RAJAGOPALAN: The presence of a veto player making it more costly for the union cabinet to dismiss the government, right?

CHOUTAGUNTA: That’s such a clean public choice. It’s crazy.

RAJAGOPALAN: We’re four co-authors. We all have different reactions to certain findings. When something is too clean and too good, I’m like, “This looks too good to be true, which probably means it is too good to be true, so let’s run it again and again.” I have my own peculiar way of driving all of you crazy. This is a fun paper. 

One of the things I think it’s funny, it’s coming up in the podcast, but we should talk, maybe write another follow-up to this is what are the characteristics of the union government which lead it to impose an emergency. Just the way you have to structure federalism papers is you have to hold that given a particular union government you find all this in states and now I’d like to do the reverse. I don’t know if it’s possible, but I’m sure we will open this conversation up.

CHOUTAGUNTA: We should I think because we have set up the data on this in a different way. We have to set up the data in a different way. I think we will be able to do that. I am quite excited because I want to see if this calculus mirrors even when you look at it from the union government’s perspective because right now, we are holding union government’s perspective constant saying this is how they act. I really want to see that.

RAJAGOPALAN: That would be a fun thing to do. 

I don’t think I’ve ever asked you what got you interested in federalism, and I am not sure this has come up in the many hundred conversations, so I feel like this is a good time to ask you that.

CHOUTAGUNTA: Yes, I guess. I think there are lots of things which got me interested in the first place. I think on a very, very broad level of what got me interested is just scale. I think India is basically a lot of countries in one. 1.4 billion people, I think some of our states are some of the biggest countries in the world. Both in terms of social, cultural and economic dimensions, India is big and there is a lot of things happening at once in a big country. That makes governance quite difficult. It puts India in a very unique spot that way. Studying how and why India is governed the way it is and what actually happens because of the way we are governed is something which has always interested me.

India’s federal design

RAJAGOPALAN: The funny thing you mentioned about scale, I’m sure you’ve heard me say this before, but it’s like we can land a Mars rover and we can have a moon mission, but we can’t have the garbage picked up. That’s how our government functions. I totally understand your point about scale for the former; you’re a big country, you can devote resources toward a space program or a space research program. But the same scale should also allow us to enable garbage pickup and sewage treatment and all those very, very basic things that India just struggles with. I guess what I’m asking is, despite the scale that’s motivating your work on federalism, why is it that our local governments work so poorly? It makes no sense.

CHOUTAGUNTA: Yes. India is a federally organized country. What that essentially means is that India has different tiers of governments. We have on the top, the union government, and below that we have the state governments and below that we have the local governments. Now, each of these tiers of governments need to coordinate on many things. They need to coordinate on legislation, they need to coordinate on policy and they need to coordinate on the implementation of policy. How these governments coordinate is what determines how their relationships are.

Now, what do I mean by center-state relationships? The way in which the Indian Constitution is set up is that there are a certain number of things that the union government is supposed to do as defined by the constitution. Then there are a certain number of things that exclusively fall under the purview of the state governments, and then there are a certain number of things that are joint purview. These are three lists in Schedule VII of the union constitution, which are those union, state and concurrent lists.

There are some things in the concurrent list where the union and the state government need to coordinate quite a bit on, and there may be issues which come up. These kinds of things might happen where nobody knows whose role is predominant, et cetera. Now, all that happens mostly because of the way, again, we designed the constitution. Our constitution comes with quite a bit of historical colonial baggage. The way we designed it was that it holds the state together. The top layers of the Indian government happen to have a lot more power than the bottom layers of the union. It’s like an inverted pyramid of sorts. It’s quite top heavy, let’s say. If you look at it, economic powers, legislative powers and political powers are all concentrated in the center. It’s very centripetal. Everything comes out of there. It’s guided by the central government. It is, in a way, one of the main reasons India, as a whole, functions the way it does.

All these power dynamics are not just between the center and the state. They also start playing down between the state and the local level, because, again, what the central government has taught the state government is what the state government is going to preach toward the local governments. That’s one of the reasons why, like you said, we can launch rockets, but not really pick up garbage.

RAJAGOPALAN: You talked about union-state. Now, local government, as we know, was never a part of the Indian constitutional and federal scheme. Of course, there were cities and presidency towns, which had their municipality, but when the constitution was written, there was no real layer of local government because localism was equated to parochialism, and the idea was that everything will be done at a much higher level, both intellectually and in a more centralized way. The 73rd and 74th amendments bring about this layer of local government. First question is, how does that interact with these other two layers, and second, why didn’t that solve the problem of picking up garbage?

Why are local governments broken in India?

CHOUTAGUNTA: The 73rd and the 74th amendments came in 1993. The initial design of the constitution happened much, much before that, in 1950. It took a while before we realized we needed local governments, or we had local governments, but not formally in the constitution. They were not enshrined in the constitution. It took us a while before we actually formally gave them a place in the constitution. Then the way we designed these amendments, the 73rd and the 74th amendments, were, again, mimicking the centripetality, which is there in the Indian Constitution as a whole. 

They essentially told the state governments to make sure to create the local governments in the first place, set them up, make sure that they have regular elections, make sure they have enough powers so that they can carry out a bunch of things, which are, again, stipulated in Schedule XI and XII of the constitution, which are essentially the jurisdictions of the local governments and also give them enough money to do so.

The state governments did, I guess, what every government would do if they were asked to do something, which is to keep a lot of the power and give out all their responsibilities to a lower level of government, and that’s what they did. They kept all the powers and then told the local governments, “You need to do this. You need to do this.” They had a lot of responsibilities, but really, no capacity to fulfill any of these responsibilities at the local level. Again, that’s how the whole garbage story plays out.

RAJAGOPALAN: When you say they kept a lot of power but gave the responsibility, what does that mean exactly? Can you give us an example of that?

CHOUTAGUNTA: I think I’ll give a bit of background before we actually get to answering the question. Most federally organized countries think of distributing money in a certain way. Now, most governments raise money in a certain way. They have three ways mostly of raising money. The first thing that a government can do, because it is a government, is raise revenue through taxes. The second thing they could do is borrow from the open market, borrow money by issuing debt. The third thing they could do, if they’re a lower level of government, is get money from a higher level of government, through what is called intergovernmental transfers.

Now, generally, in most federally organized countries, how this works is that many state governments within countries raise their own revenues, and to plug holes in what the countries they usually take to borrowing or get transfers from the higher level of government. The way it works in India is very different. 

In India, 4% to 5% of the expenditure of local government is raised through its own revenue. The rest happens through transfers from a higher level of government. Usually here, in the case of a local government, they get that money from the state government. 96% is through what are intergovernmental transfers. I think these figures are from the government of India statistics. You can look at the previous economic surveys. I think 2017, ’18, ’19 surveys, they had some of these statistics.

If you look at it, the state government essentially gives money. That makes very little sense if you compare it to other federally organized countries. With transfers, one has to remember that transfers are in many senses very discretionary. They’re all politically motivated, in a way. There are some very nice papers on India, on politically motivated strategic intergovernmental transfers written by Wiji Arulampalam, Stuti Khemani and others. If you look at it, this same thing plays out even in the local government space, but in a much lesser scale because they’re working with even less money. 

RAJAGOPALAN: One obvious thing to me—and you and I are both in the same Buchanan and Dick Wagner school of public finance. That’s the cloth that we are cut from. One obvious thing about intergovernmental transfers, and especially the way it’s set up in India, is it cuts the feedback mechanism in some sense.

We have a situation where local governments are going to have a legislature and an executive, and it’s going to look and talk and quack like a government. That it’s supposed to be responsible to its citizens, but when it comes to money, it’s actually not responsible to its citizens, it’s responsible to politicians in a higher level of government, or sometimes not politicians, oftentimes bureaucrats who come from the union government cadre or the state government cadre or something like that.

That’s one obvious thing that I can find that’s a problem with this reliance on intergovernmental transfers. What are some of the other things that you find in your paper, “Constitutionally Destined Decay”? What are the other things that are going on?

CHOUTAGUNTA: The other things that are going on is, again, I think the government of India has thought of this whole problem in a nice way, actually. It also recognizes that this is a problem. They think of this as three F’s. The first F is functionaries, the second is functions and the third is funds. Now, we’ve just spoken about the funds part of the story. Then there are the functions and the functionaries. Let me get to the functions first.

Now, the way in which Indian local governments are designed is also that within themselves they’re tiered. There are three types of local governments, which are also tiered. You have one at the block, and one at an intermediate level and one at the local village level. Each of these tiers also have their own powers. The way in which these powers are to be divided within the three local government tiers is to be decided by the state governments. From what I have seen, they’ve made a mess of this.

All three tiers of local governments do not have clearly delineated spheres of authority. They always have to contest with each other to find out what their responsibilities are and whether they can actually carry them forward. That is the problem with the functions. Now, that is the first problem. This is the design problem. 

Then the second problem is obviously a very public choice problem, which is that they don’t have enough functions to start with. Local governments can do certain things. If we were to look at the powers that they need to have, basic stuff like sanitation, water supply, lighting. Some of the panchayats, the Indian local governments, do not have these powers and they have not been devolved by the state governments to the local level or the right local level. 

If you look at what powers where delegation is with multiple authorities, stuff like, collection of property tax, it’s not with one authority in some of the states. There are, I think, at least four to five states which have multiple local governments. In some cases, there are the block level and the intermediary level. In some cases, they are the intermediary and the local level, which have these powers.

There are multiple people trying to collect the same taxes, which makes it problematic. Again, tolls. Some villages can issue tolls, and that also happens by multiple authorities. You never know where a road ends and where the other road begins. That’s another problem.

RAJAGOPALAN: By the way, this is not just in local governments. I grew up in Delhi, and in New Delhi, you will have parts where it says, “NDMC road ends here.” Then some 30 meters ahead, it’ll say, “MCD road begins here.” It’s like, are these 30 meters in the middle no-man’s land? No one is supposed to look after it? I think this is a more general problem than one imagines.

CHOUTAGUNTA: I think it’s a very good point that you raise because, see, this is the 74th amendment’s problem. What I concentrate in the paper mostly on is the 73rd amendment, which concerns rural local bodies. What you’re talking about is urban local bodies, and the problems are very similar with respect to design. With respect to design, it’s very, very similar. This is exactly what I’m talking about. It’s that the way their functions are defined are weird. 

Then the second thing is that they don’t have enough functions in the first place. There are many things that they could have powers on, property taxes being the main thing. Duties on agricultural land can be another thing. Land revenue cesses can also be collected. These are all powers that the Schedule XI dictates. Many of these powers are undelegated. That’s the other problem. If you’ve not delegated power as a state government, then the state government has the authority to do this.

RAJAGOPALAN: Basically, what you’re telling us is the state government should have passed some law that says, “We allow gram panchayats to do X, Y and Z”?

CHOUTAGUNTA: Yes.

RAJAGOPALAN: That’s what you mean by devolution of power, right?

CHOUTAGUNTA: Yes.

What do local governments do?

RAJAGOPALAN: The state government doesn’t do it because it has no incentive to part with that authority. Now, the other part of it, though, is, if I understand the ground-level situation correctly, local governments are made to do a lot of things. How is it that simultaneously state governments and union governments are not parting with their power, but at the same time they have lots of tasks? Where is that coming from?

CHOUTAGUNTA: The tasks very simply come from the fact that the 73rd and the 74th amendments were designed in such a way that all the tasks could be passed on, the power could be kept. Sanitation comes to my mind first, water supply, maintenance of roads.

RAJAGOPALAN: That’s what they’re supposed to do. What are these tasks that are just crowding up local governments in a chaotic way?

CHOUTAGUNTA: The way this works is also weird. The local governments are not just answering to one authority here, which is the state governments; the local governments are also answering to the union government in many, many, many cases, and also bodies created by the union government. What do I mean by these? These are called parastatals in the literature. Parastatals are essentially, in India at least, they come out because of the welfare schemes that the central government runs. In India, the way in which welfare schemes are run, there are central-sector schemes, then there are centrally sponsored schemes, then there are state government schemes.

Now, central government schemes are exclusively run by center. They are usually implemented in local rural areas, which means that you have an agent of the central government basically doing stuff which is where the local government is responsible.

RAJAGOPALAN: This would be something like NREGA or the Awas Yojna or something like that?

CHOUTAGUNTA: Yes.

RAJAGOPALAN: What does the local government actually have to do in that situation?

CHOUTAGUNTA: They have to coordinate with the agent of the state or the union government. Usually, the state or the union government has a lot of powers, which means that they can override the local government, and that’s what happens most of the time. You have more power, you have more finances, you can override the local government, and you can just sideline it. That’s what’s happening. That’s why things don’t work the way they should, because if you create a government, you need to empower it in the best possible manner. That has not happened at all. That’s where the problems lie. 

Let me give you an example here. Ideally, if, let’s say, there were to be streetlights installed in a village in India, you would empower the local village government to procure and put the wiring in and then install the lights and supply it with electricity. What happens is that there may be a scheme from the central government which sponsors the lights. There may be lights that are installed, but there’s no electricity on those lights. That can happen sometimes. Sometimes what can happen is that there is a centrally sponsored scheme, which would probably put in the wiring but not put in the lights because there’s no funds for that.

Instead of actually empowering the local governments to do all of this, there are different things which are coming from the top. It’s very paternalistic in the sense a central government in the top is deciding which village gets what kind of things, and they don’t quite know many of the times what they need. This is the same with the state governments. States are huge in India. With huge states, it’s not like a state government can go around looking and say, “Oh, yes, this place needs wires. Oh, that place needs lights. That place needs the connection with the electricity grid.”

All of this needs to happen from a local government level, and it doesn’t in India because of these schemes and because of the way in which they’ve designed all of the architectural governance in the first place. 

RAJAGOPALAN: I was talking to a couple of IAS officers about this, and I was asking them, how come there’s so much of focus on physical infrastructure, which is required. We have very low levels of physical infrastructure in villages and small towns and so on. On the other hand, one of the even bigger problems they have is investments in human capital. The schools are falling apart. The primary healthcare system is falling apart and so on.

I got this incredible insight. It’s basically when they are driving through a village or a city in a motorcade, everything that looks broken around them is what they want to fix, which is typically things like, “Oh, people are defecating out in the open. This place is terrible. The roads have potholes. There are no streetlights when you’re driving through the night, or there isn’t a rest stop area or there aren’t facilities.” These people have never spent a day in the village, so they actually don’t know the more specific problems which are very, very important for the people of the village.

Most of the infrastructure, even when it does get built, even if they managed to get the electric lighting and the wiring and the streetlights switched on, it’s not even clear if that was the most important problem for anyone other than a motorcade driving through that village.

CHOUTAGUNTA: I think you’ve touched upon the biggest tragedy of this piece. The biggest tragedy of this whole thing is that, there are 250,000-odd rural local bodies in India. 250,000 is a big number, and they all need to go into elections, and they don’t. In many cases, elections get delayed by a year, by two years, by three years. I think when the amendments were first passed, the first elections, I think most of them took at least a year or two, actually even five years in many cases, to institute. It is because, again, the election commission that institutes these elections is a different one than the one that institutes the state and the central union election.

RAJAGOPALAN: That’s a central election commission, these are state election commissions.

CHOUTAGUNTA: State election commissions are often prone to politics. The commissioner’s appointment in Andhra Pradesh was a whole mess—I think this was two years ago—and that created a lot of delays. Even now, Uttarakhand needs to go to elections in October, and they’ve already announced delays. Essentially, there’s no human capital which is being generated at the village level for governance. That’s the first thing.

Then the second thing about all of this is, let’s say you have elections, many people don’t go and vote for elections. So it’s unanimous. People know in the village that there’s not many people who show up for the election, so there’s only one candidate. If there’s only one candidate, there’ll be an uncontested, unanimously elected person in the village. I’m not talking about small numbers here, we’re talking about 10% of the seats of 7,000 seats going uncontested. I think this was in West Bengal two years ago.

We talk about the triumph of elections in India. There is really no triumph in local elections in India. On top of all of this, the bigger tragedy, I think, in my opinion, is that uncontested or unanimously chosen local representatives in India, the villages which do this are incentivized by the state governments to do so. The state government provides money for unanimously chosen representatives in India, and I don’t know what to say about it. I get what they’re trying to get at, but I don’t think they’re achieving that in any way. This is the biggest tragedy in this whole thing, I think. 

In the paper on local governments, I showed three things. I showed that local governments were never endowed with the powers that allowed them to function as autonomous local governments. They never had the power and they were never given the power properly. 

The second thing that I showed is that local governments do not regularly have elected representatives that can take up the functions of governance. They always have delayed elections and sometimes they do not have any elections. Sometimes they have elections where there are no competitors; there’s a single person in the elections and that person is unanimously elected in.

Then the third thing I showed is that local governments do not get the funds that are needed in order to function like they should. It’s not just reliance on higher levels of governments for getting the funds; because they’re not given the functions, they don’t have the powers to raise their own money. It’s both ways. They’re essentially in a very, very sticky wicket. It’s really bad for them. These three things I showed that this all happens because of the way centripetal federalism functions in India. It was not only in the past that centripetal federalism dictated constitutional design in the 1940s and ’50s. 

It is also in the present in the sense it can be seen in the way the 73rd and 74th constitutional amendments were designed. The central government designed the 73rd and 74th amendments in such a way that it gave state governments all the discretion in the way local governments could be structured. So state governments, again, they’re mimetic and because they’re mimetic, they behaved exactly in the way the central government would behave. They kept all the power and doled out all the responsibilities. I show this in the paper as to how they do it. 

India is Centripetal in its Federalism

RAJAGOPALAN: To connect all the different threads. Now, we’ve talked about legislative powers. You have the state list, you have the union list, you have the concurrent list. We’ve talked about union and state relations and then state and local government or union and local government relations, but residual powers or legislative powers or emergency powers are just one part of the puzzle. What is fundamentally going on with Indian federalism that you’ve gathered from just writing multiple papers in your dissertation on this?

CHOUTAGUNTA: I’ve titled my dissertation, “The Political Economy of Centripetal Federalism in India,” not just federalism in India because I think that is the most striking aspect of how the Indian Constitution affects everyday politics and economic outcomes in India. The centripetality, it’s ingrained in the way we think about governance in India. It’s not just in the central government, it’s also in the state governments. If you let it loose, it will also be the local governments. I don’t know how, but it will. There is this mimetic power structure thing. That is central to how Indian governance works. I think our COVID paper really does touch upon that quite a bit.

RAJAGOPALAN: We call it the COVID paper, it was just testing for something during COVID, but actually, it’s a paper about how centripetal Indian federalism is, though we call it dysfunctional at that time. 

CHOUTAGUNTA: In that paper, by using the COVID example, we show what happens when you have centripetal federalism. The nature of centripetal federalism essentially limits legislative, political and fiscal autonomy of state governments, of lower tiered governments. It really puts the union government on a pedestal that way. They can do whatever they please and they do whatever they please. That’s what they did during COVID. They knew that in India—we show in this paper in tremendous detail—that there’s a lot of variation within India, both with respect to healthcare capacity, and with respect to economic capacity and there’s also a lot of geographical variation. India is a huge country with a lot of variation.

The central government knew all of this. Despite knowing this, they imposed the harshest lockdown in the world. It was like a one-size-fits-all sort of a lockdown. It’s always a one-size-fits-all measure when it comes to India, be it in the local government sphere, or in the way they impose president’s rule or in the way they imposed lockdowns for COVID.

It’s always like that. What we showed in this paper was that this never took into account variation within states, variation between states or the needs of a state. I think we’ve shown that when you have such a centripetal approach, things are most likely going to fail. In some states, they may be minorly successful. The lockdown was minorly successful in some states, but it was not needed in most states. It was not needed in that manner in most states.

Because it was not going to succeed, whichever way you looked at it. We were speaking, and we really wanted to show how this was. We showed using Google mobility data, I think. I also think we tested this with Facebook mobility data at that point to assess the effectiveness of the lockdown. I think we looked at mobility data and tracked it with a disease spread. We showed that the lockdown was only partially successful in controlling COVID-19 spread in some states but in most other states, it was largely unsuccessful. In some states like Sikkim, you impose the same lockdown in Sikkim and Bombay and you expect the same outcomes. I think it’s madness.

RAJAGOPALAN: There’s always this tradeoff when you have this overcentralization. Option one is you actually treat each state as this individual subnational unit and take into account everything that’s possible. That requires lots of knowledge. This is the classic Hayekian— 

CHOUTAGUNTA: Knowledge problem.

RAJAGOPALAN: —knowledge problem which the union government can’t possibly have access to. To act without that knowledge and vary the treatment of different states now means you are getting into all kinds of constitutional and rule of law issues. Basically, you have no choice but to treat all states exactly the same, whereas the problems are extremely difficult. Even in an emergency like COVID, which is a global pandemic and this is impacting, they said it impacts the whole world in the same way, but actually, it doesn’t.

Regionally, there’s a lot of variation within India on how it impacts. That was a fun paper for us to write. At least the start of it is exogenous. Then like you said, the mimetic structure, there’s also a lot of mimetic structure on how union government learns from other governments in developed countries and what it does in terms of imposing the stringent lockdown. It’s not just that this union government didn’t do the cost-benefit analysis. It’s that what we find is that it can’t be done. I think that’s the bigger issue.

CHOUTAGUNTA: I don’t think the union government wants to acknowledge that. I think that’s one of the biggest problems. I think that’s also the source of centripetalism if you think about it in one way. I think we cited quite a few papers on the impacts of the lockdown. I’m sure that the lockdown impacted the poorer sections of society a lot more than the richer quintiles of the population. Even though it was a one-size-fits-all lockdown, it is not going to have a one-size effect on everybody. It’s going to have very differential effects.

RAJAGOPALAN: Absolutely.

CHOUTAGUNTA: I don’t know, I still think about that paper quite a bit when I think about a lot of the work that I want to do in the future.

RAJAGOPALAN: Yes, we should actually test for that outside of a pandemic setting. I think that’ll be a fun thing to write.

Thanks so much for doing this. This is fun. I always have fun chatting with you. Hopefully you’ll be back to talk about some of our other papers together.

CHOUTAGUNTA: Yes. Thank you very much, Shruti. Thank you very much for having me.