Viksit aim: India's progress will depend on Centre-state relations

Mint

02-06-2025

The 10th Governing Council Meeting of the Niti Aayog, the Indian government's think-tank, took place last week. It was attended by representatives of 24 states and seven Union territories, in addition to several dozen cabinet ministers.
For the past three annual meetings, Prime Minister Narendra Modi has been exhorting Indian states and regions to develop 'Viksit Rajya' vision statements. Each of these visions is to incorporate a laddered set of vision statements from cities, towns and villages within the state.
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The CEO of Niti Aayog said that 17 states had completed such a plan. The framework for this exercise is designed to integrate state plans into one grand one that envisions the whole of India as a developed (or 'viksit') country by the time it completes a century as an independent nation in 2047.
In some ways, this is a wonderful project. It brings the Centre and states together for a collective mission whose broad goal is to nurture inclusive prosperity in the country. At the same time, each state is encouraged to think of its own strengths, weaknesses, opportunities and threats (a 'Swot' analysis) and build plans that are unique to its endowments.
A land-locked state could focus on fields that differ (say, agriculture) from one with a coastline (say, logistics), and a hilly state with natural beauty can elect suitable policies (say, tourism) that may differ from those of an arid state (which could focus on solar energy).
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Early indications from states that have put elements of their plan in the public domain show exactly this diversity. Gujarat envisions a $3.5 trillion state economy by 2047 focused on urban development, female participation in the workforce and the pursuit of net-zero carbon emissions. Andhra Pradesh plans to attract investments, prioritize skilling, use technology for public-service delivery and governance, and 'eliminate' poverty.
Of course, states can and will enact these plans very differently. Some will gather dust, while others will have enabling and monitoring cells that keep track of progress. These plans are part dream, part industrial policy and part roadmap. As of now, they lack detailed implementation plans, and from what is available in the public domain, do not reveal a nuanced sense of the enabling steps required to deliver results.
Other countries that have tried these envisioning exercises have succeeded to different degrees. The most spectacular showcase of success is the transformation of Dubai, UAE. The emirate transformed itself from being dependent on oil revenue in the 1960s and 70s into a diversified economy based on tourism, financial services and trade. A similar transformation is underway in Saudi Arabia, with some large projects on track and others like its phantasmagorical Neom City derailed. Bangladesh's Vision 2041 was binned with the departure of Prime Minister Sheikh Hasina.
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In India, superficial bonhomie hides differences. Last year, Tamil Nadu boycotted the whole Viksit project, and this year, Karnataka has done so; both states are led by political parties that pose opposition to the Centre's ruling Bharatiya Janata Party. This lack of trust arises because there is no political forum for discussing issues between the Centre and states.
The Interstate Council (ISC) is a non-permanent body that was born as a result of the Sarkaria Commission in 1990, in part to address this. The ISC can be called at any time by order of the President. It has met 12 times since then, but has not met since 2017. While its constituent members broadly resemble those who met during the recent Niti Governing Council meeting, its agenda is not set by only one side. The purpose of the ISC is to 'resolve' difficult political conflicts, not merely to create PowerPoint documents.
There are other issues as well. Except for Andhra Pradesh, Tamil Nadu and Karnataka, Indian state-level development models are heavily state-led. The private sector is mostly uninvolved in the creation of these visions. Moreover, the philosophy of the state being only an enabler of commerce —by setting up infrastructure, for example— and enforcer of fair play is alien to most states, except a few in the South and West.
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Given the Centre's emphasis on the power of the administrative state, it does not actively encourage an organic 'flowering' of the economy. Paradoxically, the Sanskrit word 'viksit' is translated into English only as 'developed,' but its semantic meaning is closer to 'opening' or 'blossoming.' For this flourishing to happen, the role of the government must diminish over time and the country's Vision Plan must be less of a government-manicured garden and more of a natural habitat of freely growing biodiversity led by the private sector.
The right balance to strike is one where the Centre and states create enabling infrastructure. States may need roads, ports, airports, multi-modal freight stations, inland waterways, etc. To generate human capital, the government should work to improve the quality of education and employability of college graduates. Beyond this, it should incentivize the private sector to participate in the economy through business-friendly policies.
Any large-scope industrial policy at the Centre or state level is akin to central planning and is bound to result in relatively poor returns on allocated funds. It would also risk India missing the goal of creating an inclusively prosperous country.
P.S: 'All happy families are alike; each unhappy family is unhappy in its own way," said Leo Tolstoy in 'Anna Karenina'