<div><em><strong>Sutanu Guru</strong> argues how Modi is using federalism to try and transform the language of governance and policy making</em></div><div> </div><div>Very soon, you could be reading a headline like this: Who will win the race to be the 20 Smartest Cities of India? By the end of this month, get ready to see another headline: Maharashtra (or Gujarat, or Tamil Nadu or even Madhya Pradesh) tops the rankings for ease of doing business. The first headline because Urban Development Minister M. Venkaih Naidu has just released a list of 98 Smart Cities. Two more Smart Cities will be added when Jammu & Kashmir sends its recommendations. The second headline because the Department of Industrial Policy & Promotion (DIPP) will release a new ranking of states on ease of doing business on August 31. <br> </div><div>A lot is being written, and will be written about Smart Cities and Ease of Doing Business. The cynics and Modi critics will continue to say that these are more examples of symbolism rather than substance of the Modi regime. But they miss a point. Arguably for the first time, Narendra Modi is introducing a system of organized competition between states for resources. To be sure, states have been competing with each other to attract investments for more than a decade now. It has become a ritual for chief ministers of states to organize annual investment meets, Some states have succeeded in leveraging these meets to actually attract new investments that have translated into new factories, new offices and new jobs. For most other states, these meets have remained a ritual. At another level, states have been competing fiercely with each other through innovative marketing and advertising campaigns to attract tourists.</div><div> </div><div>But Smart Cities and Ease of Doing Business promise to instutionalise this competition. And that can only mean good news for the economy as well as citizens. Take Smart Cities. Out of the 98 cities announced, the center will initially select just 20 cities who will get an Rs 100 crore corpus from the central government. All 98 cities (which means their state governments) will have to compete with each other and demonstrate through measurable parameters why they deserve to be in the Top 20. M. Ps, MLAs and other stakeholders of these 98 cities will make strenuous efforts to ensure “their” cities make the cut. In fact, we already hear stories of how MPs have started lobbying for this. But while politics will definitely play a part, the measurable criteria will ensure it will not be purely political. State governments have to give physical evidence of plans to improve infrastructure, sanitation, public transport, digital connectivity, low cost housing, public education and health, among other things. Surely this will lead to better governance; and in a manner that will directly impact the quality of life of citizens? This will be federalism at its best. The center is not going to suggest solutions. It is the local municipal bodies and state governments that will do the heavy hitting.</div><div> </div><div>Ditto for ease of doing business. Currently, India ranks a lowly 142 in the ease of doing business rankings released periodically by the World Bank. Modi has an ambitious target of taking India to the top 30 in rankings in the next five years. But Modi-having being a chief minister himself-knows that it is state governments that matter when it comes to creating a business and investor friendly environment. Modi demonstrated this successfully in Gujarat. Despite a hostile government at the center, the Modi government in Gujarat took many bold steps to make Gujarat (already business friendly) to an even more investment and business friendly destination. The results are clear. Gujarat is the one state where manufacturing jobs actually grew on a sustained basis for almost a decade while organized manufacturing jobs actually declined in the last decade. It is only if states and state governments become more proactive and compete with each other to become more investor friendly that India has a chance of improving its position in the World Bank rankings. States like Rajasthan, Andhra Pradesh and Madhya Pradesh have already taken concrete steps to reform local land and labor laws to attract more investments. Why, even the chief minister of West Bengal, Mamata Bannerjee, not known to be really business friendly made a trip to London and sought investor support! This is one issue when the adage The More the Merrier actually applies!</div><div> </div><div>Of course, hide bound, obstructionist and corrupt officials, corrupt politicians and contractors and other vested interests are not going to become angels of good governance overnight. But as any student of economics knows, healthy competition always delivers excellent outcomes. This is one of the least talked about achievements as the Prime Minister. </div><div> </div>
