CEO Modi’s Strategy: Cooperative Federalism

by Muralidhar Selvamani

The Bhartiya Janata Party’s impressive performance in India’s parliamentary election culminated in Narendra Modi taking over as the Prime Minister of the world’s third largest economy measured in terms of purchasing power parity. This is the first time in three decades that a single party has won enough seats to not have to rely on smaller regional parties for survival. The regional parties play a crucial role in India’s fragmented political landscape by representing people from the country’s diverse provinces. However, their regional focus has sometimes militated against larger national goals paralyzing several domesticand foreign policy decisions.

India’s federal structure operates on a complicated power-sharing model. Technically, the federal government (known as the “Centre”) enjoys broad decision making powers. But, provincial governments’ cooperation is crucial to operationalize key policy decisions. The Centre may announce new airports, allow foreign companies to invest in mines and power plants but the land required to build these has to be acquired by the states. In India, land has not only commercial but also emotional value, making decisions over its use an easy way to stir up opposition. Protests—spontaneous or engineered—are politically expensive for regional parties who use their local popularity as their calling card. It is easy for them to choose the path of least resistance and place myopic political considerations above long-term developmental goals. It takes strong political skills and smart policymaking to eliminate slips between intention and execution.

It is in this context that Mr. Modi’s talk of “cooperative federalism” holds promise. States, especially those ruled by parties in opposition, often accuse the Centre of step-motherly treatment. Perhaps wary of this, Mr. Modi used his maiden parliamentary address to praise state governments. In a country where symbolism heavily influences perceptions, such acts can yield rich dividends. Having been a state leader himself—he was Chief Minister of Gujarat for over a decade—Mr. Modi knows the game too well. He stormed to power on the promise of replicating his “Gujarat Model” of development nationally and knows the costs of non-delivery are high. He has acknowledged that the “Gujarat Model” isn’t a homogenous “one-size-fits-all” model, but rather, a bespoke approach to development that requires him to work closely with leaders from different states. Admirably, he avoided speaking from an assumed position of superiority. Welcoming alternate developmental models, he suggested that states compete with each other to come up with models that best suit their needs. It seems he is looking to play in government the role a venture capitalist would play in business—that of an enabler who sets up people for success. He was known for his CEO-style approach to governance in Gujarat and has indicated his inclination to continue doing so in New Delhi. In another classic management soft touch, he questioned why the annual Chief Ministers’ conference should have the Prime Minister seated on the stage and the Chief Ministers below when it can be a round table discussion of equals. When the power distance between states and the federal government reduces, policy actions can be better coordinated and the states become equally invested in decisions and outcomes.

The states have much to gain by responding positively to Mr. Modi’s overtures. With investor sentiment buoyant and the global economy on the rebound, there will be plenty of opportunities to add local jobs, build enduring infrastructure, and create productive assets. These will improve the stocks of the Chief Ministers in their home states and force laggards on the path to reforms. One state’s loss will be another’s gain, and any lost opportunity will be hard to defend for the states in the face of Mr. Modi’s open commitment to collaborate with state leaders cutting across party lines. Early indications suggest that Mr. Modi’s strategy may be working already—twenty-one Chief Ministers have met Mr. Modi in just over a month since his inauguration. Whether Mr. Modi can transform himself from a strongman to a statesman will depend on his ability to convert promise to performance. It will be a remarkable achievement if Mr. Modi’s cooperative federalism reshapes Centre-State relations.

About the Author

Muralidhar Selvamani is a MALD student at The Fletcher School. He writes at the intersection of politics, business, and government.

Human Rights Promotion Backfiring as “World War LGBT” Shakes Eurasia

It Will Take a Village, Creativity, and Collaboration