Fixing the federal fallout of the Kerala flood relief funding row requires care

The differences between the Kerala and Central governments over the denial of external assistance to rebuild the State after the devastating floods of August last year surfaced again last month, in the Kerala Governor’s policy speech in the Assembly as well as the statements of a Kerala Minister at the Pravasi Bharatiya Divas in Varanasi. Governor Justice P. Sathasivam had said that the Kerala government had requested the Centre to enhance its borrowing limit to mobilise additional resources for rebuilding the flood-hit State. “We are still awaiting a favourable response from the Central government in this regard,” he added. Minister K.T. Jaleel, who represented Kerala at the conclave, complained that he was not allowed to raise the issue there. The bitterness over the flood money still persists.

Competitive federalism, in the context of interaction with foreign countries, promoted by Prime Minister Narendra Modi, has proved to be a double-edged sword. Kerala Chief Minister Pinarayi Vijayan now stands accused of violating rules regarding the seeking of foreign assistance. He remains unclear on how to make up for the shortfall, of several crores. The Central government is unable to provide the funds while Kerala has been stopped in its tracks from seeking resources from abroad, either from the Kerala diaspora or from friendly foreign governments.

The present situation is a result of a series of errors of judgment and misunderstandings on both sides. Mutual political suspicion and a lack of appreciation of the complexities of the international situation have brought about a confrontation. The Chief Minister may have even made diplomatic and tactical misjudgments.

Diplomatic trajectory

India had no qualms about receiving foreign assistance for disaster management till 2004. But when India’s aspiration for permanent membership of the UN Security Council met with strong resistance, New Delhi hit upon the idea of forcing a vote in the General Assembly. The game plan was to secure a two-thirds majority and then attempt to embarrass the permanent members into supporting the expansion of the Security Council. The two false presumptions were that India would win the required number of votes and that the Security Council would wilt under pressure from the General Assembly. In fact, many Assembly members were opposed to the veto even for the existing permanent members and had no interest in creating more permanent members with veto. India thought that it could win over the other countries if it was seen to be helping them in emergencies rather than seeking such assistance for itself.

The tsunami of 2004 and the threat of piracy in the Indian Ocean provided India an opportunity to test its new posture. Everybody was grateful, but it made no difference to India’s claim to permanent membership. There were other factors too which militated against India’s claim. The Modi government decided, however, to lay down the rules regarding foreign assistance in order to bring some clarity to the situation.

The rules, which were framed in 2016, clarified that India would not solicit any assistance but would receive relief assistance, even as cash, from individuals, charitable institutions and foundations. If cash were to be offered bilaterally by foreign governments, the matter would be considered on a case-by-case basis. Even before the extent of the damage was fully known, I had urged the Central government in early August 2018 to make a suitable amendment to the rule as the damage in Kerala was beyond the capacity to handle it. Needless to say, nobody responded at that stage.

The UAE’s offer

The saga of the offer by the United Arab Emirates (UAE) began well when the Prime Minister was informed by the UAE authorities that relief assistance was being put together as a special gesture, which the Prime Minister reciprocated with a warm reply of gratitude. But the Kerala Chief Minister’s announcement that the UAE would provide ₹700 crore, made on the same day as the Central government’s announcement of a provision of ₹500 crore, opened a Pandora’s box. It appeared as though the UAE was more generous than New Delhi was to Kerala and that the Central government was not empathetic to Kerala’s plight because of political considerations. Moreover, the source of the information was supposed to have been an Indian businessman in the UAE. An embarrassed UAE government then asked its Ambassador in New Delhi to deny that there was any specific offer of ₹700 crore.

An immediate consequence was a reluctance by other governments to make any offer of bilateral assistance. No one could answer the question whether any offer from other governments would be accepted. When the Thai Ambassador in Delhi was stopped from being at a ceremony to hand over relief goods to an Indian official, the world was convinced that India would not accept resources. The issue was politicised as one between the Bharatiya Janata Party and the ruling CPI(M) in Kerala.

It was against this backdrop that Kerala put forward an unwise proposal to despatch its Ministers abroad to collect donations. This was unacceptable in the context of the policy that had crystallised after the floods in Kerala and the Central Government having refused permission for Ministers other than the Chief Minister to travel to countries. Apart from the ignominy of soliciting donations, there was a clear likelihood of receiving very little by way of cash donations. The possibility of loans from the International Monetary Fund and the World Bank became distant as the Centre refused to raise the limits on loans from these global organisations that a State government could take. The emergence of the Sabarimala crisis further eroded the credibility of the State Government and much of the empathy over the flood damage was also lost.

The Prime Minister had always maintained that marshalling of resources is the responsibility of the Union government according to the Constitution. Now the only option before Kerala is to demand more funding from the Centre to make up the shortfall. Undoubtedly, the situation is a tragedy of errors caused by an inadequate familiarity with decision making and the complexity of international relations.

India is a federal state, but unitary in nature when it comes to national security and foreign policy. Individual States may have some advantages in dealing with some countries in their neighbourhood, but they will do well not to transgress the thin line when it comes to managing international relations. Now it will take longer for trust to be established to have competitive federalism work again.

T.P. Sreenivasan, a former diplomat, is Chairman, Academic Council and Director, NSS Academy of Civil Services. He is also Director General, Kerala International Centre, Thiruvananthapuram