'Brush up your federalism'

Fiscal And Financial Arrangements In A Federal Sri Lanka

Author - Asanga Welikala

Publisher - Centre for Policy Alternatives (CPA)

BY KARUNARATHNA Paranawithana

ACCORDING to the traditional classification of constitutions on the basis of the nature of the state to which the constitution applies, every state belongs to one of two great classes - unitary or federal.

However this classic model introduced by the political scientist Dicey and his contemporaries is now lacking the capability in providing a comprehensive analysis on modern constitutions.

Many "unitary" models, including that of the United Kingdom, which belong to Anglo Saxon tradition have undergone tremendous changes in order to respond to the dynamics of modern politics.

With the introduction of the Scottish Act and the Wales Act the nature of the State of the UK has marked new federal features in governance. Arguably UK is now not a unitary state. The case with the Sri Lankan constitution also is the same.

After the 13th amendment to the second republican constitution it has been converted into a federal constitution. However both unitary and federal fundamentalists are reluctant to accept this ground reality. They perceive that Sri Lanka still is a unitary state.

In order to facilitate this argument they tend to cite the Supreme Court decision which said "no division of sovereignty or of legislative, executive or judicial power has been affected.

The national government continues to be legally supreme over all other levels or bodies. The Provincial Councils are merely subordinate bodies. Parliament has not parted with its supremacy or its power to the Provincial Councils.

The very intention of the Supreme Court at that time to take this pro-unitarist stand can be understood. It had to reconcile the new structure of devolution of power to the provinces with the constitutional provisions in Article 2 and 76 which respectively envisaged the concepts of unitarism and the supremacy of the Parliament.

Despite this pro-unitarist interpretation, the 13th amendment brought substantial powers to the provincial units. Among those powers, police, public security, education, health, social services, and agriculture are noteworthy. Generally these are the powers that most federal units in the federal countries use as the portions of devolution.

The political communities in the Southern polity in this country who at the very inception opposed this devolution are now enjoying devolution by contesting each and every Provincial Council election. In the true sense of the word therefore federalism is not a coming danger or a monster. Sri Lankan federalism has already started its process of evolution.

Setting aside hypocrisy we have to now invent a developed futuristic modern form of federalism which guarantees plural democracy, territorial integrity and the national unity. Constitutional literacy of the citizens must be cultivated by bringing the knowledge on federalism with its various aspects.

The thesis 'Fiscal And Financial Arrangements In A Federal Sri Lanka' written by Asanga Welikala can be identified as a serious micro political writing which articulates the aspects of financial devolution of Sri Lankan federalism.

The Centre For Policy Alternatives (CPA) published the thesis last year and the Sinhala translation was launched at the Sri Lanka Foundation Institution two weeks ago.

According to the author, noteworthy of the post 1987 attempts at addressing the issue of federalism is the dearth of interest in the financial and fiscal aspect of devolution and power sharing. The idea seems to have been that it is more important to resolve the fundamental political and constitutional question first, leaving the details of finance for a later time.

Even the federalist political personalities who participated in the process of drafting various devolution proposals focused their attention mainly on the political issues while allowing the bureaucracy to suggest anything on financial devolution.

Because of this lacuna still a serious political dialogue on financial devolution is hardly found. If we are to decide on a federal structure of governance for Sri Lanka as well as for its implementation, an understanding of the pivotal financial dimensions of federalism is indispensable. The young liberal scholar's above mentioned contribution in this regard has given a good starting point.

The reader can observe that the author has done serious and appropriate studies on various subjects such as comparative constitutional law, public finance and political history of the contemporary experiences of federalism under different sub titles.

In this thesis, four broad sets of problems have been identified with regard to the case. They are the questions relating to the allocation of expenditure responsibilities, the assignment of revenue racing powers, and system for fiscal equalization and framework for the management of the national economy and regional borrowings.

As the author rightly points out there is no "off the shelf" standard form of fiscal federalism that can be adopted by a country seeking federal type reformulations.

Every country has its peculiar needs to which its fiscal and financial arrangements should be specifically tailored. For this reason it is pertinent to remember that the fiscal arrangements are the consequences and their existence and continue to be heavily influenced and shaped by the political and social conditions within which they operate.

Considering the political, economic aspects of the problem of allocating expenditure responsibilities, the author endorses the idea of asymmetric devolution for the North & East.

He perceives that the asymmetric frame work is vital if federalism is to represent an alternative to secession. Simultaneously, he argues that the asymmetric assignment of functions to the North East to address the Tamil aspirations to self rule has to be counter balanced by the competing principle of unity and territorial integrity of the state as a whole.

Under the theme of equalization of vertical and horizontal imbalances the author briefly observes the possible disparities and inequities between the centre and the peripheral units in a federal system.

Going by federal principles the author argues that there is nothing inherently wrong with an institutional design that creates a vertical imbalance between center and the regions in terms of income and expenditure. But a devolution system of this nature can succeed only where the arrangements for intergovernmental transfers are effective and efficient.

Under all sub titles of the thesis the author has briefly outlined the parameters for further deliberations on fiscal federalism. As mentioned earlier Asanga Welikala's monograph can be considered a micro political thesis which helps us to brush up the idea of fiscal federalism.

Though it is a small monograph, in the future it will be a sufficient textbook and a guideline for the policy-makers of the subject.

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