Relations between the Centre and the States should be restructured into a federal framework that provides more autonomy to the States, Communist Party of India (Marxist) general secretary Prakash Karat said here on Saturday.

Addressing the alumni meeting of the Madras Christian College–Madras chapter, Mr. Karat said that under the current centralised framework, the States lacked adequate decision-making powers on basic fiscal policy or other matters and depended on the devolved share of taxes from the Central government for implementing development programmes.

This lack of autonomy at the State level partly explained why the Left, which lacked the strength in Parliament, had to confine itself to the advocacy of alternative policies of development at the national level and “working within the system” in States such as West Bengal and Kerala, where it was in power, Mr. Karat said.

Elaborating on the topic for the evening — the seemingly contradictory positions the Left took on the FDI and market economy at the national level and in the States where it was in power— Mr. Karat said that contrary to the misconception, “Marxists are not against the market,” or opposed to FDI.

“Our experience of building socialism has led us to understand that the market has a function even in a socialist order… and that if you eschew the market, or fail to integrate the market into a planned economy, as the Soviet Union did, you are in trouble,” he said.

He cited the example of China, which had changed course in the 1970s to successfully build a socialist market economy that did not relinquish centralised planning.

The CPI (M) never said that it was opposed to foreign capital, he said. In fact, the party programme made a clear distinction between the positive impact of FDI inflows into productive activities and opening up sectors such as banking and insurance to speculative financial flows, Mr. Karat said.

“We must decide in which sectors we need the FDI and which sectors need to be regulated,” he said.

While India had survived the recession and was on target to achieve a GDP growth of 8.5 per cent, the question to be asked was whether this was the ideal type of growth that the country required and whether it was beneficial to the entire people, he said.

Focusing on GDP growth alone could provide a skewed and distorted picture of development when it benefited only the privileged few. “India, with the fastest rate of growth of dollar billionaires, now has some of the richest people in the world and also some of the poorest,” he said.

MCC Alumni Association office-bearers Revi Thomas, Pothen Cherian, K.M. Mammen and Alexander Jesudasan also participated.