How States Fail

Context: When the states failed to perform its important functions, the compact between citizens and the State also breaks down. India, as a state seems to be struggling to perform those functions properly.

Reasons for the failure of States: When the states fail to monopolize the following two functions, it leads to its demise.

• Capacity to monopolize violence: A state must monopolize violence within the territory it controls, thus preventing non-state actors from victimizing citizens, or external forces from annexing territory. 

• Ability to monopolize fiscal and monetary functions: like taxation and the issue of currency, preventing non-state actors from inflicting extortion. 

Implications of States' inability to monopolize functions

• Failure to monopolize violence:

• Increases the vulnerability of law-abiding citizens: if the government cannot protect its monopoly on violence

• The threat of favoured Vigilantism: if a government gives permission to its favoured vigilantes to commit violence on those, it does not favour.

• For, E.g. as happened in Nazi Germany when the State let thugs target minorities.

• Failure to monopolize taxation: 

• Broken Social Compact: since citizens see taxes used transparently for purposes, they consider beneficial.

• Extortion Raj – An Internal Security Concern: When the states' monopoly breaks, non-state actors start collecting taxes.

• For E.g. In Sri Lanka during the heyday of the LTTE, Jaffna residents received receipts for "taxes" collected.

• Corrupt government officials asking for cash from citizens and criminals asking businesses to pay 'protection money' – also breaks the state's monopoly.

• Impact on federal structure: State governments hate it when the Central government collects taxes on their behalf and refuses to give them their promised dues.

• Cause of revolutions: Taxation issues contributed to the English Civil War, The French Revolution, The Russian Revolution, et al.

•  For, E.g. Taxation without representation was famously the cause of the US revolution. 

• Fall and rise of empires: While the Mughal empire fell as it was no longer able to collect taxes, Shivaji, Murshid Quli Khan and Nizam used taxation to build their empires.

India losing its ability to monopolize:

• The central government doesn't have a monopoly on collecting taxes.

• Reneged on the disbursal of taxes to the states: For, E.g. in recent compensation cess issue.

• It doesn't have a monopoly on violence, and it has encouraged vigilantes to commit violence on its behalf. (tax collection in north-eastern states)
• It has lost territory to other nations – Indo-China LAC issue.