India’s Eroding Cooperative Federalism

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Recently ,it has been observed that rather than strengthening cooperative federalism, the central government of the day is resorting to policies that make the Indian federation coercive.

About Cooperative federalism

• Federalism is the method of dividing powers so that the general and regional governments are each within a sphere coordinate and independent”. 
  • This implies a system of governance in which sovereignty is constitutionally divided between a central governing authority and subnational political entities.

• Article 1 of the Constitution states, “India, that is Bharat, shall be a Union of States”. While the Constitution doesn’t mention the term “federal”, it does provide for a governance structure primarily federal in nature.

• Cooperative Federalism signifies a horizontal relationship between the Centre and the State. 
  • This means the two entities cooperate and tackle shared issues to serve the larger public interest

• Accordingly, Indian constitutional law expert Granville Austin remarks that despite a strong Centre, cooperative federalism doesn’t necessarily result in weaker States; rather, the progress of the Republic rests upon active cooperation between the two.

Emerging Issues 

• It is unfortunate that NITI Aayog has not taken any major steps since its constitution to promote cooperative federalism. 
• Taxation powers are another contentious issue and the Central government has won most of the disputes purely due to express provisions in the Constitution

• Some recent developments have revealed fissures in Centre-State cooperation.
  • For instance, the zone classifications into ‘red’ and ‘orange’ have evoked sharp criticisms from several States. 
    • The States have demanded more autonomy in making such classifications. 
• The Centre has also declared that corporations donating to PM-CARES can avail CSR exemptions, but those donating towards any Chief Minister’s Relief Fund cannot. 
  • This directly disincentives donations to any Chief Minister’s Relief Fund; diverts crores in potential State revenues to PM-CARES; and makes the States largely dependent upon the Centre.

• Undermined the stature of the institution of the Finance Commission: It has been a well-established tradition to treat all the recommendations of the Finance Commissions relating to transfers to States as an award and a package.
  • The Fifteenth Finance Commission had recommended a special grant to three States to ensure that the tax devolution in 2020-21 in absolute terms should not be less than the amount of devolution received by these States in 2019-20.
    •  This recommendation was not accepted by the Union Government. 
    • This clearly demonstrates that the Union Government has undermined the stature of the institution of the Finance Commission and cooperative federalism.

• The use of cesses and surcharges: The government has been resorting to the levy of cesses and surcharges, as these are not shareable with the States under the Constitution.
• The Centre has enacted three farm laws though agriculture is a subject listed in the State List under the Constitution. 
  • These farm laws have been enacted under Entry 33 of the Concurrent List relating to trade and commerce in, and the production, supply and distribution of foodstuffs including edible oils and oils. 
    • Though these Acts have been repealed, their enactment is against the spirit of the Constitution, and States were not even consulted while introducing these Bills.

Developments and Related Intiatives 

• NITI Aayog replaced the Planning Commission of India with the main objective of promoting cooperative federalism and to enable good governance in India. 
  • It aims  to foster cooperative federalism through structured support initiatives and mechanisms with the States on a continuous basis, recognising that strong States make a strong nation.
  • It has also established models and programmes for the development of infrastructure and to reignite and establish private-public partnership, such as the Centre-state partnership model Development Support Services to States and Union Territories (DSSS); and the Sustainable Action for Transforming Human Capital (SATH) programme.
• Centre-State Council: Under Article 263, this council is expected to inquire and advice on disputes, discuss subjects common to all states and make recommendations for better policy coordination
• The implementation of GST after years of consultation between the states and the Union is said to be one of the finest examples of cooperative federalism.
  •  Both the Centre and the states pooled their powers to tax goods and services to attain the idea of “one country one tax”
• The Supreme Court is the ultimate check on the powers of the Union government, particularly in matters pertaining to the balance of power between the Union and the states. 
  • The Constitution Bench of the Supreme Court held in Government of NCT of Delhi v. Union of India (2018) that the idea behind the concept of collaborative federalism is negotiation and coordination so that differences which may arise between the Centre and the State Governments in their respective pursuits of development can be ironed out
• The government of India has been consistently supporting states in financial matters including flagship schemes/programmes of national importance.
  •  Overall allocation under Centrally Sponsored Schemes has increased from Rs. 2,03,740 crore in 2015-16 to Rs 4,42,781 crores in 2022-23

Suggestions 

• Union Government and the State governments should endeavour to address the common problems with the intention to arrive at a solution by showing statesmanship, combined action and sincere cooperation.
  • They  have to strive to work in coordination in the best interests of the people.
•  An institutional mechanism must be evolved where important decisions are appropriately discussed with states. 
•  States have suffered a steep fall in other taxes as well, like excise on alcohol. 
  • The corona shock has been double-edged for states, reducing their revenues while adding pressure for expenditure on a function falling squarely in their domain.
  • The Centre should take cognizance of this and take immediate efforts to handle the issues 
• There is a the need for greater Centre-state cooperation to implement agricultural reforms, strengthen medical education, promote tourism, and attract investments
• Greater transparency and stakeholder participation in the budget-making process of the Centre as well as states could go a long way 
• Covid-19 pandemic has taught us that individual efforts are not enough to tackle national exigencies and there is a constant need to strengthen and renew the cooperative spirit in Indian federalism.
• Above all, political parties need to rise above their electoral mindsets and act in favour of the country’s greater good for India to realise the true potential of cooperative federalism.