Centre vs states: How much control is too much in India

New DelhI,Swati Chawla: The hot month of May and the heated controversies between Lieutenant Governor Najeeb Jung and Delhi Chief Minister Arvind Kejriwal has brought to the fore an urgent need to debate and discuss two major issues – statehood for Delhi and the issue of federalism in India. The Delhi High Court’s judgement of 25 May in the matter of Anil Kumar vs GNCT of Delhi raises concerns about the dominance of the Centre on states. The states have time and again accused the Centre of interfering with their powers – a stand resonated by PM Narendra Modi himself during his recent trip to Burnpur, West Bengal, where he disclosed the problems of working with the Centre to his ‘new friend’ Mamata Banerjee. He could be drawing from his own experiences as a state administrator.

If this is how it is, then how much control is too much? With Modi’s ubiquitous pitch for ‘cooperative’ federalism in the past, how does the Centre, with the bevy of powers that are entrusted upon it, ensure cooperation of states that have relied on the Centre for both fiscal and financial autonomy?

(Cooperative) Federalism in India

In one sense, India has really been ‘semi-federal’ or ‘quasi-federal.’ The Government of India Act of 1935 was the first call towards a federation, to be drubbed later because the Princely States would not give their assent. The Constitution of independent India bestowed upon India a federal structure, with a clear division of subjects between the Centre and the states. As per Schedule VII, List I, there are 97 items under the Union, as against 66 items of the State (Schedule VII, List II), and 47 items on the concurrent list where both Union and State can make laws (Schedule VII, List III). The Centre retains the power of veto; inter-alia, in case a subject obtains federal colour. Come the 70s, and the concept of federalism in India underwent a major change. States were created on linguistic and cultural lines. The rise of regional parties and coalition governments entrusted a greater say to states. Article 263 of the Constitution mandates the setting up of Inter-State Councils or the National Development Council (NDC) to ensure better Centre-state cooperation. These Councils, however, have been largely underutilised and with the demise of the Planning Commission in 2014, the NDC too died a natural death. Only to be resuscitated by the PM’s ‘sabka sath, sabka vikas’ replacement body called the National Institution for Transforming India (NITI) Aayog. As its Chairman, Modi vouches for a new form of ‘cooperative or competitive federalism’ in the country. Cooperative federalism must not be confused with competitive federalism. As a strong advocate of competitive federalism, the PM believes that if states are pitted against each other in a competitive spirit, it will be a great fillip to investments in the country. Now, competition has to be between equal and opposing grounds. This model is seemingly viable for a country like the US; but, for Indian states where disparities occur hugely, competition is a far cry. Cooperative federalism, on the other hand, calls for greater cooperation between the Centre and states, a pitch made louder with the recommendations of the 14th Finance Commission. In its recommendations, the Commission has increased the share of funds transfer to states to 42% (from Rs. 3.48 lakh crore in 2014-15 to Rs. 5.26 lakh crore in 2015-16).

Centre-state Cooperation

In an interview to NDTV, Arvind Subramanian, Chief Economist, GOI has rated the incumbent government fairly well in ensuring economic federalism in the country. Although the greater share of devolution of funds is a major achievement, but that would call for a suspension of major Centrally Sponsored Schemes (CCS). So the real task for the government is to ensure funds transfer in all fairness. But given the current situation, how would a blanket rule of resource allocation apply to all states?

Let us look at the issues raised by states during the first meeting of the government’s NITI Aayog. By having chief ministers of states as members, Modi might have put sandal paste on their wounds, but the states remain concerned. Oommen Chandy, for example, wanted to know how Central schemes such as ‘beti bachao’ would apply to a rather enlightened Kerala. Tamil Nadu asked for fairness in budget allocation, while the BJP-led states have warned the government against arbitrary cuts in CCS Schemes. Himachal Pradesh CM Virbhadra Singh, on the other hand, has asked Modi to consider resource allocation for his state along the lines drawn by the Planning Commission.

The way the Centre has played in Delhi, by asserting command through the LG, is giving out wrong signals to the states. Just by calling support for ‘Team India’ or ‘Bharat Maa’ will not ensure cooperation by states. The government must empower them by allowing them to deal with common subjects. Also, it is a good time to put the inter-state councils to use. Centre-state cooperation should be based on mutual respect.