“Cooperative federalism: Myth or reality.”

 

1. Interpretation & Key Theme

  • Central idea:
    • Cooperative federalism implies Centre and states functioning as partners—joint decision-making, revenue sharing, and policy coordination. The debate asks whether India’s fiscal and administrative architecture truly embodies this partnership or whether it remains aspirational.
  • Underlying message:
    • While institutional mechanisms (GST Council, NITI Aayog, Inter-State Council) exist, political tensions, conditional funding, and unilateral directives often undermine genuine cooperation.

Revision Tip:
Frame around three pillars: fiscal, administrative, and policy cooperation. Use specific recent examples (e.g., GST Council debates).

2. IBC-Style Outline

Introduction

  • Hook: “When Parliament passed the GST (2016), it heralded a new era of cooperative federalism—yet states still grumble over compensation delays and cascading input-tax credits, questioning if genuine partnership exists.”
  • Definitions:
    • Cooperative federalism: a governance model where Centre and states share powers, resources, and responsibilities through consultation and joint decision-making, respecting state autonomy.
    • Myth vs. Reality: contrasting the theoretical ideals with ground realities of centre-state relations.
  • Thesis: “Although India’s constitution and institutions—GST Council, NITI Aayog, Inter-State Council—are designed to foster cooperative federalism, in practice, power asymmetries, financial dependencies, and political rivalries often relegate it to rhetoric rather than reality.”

Body

  1. Fiscal Federalism: Devolution & Conditional Grants
    1. Finance Commission Devolution:
      • 15th FC (2020–25) recommended 41% share of divisible pool to states—historic high.
      • Yet, states complain that GST compensation shortfall (₹1.4 lakh crore in 2022) undermines fiscal autonomy.
    1. Centrally Sponsored Schemes (CSS):
      • Rationalization reduced CSS from 66 to 28, but matching requirements (30–50%) strain weaker states.
      • Example: In Jammu & Kashmir (Union territory since 2019), 100% funding of new CSS but no legislative input—limiting local priorities.
    1. Dimension: While devolution increased, conditionality and delays in transfers compromise true fiscal partnership.
  2. Administrative & Institutional Mechanisms
    1. GST Council:
      • Weighted voting (65% states, 35% Centre) epitomizes cooperative decision-making; yet, contentious issues (petroleum, alcohol) remain outside its purview.
      • Tamil Nadu’s tussles over alcohol and fuel taxation show limits of Council’s binding power.
    1. NITI Aayog vs. Planning Commission:
      • NITI (2015) envisaged as a think tank with state representation—aims to build consensus.
      • Critiques: Lack of financial powers (unlike erstwhile Planning Commission’s plan grants) limits its clout.
    1. Inter-State Council (ISC):
      • Convened by PM every quarter—vehicle for conflict resolution.
      • Low attendance by chief ministers (only 60% present in 2023 ISC meeting) reflects apathy.
    1. Dimension: Institutional frameworks exist, but limited enforcement and political will hamper effectiveness.
  3. Political Dynamics & Power Asymmetries
    1. Single vs. Multi-Party Rule:
      • States ruled by national opposition parties (e.g., West Bengal, Maharashtra) often clash with Centre over policy (e.g., CAA protests, farm laws repeal).
      • BJP-ruled states (Rajasthan, Madhya Pradesh) more cooperative, receiving larger share of centrally funded projects.
    1. Governor’s Role & President’s Rule:
      • Use of Governor’s discretionary powers to dissolve state assemblies (e.g., Arunachal Pradesh, 2016) demonstrates Centre’s influence—undermining federal balance.
    1. Political Conditionality in Transfer of Funds:
      • Centre’s tendency to tie political allegiance to funding (e.g., withdrawal of special category status to states like Himachal Pradesh post-1972) shows partisan biases.
    1. Dimension: Political polarization and use of constitutional office compromise cooperative ethos.
  4. Policy Implementation: Case Studies
    1. COVID-19 Management (2020–22):
      • Early uniform lockdown dictated by Centre created distress; states like Kerala diverged with graded strategies—illustrated need for local autonomy.
      • Vaccine procurement: Centre’s centralized approach slowed initial rollout; some states (Gujarat, Maharashtra) later forged direct deals with manufacturers.
    1. Compensation to States for GST:
      • Centre’s Initial promise of 5 years of compensation at 14% growth—but post-2022 shortfall continues—eroded trust.
      • States like Kerala and West Bengal rely on special loans from Centre to bridge gaps.
    1. Agricultural Laws (2020–21):
      • Centre’s enactment of three farm laws without state consultation, leading to massive protests—demonstrated unilateral overreach.
    1. Dimension: Cooperative federalism falters when Centre bypasses state inputs on critical policies.
  5. Way Forward: Strengthening Cooperative Federalism
    1. Reforming GST & Revenue Mechanisms:
      • Extend GST compensation for additional 2 years or establish a permanent “Compensation Fund” to avert fiscal uncertainty.
      • Rationalize inclusion of petroleum and alcohol under GST over a transitional period.
    1. Empowering NITI Aayog & ISC:
      • Grant ISC power to adjudicate inter-state disputes with binding effect, subject to parliamentary oversight.
      • Provide NITI Aayog matching grant-making capacity—similar to Planning Commission—for state-driven projects.
    1. Political & Constitutional Safeguards:
      • Amend Governor’s appointment and powers: involve state governments in consultation to reduce partisanship.
      • Codify guidelines for President’s Rule (as in Sarkaria Commission recommendations) to prevent misuse.
    1. Promoting State-Centric Policy Design:
      • Mandate state consultation in enacting concurrent list laws—e.g., farm laws, labor codes—to avoid one-size-fits-all.
      • Encourage “Cooperative Councils” in each sector (health, education, water) comprising Centre and state secretaries for joint policy framing.
    1. Dimension: Structural reforms and trust-building are vital to realize cooperative federalism.

Conclusion

  • Summarize: “India’s cooperative-federalism institutions—GST Council, NITI Aayog, ISC—provide a framework for partnership, but in practice, power imbalances, conditional grants, and political rivalries often reduce cooperation to rhetoric.”
  • Synthesis: “By reforming fiscal transfers (GST compensation fund), empowering collaborative bodies (binding ISC decisions), and insulating constitutional offices (Governor) from partisanship, India can transform cooperative federalism from myth into reality.”
  • Visionary Close: “Only when Centre and states work as true partners—sharing power, resources, and responsibility—will India’s federal fabric achieve its full potential.”

3. Core Dimensions & Examples

  • GST Council Voting Weights: 65% states, 35% Centre—unique cooperative mechanism, yet key items (petrol, alcohol) remain outside.
  • Farm Laws 2020: Passed without state consultation; led to 1 year of protests, repeal in November 2021—demonstrates breakdown in cooperation.
  • COVID Vaccine Procurement: Centre’s initial sole procurement → supply crunch; states (e.g., Maharashtra) bid directly—but Centre later tightened control.
  • Finance Commission Devolution: 15th FC’s 41% share increased state budgets by ₹2.5 lakh crore in 2021–22, but GST compensation gap left a ₹1.4 lakh crore shortfall.

4. Useful Quotes/Thinkers

  • Sarkaria Commission (1988): “Federalism in India must be cooperative, not confrontational.”
  • C. Rangarajan (Economist): “Fiscal federalism should be calibrated to empower states without compromising national priorities.”
  • Justice R.P. Sethi (Former CJ India): “Centre-state relations define the strength of a federation; conflicts must be resolved through dialogue, not diktat.”

5. Revision Tips

  • Contrast one success (GST Council’s consensus on 5 GST rates) with one failure (farm laws 2020) to show cooperative theory vs. practice.
  • Memorize one fiscal figure: “41% devolution (15th FC) vs. ₹1.4 lakh crore GST compensation shortfall.”
  • Emphasize recommendations: binding ISC decisions and Governor’s reform to highlight the “way forward.”