Mains Practice Questions

Introduction

The Constitution envisions a "Union of States", blending unitary and federal features. And, federalism in India is a dynamic process, shaped by historical, economic, and political factors.

Body

Changing Nature of Centre-State Relations:

• Cooperative Federalism:
  • Concept: A structured, policy-driven approach where the Centre and States work together towards shared national goals through coordinated planning and financial transfers.
  • Key Features:
    • Centralized Planning through the Planning Commission (1950-2014).
    • Fixed mechanisms for policy coordination, such as the National Development Council (1952-2014).
  • Examples:
    • Green Revolution (1960s-70s): Centre-State collaboration on agricultural development.
    • Sarva Shiksha Abhiyan (2001): A centrally sponsored scheme for education, implemented with State involvement.
  • Challenges:
    • Over-centralization limited States’ autonomy.
    • Rigid funding structures, leading to inefficiencies.
    • Politicization of financial allocations, favoring ruling-party States.
• Competitive Federalism:
  • Concept: States actively compete for economic resources, investments, reducing dependency on the Centre and fostering efficiency.
  • Drivers of Change:
    • Economic Liberalization (1991) led to decentralized economic decision-making.
    • Dismantling of the Planning Commission (2014) reduced central economic planning, emphasizing State-led growth.
    • 14th Finance Commission (2015) increased States’ share in central taxes from 32% to 42%, giving them more financial autonomy. (though later reduced to 41% by 15^th Finance Commission )
      • Also, 15^th Finance Commission of India (FC) gave 2.5% weight to tax effort when allocating grants to states
  • Examples:
    • Aspirational Districts Programme (2018): Performance-based funding to improve socio-economic indicators.
    • UDAY Scheme (2015): Competitive model for States to reform the power sector.
  • Concerns:
    • Regional Disparities: Wealthier States attract more investment, leaving poorer States behind.
      • Fiscal Stress: States with weaker revenue bases struggle to compete.
    • Over-reliance on Market Forces, leading to potential neglect of social welfare objectives.
• Collaborative Federalism: A Vision in Progress
  • Concept: Unlike cooperative federalism (which is structured and coordinated by the Centre), collaborative federalism is more flexible, involving voluntary participation, best practice sharing, and co-development of policies among States and between the Centre and States.
  • Attempts at Collaboration:
    • GST Council (2017): A structured platform for joint tax policy making between the Centre and States.
    • State-Led Initiatives: Indira Sagar Polavaram Project envisages transfer of 80 TMC of surplus water of Godavari river to Krishna river to be shared between Andhra Pradesh, Karnataka and Maharashtra
  • Challenges Hindering Collaboration:
    • Centralization of Decision-Making:
      • NEET Examination Policy: Imposed uniform standards despite opposition from some States.
    • Fiscal Imbalances:
      • GST Compensation Delays (post-2020) strained State finances..

Measures for Strengthening Collaborative Federalism:

• Institutional Strengthening:
  • Revamp Inter-State Council (Article 263) as an active dispute resolution body.
  • Strengthen Finance Commission’s role to ensure fair fiscal distribution.
    • Empower State Finance Commissions for better local governance.
• Balanced Fiscal Devolution:
  • Ensure timely GST compensation to States.
  • Reduce Centre’s discretionary grants and cesses, giving States greater financial independence.
• Encouraging Voluntary Collaboration:
  • Establish State-driven policy networks to exchange best practices (e.g., sustainable urban development, digital governance).
  • Promote regional economic cooperation (e.g., eastern and northeastern States working together for industrial corridors).
• Consensus-Based Decision Making:
  • NITI Aayog should facilitate policy consensus, not just rank States.
  • Encourage co-legislation models where both Centre and States draft key national policies.

Conclusion

A truly balanced federal structure requires institutional strengthening, financial autonomy for States, and mechanisms for voluntary collaboration. By fostering a trust-based Centre-State relationship, India can ensure that federalism remains a force for inclusive growth, good governance, and national development as "Strong States make a strong nation",