Why federalism can’t be just another slogan
Regional parties with powerful leaders are no longer subservient to the party at the Centre. Their priorities, too, have come to the fore
Concepts of federalism are, ultimately, a matter of enlightened practice, and not only constitutional phraseology. The very first clause of our Constitution states categorically that India is a “Union of states”. It allows for a central government, and state governments; it lays down divisions of powers between both; and it accepts that in a country of the size of India, there must be a structured federal component that allows for diversities to be accommodated.
However, there is a strong unitary spirit underlying this federalism. The balance of power is, undeniably, vested in the central government: there is no dual citizenship; all-India services, which serve in the states, are controlled by the Centre; and, emergency powers to take over the government of states lie with the Centre. It is for this reason that our republic has been described as “federal in concept but unitary in spirit”. In the early years after Independence, federalism seemed to be working well enough because the Congress party that held power at the Centre was also in power in most states.
When, in later years, different parties ruled at the Centre and in states, the definition of what constitutes actual federal practice began to crop up. That is why today, there is talk of the need not only of federalism, as outlined in the country’s Constitution, but “cooperative federalism”, which ensures that the letter of the Constitution is practised in spirit as well.
In many ways, such a debate is inevitable. Significant regional priorities have now come to the fore; there are deep-seated regional aspirations in evidence; strong regional parties with powerful leaders are no longer subservient to the party at the Centre; and new environmental and economic challenges have emerged.
Earlier, institutional structures that guided Centre-state relations, such as the Planning Commission, have been abolished. The mandate of the Niti Aayog that replaced it is, at best, amorphous. This has led to the Union Finance Commission, which handles the key issue of allocation of financial resources between Centre and states, emerging as the most important — and the most contentious — institution to judge whether there is, indeed, the spirit of cooperative federalism at work.
The 14th Finance Commission increased the quantum of transfers to the states from the central tax kitty, from 32% to 42%. On paper, this seemed a substantive favour done to the states. However, in reality, this was just a compositional shift. The increase in tax transfers was negated to a large extent by the reduction of allocations by the Centre for the centrally planned and sponsored schemes. In fact, as a result, in spite of the rise in overall percentage share, the share of many states actually fell in the divisible pool of taxes. Any arbitrary or unilateral change in the Terms of Reference (TOR) of the Finance Commission also affects the ‘cooperative’ manner in which a federal scheme of things should run. Such changes should be brought about only after comprehensive consultations with states, and avoid politically inspired subjectivities such as “performance-based incentives”. Finally, no federalism can be genuinely cooperative if it does not take into account the growing regional disparities in the Union.
Some five or six relatively developed states continue to get the overwhelming flow of both public and private investment, whereas others in which the largest number of Indians live, continue to languish in a vicious cycle of poverty. For instance, although Bihar has for many years now had one of the highest annual economic growth rates in the country, it will still require, even at these growth rates, another 25 years before it reaches the mean national per capita income.
Obviously, such a situation requires institutional affirmative action from the central government in the form of reduced state contributions for centrally sponsored schemes, improved access to external resources, and tax breaks on private investment. This is the basis of the demand for Special Category Status, which is required not only for Bihar, but for states such as West Bengal, Odisha and Jharkhand.
Cooperative federalism cannot, therefore, be just a slogan. In the increasingly competitive and acrimonious politics of today, it must be based on a transparent institutional framework that ensures justice to all constituents of the Union, and makes them respected stakeholders in the functioning of the Republic.