FED­ERAL FAULT­LINES

Af­ter a promis­ing start and PM Modi’s call for a ‘com­pet­i­tive, co­op­er­a­tive fed­er­al­ism’, Cen­tre-state re­la­tions are again on the brink

India Today - - FEDERALISM -

ONE OF THE DEFIN­ING FEA­TURES of Prime Min­is­ter Naren­dra Modi’s dis­course around gov­er­nance re­form has been the goal of build­ing a more co­op­er­a­tive form of Cen­tre-state re­la­tions. A for­mer chief min­is­ter him­self, Modi promised a new ap­proach. Chief min­is­ters would work to­gether with the Cen­tre as a ‘Team In­dia’ to re­solve dif­fer­ences and achieve a jointly de­fined na­tional in­ter­est.

There have been real changes in the prac­tice and in­sti­tu­tional ar­chi­tec­ture of fed­er­al­ism in the last two years. The im­ple­men­ta­tion of the Four­teenth Fi­nance Com­mis­sion rec­om­men­da­tions in­creased the states’ share of cen­tral tax­a­tion from 32 per cent to 42 per cent. Along with the ra­tion­al­i­sa­tion of cen­trally spon­sored schemes, this move recog­nised the de­mand of state govern­ments to have more au­ton­omy over their spend­ing de­ci­sions. It con­sti­tuted a sub­stan­tial in­crease in the un­tied funds they re­ceived from New Delhi.

Even more sig­nif­i­cant was the pas­sage of the Goods and Ser­vices Tax Act this year. The align­ment of in­di­rect tax­a­tion by Cen­tral and state govern­ments and the re­moval of in­ter-state tar­iff bar­ri­ers are ma­jor steps to­wards achiev­ing a com­mon mar­ket in In­dia. The move has re­quired the Cen­tre and states to pool their sovereignty to pur­sue shared na­tional eco­nomic goals. The states will not have veto rights on the GST Coun­cil that gov­erns the op­er­a­tions of the new tax—they will have to form al­liances with the Cen­tral gov­ern­ment to get amend­ments passed.

The other ma­jor in­sti­tu­tional in­no­va­tion re­lated to fed­er­al­ism was the abo­li­tion of the Plan­ning Com­mis­sion. The gov­ern­ment ar­gued that the Niti Aayog would over­see a tran­si­tion from a top-down, Cen­tre-to-state pol­icy flow to­wards a gen­uinely co­op­er­a­tive part­ner­ship be­tween the two. At the first meet­ing of the Niti Aayog in Fe­bru­ary 2015, Modi urged the states to em­brace a spirit of ‘com­pet­i­tive, co­op­er­a­tive fed­er­al­ism’ in which they would com­pete with each other to im­prove gov­er­nance, work­ing in tan­dem for the goal of sabka saath, sabka vikaas.

How­ever, there are signs that in a num­ber of re­spects Cen­tre-state re­la­tions are be­com­ing in­creas­ingly politi­cised in ways that threaten to un­der­mine the promised goal of a more co­op­er­a­tive form of fed­er­al­ism. This also raises ques­tions about how far the Niti Aayog is able to func­tion as a neu­tral plat­form for Cen­tre-state di­a­logue and pol­icy dis­cus­sion. For in­stance, in its first meet­ing, the Niti Aayog gov­ern­ing coun­cil, which in­cludes all CMs and state gov­er­nors, es­tab­lished groups to ex­plore and re­port on three pri­or­ity ar­eas for Cen­tre-state co­op­er­a­tion: skills de­vel­op­ment, Swachh Bharat and the ra­tion­al­i­sa­tion of cen­trally spon­sored schemes. Chief min­is­ters of all 29 states, the NCT of Delhi plus the Union ter­ri­to­ries of Puducherry and the An­daman and Ni­co­bar is­lands were rep­re­sented on one of the three sub-groups.

Ini­tially, two of the three sub-groups were due to be con­vened by CMs be­long­ing to Op­po­si­tion par­ties (the Congress’s Sid­dara­ma­iah from Karnataka and the CPI(M)’s Manik Sarkar from Tripura). Un­cer­e­mo­ni­ously, two weeks af­ter their for­ma­tion, news came that these com­mit­tees were in­stead to be con­vened by re­gional al­lies of the Cen­tral gov­ern­ment (Pun­jab’s Parkash Singh Badal and Andhra Pradesh’s N. Chan­drababu Naidu), along with the third com­mit­tee chaired by the BJP’s own CM Shivraj Singh Chouhan from Mad­hya Pradesh.

Since the three groups re­ported in late 2015, there have been no other com­pre­hen­sive con­sul­ta­tive plat­forms. Those which have been es­tab­lished, such as the small com­mit­tee on dig­i­tal pay­ments launched in the wake of de­mon­eti­sa­tion and con­vened by Naidu, look even more par­ti­san. The CMs of Bi­har and Tripura pulled out of the com­mit­tee soon af­ter it was es­tab­lished.

Naidu is the non-BJP chief min­is­ter most vig­or­ously com­mit­ted to the plat­form of co­op­er­a­tion with the Cen­tre. This is a reprise of a role he played in the ear­lier NDA regime of 1999-2004. Andhra is fast be­com­ing the poster-child of com­pet­i­tive fed­er­al­ism too. The state came first—with Te­lan­gana—in the gov­ern­ment’s 2016 in­dex of im­ple­men­ta­tion of ‘busi­ness re­forms ac­tion’ plans (the in­dex mir­rors the World Bank’s ‘ease of do­ing busi­ness’ in­dex). Of the top 12 re­form­ing states—the ‘lead­ers’—all

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