[Solved] How far do you think cooperation, competition, and confrontation have shaped the nature of federation in India? Cite some recent examples to validate your answer (UPSC GS-2 Mains 2020)

Some contemporary examples citing how far cooperation, competition, and confrontation have shaped the nature of federation in India. The Centre removed the special status conferred on Jammu and Kashmir (J&K) under Article 370 of the Constitution, divided it into two regions, and affirmed them to lead the UT Status.

  • This stands as a historical revision of the inherent feature of federalism. Besides, there were the Citizenship (Amendment) Act (CAA) and the National Investigation Agency (NIA) Act where the respective states moved the Supreme Court under Article 131 raising the question: Could the center-state dispute be premised on political differ,ences?
  • The Goods and Services Tax (GST), the biggest tax reform, is the outcome of extended consensus among states including the GST Council where states contribute to national fiscal policy equally.
  • An EoDB Index for the Indian States with yearly rankings pointing to the areas they lag introduces the sense of competition among different states to encourage corrective actions and make India a much better and easier destination for investment.
  • Moreover, the SDG India Index and collaboration between states for the Aspirational Districts Programme (ADP) show how competitive federalism complements cooperative federalism.

In Cooperative federalism the Centre and states share a horizontal relationship, where they “cooperate” in the larger public interest.

  • It is an important tool to enable states’ participation in the formulation and implementation of national policies.
  • Union and the states are constitutionally obliged to cooperate with each other on the matters specified in Schedule VII of the constitution.
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In Competitive federalism the relationship between the Central and state governments is vertical and between state governments is horizontal.

  • The investors prefer more developed states for investing their money. Union government devolves funds to the states on the basis of usage of previously allocated funds.
  • Healthy competition strives to improve physical and social infrastructure within the state.
  • This idea of Competitive federalism gained significance in India post 1990s economic reforms.
  • In a free-market economy, the endowments of states, available resource base and their comparative advantages all foster a spirit of competition. Increasing globalisation, however, increased the existing inequalities and imbalances between states.
  • In Competitive federalism States need to compete among themselves and also with the Centre for benefits.
  • States compete with each other to attract funds and investment, which facilitates efficiency in administration and enhances developmental activities.
  • The investors prefer more developed states for investing their money. Union government devolves funds to the states on the basis of usage of previously allocated funds.
  • Healthy competition strives to improve physical and social infrastructure within the state.
  •  

Confrontational Federalism: It is a result of central government transgressing into the powers of the state government.

  • The unilateral revocation of the special status conferred on Jammu and Kashmir (J&K) under Article 370 of the Constitution has been criticized by many experts as against the spirit of federalism.

Role of NITI Aayog in Promoting Co-Operative, Competitive Federalism

  • In 2017, the Niti Aayog called out for competitive “cooperative federalism” stressing that this formula would redefine the relationship between the Centre and the States.
  • Former vice chairman of Niti Aayog Arvind Panagariya put the onus on the States to reimagine brand India.
  • Chief secretaries of States in one of the meetings even showcased the best practices being incorporated in their respective States, a move aimed at promoting cross fertilisation of ideas.
  • There appears to be a silver lining in the functioning of the Aayog in enabling states competing with each other to promote governance initiatives in the spirit of “co-operative, competitive federalism”.
  • An important objective of NITI Aayog is to establish a dynamic institutional mechanisms where ‘eminent individuals outside the government system’ could contribute to policy making.
  • The priorities for the Aayog are evident with the suggestions for rationalisation of 66 central schemes on skill development and making Clean India a continuous program leading to the formation of three CM sub-committees.
  • In a subtle manner, NITI Aayog not only puts the onus on Chief Ministers to hasten implementation of projects for the betterment of the state, but also make the state an attractive investment destination – a kind of competitive federalism.
  • Given the greater scope for states to work together and learn from each other, it is obvious that for federalism to work well, these states must also fulfil their role in promoting the shared national objectives.
  • It is true that India cannot advance without all its states advancing in tandem but it may so happen that by not granting the statutory status for the NITI Aayog, government has made it vulnerable to future ambush under a different political dispensation.

Hindrances for Competitive federalism

  • Several issues such as trust deficit and shrinkage of divisible pools plague Centre-State relations. Together, they make total cooperation difficult
  • Trust deficit between Centre and States is widening. Most state governments believe the thrust on federalism is limited to lofty ideas and big talks. Many States have shown their displeasure with the way the Centre has been dealing with the States.
  • On one hand the Centre has increased the States’ share of the divisible pool but in reality States are getting a lesser share. The allocation towards various social welfare schemes has also come down, affecting the States’ health in turn.
  • The present inter-state competition in attracting investment is too early to determine whether it will really encourage competitive patterns of investment on a continuous basis.
  • The socio-economic parameters and development of each State in India is different and while a few have made substantial progress in terms of employment, literacy and creating a conducive environment for doing business and investments, there are a few which are lagging.
  • There are varied economic patterns in different states. There are deficit states or the backward regions or the states under debt. Those states should not be treated on par with the well-off states.

Suggestions

  • Efforts at cooperative and competitive federalism have commenced but need to be strengthened.
  • NITI Aayog concentrates on the broader policy framework instead of micro resource-allocated functions. So there is a need to take some further steps.
  • Reactivation of the Centre-State Council: Under Article 263, this council is expected to inquire and advice on disputes, discuss subjects common to all states and make recommendations for better policy coordination.
  • The NITI Aayog can’t replace the council’s functions as it is the only recognised constitutional entity for harmonising the actions of the Centre and states. Its effective utilisation would lend legitimacy to cooperative federalism.
  • On contentious issues like land, labour and natural resources, the state should promote best practices.
  • This will enable greater investment and economic activity in states with a favourable regulatory framework. Enactment by states must secure expeditious Central approval.
  • The World Bank’s Ease of Doing Business index reflected competition between states has generated interest, this must be a continuing exercise.

Way Forward  to deal with such situations

Cooperative and competitive federalism are not mutually exclusive. They have the same basic principle underlying i.e. development of the nation as a whole.

Cooperative and competitive federalism may be two sides of the same coin as the competition alone cannot give the best results, it is competition with cooperation that will drive the real change.

Centre’s support would be required by some states to participate in competitive federalism. Strong states make strong nation and to realise this vision, it requires a “Team India” approach to work for India’s development.

The passage of GST Bill does usher in a new era in cooperative fiscal federalism and a growing political consensus for economic reforms.

Further, the government’s structural reforms particularly for land and labour, are now widely seen as necessary for realising the potential of the economy.

While all policy-makers and economists believe that “true” cooperative federalism is the way forward, they underline the need for the Centre to include states more aggressively in the decision-making process.

Most state finance ministers also feel that the Centre’s fund allocation to States must be done more judiciously.

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