Our Constitution ensures that topics of national importance are within the ambit of central government but the most important points of interface between the businesses or citizens and the government are at the state level. So while central government is constitutionally responsible for collection of most of the taxes it is the state government that is responsible for most if the services.
Rising importance of state finances: Total expenditure at the state level was much higher than the center’s expenditure and state capital expenditure was almost double the centre.
Cooperative federalism is a concept of federalism where governments at various levels i.e. at centre, states and at the local level work in synergy with each other bypassing the differences by resolving them and working for the development of the populace. This results in optimum utilization of resources along with increase efficiency.
Ingredients of the cooperative federalism can be classified mainly under three heads namely Administrative, Legislative and Financial.
Some Obstacles of it:
- Proclamation of emergency under Article 356. It was used many times arbitrarily after 1977 due to emergence of multi-party governments in centre and states.
- Union dominance to legislate over concurrent list and its interference in state list also in special cases like while ratifying international agreement.
- States having no say in appointment and transfers of Governor.
- Imposition of Centrally sponsored schemes on states under the policy of ‘One size fits all’ which restricts their scope of need based financial expenditure. As an example schemes like Jan Dhan Yojana and Beti Bachao Beti Padhao are very useful for states like Rajasthan, Haryana but is of little significance to Kerala which already good numbers over the parameters being have targeted under the scheme. This restricts Kerala’s financial capacity in other needed areas like industry expansion, business development.
- Discretionary funds allocation under Article 275 on the advice of erstwhile Planning commission was also one of the biggest reason for bitter centre-state relations. This resulted in demands coming from states for special category status.
- Deployment of paramilitary forces in states without their consent
- Enquiries against chief ministers to settle personal equations.
How Union Government help foster it:
- Greater devolution of power to states. Ideally union should have only those powers which state can’t handle and requires national unity like in the form of matters like defence, communication, foreign policy etc.
- Union government consulting states before legislating over the matters of state list.
- Improved and efficient use of inter-state and zonal councils
- Increased fund devolution to states by the centre. Union government accepting the recommendations of 14th Finance commission is a welcome step. At the same time states are apprehensive about the fund devolution from taxes once Good and services tax is implemented. Union government needs to bring states in confidence of adequate devolution citing the needs of states.
- Using NITI Aayog efficiently with increased participation of states and making it functioning more democratic. Mistakes of its predecessor (Planning Commission) should not be repeated.
- States having a say in appointment and removal of governor.
- Involving states in formulation of foreign policy will not only help to improve foreign policy but will also strengthen centre-state relations. It will also boost the economy by fast-forwarding execution of projects and policies like FDI which remains a matter of contention with union giving a green signal and being opposed and blocked by states in their respective states. So all these problems will also be solved with cooperative federalism.
In pursuit of ‘cooperative federalism‘, the union government has chosen to spend nearly half of its fiscal stimulus through the state governments. In this regard, do you think states are administratively efficient to spend these funds prudently and productively? Critically examine. (200 Words)
In your opinion, what are the ingredients of true cooperative federalism? In India, how can the union government help foster true federalism? Critically discuss. (200 Words)