Indian Federalism: From ‘Unitary bias’ to ‘Being Cooperative’

Indian Federalism: From ‘Unitary bias’ 

to ‘Being Cooperative’

By Avinash Agarwal

UPSC GENERAL STUDIES: Paper II (Issues related to Federalism)

Table of Content

Design of Indian Federation

* Manifestation of unitary bias

* International Comparison

Constitutional Provisions

Why we designed our federation with a unitary bias?

Steps taken to encourage the federal character of our polity

Word on ISC

* Meetings

* Mandate

* Present Day Relevance of ISC

* Comparison with NITI Aayog’s Governing Council

* ISC Going Ahead

Cooperative Federalism

* Economic Empowerment of States

* Example from the Power Sector

* But all is not well on Administrative Front

* Hand-holding Required

Design of Indian Federation

The Indian nation is a federation with a unitary bias.

Manifestation of unitary bias: The peculiar phrase “unitary bias” arises because residuary powers—the power to legislate on matters not enumerated in the central, state or concurrent list of subjects—is given to the centre under Article 248.

International Comparison: This is unlike the constitutions in many other federations such as the United States, Germany and Australia where such power is conferred on the states.

Constitutional Provisions

Part XI of the Constitution (Articles 245 through 263) deals with centre-state relations. It covers legislative and administrative relations between states.

The financial relationship between the centre and states is covered in the next chapter of the Indian Constitution, including Article 280 that deals with the mandate for setting up a periodic Finance Commission.

Why we designed our federation with a unitary bias?

* Concerns about disunity (especially after the events that led up to the partition)

* Need for Uniform Development

* Prevailing Constitutional Design

* Minority Protection

* Interest of Princely States

(Note: B.R. Ambedkar once described India and its states as “one integral whole, its people a single people living under a single imperium derived from a single source”.

It was a necessary sentiment at a time when a newly independent and partitioned nation was trying to frame a coherent idea of itself.

But the political and economic context has changed drastically since then. The relationship between the centre and the states has failed to keep pace with its evolution.

The pertinent question is that does India still need a unitary bias? Or its interest will be better served by unshackling the states from Centre’s grip?)

Steps taken to encourage the federal character of our polity:

A National Development Council was set up in 1952 and a National Integration Council was similarly set up in 1962.

Annual conferences were held between the centre and state chief ministers on finance, labour, food and other functional areas.

The first constitutional body—called the Inter-State Council (ISC)—was set up in 1990 following the initial recommendation of the First Administrative Reforms Commission (1969), which was endorsed by the Sarkaria Commission on centre-state relations (1988).

Word on ISC

Meetings: The ISC has met 10 times since it was established. Eight of the 10 meetings have been held during non-Congress governments. It met this year (2016), for the 11 time, after a gap of 10 years.

Mandate: The ISC’s mandate is to investigate and discuss matters in which states and the Union have a common interest and to make recommendations on such matters particularly with respect to coordination of policy and implementation.

Present Day Relevance of ISC: The ISC is the only multilateral centre-state forum that operates directly within the framework of the Constitution (Article 263 (b) and (c)) where topics like the GST and contemporary issues like disaster management, terrorism and internal security can be taken up.

Comparison with NITI Aayog’s Governing Council: ISC has a similar composition, including the prime minister, chosen cabinet ministers and chief ministers—that could address centre-state issues. But the ISC has constitutional backing, as against the NITI Aayog which only has an executive mandate. This puts the states on more solid footing—an essential ingredient in building the atmosphere of cooperation needed for calibrating centre-state relations.

ISC Going ahead:

* The ISC should be further strengthened to become the critical forum for not merely administrative but also political and legislative give and take between the centre and states.

* It should function in such a manner that it reflects the equal status of states and the centre.

* It should meet once a year.

* Even though the ISC’s mandate is very broad, its aspiration has generally been limited to discussing affirmative action, welfare subjects and administrative efficiency and coordination.

Along with another constitutionally sanctioned entity—the Finance Commission (FC)—the ISC should be the body that puts the “federation” back in the definition of the Indian nation. Together, the FC and the ISC should operationalize again Part XI and XII of the Constitution that ensure appropriate financial devolution and political decentralization.

Cooperative Federalism

Punchhi Commission report on centre-state relations introduced the term ‘Cooperative Federalism’.

PM Modi on the eve of Republic Day in 2012 (then he was the CM of Gujarat) blogged thus: “It is high time the Centre realizes that giving to the states what rightfully belongs to them will not weaken the Centre. The states must co-ordinate with the Union Government and not remain subservient to it. Co-operative and not coercive federalism must be the norm in our country.” 

Economic Empowerment of States: In the past two years, the government has taken many steps to economically empower states and make them key stakeholders in India’s development agenda.

The Fourteenth Finance Commission had favoured giving states more untied funds along with greater fiscal responsibility in implementing centrally sponsored schemes. To this effect, it increased the states’ share in central taxes to 42% from 32%. In addition, the centre also decided to bring down the number of centrally sponsored schemes to less than 30 from more than 72 at present, giving states more flexibility in modifying the schemes to meet their individual requirements. This leaves the decision of how to utilize these funds to the state governments.

Effectively, the FFC had sowed the seeds of cooperative federalism as states have been accorded unprecedented fiscal freedom. For the first time, public expenditure is now decisively in the jurisdiction of states. Consequently, states are now greater stakeholders.

Example from the Power Sector: In the power sector, the Modi government framed policies by seeking views from states first rather than asking states to adopt a centrally designed scheme. One example is the turnaround scheme for state-run power distribution companies, the Ujwal Discom Assurance Yojana.

But all is not well on administrative front: But there has also been a sharp increase in the number of conflicts between the Centre and the states, especially those ruled by other parties. Example: Arunachal Pradesh, Uttarakhand, Delhi.

Electoral promise of cooperative federalism was caught in the tension between the push towards decentralized governance necessary for economic growth and the desire to conquer power in the states which the ruling party does not control.

The return of President’s rule as a political weapon is totally in contradiction with the federalism promises.

Hand-holding Required: N.R. Bhanumurthy, professor at the National Institute of Public Finance and Policy, said that the centre has given states more fiscal responsibility with spending powers by giving them more untied funds. However, it has stopped there, he said, pointing out how some states still lack the capacity to effectively utilize these funds.

“The central government needs to handhold states which lack capacity to utilize funds to meet their development needs. The central government has given them the right through higher allocation of funds but not fixed responsibility on them,” he said.

There is a lot of ambiguity on how centrally sponsored schemes are going to be implemented at the state level.

India’s true potential will be achieved only when both the centre and the states are strong.