Cooperative Federalism

In News

• Recently, the Prime Minister of India voiced the need for healthy competition among the States.

Key Points

• PM on federalism:
  • While the Union and states may have different schemes, or different styles of working, dreams for a nation will remain identical. 
    • He lauded states for playing a significant role in India’s growth.
  • PM emphasised the need for forging a model of competitive, cooperative federalism. 
    • There are many states that have played a great role in taking the country forward, and have done exemplary work in many fields. 
    • They give strength to our federalism. 
    • There is a need for competition in development.
•  Steps toward Competitive Federalism:
  • The government’s public policy think tank NITI Aayog — set up as an institution with the mandate of cooperative federalism — has played a significant role in promoting healthy competition among states and Union Territories to rank them on various parameters.

Image Courtesy: BS

Image Courtesy: BS

• The Aayog also releases rankings on the performance of aspirational districts every month. 
  • The Aspirational Districts Programme was launched four years ago to effectively transform 112 most underdeveloped districts in the country.
• The Department for Promotion of Industry and Internal Trade has also been ranking states on start-ups since 2018. The exercise facilitates states on the basis of ease of building a start-up and doing business. 
• The Center also releases a Business Reform Action Plan, under which states are categorized and ranked as ‘top achievers’, ‘achievers’, or ‘aspirers’. 
•  GST further cemented this federal structure.

Image Courtesy: BS 

Benefit of Competitive Federalism

• The ranking of states in various social sectors based on quantitative objective criteria encourages them to improve their performance. 
• It helps in fostering a culture of learning from best practices from each state and improving the business climate and emerging as the most favored investment destination across the globe.

Federalism in India

• Meaning: 
  • Federalism refers to a vertical division of power in a political system. It is a system in which power is divided between a central authority and other constituents. 
  • For e.g. in India, political power is divided between the Central government, state governments and the institutions of local governance. 
• Four important features of a federal system:
  • Multiple levels of government: Federalism, by its very definition, requires multiple levels of government functioning within their defined territory.
  • Division of Power: The power is divided by the division of subjects between the entities so that the chances of conflict are reduced to a minimum.
  • Written Constitution: It ensures there is clarity in the respective division of power. Again, a rigid constitution ensures that this division of power is not easily disturbed.
  • Independent Judiciary: It acts as a dispute resolution mechanism between the different levels of government.
• Interdependence of state and Central Government: 
  • India consciously adopted a version of federalism that made the Union government and State governments interdependent on each other (latter more vis-a-vis the former).
  • Thereby violating the primal characteristic of a federal constitution i.e., autonomous spheres of authority for Union and State governments. 
• Other constitutional features, on similar lines, include:
  • The size and composition of the Rajya Sabha akin to that of the Lok Sabha thereby favouring larger States; 
  • Article 3 of the Indian Constitution which allows the Union to alter the boundaries of a State without the latter’s consent, 
  • Emergency powers, and 
  • Concurrent list subjects of the Seventh Schedule wherein the Union possesses more authority than the State barring a few exceptions. 
• ‘Holding together’ Federalism: 
  • India’s centralised federal structure was not marked by the process of ‘coming together’ but was an outcome of ‘holding together’ and ‘putting together’.
• Indestructible & Flexibility: 
  • B. R. Ambedkar called India’s federation a Union as it was indestructible which is why the Constitution does not contain words related to federalism. 
  • He also said that India’s Constitution holds requisite flexibility to be federal and unitary on a need basis. 

Types of Federalism

• Cooperative Federalism: It refers to the horizontal relationship between the entities in a federal structure. For e.g. India is a federal country with power divided between the Centre and the States. Cooperative federalism refers to the cooperation between the two entities in pursuit of unified socio-economic development of the country. For e.g. despite having their divisions over various issues, the Centre and States are expected to come together to face a crisis, which affects the country in its entirety.
• Competitive Federalism: It refers to promoting healthy competition between the states to keep them motivated in pursuit of economic development. For e.g. NITI Aayog has developed multiple indices to showcase the progress achieved by respective states in different sectors. The laggard states are expected to put in extra efforts to catch-up with the front-runners, while the front-runners are expected to work hard to retain their ranking in the indices.
• Fiscal Federalism: It deals with the division of financial powers as well as the functions between multiple levels of the federal government. It has within its ambit the imposition of taxes as well as the division of different taxes between the Centre and the constituent units. Similarly, in the case of joint collection of taxes, an objective criterion is determined for the fair division of funds between the entities. Usually, there is a constitutional authority (like Finance Commission in India) for the purpose to ensure fairness in the division.

Supreme Court of Federalism in India

• The Supreme Court of India held that federalism was a part of the basic structure of the Indian Constitution in the S.R. Bommai vs Union of India case (1994). 
• The Court also held that the Indian variant of federalism upholds a strong centre in the Kuldip Nayar vs Union of India case (2006).

Reason for a centralised federal structure in India

• Partition of India and the concomitant concerns: Anticipating the Muslim League’s participation in the Constituent Assembly debates following the Cabinet Mission plan in 1946, the Objectives Resolution introduced by Jawaharlal Nehru in the Assembly were inclined towards a decentralised federal structure. In it, the States would wield residuary powers. 
• Safeguarding the integrity of the nation: After the Partition a revised stand was unanimously taken by the Union Powers Committee of the Constituent Assembly, in favour of a strong Union with residuary powers and weaker States, to safeguard the integrity of the nation.
• Helping India come out of social problems, a strong centre was important: Nehru and Ambedkar believed that a centralised federal structure would unsettle prevalent trends of social dominance, help fight poverty better and therefore yield liberating outcomes. 
• Objective of building a welfare state: In a decentralised federal setup, redistributive policies could be structurally thwarted by organised (small and dominant) groups. Instead, a centralised federal set-up can prevent such issues and further a universal rights-based system.
• Alleviation of inter-regional economic inequality: The cotton mill industry in Bombay, and the jute mill industry in the Bengal region were subject to a ‘race to the bottom’ or rampant cost cutting practices. 
  • Provincial interventions seemed to exacerbate inequalities. 
  • India’s membership in the International Labour Organization, the Nehru Report (1928), and the Bombay Plan (1944) pushed for a centralised system to foster socio-economic rights and safeguards for the working and entrepreneurial classes.

Conclusion

• Healthy competition would pave the way for India to reach new heights of development.

Source: BS