POLITY

Federalism and Emerging Challenges

Context:

Recently, several states have complained about the growing crisis of Indian federalism. They have argued about the ordinances and the bills brought by the Centre which encroaches on their area of legislation, which is an assault on the federal structure of the Constitution.

Probable Questions:

The concept of federalism has unrelentingly changed its contours in Indian Polity. Discuss, and examine the significant gaps in the Indian Federalism
Upholding federalism requires political maturity and a commitment to the federal principle in present times. Discuss.

About Federalism:

Federalism is a system of government in which the power is divided between a central authority and various constituent units of the country. Usually, a federation has two levels of government. One is the government for the entire country that is usually responsible for a few subjects of common national interest. The others are governments at the level of provinces or states that look after much of the day-to-day administering of their state. Both these levels of government enjoy their power independent of the other.

New Challenges to India’s Federalism:

Areas of Friction between Centre and States:

● Economic Federalism

➢ Delay in GST compensation:- The refusal of the Central government of its legal commitment to compensate for Goods and Services Tax (GST) shortfall on account of lower revenue.

➢ Increasing Inter-State Divergence:Growing divergence between richer (southern & western) and poorer States (northern & eastern), remains an important source of tension in inter-State relations that can become a real impediment to collective action amongst States.

➢ Centralised Planning:- Although economic and social planning is found in the Concurrent List of the Seventh Schedule to the Constitution, the Union Government enjoys unbridled authority over national and regional planning in India.

● Legislative and Institutional Interference

➢ The recent Farm Acts allow farmers to sell their produce outside the Agricultural Produce Market Committee (APMC) and aim to promote inter-state trade. However, it is alleged that the acts encroach upon the State list.

➢ Many international agreements, a domain of Union government now touch upon the state subjects such as the Agreement on Agriculture of WTO.

➢ The Concurrent list has grown and the State list has shrunk significantly from the last few decades.

● Socio-Cultural Foundation

➢ Federalism & Development Challenge:To accelerate progress, India has proposed several schemes and visions which may undermine the federal principle.

➢ For example, developmental narratives like ‘one nation, one market’, ‘one nation, one ration card’, ‘one nation, one grid’, GST etc.

➢ Undermining States: The downgrading of a full-fledged State in Jammu and Kashmir into a Union Territory in 2019, or more recently, the notification of the NCT of Delhi (Amendment) Act, 2021, reflected the centralising tendencies of the Union government.

➢ Centralising power during COVID 19:-The union government had invoked the Epidemic Diseases Act and the Disaster Management Act, centralising the powers to deal with the pandemic.

➢ Lack of state consultation is a legislative mandate cast upon the centre under these acts and binding Covid-19 guidelines are being issued by the Centre to the States.

Way Forward:

● Inter-State Platform: An inter-State platform that brings States together in a routine dialogue on matters of fiscal federalism could be the starting point for building trust and a common agenda.

➢ In this context, the Inter-state council can be revived.

➢ Economic growth trajectories since liberalisation have been characterised by growing spatial divergence.

● Reforms at the institutional and political level can deepen the roots of federalism in India. e.g.

➢ The contentious role of the Governor in suppressing the states for the Centre’s interest needs to be reviewed.

➢ Proper utilisation of the institutional mechanism of the Inter-state Councilmust be ensured to develop political goodwill between the Centre and the states on contentious policy issues.

➢ The gradual widening of the fiscal capacity of the states has to be legally guaranteed without reducing the Centre’s share.

● Relaxing FRBM Norms: The relaxation of limits imposed by the FRBM Act, regarding the market borrowings by the states, is a step in the right direction.

➢ However, these borrowings can be backed by a sovereign guarantee by the Union Government.

➢ Moreover, the Union government can provide money to states so that they can take necessary action to deal with the crisis at the state level.

● Political Will: Upholding federalism requires political maturity and a commitment to the federal principle. A politics for deepening federalism will need to overcome nationalist rhetoric that pits federalism against nationalism and development.

● Implementing the recommendations of the Sarkaria Commission and Punchhi Commission for improving Centre-State relations is the need of the hour.