Ever since India’s Independence, the debate on federalism has been an engaging one with multiple contesting views. However, in theory, no one disagreed with the argument that the state governments should be sufficiently empowered and that they should not be made to feel as subservient to the central government.
Dr. B.R. Ambedkar, the man who drafted India’s Constitution, explicitly favoured this view while maintaining that India is union of states. In reality though, the central government accumulated vast powers, many times misusing the extraordinary powers it had been provided, and the nature of polity did not evolve as was envisioned by Dr. Ambedkar.
The direction of centralisation of powers changed when Prime Minister Narendra Modi took office in 2014. His experience of having served as a Chief Minister for more than 12 years before he became Prime Minister certainly came in handy. The progress in the last seven years, in restoring the balance of powers between the centre and the sates, and in making India a more federally governed structure has been immense. Consider some examples.
Tectonic shift in balance of powers
The first move to empower the states was announced in the first Independence Day Speech itself by Prime Minister Modi. The time-tested failed Planning Commission was dismantled and the creation of Niti Aayog was announced. With this move, the lordship of the Planning Commission was also consigned to history. This one change itself was like a tectonic shift in the balance of powers and the way states were treated.
Earlier, it was standard practice for state plans to be approved in Delhi. Half year and annual fund allocation along with detailed state plans would only be approved after going through a series of unelected, unaccountable bureaucrats like the Adviser, the Secretary and then the Member, Planning Commission.
But this was not the end of it. The final allocation would only be finalised at the meetings of Chief Ministers and the Deputy Chairman. Imagine an elected Chief Minister of a State having to plead his case on how govern his state before an appointee of the central government? This top-down planning gave states little flexibility in designing their own development programmes as per their own priorities or commitments to the people.
With Planning Commission gone, the State Plans would no longer be needed to be approved by a series of bureaucrats. States and the Centre now met as equals at Niti Aayog’s Governing Council Meetings with the states having full freedom to devise their own yearly plans.
Increase in devolution
Simultaneously, fiscal federalism was strengthened with increase in devolution from 32% to 42% of the financial divisible pool. This was again done very early in the tenure of Prime Minister Modi, demonstrating his commitment to take decisive action on federalism front. Assured, untied funding was a long-standing demand of state governments to design and implement schemes as per local realities and now this was a reality.
The GST Council is the second major example of strengthening federalism in India through the concept of cooperative federalism. The GST Council is India’s first Centre-State body and the present GST Council empowers the state governments much more comprehensively in all forms of decision making.
Decision making in the GST Council can only happen with by a majority of not less than three-fourths of the weighted votes of the members present.
This ensures that the Central Government cannot ride roughshod as the vote of the central government has a weightage of only one-third of the total votes cast. The votes of all the state governments taken together have a weightage of two-thirds of the total votes cast.
Therefore, unless the states also agree, the required super majority of three-fourths can never be achieved. It is however a testimony to India’s evolving federal structure that not a single decision went to vote in the run up to roll out of GST or for many months thereafter.
Concept of competitive federalism
The third example of federalism being strengthened is through the concept of competitive federalism. States now compete with each other for higher rankings on various outcomes, such as Ease of Doing Business, SDGs, export preparedness, water management, health, education, innovation etc.
The effectiveness of the various government initiatives obviously has to increase for that initiative to be ranked higher as compared to a competing state government. The result is an improvement in development outcomes, even with same funding.
The fourth example of strengthening federalism and which embodies the spirit of both cooperative and competitive federalism is the Aspirational Districts Programme. Centre and states are working together to improve outcomes in 115 of India’s most backward districts.
49 key performance indicators across such sectors as agriculture, financial inclusion, health, education, nutrition, skill development and infrastructure are being monitored through real time data generation and using this data the districts are ranked at regular intervals.
A key innovation of this programme is that it ranks the delta improvement or the change in the performance. Therefore, no district starts at a historical advantage or disadvantage and the districts which are able to bring the maximum change have the best chance to be rewarded.
The fifth example of federalism in action has been most recently seen in the battle against the COVID-19 pandemic. The Prime Minister and Chief Ministers have interacted more than a dozen times to strategise on pandemic management.
After the first nationwide lockdown, and as the states also learnt from the experience, states took the lead in deciding their own containment, lockdown and unlock strategies. Other aspects of the battle against the pandemic — ensuring availability of beds, medicines, medical grade oxygen — were also undertaken in the spirit of cooperative federalism.
There are multiple other examples of the renewed nature of federalism exhibiting itself in day-to-day governance. Take the case of the rationalisation of Centrally Sponsored Schemes (CSS) by a subgroup of Chief Ministers themselves — who deliberated and rationalised 66 CSS into 28 schemes.
Or consider the High-Level Committee of Chief Ministers on Agriculture Reforms which recommended several reforms in agriculture marketing, and which ultimately were enacted as the three new farm laws.
As the debate around federalism is once again ignited in India, the experience of the last seven years has been transformative. Several things have played a role in making this happen. The fact that Prime Minister Modi has been on the other side of the table and hence understands the need of the states.
The Prime Minister did not change his core beliefs and took the opportunity to put in place what he had always argued. The fact that the BJP, the party to which the Prime Minister belongs to, has federalism as one of its core founding values and having being elected twice, it put into effect one of its core philosophy.
Overall, India has moved in the right direction in the last seven years this augurs well for the development journey of India.