In India, the Center dominates. States’ powers are minimal and routinely infringed upon. Cooperative federalism has therefore become a mere slogan, writes former diplomat and MP Pavan Varma in the following article…

[Excerpts of Varma’s article first published in The Hindustan Times]

By Pavan K Varma

A strong unitary spirit underlies Indian federalism

Concepts of federalism are, ultimately, a matter of enlightened practice, and not only Constitutional phraseology. The very first clause of our Constitution states categorically that India is a ‘union of states’. It allows for a central government, and state governments; it lays down divisions of powers between both; and, it accepts that, in a country of the size of India, there must be a structured federal component that allows for diversities to be accommodated.

However, there is a strong unitary spirit underlying this federalism. The balance of power, undeniably, vests with the central government: there is no dual citizenship; all India services, that serve in the states, are controlled by the Centre; and, emergency powers to take over the government of states lie with the Centre.

It is for this reason that our Republic has been described as ‘federal in concept but unitary in spirit’. In the early years after independence, federalism seemed to be working well enough because the Congress party which held power at the Centre was also in power in most states. Such a political congruence overarched frictions between the Centre and states.

When, in later years, different parties ruled in the Centre and in states, the definition of what constitutes actual federal practice began to crop up. That is why today there is talk of the need not only of federalism as outlined in the Constitution, but ‘cooperative federalism’, that ensures that the letter of the Constitution is practised in spirit as well.

In many ways, such a debate is inevitable. Significant regional priorities have come to the fore; there are deep seated regional aspirations in evidence; strong regional parties with powerful leaders are no longer subservient to the party at the centre; and new environmental and economic challenges have emerged.

There are other reasons why the notion of ‘cooperative federalism’ has acquired a new salience. Earlier institutional structures that guided Centre-state relations, such as the Planning Commission, have been abolished. The mandate of the Niti Aayog that replaced it, is at best amorphous. This has led to the Union Finance Commission, that handles the key issue of allocation of financial resources between Centre and states, to emerge as the most important- and the most contentious-institution to judge whether there is, indeed, the spirit of cooperative federalism at work.

The XIV Finance Commission increased the quantum of transfers to the states from the central tax kitty, from 32 per cent to 42 per cent. On paper this seemed a substantive favour done to the states. However, in reality, this was just a compositional shift. The increase in tax transfers was negated to a large extent by the reduction of allocations by the Centre for the central planned and sponsored schemes. In fact, as a result, in spite of the rise in overall percentage share, the share of many states actually fell in the divisible pool of taxes.

Any arbitrary or unilateral change in the Terms of Reference (TOR) of the Finance Commission also affects the ‘cooperative’ manner in which a federal scheme of things should run. Such changes should be brought about only after comprehensive consultations with states, and avoid politically inspired subjectivities such as ‘performance -based incentives’. This last point becomes especially important when there is a suspicion that the ruling party at the Centre is being a little extra generous to states where it is in power, and step-motherly to those where it is not.

Finally, no federalism can be genuinely cooperative if it does not take into account the growing regional disparities in the Union. Some five or six relatively developed states continue to get the overwhelming flow of both public and private investment, whereas others in which the largest number of Indians live, continue to languish in a vicious cycle of poverty. Any rational economic strategy should foster both investment and devolution patterns which would enable least developed states to reach the national average within a stipulated time frame. For instance, although Bihar has for many years now had one of the highest annual economic growth rates in the country, it will still require, even at these growth rates, another 25 years before it reaches the mean national per capita income.

Obviously, such a situation requires institutional affirmative action from the central government in the form of reduced state contributions for centrally-sponsored schemes, improved access to external resources, and tax breaks on private investment. This is the basis of the demand for Special Category Status, which is required not only for Bihar, but for states like West Bengal, Odisha and Jharkhand. Unfortunately, neither the UPA government nor the current NDA dispensation has acceded to this legitimate demand.

Cooperative federalism cannot, therefore, be just a slogan. In the increasingly competitive and acrimonious politics of today, it must be based on a transparent institutional framework which ensures justice to all constituents of the Union, and makes them respected stakeholders in the functioning of the Republic.

[Pavan K. Varma is a former MP of Rajya Sabha, and currently the National General Secretary of the Janata Dal (U)]


This article was first published in Hindustan Times on 3 October 2018