Q.What changes has the Union Government recently introduced in the domain of Centre-State relations? Suggest measures to be adopted to build the trust between the Centre and the States and for strengthening federalism.

Body Analysis

Recent Changes Introduced in Centre-State Relations

• Increased Role of the Centre in Health and Disaster Management:
  • During the COVID-19 pandemic, the Centre invoked the Disaster Management Act, 2005, centralizing decision-making related to health and disaster responses. This led to the National Disaster Management Authority (NDMA) issuing guidelines that all States had to follow, often limiting their autonomy in addressing local conditions.
  • For instance, States had to follow uniform lockdown protocols and vaccination strategies, which sometimes clashed with local needs.
• Monetary Tightening under the 15th Finance Commission’s Recommendations:
  • The 15th Finance Commission (2021-26) introduced significant changes in the distribution of central tax revenues to States. The share of divisible taxes to States was recommended at 41%, continuing the 14th Finance Commission’s recommendation, but with notable adjustments for grants and funds allocated for disaster management.
  • Additionally, the removal of revenue deficit grants for many states has led to tensions regarding the reduced fiscal autonomy of States.
• Abolition of the Planning Commission and Shift to NITI Aayog:
  • The Planning Commission was replaced by NITI Aayog in 2015, signaling a shift from centralized planning to cooperative federalism. However, critics argue that NITI Aayog’s recommendations often reflect the Centre’s priorities rather than being driven by equal consultation with the States.
  • Unlike the Planning Commission, which had direct control over fund allocation, NITI Aayog serves primarily in an advisory role, leaving States more dependent on central ministries for financial allocations.
• Centralized Taxation under the Goods and Services Tax (GST):
  • The introduction of GST in 2017 marked one of the most significant shifts in Centre-State financial relations. While the GST Council provides a platform for joint decision-making, the delays in GST compensation payments to states have strained relations, especially during the economic downturn caused by the pandemic.
  • Several States have expressed dissatisfaction with the Centre’s approach to GST compensation, arguing that their financial independence has been compromised.
• Use of Central Agencies in State Matters:
  • Increasing involvement of central investigative agencies like the Enforcement Directorate (ED), Central Bureau of Investigation (CBI), and Income Tax Department in state-level issues has led to growing tensions. Several states have accused the Centre of using these agencies for political purposes, which undermines cooperative federalism.
  • For example, multiple states like West Bengal, Kerala, and Chhattisgarh have withdrawn general consent for CBI investigations, citing concerns of misuse of power by the Centre to interfere in state governance.
• National Education Policy (NEP) 2020:
  • The NEP 2020 introduced sweeping changes in the education sector, which is under the Concurrent List. While the policy emphasizes the role of both the Centre and States in implementing educational reforms, some States have expressed concerns about the Centre’s dominant role in shaping educational policy without adequate consultation with States.

Measures to Build Trust Between the Centre and States and Strengthen Federalism

graph TD
    A["Strengthening Centre-State Relations in India"] --> B["Inter-State Councils"]
    A --> C["Inclusive Policy-Making"]
    A --> D["Institutional Mechanisms"]
    A --> E["Fiscal Federalism"]
    A --> F["State Autonomy"]
    B --> B1["Promote Dialogue"]
    B --> B2["Cooperation on National Issues"]
    C --> C1["Involve States in Formulation"]
    C --> C2["Involve States in Implementation"]
    D --> D1["Strengthen NITI Aayog"]
    D --> D2["Regular Centre-State Consultations"]
    E --> E1["Equitable Tax Sharing"]
    E --> E2["Timely Fund Transfers"]
    F --> F1["Avoid Article 356 Overuse"]
    F --> F2["Uphold Cooperative Federalism"]

• Strengthening Cooperative Federalism:
  • Cooperative federalism is essential for balancing the powers of the Centre and the States. Mechanisms such as the NITI Aayog and the GST Council must be empowered further to ensure that decisions are made through consensus and dialogue, rather than unilateral actions by the Centre.
  • Example: The success of the NITI Aayog’s State Development Index demonstrates how Centre-State collaboration can be mutually beneficial by promoting competitive federalism.
• Ensuring Fiscal Federalism:
  • The Centre should ensure timely disbursement of funds to States, particularly in areas like GST compensation. The Finance Commission should continue to play a pivotal role in determining equitable revenue-sharing mechanisms.
  • 15th Finance Commission recommendations should be implemented to ensure that States receive adequate financial resources to fulfill their responsibilities without over-reliance on central grants or loans.
• Reviving the Inter-State Council:
  • The Inter-State Council should be revitalized to facilitate discussions on disputes and governance challenges between the Centre and States. This body, under Article 263 of the Constitution, is meant to serve as a forum for consultation, but its use has been limited in recent years.
  • Regular meetings and structured dialogues within this council would foster better coordination and resolve conflicts through consensus-building.
• Respecting State Autonomy in Legislative and Administrative Domains:
  • The Union Government should respect the legislative competence of States, particularly in areas that fall under the State List, such as agriculture, health, and policing. Imposing central legislation in these areas without consulting States creates friction and undermines federal principles.
  • Article 246 of the Constitution outlines the division of powers, and the Centre should adhere strictly to these provisions unless exceptional circumstances arise.
• Balanced Use of Central Agencies:
  • The perceived misuse of central investigative agencies such as the CBI and ED has led to mistrust between the Centre and States. There needs to be greater transparency in their functioning, with clear guidelines on when and how these agencies can intervene in State matters.
  • The Centre and States should work together to establish protocols for these agencies’ operations, ensuring that they do not become tools for political leverage.
• Decentralization in Disaster Management and Crisis Handling:
  • Disaster management and health emergencies should involve more decentralized decision-making. States should have greater autonomy in implementing policies tailored to their specific circumstances, especially in areas where they have local expertise and resources.
  • Example: During the second wave of COVID-19, states like Kerala and Tamil Nadu successfully implemented localized lockdown and health strategies that were better suited to their specific needs.
• Promoting Dialogue and Consultation:
  • Regular consultation between the Centre and States is critical. Before introducing major policy changes that affect State subjects (e.g., agriculture, education, health), the Centre should engage in dialogue with State governments to consider their concerns and feedback.
  • Example: The NEP 2020 should be implemented in close consultation with State governments, ensuring that regional educational priorities are respected.