In recent years, the frequency and intensity of disputes between India’s central and state governments have risen. This has implications for both ‘cooperative federalism’ – where the state and centre cooperate for public interests – and the Indian economy. These disputes can lead to changes to Schedule VII of the Constitution, which relates to economic reforms such as the National Pension System (NPS) and PM Gati Shakti.
Centre-State Relations: Current Issues and Background
Economic reforms since 1991 have led to increased investment freedom for states. However, states are still reliant on the Centre for revenue receipts. As a result, states have increasingly pushed back against the Centre, creating a hardened stance between the two and leaving little room for negotiation. This friction has slowly eroded the foundations of cooperative federalism, with disputes arising from areas such as social sector policies, regulatory institution functionality and central agency powers.
The Constitutional Provisions Governing Centre-State Relations in India
The relationship between the Centre and the states in India is governed by various articles spread across Part XI and XII of the Constitution. These articles address legislative relations (Articles 245-255), administrative relations (Articles 256-263) and financial relations (Articles 268-293). The Schedule VII of the constitution further strengthens this by outlining the ability of the Centre and states to levy taxes.
The Compromise of Fiscal Federalism
Recent action by the Centre, such as the launch of PM Gati Shakti, has encroached upon states’ investment territory. This, along with competition between the states for fiscal resources, has led to underinvestment by states and an imbalance in expenditure. The emergence of ‘parallel policies,’ like the differences in pension systems between states, also raises long-term fiscal implications for the Indian economy.
Strengthening Federalism in India
To strengthen federalism in India, open and transparent communication between the Centre and states must be fostered. Empowering states with decision-making power can lead to a more balanced relationship. Cooperative policies should be encouraged, where the Centre and states work together on formulation and implementation. Clear definitions of roles prevent overlap and confusion, paving the way for efficient operations. Trust-building can also ease the implementation of policies and reforms.
Conclusion
The need for a harmonious relationship between the Centre and states is vital for a productive economic environment. Collaboration, empowerment, clarity and trust-building can greatly enhance this relationship, leading to a more effective and cooperative form of governance.
Legal Insights: Understanding Centre-State Relations through UPSC Civil Services Examination’s Previous Year’s Questions
To gain further insights into the complexities of Centre-state relations, one can look at previous questions from the Union Public Service Commission (UPSC) Civil Services Examination. For instance, in 2017, a question asked to identify a feature not present in Indian federalism received responses reflecting various perspectives on the issue. Another question required an explanation of ‘local self-government,’ demonstrating the overlap between federal and local governance. The 2014 Mains question posed a discussion on the dominance of the federal principle in the Indian Constitution, providing another angle to gauge understanding of this important issue.