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Insights into Editorial: An Unfinished Agenda of Federalism

Insights into Editorial: An Unfinished Agenda of Federalism

04 November 2015

Since the NDA government took over in May 2014, debate over promoting cooperative and competitive federalism has been going on.

What is Federalism?

Political analyst K.C. Wheare, in his book Federal Government, defines “federalism” as “the method of dividing powers so that the general and regional governments are each within a sphere coordinate and independent”. It means a system of governance in which sovereignty is constitutionally divided between a central governing authority and subnational political entities.

What is cooperative federalism?

Cooperative federalism implies the Centre and states share a horizontal relationship, where they cooperate in the larger public interest. It is visualized as an important tool to enable states’ participation in the formulation and implementation of national policies.

What is competitive federalism?

Competitive federalism means that regional or local governments compete with other regional or local governments. Essentially, it means that states need to compete among themselves and also with the Centre for benefits.

How the Constitution of India upholds the principle of federalism?

Article 1: it states, “India, that is Bharat, shall be a Union of States”. Here, though the constitution does not explicitly mention the term “federalism”, it does provide for a governance structure primarily federal in nature. How?

  • It provides for separate governments at the Union and in the states.
  • It specifies and demarcates the powers, functions and jurisdictions of the two governments.
  • It details the legislative, administrative and financial relations between the Union and the states.

Seventh schedule: The distribution of legislative powers has been broken down clearly into three lists: the Union List, the State List and the Concurrent List.

  • The Union List, comprising the vital interests of the State, is the longest, with 100 items. It includes defence, arms and ammunition, foreign affairs, foreign trade, atomic energy, treaties, war and peace, currency, and the Constitution. On the Union List, Parliament has exclusive powers to legislate.
  • The State List (61 items) comprises, among others, public order, police, trade and commerce within the state, agriculture, land revenue and various taxes. While the state has exclusive powers to legislate on the State List, in certain situations, Parliament can also do so.
  • The Concurrent List (52 items) includes preventive detention, contracts, economic and social planning, social security, education, labour welfare and electricity. In concurrent list, in case of a conflict between a state and a Central legislation, the parliamentary legislation shall prevail.
  • Residuary powers of legislation are vested in the Union.

However, a disconcerting trend has been observed since 1950. While the Union and Concurrent Lists have expanded, the State List seems to have shrunk. This has led many to question the structure of Indian federalism and to propose its remodelling.

Recent efforts to promote cooperative federalism:

  • The acceptance of the 14th Finance Commission’s recommendations significantly enhanced devolution and also enabled states to design and implement programmes better suited to their needs.
  • The disbandment of the Planning Commission (PC) and its replacement by the NITI Aayog was also specifically designed to promote cooperative federalism. NITI Aayog will concentrate on the broader policy framework instead of micro resource-allocated functions.

What else can be done?

  • The Centre-State Council should play a more proactive role. It should inquire and advise on disputes, discuss subjects common to all states and make recommendations for better policy coordination.
  • Legislations related to contentious issues like land, labour and natural resources should be left to the states, as the state will promote best practices. This will also enable greater investment and economic activity in states with a favourable regulatory framework.
  • Healthy competition between the states should be encouraged.
  • To deal with issues related to international treaties, WTO obligations, or the environment, an institutional mechanism must be evolved where important decisions are appropriately discussed with states.