Building blocks

Cooperative federalism needs institutional structures

The seventh meeting of the NITI Aayog’s governing council and the first in-person interaction since 2019 indirectly highlighted the urgent need for more robust institutional structures to enhance the cause of cooperative federalism. Attended by Prime Minister Narendra Modi, the meeting offered a snapshot of central concerns vis-à-vis the states and vice versa. Both constituencies raised valid issues. The prime minister spoke of the need for states to develop a clear timeline for the new education policy, focus on promoting trade, technology and tourism, and for collective action to increase revenue from the goods and service tax (GST). On their part, the states and Union Territories voiced the need for higher minimum support prices for crops and a five-year extension of the compensation paid to states for the revenue shortfall due to GST implementation. Crop diversification towards oilseeds and pulses was also high on the agenda.

Beyond the atmospherics, the broad takeaway from the meet suggested that the Centre and states were largely talking past each other. Indeed, the criticality of the meet was somewhat reduced by the fact that the chief ministers of Bihar, Telangana, Tamil Nadu, Delhi, Karnataka and Mizoram, the lieutenant governor of Puducherry, and the administrator of Chandigarh, did not attend the meeting. Covid-19 kept only one of them away — Basavaraj Bommai of Karnataka. This significant non-attendance suggests that heightened tensions in Centre-state relations are yet to abate. At least part of the problem is that the Centre has chosen to play a larger role in policies in which the states have a role via the concurrent list of the Constitution—in reframing labour laws, for example, and, most controversially, in seeking to amend the farm laws — with little meaningful consultation with the states. Yet, as Mr Modi pointed out in his remarks, it was the states that played a key role in the battle against Covid-19, emphasising the gains to be extracted from genuine cooperative federalism. 

If closer Centre-state collaboration remains elusive, part of the problem lies in the lack of an effective mechanism. With the NITI Aayog set up to replace the erstwhile Planning Commission, which several leaders had considered to be past its prime, the governing council’s annual meet was to serve as a constructive replacement for the National Development Council (NDC). Indeed, in his last year as Gujarat chief minister, Mr Modi, together with then Tamil Nadu chief minister J Jayalalithaa, had been conspicuous protestors against the top-down configuration of the NDC’s recommendations and allocative policies. Those protests were valid. Ironically, however, the governing council meetings do not seem to differ much from the old NDC in form. If the Union government is seeking a basis for constructive and sustainable dialogue in the interests of genuine cooperation, an alternative structure is needed.  

Beyond an annual meeting, a calendar of meetings decided in consultation with the states in which common agendas are transparently discussed may be a better idea. The GST experience, for instance, offers a template of best practices. Had similar rigorous consultations been held on, say, labour or farm laws, it is possible that the outcome of these two critical pieces of legislation would have been different.