Prime Minister Narendra Modi’s comment on Sunday that the country’s federal structure, shaped by the principle of cooperative federalism, had emerged as a “model for the world” came amid the opening up of new areas of contestation between the Centre and states. PM Modi, who was speaking at Niti Aayog’s governing council meeting, also acknowledged the “crucial role” played by the states in the country’s fight against the pandemic, giving credit to state governments for the grass roots delivery of public services. While the ruling dispensation repeatedly declares its commitment to cooperative federalism, it is hard to dispute the notion that increasing political centralisation over the years has widened and deepened the faultlines in Centre-state relations. The manner in which the PM’s recent comments over subsidies framed the debate — juxtaposing the Centre’s model of “new welfarism” against “freebies” given by states — illustrates the deepening of fissures.
There is an element of half-truth in the government’s assertions. Take, for instance, the Covid vaccination programme. During the early days of the second wave of the pandemic, the Centre shifted the onus of procurement and distribution of vaccines onto the states. It was only after much criticism, and a nudge from the Supreme Court, that the central government reversed its earlier decision. Similarly, during the early days of the pandemic, there was considerable disagreement between the Centre and the states on GST compensation — the issue remains a sore point between the two. It was only after considerable pushback from the states that the Centre relented, borrowing to ensure that the promise made to states to protect their revenues was kept.
At the same time, it is also true that on several, critical economic policy issues, despite much prodding by the Centre, states have stuck to status quoist positions. For instance, over the years, the Centre has not only helped ease the financial stress on state-owned power distribution companies, but has also repeatedly incentivised states to fix the mess in the distribution segment, to turn around the financial and operational position of discoms. However, across states, not much headway has been made. Similarly, on various other critical reform areas which lie in the domain of the states, labour reforms for instance, progress has been glacial. And on GST, notwithstanding public posturing for political gains, all decisions are taken by the Council where states can openly voice their concerns, and put forth their demands. States, when making other demands on the Centre, such as a legal guarantee for minimum support prices, must also realise their fiscal implications and consequences for the larger economy. Be that as it may, at this critical juncture in Centre-state relations, it is incumbent upon both to widen spaces for dialogue and negotiation.