Cooperative and Competitive Federalism

  • IASbaba
  • October 9, 2021
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Oct 6 – Cooperative and Competitive Federalism – https://youtu.be/NuyINLiSby0 


  • GS-2: Indian Constitution, Issues and Challenges Pertaining to the Federal Structure

Cooperative and Competitive Federalism

Context: Federalism is a system of government in which states or provinces share power with a national government. The quasi-federal structure of the Indian nation was settled in after the country became free of colonialism and gained independence from the British. This style of federalism is responsible for the introduction of its cooperative as well as competitive variants in the country.

The Constitution of India has created a strong Central government, but at the same time, it has not made the state governments weak and has not reduced them to the level of administrative agencies for the execution of policies of the Central government. Rather, the states have an independent constitutional existence. 

Cooperative federalism

The concept of cooperative federalism professes a horizontal relationship between the Central as well as the State governments. This essentially means that the legislature at the Union as well as the State levels cooperate to serve the larger public interest. 

Such an arrangement, if executed successfully, would be a significant leap in enabling the participation of States in determining national policies.

Usually cooperative federalism is seen in socialist economies where most of the resources are controlled by the government. It is being promoted in India through steps like the formation of NITI aayog, passing of GST etc.

  • The essence of co-operative federalism is that the Centre and the State Governments should be guided by the broader national concerns of using the available resources for the benefit of the people. 
  • Co-operative federalism encourages the Government at different levels to take advantage of a large national market, diverse and rich natural resources and the potential of human capabilities in all parts of the country and from all sections of the society for building a prosperous nation. 
  • Co-operative federalism makes it possible to raise all the available resources by the Government at different levels in a co-ordinated way and channel them for use for the common good of the people. This requires a harmonious relationship and co-operative spirit between the Centre and the States and among the States themselves. 
  • Co-operative federalism is intended to ensure a minimum bundle of basic services and a nationally acceptable level of living for all the people of the country.

Must Read: Cooperative federalism amidst COVID-19

Competitive federalism

In competitive federalism, the States share a vertical relationship with the Central government while competing amongst themselves. Essentially, States individually work towards attracting funds and investment to aid their developmental activities. This leads to the formation of a free market scenario amongst the States wherein they play the role of the sellers and the investors become the buyers.

A type of Competitive federalism is seen in India where states want more funds and perks from the state government for growth. Also states can be involved in International treaties and business deals. They are also trying to woo MNCs to get more FDI.

  • Competitive federalism follows the concept bottom-up approach as it will bring the change from the states. It ensures inclusive development in the country.
  • It instill a spirit of positive competition and help utilization of successful models of development across many states. Thus, it helps in reducing inter-states and intra-states inequalities through development.
  • It ensures that every limb of the whole country is developing. E.g. there are many disparities between various cities in terms of development, competitive sub-federalism reduces such disparities. It helps in instilling sense of responsibility in city administrations, ensuring no one have been left out.
  • The policy of one-size-fit-all is replaced with different policies of various states based on the own priorities with in the state. Each state will design their own policies for development of the cities with self-fund. The concept also promotes discipline among the states.


  • Cooperation as well as Competition on a national level is not a small feat to achieve and thus it requires a mutual understanding between the Central and State governments. 
  • While prosperous States may be able to execute both policies effectively but economically backward States would require the Centre’s support to achieve their goals.
  • Hence, there is a need for more cooperative federalism than competitive federalism in present times where states come together to help each other develop.

Can you answer the following questions?

  1. Cooperative federalism is the only democratic way for the smooth functioning of Centre-State interactions. Illustrate.
  2. What is competitive federalism? Is it good for a developing country like India? Substantiate by taking suitable examples

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