Federal Fabric under threat

Governance

“Once is happenstance. Twice is coincidence. Three times is enemy action,” Ian Fleming famously wrote in the James Bond classic Goldfinger. Change the words “enemy action” to “trend” and it will explain what’s going on between Maharashtra and Gujarat.

Context: Maharashtra’s repeated loss of projects to Gujarat appears to indicate Centre’s preference, damage to federal structure including recently concluded Vedanta – Foxconn project.

Earlier the projects such as International Financial Services Centre (IFSC), Nanar oil refinery, a joint venture between India’s state-owned PSUs and Saudi Arabia’s Aramco, and the National Academy of Coastal Policing are proposed to set up in Maharashtra but later moved to Gujrat.

This, as the legendary Fleming notes, is enough to underline a trend that seriously undermines our federal structure. It’s always heartening to see states vying for investments, but it’s equally damaging to see the powerful Centre favouring one state over the other.

It not only makes the battle unfair, but also threatens the federal fabric of the nation. However, Maharashtra politicians undoubtedly owe explanations for their consistent flip-flop over mega projects, beginning with Enron’s ambitious power project.

In this context let us understand Federal structure of India:

The Federal Structure of India:

Nature of Indian Federalism: A Federal theorist K.C. Wheare has argued that the nature of Indian Constitution is quasi-federal in nature.
- The SC in Sat Pal v State of Punjab and Ors (1969), held that the Constitution of India is more Quasi-federal than federal or unitary.
Constitutional Provisions for Ensuring Federalism: The respective legislative powers of states and Centre are traceable to Articles 245 to 254 of the Indian Constitution.
- The lists in the 7th Schedule of the Constitution — Union, State and Concurrent also exemplify equitable share of powers, wherein each level of government has its own sphere, enabling context-sensitive decision-making.
- Article 263 provided for the establishment of an Inter-State Council for smooth transition of business between the Union and states and resolution of disputes.
- Article 280 provided for the constitution of the Finance Commission to define the financial relationship and terms between the Union and states.
- Also, the institutions for local self-government were added through the 73rd and 74th amendments, to strengthen the grass roots democracy.
Institutions for Federalism: The Planning Commission always had space for discussion on issues concerning the federal nature of the polity and was sensitive to the different developmental requirements of states.
- The inter-state tribunals, the National Development Council and other informal bodies have served as vehicles of consultations between the Union, states and UTs.
- These bodies have been instrumental in tackling difficult issues democratically through deliberations while upholding the cooperative spirit between the Union and states.

Challenges in Maintaining the Federal Spirit of India

Apart from above mentioned tussle between Gujrat and Maharashtra, the following are the major challenges to cooperative federalism in India.

Ineffective Functioning of Several Bodies: The Planning Commission has been scrapped; the Inter-State Council has met only once in the last seven years while the National Development Council has not met at all.
Issues in Tax Regime: The misconceived Goods & Services Tax (GST) has already taken away much of the autonomy available to states and has made the country’s indirect tax regime unitary in nature.
During the pandemic, the Union government repeatedly violated the compensation guarantees to the States under the GST regime. Delay in paying the States their due worsened the impact of the economic slowdown.
Encroachments Upon States’ Autonomy in State Subjects: Many important and politically sensitive decisions have been taken in the past few years, without reference to, and consultation with, the concerned states such as:
Parliament legislated on “agriculture” in the state list, to enact the three contentious farm laws, overstepping its jurisdiction and imposing a law on the states.
The New Education Policy 2020 has also been flagged as encroaching on the federal nature of the polity.
Additionally, the BSF’s jurisdiction was extended in Assam, West Bengal, and Punjab without any consultation with the concerned states.
Impact of Covid-19: The states were curtailed in aspects relating to Covid-19 management such as procurement of testing kits, vaccination, the use of the Disaster Management Act, 2005, and the unplanned national lockdown.

Way Forward:

Recognition of Federalism: It should be underlined that Article 1 of the Constitution declares that “India that is Bharat is a union of states”, and that devolution of powers is necessary in such a setting.
- A conscious recognition of the federal character of India’s polity is essential to protect its national character.
Strengthening Inter-State Relations: State governments shall consider deploying human resources to support them in preparing responses to the consultations initiated by the Union, especially with a focus on the federalism angle.
Bringing Reforms while Balancing Federalism: A diverse country India requires a proper balance between the pillars of federalism (autonomy of states, centralisation, regionalisation etc).
- Extreme political centralisation or chaotic political decentralisation shall be avoided as both lead to the weakening of Indian federalism.