Model Answer
0 min readIntroduction
Indian federalism, envisioned by the framers of the Constitution, initially leaned towards a ‘cooperative’ model, emphasizing Centre-State collaboration. This was characterized by financial transfers, policy harmonization, and a spirit of consensus-building. However, over the decades, particularly post-economic liberalization in 1991, a discernible shift towards ‘competitive federalism’ has emerged. This transformation is marked by increased competition among states for investment, resources, and political influence, altering the dynamics of Centre-State relations and inter-state cooperation. The question asks to analyze this transition and its underlying causes.
Understanding Cooperative and Competitive Federalism
Cooperative Federalism, as initially conceived, emphasized mutual cooperation between the Centre and States. This involved the Centre providing financial assistance and guidance, while States implemented policies aligned with national objectives. Article 282 of the Constitution empowers the Centre to make grants to States. This model prioritized national unity and planned development.
Competitive Federalism, on the other hand, signifies a scenario where states compete with each other to attract investment, skilled labor, and achieve higher economic growth rates. This competition often leads to policy divergence and a reduced emphasis on uniform national standards. It’s driven by globalization, liberalization, and the increasing importance of state-level economic performance.
The Initial Cooperative Framework (1950-1990)
- Planning Commission (1950): Played a crucial role in coordinating development plans between the Centre and States, fostering a cooperative approach.
- Financial Transfers: The Centre used its fiscal powers (tax sharing, grants-in-aid under Article 275) to influence state policies and ensure national priorities were addressed.
- National Policy Framework: The Centre largely dictated policy direction in key sectors like education, health, and agriculture, with States implementing these policies.
- Inter-State Council (1990): Established under Article 263, aimed to promote coordination and cooperation among states, though its effectiveness was limited initially.
Factors Driving the Shift to Competitive Federalism
- Economic Liberalization (1991): Reduced the Centre’s control over the economy, empowering states to pursue independent economic policies.
- Globalization: Increased competition for foreign investment, forcing states to create attractive investment climates.
- Rise of Regional Parties: The emergence of strong regional parties gave states greater bargaining power and a stronger voice in national politics.
- Fiscal Decentralization: The recommendations of the Finance Commissions (particularly the 14th and 15th) increased the share of states in the divisible pool of taxes, enhancing their financial autonomy.
- GST Implementation (2017): While intended to be cooperative, GST also introduced a competitive element as states vied for revenue and economic growth within the new framework.
Consequences of Competitive Federalism
| Positive Consequences | Negative Consequences |
|---|---|
| Increased economic growth and innovation due to competition. | Increased regional disparities as some states are better positioned to attract investment. |
| Greater responsiveness of state governments to local needs. | Potential for policy fragmentation and lack of national coherence. |
| Improved efficiency in governance as states strive to outperform each other. | Increased inter-state rivalry and potential for conflicts over resources. |
| Enhanced entrepreneurial spirit and investment climate. | Weakening of national unity and social cohesion. |
The recent trend of states challenging central laws (e.g., farm laws, Citizenship Amendment Act) also reflects this increased assertiveness and competitive spirit.
Conclusion
The transition from cooperative to competitive federalism in India is an ongoing process, shaped by economic, political, and social forces. While competition can spur economic growth and innovation, it also carries the risk of exacerbating regional disparities and undermining national unity. A balanced approach, fostering both cooperation and healthy competition, is crucial for ensuring inclusive and sustainable development. Strengthening institutions like the Inter-State Council and promoting greater fiscal equalization are essential steps towards achieving this balance.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.