Strengthening India’s Cooperative and Competitive Federalism through Inter-State Council
B.R. Ambedkar once described India and its states as “one integral whole, its people a single people living under a single imperium derived from a single source”. With this approach the Constitution provided for a Union of States under Article 1 making its character federal and the spirit unitary. Any federal polity is essentially based on the principle of separation of powers, either vertical (between the Union and States) or, horizontal (between states) or both. The Constitution of India prescribes for both, despite being established on the principle of fusion of powers between the Legislature and the Executive protecting its unitary spirit. The vertical separation of powers is provided through the three lists of the subjects for law making as enshrined in Article 246 whereas, horizontal separation between the Executive and judiciary is incorporated in Article 50. Moreover, such separation of powers is also done indirectly in Articles 121 and 122 by restricting the Parliament and the Judiciary to intervene into each other’s affairs unless required by the Constitution. On the other hand, by making a provision for the Council of Ministers to be collective responsible to Lok Sabha in Article 75(3) it institutionalizes the principle of fusion of powers. The most interesting part is that none of these terms have been explicitly used in the Constitution to accommodate both the concepts without any possible conflicts.
This arrangement is done for keeping India politically united and integrated and for ensuring equitable distribution of resources to establish an egalitarian socio-economic order so that all forms of justice, social, economic and political are delivered. In this backdrop, it is essential that the Centre, states and the local governments work together and share responsibilities to achieve common constitutional goals. This is the key to cooperative federalism in India signifying a participatory approach in the context of policy making and implementation.
The Supreme Court in State of West Bengal v. Union of India AIR 1963 SC 1241 held that federalism in India is not absolute and differs from a traditional federal political design due to the following features it incorporates:
- Single constitution for both the Centre and States.
- Amendment to the Constitution by the single constituent authority, i.e. Parliament.
- Supremacy of the Constitution to review any action.
- Distribution of powers in a such a manner that it facilitates local governance by the states and national policies by the Centre.
While citing Granville Austin in State of Rajasthan v. Union of India AIR 1977 SC 1361 the Court held that the Constitution of India was perhaps the first document to incorporate the concept of cooperative federalism (a term promoted by A.H. Birch). The Court also said that the Constitution of India was ‘amphibian’, i.e. the Centre may move on federal or unitary planes according to the needs. The Court however, in S.R. Bommai v. Union of India AIR 1994 SC 1918 held that India’s federal polity shall be called ‘pragmatic’ which means that while distributing the legislative powers and indicating the spheres of governmental powers of the central and state governments, the Constitution has provided strong unitary features.
However, over the period the demand for greater autonomy by the states created much debate in India on the matter whether India really practices cooperative federalism. In view of the pressure the Sarkaria Commission was set up in June 1983 to review the status of center state relations. The commission in its report in October 1987 recommended for establishing a permanent Inter-State Council as an independent national forum for consultation with a mandate well defined in accordance with Article 263. It also recommended that for coordination of policies and implementation especially in view of large areas of common interest and shared action requires a sustained process of contact, consultation and interaction, for which a proper forum is necessary. The Commission observed that executive powers of the Union and States overlap in many areas and as such division of matters in Union List and State List is not absolute. Then in implementation of its laws and policy Union is largely dependent on State administrations. Union and States can entrust their executive functions to each other. States are dependent on Union for fiscal resources and in many administrative matters. Therefore, interdependence is indispensable in a diverse and developing society. Institutionalized and sustained consultation is indispensable in view of this interdependence. The Commission was of the view that there has been a pervasive trend towards greater centralization of powers over the years and narrow personal interests have been given priority over larger national interest. Albeit, it did not favour limiting of the powers of the union or transfer of various subjects to state or concurrent lists, it recommended a process of consultation by the center on all concurrent subjects. Moreover, it said that Articles 258 and 258 A (Inserted by the 7th Amendment Act, 1956 shall be invoked as many times as possible for developing interdependence.
The Article 263 of the Constitution provides for the establishment of an Inter-State Council which is mandated to inquire into and advise upon disputes which may arise between states, investigate and discuss subjects in which some or all of the states, or the Union and one or more of the states, have a common interest.
Article 263 says, Provisions with respect to an inter State Council If at any time it appears to the President that the public interests would be served by the establishment of a Council charged with the duty of
(a) inquiring into and advising upon disputes which may have arisen between States;
(b) investigating and discussing subjects in which some or all of the States, or the Union and one or more of the States, have a common interest; or
(c) making recommendations upon any such subject and, in particular, recommendations for the better co-ordination of policy and action with respect to that subject, in shall be lawful for the President by order to establish such a Council, and to define the nature of the duties to be performed by it and its organization and procedure.
Finally, the Council came into being in on 28 May 1990 on recommendations of the Sarkaria Commission and also on the directives given by the Supreme Court in Dabur India Limited v. State of UP AIR 1990 SC 1814. The council helped bridge the trust deficit between the Centre and the states. If not always a problem solver, it at least acted as a safety valve.
The eleventh meeting of the Inter-State Council (ISC) held on 16 July 2016, after a gap of a decade made it evident that the Government of India intended to strengthen it as the most important to revisit Centre-state and inter-state relations and discuss policies. The meeting of the Council hinted that the Centre was willing in principle to discuss and implement some of the Punchhi Commission’s recommendations on Centre-state relations, broadly falling under legislative, administrative and financial heads. To recall here, the Government of India had set up a commission on Centre-state relations under the chairmanship of former Chief Justice of India, Justice M M Punchi on 27 April 2007. The Commission submitted its report on 30 March 2010 containing 273 recommendations. It is pertinent to note here that over the decades, the role of governors and, by extension, the relationship between the Centre and states headed by rival parties had both come into prominence on occasion. The recent crises in Uttarakhand and Arunachal Pradesh had also put similar instances. Expectedly, number of chief ministers had much to say about adventurism by governors at the meeting of the Council.
The meeting also discussed the implementation of the interlinking of rivers project, devolution of powers and autonomy to Panchayati Raj Institutions and creation of an integrated domestic market, i.e. without any inter-state barrier. However, on the issue of governor, states like Bihar, Gujarat and Haryana differed with 19 states on the eligibility criteria for appointing governors. Bihar wanted abolition of the post, whereas, Gujarat and Haryana favored the existing rules and regulations. On the other hand, Punjab wanted that the state government shall be consulted before appointing governor. But all the states agreed that politicization of the post of governor should immediately be stopped.
Considering the controversy raised after the appointment of the Chief Ministers in Goa and Manipur, most of the states were of the view that 5-30-days period should be given to prove majority on the floor of the Assembly. Governor should follow the interpretation made by the Supreme Court before ordering prosecution against a member of the Council of Ministers under section 197 Cr.P.C. and should not be bound by the advice of the Council of Ministers. Seven states including UP and Punjab opined that the Governor should not disregard the advice of the Council. Most of the states agreed that for deployment of security forces in states should be the prerogative of the Centre. So far as invoking Article 356 was concerned, Punjab said that it should be scrapped. Though there was some disagreement on certain issues, the meeting did give a signal that both the Centre and states are reiterating to strengthen the Inter-State Council so that it becomes able to achieve the goals set by the Constitution.
Another step in this direction has been taken in November 2017 in the form of reconstituting the Council. According to a gazette notification, the Union ministers who will be members of the reconstituted Council are the Ministers for Home, External affairs, Finance, Road transport, Social justice and Empowerment and Defence. Chief ministers of all states and Union territories having legislative assemblies will also be members of the council. Eight other Union ministers have been made permanent invitees to the council. They are the Ministers of Commerce, Food, Food Processing Industries, Tribal Affairs, Human Resource Development Petroleum and Railways. The Standing committee of the Inter-State Council has also been reconstituted under the chairmanship of Home Minister. Four Union ministers and seven chief ministers are members of the new standing committee of the council. It will recommend matters for consideration of the council, process all matters pertaining to Centre-state relations before they are taken up for consideration in the council. It will also monitor the implementation of decisions taken on the recommendations of the council and consider any other matter referred to it by the council.
It is expected that the newly reconstituted Inter-State Council along with the iconic body, the NITI Aayog) would be striving hard to address the issues and concerns to ensure that not only cooperative but competitive federalism and competitive sub-federalism, as perceived by the Government are also strengthened.
Competitive federalism is in fact, the relationship between the Centre and states or between states, which may also be referred to as vertical and horizontal competition respectively. With the advent of globalization and economic liberalization in the post-Cold War era, the idea of competitive federalism assumed greater significance considering the a free-market economy, the endowments of states, available resource base and their comparative advantages which could foster a spirit of competition. States need to compete among themselves and also with the Centre for benefits. Increasing globalization, however, made the already existing inequalities and imbalances between states starker. This gave rise to concerns about states’ freedom to formulate their own growth policies. A serious question was also raised that the greater is the competition, the lesser will be cooperation, however, it should be made crystal clear that India needs a mix of both cooperative and competitive federalism. This is in fact, cooperation in political terms while competition in economic ones.
Very recently, the idea of competitive sub-federalism has been mooted which means competition and development at the level of cities making them the real drivers of growth. The Economic Survey 2016-17cites Jane Jacob, ‘All through organized history, if you wanted prosperity you had to have cities. Cities are places that attract new people with new ideas.’ According to the Census 2011 about 380 million people live in about 8000 cities/towns, at least 53 of which are home to over 1 million people. Urban Indians constitute about 1/3 of the total population but contribute to about three-fifths to the GDP. Therefore, cities need to be entrusted with responsibilities and should be empowered with resources. The Survey further writes that the cities should be encumbered by accountability to make them effective vehicles for unleashing dynamism so that to competitive federalism India can add and rely on competitive sub-federalism.
Thus, whether it is cooperative or, competitive federalism, one thing is for sure that the States should be allowed to chalk out their programmes and schemes with greater financial strength and autonomy, while observing financial prudence and discipline. According to the recommendations made by the Fourteenth Finance Commission (FFC), the Centre will now devolve 42 per cent from the divisible pool to States, an increase of 10 percentage points. This step appears to be in tune with the agenda of seeking a mix of cooperative and competitive federalism.