Model Answer

Introduction

The Centre-State relations in India have seen notable changes recently, particularly in the context of cooperative federalism and fiscal management. The 15th Finance Commission’s recommendations, the implementation of the Goods and Services Tax (GST), and the contentious farm laws have all influenced this dynamic relationship.

Recent Changes Introduced by the Union Government

1. 15th Finance Commission’s Recommendations: The Centre has implemented the recommendation to reduce the states’ share in central taxes from 42% to 41%. This adjustment acknowledges the fiscal challenges while considering the needs of newly formed Union Territories like Jammu & Kashmir .
2. Introduction of GST: While GST aimed to unify the Indian market, it has led to financial stress for states, particularly due to delays in compensation payments. Several states have expressed concerns over these delays, which strain their budgets .
3. Farm Laws: The controversial farm laws enacted by the Centre aimed at agricultural reform but faced significant backlash from states like Punjab and Haryana, which argued that agriculture is a state subject and that these laws infringed upon their legislative powers .
4. Establishment of NITI Aayog: The transition from the Planning Commission to NITI Aayog was intended to promote cooperative federalism. However, some states feel that decision-making remains overly centralized .
5. Increase in Centrally Sponsored Schemes: The rise in centrally sponsored schemes has reduced the financial autonomy of states, as they are often required to contribute funds, limiting their flexibility in local development priorities .
6. Direct Benefit Transfer (DBT) Scheme: The DBT has centralized welfare disbursement, reducing state control over social welfare programs, which may not always align with local needs .

Measures to Build Trust and Strengthen Federalism

1. Strengthening the Inter-State Council: Revitalizing this council can foster dialogue on policy decisions and disputes, ensuring inclusiveness in governance .
2. Timely GST Compensation: Ensuring timely compensation will help maintain fiscal stability and trust between the Centre and states.
3. More Autonomy in Centrally Sponsored Schemes: Empowering states to tailor schemes according to local needs will enhance efficiency .
4. Cooperative Federalism through NITI Aayog: Involving states in key decisions will promote shared ownership of national development goals .
5. Resolving Disputes through Consensus: A collaborative approach to resolving issues like river water-sharing disputes can reduce friction .
6. Constitutional Clarity on State Subjects: Clearly defining powers and responsibilities will minimize conflicts and enhance cooperative federalism .
7. Fiscal Empowerment of States: Revisiting the 15th Finance Commission’s recommendations to provide greater fiscal autonomy will ensure balanced development.
8. Collaborative Policy Formulation: Engaging states in the early stages of policy formulation will foster a sense of ownership and cooperation.

Conclusion

In conclusion, nurturing India’s federal structure through mutual trust and cooperation is essential for effective governance. Strengthening Centre-State relations through dialogue, financial autonomy, and clear constitutional definitions will enhance the foundation of Indian democracy.