Centre-State Disputes

Why in news?

In recent years, the economic conflicts between Centre and States in India have increased and become a source of ‘persistent frictions’ in the federal system.

Why there is economic conflict between Centre and State?

• Economic reforms- New Economic Policy, 1991 changed the context of Centre-State relations from cooperative to a conflictual one.
• Mobilisation of resources- States have less autonomy over their public expenditure policies and more disputes arouse over resource sharing with the Centre.
• Policy resistance- States have resisted the Centre’s policies leading to breakdown of the give and take equation that used to govern the Centre-State relations.
  • Example- Tamil Nadu oppose Centre’s NEET (National Eligibility and Entrance Test) for admission to undergraduate medical courses.
• One size fits all approach- Homogenisation of social sector policies may not address the specific challenges faced by each State.  
• Hinders fiscal federalism- 16^th Finance Commission has recommended 45% weightage criteria to income which is not welcomed by rich States.
• Limited autonomy- States should ideally have more discretion and autonomy in regulatory institutions and central agencies, but the Centre has tried to impose its own preferences and agendas on them.
• Impact on fiscal autonomy- Both have adopted a more rigid and confrontational stance, reducing the scope for negotiation and compromise.

Cooperative federalism is a concept that emphasise the need for coordination, collaboration and consensus among different levels of government in federal system.

What are the economic consequences due to conflict?

What lies ahead?

• The inter-dependence between Centre and States must be preserved for successful implementation of laws and policies.
• The Centre should respect the State’s autonomy and discretion in various spheres.

References

1. The Hindu- Persistent federal frictions
2.  Indian Express- Constitution of 16^th Finance Commission