17 Nov 2022 Undermining federalism, eroding States’ autonomy
Significance for Prelims: NITI Aayog
Significance for Mains: Co-operative Federalism; Federalism; Way forward for Cooperative federalism.
News: National Democratic Alliance Government (NDA) replaced the Planning Commission of India with National Institution for Transforming India (NITI Aayog) to promote cooperative federalism.
India’s move towards co-operative federalism:
- Recommendations of Fifteenth Finance Commission: Recommended special grant to three States so that tax devolution in absolute terms in 2020-21 should not be less than the devolution amount received by these States in 2019-20.It recommended ₹7,735 crore grants for nutrition. It recommended sector-specific grants and State-specific grants amounting to ₹1,29,987 crore and ₹49,599 crores, respectively.
- Union government often meet revenue expenditure through Extra Budgetary Resources (EBR), but such borrowings are not reflected in the Central Government Budget. So, it is totally unjustified to treat State corporations’ off-Budget borrowings as States borrowings.
- Constitution of National Institution for Transforming India (NITI Aayog) after replacing the Planning Commission.
Instances that show that policies of central government eroded the autonomy of the States and undermined federalism:
- Union Government has undermined the stature of the Finance Commission by not accepting its recommendation of tax devolution to states.
- ‘Award and package’ tradition of grants: Centre government treat all Finance Commissions recommendations with respect to transfers to States as an award and a package.
- The inefficiency of NITI Aayog in promoting Co-operative federalism: Major objective of NITI Aayog is to promote cooperative federalism. But, since its constitution, it has not taken major steps to promote cooperative federalism.
- Treating off-Budget borrowings as government borrowings retrospectively from 2021-22: The decision to adjust off-Budget borrowings against the borrowing limits under Fiscal Responsibility and Budget Management (FRBM) in 2022–23 and subsequent years, starting with borrowings serviced from State budgets beginning in 2021–22, is against all standards.
- Increase use of cesses and surcharges to garner revenues, but these are not shareable with the States under the Constitution: In the Budget estimates for 2022-23. cesses and surcharges share in the Union gross tax revenue increased to 20% from 13.5% in 2014-15. The fifteenth Finance Commission recommended States’ share of 41% in the Central taxes. But, because of higher cesses and surcharges states are getting only a 29.6% share.
- Union government is denying States their due share as per the constitutional provisions: The C&AG ‘s Audit Report for 2018-19 observed that out of the ₹2,74,592 crore collected from 35 cesses only ₹1,64,322 crore credited to the dedicated funds and the rest was retained in the Consolidated Fund of India.
- Increase in Central Sponsored Schemes led to the loss of autonomy of states: The government of India grouped the Centrally Sponsored Scheme under certain broad umbrella heads. Also, with an increase in the State’s share in the number of CSSs burden of the states got increased. Since most CSS operates in the State list subjects so, States lost their autonomy.
- Recent incident: The Centre has enacted three farm laws though agriculture is a state subject, the states were not even consulted while introducing these Bills. Now, these farm laws have been repealed.
Way forward:
- Formation of a high-powered intergovernmental group consisting of representatives from the state as well as the Central government: The functioning of this group is to guide states to observe strict fiscal discipline, resist stock of off-budget transactions, and proper timetable for achieving debt sustainability.
- Centre and states should work together to ensure that the legislations of the Union and the States are consistent with respect to FRBM Act.
- Various Committees recommended that the Government of India should restrict the Centrally Sponsored Schemes (CSS) to a few areas of national importance.
- Government should act on the recommendations of the Sub-Committee of Chief Ministers appointed by NITI Aayog which is the reduction in the number of schemes and the introduction of optional schemes.
Conclusion: Centre should seriously move from the Indian federation’s coercive to cooperative federalism.
Further reading:
- Five Years Plan
Prelims Question(2019):
With reference to the Legislative Assembly of a State in India, consider the following statements:
1. The Governor makes a customary address to Members of the House at the commencement of the first session of the year.
2. When a State Legislature does not have a rule on a particular matter, it follows the Lok Sabha rule on that matter.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Mains Question(2021)
Q1.How have the recommendations of the 14th Finance Commission of India enabled the states to improve their fiscal position?
Source: The Hindu
Article: Undermining federalism, eroding States’ autonomy(B. Vinod Kumar)
Article Link:
https://www.thehindu.com/opinion/op-ed/undermining-federalism-eroding-states-autonomy/article66141425.ece
Yojna IAS daily current affairs eng med 17th November
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