New Delhi: As Punjab withdrew its general consent to the Central Bureau of Investigation (CBI) to probe cases in the state earlier this month, it signalled increasingly fractious Centre-state ties, with opposition-ruled states chipping away at the edifice of Prime Minister Narendra Modi’s ‘cooperative federalism’ mantra.
This is not the first time that the Centre-state relationship in India has turned testy.
In the past, it necessitated setting up of two high-level commissions — one led by retired Supreme Court judge, Justice R.S. Sarkaria in 1983, and the second by former Chief Justice of India, retired Justice M.M. Punchhi in 2007 — to examine this relationship and suggest changes.
But the friction has never been as stark as in recent times.
From resisting the Modi government’s recent legislations in the farm sector to protesting the Centre’s stringent rules to fight Covid-19, to demanding their share of GST compensation, many opposition-ruled states have been at loggerheads with the Centre in recent months, accusing the latter of trying to usurp their power.
‘Centralisation of power has created friction
With a dominant political formation at the Centre, which believes in more and more centralisation of power, the earlier ‘give and take’ equation between the Centre and states, including the opposition-ruled ones has given way to a more hardened stand by the states, leaving little elbow room to negotiate, say analysts.
The recently enacted farm legislation is a clear instance of this. Accusing the Centre of not consulting them, three opposition-ruled states — Punjab, Rajasthan and Chhattisgarh — have passed their own bills to amend the central Acts and in the process make them ineffective.
These states argued that agriculture is a state subject and they are well within their rights to bring their own law. This stand has now opened the doors for more acrimony with the Centre.
Former Union minister Y.K. Alagh, who was a member of the erstwhile Planning Commission, says if you bring good legislation like the three farm laws, which are in concurrent list, through an ordinance and without any discussion with states, they are bound to oppose it.
“Instead, the Centre should have said that the laws will be implemented next year, after it had readied a proper roadmap. Take Direct Benefit Transfer. When you know that there are many farmers who do not have Aadhaar, the whole purpose of empowering them gets defeated,” says Alagh.
The withdrawal of general consent to CBI for probing cases in the state is another instance. Accusing the investigation agency of running political vendetta, eight states — Punjab, West Bengal, Rajasthan, Jharkhand, Maharashtra, Kerala, Chhattisgarh and Mizoram — have withdrawn consent to the agency to probe cases in their respective state.
Alagh says the way Centre-state relations are heating up, it will impact governance in the country.
“Especially on internal security matters, which are prerequisites of overall growth. CBI is the prime investigating agency of the country and it not getting clearance for investigating cases in half of the country is ridiculous. It imperils our safety,” he says.
“The central government has to be very careful in such matters.”
Former home secretary G.K. Pillai, however, feels it will be unfair to blame states as the CBI itself has got politicised in recent times. “It has lost its credibility. The onus is on the Centre to take the states along and enhance their confidence in such central agency,” he says.
It’s ironic in some ways that the equation between Centre and the states, especially the opposition-ruled ones, is turning bitter under the leadership of PM Modi, who has been one of the most vocal advocates of cooperative federalism, especially during his tenure as Gujarat chief minister.
Asked about the increasingly fractious equation, BJP Rajya Sabha MP Rakesh Sinha says the states’ responses are against the principles of federalism.
“GST law was framed after due consultations with states. When a new law is enacted, there is bound to be teething issues initially. On the farm laws, some states are passing law as a political gimmick. In the process they are harming the interest of farmers at large,” he says.
Sinha adds that the main problem is that some political parties are finding it difficult to digest the emergence of BJP.
No body to foster coordination, manage bargaining & conflict resolution
According to M. Govind Rao, who was a member of the 14th Finance Commission, the Centre-state relationship keeps oscillating between this end and the other, and it is not specific to the Modi government.
“A part of the reason is that the power structure between the Centre and states is asymmetric,” says Rao.
“After Independence, for a long time, there was one political party in power at both Centre and in states and there was not much friction. Because of that, the engagement between the Centre and states was informal and no formal rules of engagement developed. With centralisation of power at the Centre and with a number of states governed by opposition parties, the friction has increased,” he adds.
It was to address these very issues that the Sarkaria and Punchhi commissions were set up. But many of the recommendations made by the two panels were not implemented properly.
The Sarkaria Commission, Rao says, suggested setting up of an Inter-State Council Secretariat. But as it was set up within the Union home ministry, it ceased to be an independent body to foster coordination, manage intergovernmental bargaining and conflict resolution.
“Today we don’t have an independent institution to resolve Centre-state and inter-state issues,” Rao adds.
Sinha, however, argues that it was erosion of federalism that led to the formation of Sarkaria and Punchhi Commission. The reason for that was the suspension of the state governments by the Centre, including the N.T. Rama Rao government in Andhra Pradesh.
“During the Congress regime, there was strain because the government was working in an authoritarian manner. In Modi’s regime, non-NDA states have been given the freedom to act according to their own mandate,” he says.
‘Centre should not think devolving taxes to states is charity’
Release of funds to states has also become a major flashpoint in the Centre-state relationship, particularly at this time of pandemic.
Opposition-ruled states have also been up in arms against the Centre on the goods and services tax (GST) issue. They have accused the Centre of going back on its promise to fully compensate the states for any loss in revenue they incur for the first five years of the GST regime.
The states’ vehement protests have now forced the Centre to agree to borrow a part of the amount and pass it on to states.
The states have been also demanding release of more funds from the Centre to tide over the economic hardship unleashed by the pandemic. Some of the decisions taken by the Centre to check the spread of Covid-19 like closing of liquor shops had met with a lot of resistance from states like Punjab because of the loss of revenue. The Centre was forced to rescind the order after such pressure.
“It’s the lowest ebb of the fiscal federal relationship in recent times,” says Haseeb Drabu, former finance minister of the erstwhile state of Jammu and Kashmir.
According to Rao, the Centre should not think that devolving taxes to states is a charity. “It is based on the recommendation of the Finance Commission, which is mandated to resolve the mismatch between revenue assignments and expenditure responsibilities,” he says.
The 6th Finance Commission, Rao adds, had stated that the resources belong to the nation and should be applied to areas in need.
“The tendency to see this as a giveaway had always existed as we often hear the finance minister making announcements about the tax devolution and grants made according to the Finance Commission as if it is a favour,” he says.
Drabu says the big thing to watch out for will be the 15th Finance Commission’s award to states. “Already murmuring has started, especially about the proposal to get defence into the divisible pool. States are waiting for the finance minister’s announcement.”
BJP Rajya Sabha member Vinay Sahasrabuddhe, however, is of the view that many opposition-ruled states are in the habit of complaining.
“The prime minister and the home minister have always stood behind all calamity-affected states. Even during the pandemic, states have enjoyed every liberty to take a call on unlock measures. Nothing has been imposed,” he says.
Citing the example of GST, Sahasrabuddhe says, “All state FMs were taken on board at the time of every decision making. Most decisions have happened in the meetings on consensus basis. But after the meeting is over they act irresponsibly and describe the tax regime that they approved as Gabbar Singh Tax! This is rank politicisation of an administrative or policy decision.”
Impact of abolishing institutions like Planning Commission
Alagh, who was a member of the erstwhile Planning Commission, says to some extent the strenuous relationship is also because the Modi government abolished institutions like the Planning Commission, which was responsible for rule-based systems.
“There is this whole business of treating the political system in a somewhat cavalier manner. Politics has become very thinly balanced because of all this. It creates instability, which is not good,” he adds.