Corporate Federalism
Corporate Federalism
Corporate Federalism
Thus, a
federation is a new state (political system) that is formed through a treaty or an agreement between
the various units. It is a philosophy or ideology of political organization that involves a combination of
the principles of centralization, non-centralization, and power-sharing.
In a country like India, the spirit of co-operative federalism should guide the relations between the
Centre and the States on the one hand, among different States and between the States and the
Panchayati Raj Institutions and the Urban Local Bodies. [1]
Then seeds of Cooperative federalism can be traced right from the Regulating Act of 1773 which set
up a system whereby the British Government supervised the work of the East India Company but did
not take power for itself. The Government of India Act 1919 provided for a federal India, however
superficial, by envisaging a dual form of government called 'dyarchy.' The same was sought to be
achieved by the Government of India Act, 1935.
From 1946 to 1950, the leaders of India's Freedom Movement and the founding fathers of the
Constitution had the task of drafting the Constitution. The members of the Constituent Assembly
aimed to build a united polity out of a highly fragmented and segmented society, which they
attempted through strengthening the �Union� or federal order, by shifting residuary powers to it.
[3]
Many politicians thought that only a strong center could effectively drive economic development and
ensure equity. Hence the trend generally was toward ever more centralization under the Congress
Party from independence to the 1980s. During the 1980s, however, Union-state relations became
more rancorous, the Congress party began to decline, and a coalition government, the National
Front, assumed power in New Delhi as a result of the 1989 elections in part because centralized
federalism driven by a monopoly party for some 40 years had fallen far short to achieve objectives
outlined in the Constitution. Since 1989, coalition governments at the Centre, proliferating regional
and state parties across the country.
Redistribution of responsibilities through devolution of powers from the Union to the states and
from the states to the Panchayats and allocation of financial resources to the state domain is
facilitating the attainment of the objectives of the Constitution: unity, social justice, and democracy.
All this indicates steps in the direction of cooperative federalism. [4]
Cooperative federalism is the horizontal relationship between union and states and shows neither is
above the other. Indian constitution has incorporated instruments to ensure co-operation between
the center and states to ensure that cooperation is necessary for the proper growth of the country.
Therefore, few are the listed provision in the Indian constitution which depicts the core relationship
between center and state.
7 th schedule
It demarcates central, state, and concurrent lists based on the principle of subsidiarity. Residuary
power has been kept with the center. Article 249[5] provides authority to the parliament to make on
those subjects which are under state jurisdiction if the resolution passes in-state council with a two-
thirds majority.
Zonal council
These are statutory bodies established under the State reorganization act of 1956 to ensure
coordination. It provided for 5 zonal councils, one for each north, south, east, west, central. The
northeastern council has been created under a separate act.
Cooperative Federalism in Recent Policies
NITI AYOG
NITI AYOG' or the National Institution for Transforming India is a Government of India policy think-
tank established by the Narendra Modi government to replace the Planning Commission. The main
emphasis of NITI AYOG is to bring the effect over center and state relationship. NITI Aayog provides
relevant strategic technical advice at the center and state levels, dissemination of best practices
within the country as well as from other nations, infusion of new policy ideas, it ensures that India is
an active player on the global commons, etc. In this way, it will function in close cooperation,
consultation, and coordination with the Ministries of the Central Government and State
governments. It will provide critical directional and strategic input to the development process,
focusing on deliverables and outcomes.
GST
GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer.
GST was passed by the 101st amendment, 2016 and it came into effect on April 1, 2017. The main
agenda behind the whole concept of GST is �ONE TAX ONE NATION'.
The free movement of goods and services will give a fillip to employment opportunities and give
consumers a wider choice and better prices. This economic integration will not only boost economic
growth but also bind the nation better. It is an idea whose time has come and would not have
materialized but for the spirit of co-operation displayed by the Centre and the States.[7]
Although public order and public health are subjects of the States as per the Indian Constitution, the
Centre has used the DM Act to effectively bypass States and assume complete control. Then some
fissures are seen in funding policies as the Centre declared that corporations donating to PM-CARES
can avail CSR exemptions, but those donating towards any Chief Minister's Relief Fund cannot. This
directly disincentivizes donations to any Chief Minister's Relief Fund; diverts crores in potential State
revenues to PM-CARES; and makes the States largely dependent upon the Centre.[8]
Conclusion
Together We Are More Stronger
Federalism is a concept which needs to be adopted in practice and spirit rather than a letter. In this
article, we have analyzed the importance of cooperative federalism since time immemorial and to
strengthen it I have some suggestions to give that are as follows:
To make collaborative federalism work, more institutional reforms are required to eliminate
the possibility of manipulation by ad hoc political bargaining or by welfare-reducing strategic
behavior by the governments at different levels.
In an era where the party system is fragmented along federal lines, the need is still felt to
include State parties in federal coalitions, even when technically not necessary. The way
alliance partners are treated thus becomes an important element in federal functioning.
State bills should be taken on a priority list for the assent of the President as the speedy
procedure of this will foster more cooperation among state and center.