The Country's federal structure has three gaping holes

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 The Country's federal structure has three gaping holes

Read more on - Polity | Economy | Schemes | S&T | Environment


  • India's federal structure: There have been many recent structural changes in the way the Union of India is built, and some of them caused a lot of dismay. The pandemic accelerated the changes.
  • Cooperative Federalism: The claim was that from 2014 to 2019, many positive steps were taken for cooperative federalism like NITI Aayog, GST Council, and restructuring of government schemes. States were supposedly involved in all.
  • Three major troubles: That promise is shaken to the core now.
    1. GST promise broken - All states joined in as they were treated like consenting adults, not to be tutored or guided by the Centre. In 2020, the Centre simply walked away from its promise of Compensation Cess (to make up for revenue shortfalls). The states are hit hard, as pandemic has already shrunk their revenues. GTR (gross tax revenues) was expected to grow by 12% in 2020-21 (B.E.) and it has fallen sharply from Rs.6.6 trillion (Apr-Aug 2019) to Rs.5.0 tr (Apr-Aug 2020). Add to this the suboptimal stimulus package of the Union govt. and bigger states face a demand collapse.
    2. Agriculture and labour bills - These extremely crucial bills that impact entire sectors of citizens were passed in the Parliament hurriedly, with zero Committee oversight. Agriculture is a state subject, and Labour laws are a concurrent subject. Sadly, the taxe from grain markets will now end right when economy is down and GST dues are not being paid.
    3. Change in educational syllabus - Ministry of Education has dropped many crucial subjects from the Class 9-12 books, including "democracy in diversity", "federalism", "secularism", "citizenship", etc. No stakeholder discussions happened.
  • Role of the FFC: Given these fractures in Centre-State relations, the role of the 15th Finance Commission becomes crucial. Its terms of reference (TOR) need amendment, and health infra funding needs to be added. States must get the 42% share of divisible tax pool (as earlier), and also a share of national commons like Telecom spectrum, and Disinvestment proceeds. 
  • Summary: Finally, the entire concept of fiscal deficit and debt now needs a relook, given the pressing circumstances.
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                                                                                                                                                                                                                            PT's IAS Academy: The Country's federal structure has three gaping holes
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