At the 10th meeting of the NITI Aayog Governing Council last Saturday, Prime Minister Narendra Modi underlined the need for “the Centre and all the states to come together and work together like Team India”, to achieve the Viksit Bharat goal by 2047, if not earlier. Economists may differ on the matrix of development, and whether India is actually poised to accomplish the median or even per capita income, and other parameters to be “Viksit” by the 100th year of Independence. Leaving that debate aside, the PM’s focus on speeding up the country’s all-round and all-inclusive development, and making states active partners in the process is unexceptionable. But the NITI meeting reflected a strong feeling of deprivation among several states. While the participation of chief ministers was underwhelming, many who were present denounced what they perceive as an attempt by the Centre to undermine the constitutional principles of federalism.
Tamil Nadu chief minister MK Stalin reportedly said, “It is not ideal in a cooperative federal structure that states should constantly have to fight, argue, and approach courts to receive their rightful share of funds.” On its part, however, the Centre’s policies are underpinned by a courage of conviction. It has several achievements to show, especially in regard to efficient and targetted transfers to the needy, and on the infrastructure front. It has been making deliberate efforts to help the states meet their multiple development objectives via policies like reform-linked long-term capex loans, and prompt release of funds from the divisible tax pool.
The Centre believes that issues that continue to afflict the country even nearly eight decades after Independence like poor sanitation and healthcare, decrepit primary and secondary education infrastructure, etc. need solutions that it can best devise and implement. However, its policies are also an offshoot of a strong ideological resolve to bring about greater homogeneity among all regions of the diverse nation, with wide developmental disparities. In practical terms, this manifests as tools to influence state-level policies, sometimes to the extent of blurring the separation of powers outlined in the Constitution. Political factors are also at play.
There are allegations of undue use of assorted agencies and gubernatorial posts to besmirch opposition-ruled state governments and even put a spoke in their wheel. Several of these disputes have reached the Supreme Court (SC). The apex court’s rulings like the one where it invoked Article 142 to accord the status of law to the 10 Bills that were lying for years with the Tamil Nadu governor, and its recent reprimand of the Enforcement Directorate are salient. A case filed by the Kerala government against the cap imposed by the Centre on its borrowings, arguing public debt of states is a State List entry, is being considered by the SC. Tax devolution to the states was just 33.3% of the Centre’s gross tax revenue in FY25, and a similar fraction is budgeted for FY26 too, implying an artificial constriction of the divisible tax pool where states have a legitimate 41% share. States’ “own tax revenues” aren’t growing at the desired pace, despite their large spending obligations. The riders to the release of funds under centrally sponsored schemes too worry many states. The Centre is well within its prerogative to enforce fiscal discipline, and coax states to implement its policies. But it will need to do much more to win the states’ trust.