Cooperative and Competitive Federalism

At a Glance

• What it is Two modes of working of federalism: partnership and healthy competition among states
• Institution NITI Aayog, set up in 2015 in place of the Planning Commission
• Cooperative tools CM meetings, subgroups, GST Council, Inter-State Council
• Competitive tools State rankings and indices
• Exam link UPSC Prelims, Polity: Systems of Government

Where Does It Fit?

This is the last topic of the category on Systems of Government. Granville Austin called Indian federalism cooperative federalism. Recent institutional changes, especially the replacement of the Planning Commission by NITI Aayog and the creation of the GST Council, are described as tools of cooperative and competitive federalism.

Cooperative Federalism

Cooperative federalism is a model in which the Centre and the states work as partners and share responsibility instead of acting in rigid separation. Austin used the phrase to describe Indian federalism because the Constitution created a strong Centre but did not reduce the states to mere agencies. Articles on Centre-state coordination, such as the Inter-State Council under Article 263, the Finance Commission and, since 2016, the GST Council, give institutional form to it. The GST Council is described as the first constitutional federal body vested with powers to take all major decisions relating to GST, with the vision of the highest standard of cooperative federation.

NITI Aayog was constituted to actualise cooperative federalism. It was set up in 2015, in place of the erstwhile Planning Commission, on the premise that strong states make a strong nation. It is built on the foundations of an empowered role for the states as equal partners in national development, a knowledge hub, and a collaborative platform for monitoring progress and bringing together ministries at the Centre and in the states. It acts as a platform for bringing states together as Team India.

Steps Taken to Foster Cooperative Federalism

1. Meetings between the Prime Minister or Cabinet Ministers and all Chief Ministers.
2. Subgroups of Chief Ministers on subjects of national importance.
3. Sharing of best practices.
4. Policy support and capacity development of state and Union territory functionaries.
5. The Aspirational Districts Programme for the development of backward districts.
6. Theme-based extensive engagement in various sectors.
7. Framing model laws for land leasing and agriculture marketing reforms.
8. Area-specific interventions for the North-Eastern and Himalayan states and island development.

Constitutional Provisions for Cooperation

The Constitution contains several provisions to secure cooperation and coordination between the Centre and the states. Parliament can provide for adjudication of any dispute on the use, distribution and control of waters of an inter-state river or river valley. The President can establish under Article 263 an Inter-State Council to investigate and discuss subjects of common interest between the Centre and the states, and such a council was set up in 1990 on the recommendation of the Sarkaria Commission, which was the most important of its recommendations that the Central government implemented. Full faith and credit is to be given throughout India to the public acts, records and judicial proceedings of the Centre and every state. Parliament can also appoint an authority for inter-state freedom of trade, commerce and intercourse, but none has been appointed so far.

Competitive Federalism

Competitive federalism is a mode of federal functioning in which states are encouraged to compete with one another to improve their performance. NITI Aayog promotes it by facilitating improved performance of states and union territories and encouraging healthy competition through transparent rankings in various sectors, along with a hand-holding approach. Indices launched by it include the School Education Quality Index, State Health Index, Composite Water Management Index, Sustainable Development Goals Index, India Innovation Index and Export Competitiveness Index. It releases monthly delta rankings of the Aspirational Districts. Ranking states on quantitative and objective criteria encourages them, and even districts, to improve their performance.

Tensions and the Balance

The two work together in NITI Aayog’s approach, which pairs structured support with transparent rankings. Tension areas in Centre-state relations include the role of Governors, imposition of President’s Rule for partisan interests, deployment of Central forces in states, reservation of state bills for the President, discrimination in financial allocations and the management of All-India Services. Both modes depend on resolving these tensions through consultation.

Why Is This Topic Important?

• Current topic Frequently linked to NITI Aayog and GST
• Mains keyword Used in federalism and governance answers
• Link to Centre-state Prepares for category 22

What Came Next?

The next category covers the President of India, beginning with qualifications and election.

Key People and Terms

• Team India NITI Aayog’s framing of Centre and states together
• Aspirational Districts Backward districts programme
• Delta rankings Monthly performance ranking
• Hand-holding Support alongside rankings
• Inter-State Council Article 263 forum

Exam Corner

Mains Angle

Questions on this topic usually ask about their complementarity and limits. Use these points to add depth.

• Institutions NITI Aayog, GST Council, Inter-State Council
• Incentives Rankings encourage performance
• Tension areas Governors, President’s Rule, financial allocations
• Pairing Structured support with transparent rankings