SHOULD THERE BE A NEW FEDERAL COMPACT BETWEEN THE CENTRE AND STATES?
Kashmir Life|March 28, 2021
In the book, Beyond Covid’s Shadow: Mapping India’s Economic Resurgence, Haseeb A Drabu makes a case and suggests an alternative. Here is an abridged version of a chapter
Haseeb A Drabu
The Covid-19 pandemic has exposed the fault lines of federalism in India like never before. The policy responses to the unprecedented crisis have not only lacked in coordination and even worked at cross purposes but have failed to leverage the strengths of the three levels of governance.

Indeed, it reached a point where the management of the pandemic has become a centre versus states issue. There is little doubt that the pandemic has exposed the Union Government’s commitment to a federal constitutional republic to a degree unmatched since its birth. This has become possible because the foundational framework of federalism and its design as laid out in the Constitution of India is not just weak but outdated.

In this essay, it is suggested that the current federal framework, which is colonial in its moorings, unionist in its ideology and patriarchal in its operations needs a complete rethink. Its instrumentalities which have evolved in the context of a closed command economy have to be redesigned to suit the needs and open regulated economy. The scope and remit of federalism has to be widened to include the newer forms of government intervention, which are aligned to the new economic structure.

THE NEW FRAMEWORK

In the new framework, the Centre should exercise leadership instead of control, and economic support instead of dominance. It is this that should form the basis of the new federal compact of the Union with states.

This is all the more important in the context of a distinct move from a republican democracy to a majoritarian one, which has far-reaching implications and consequences for the Indian nation and the nation-state; be the social compact with the people across the country or the politicaleconomic compact with states in the Union. This new compact should be based on the following four pillars:

REGULATORY FEDERALISM

The demise of the old control and command state has seen the rise of the new regulatory state in India;equally centralised, more pervasive and all-powerful. Post-1991, there has been a proliferation of “autonomous” regulatory institutions set up under Acts of Parliament in various sectors and spheres of the national and state economies. To a large extent, the direct ministerial and bureaucratic control has been replaced by indirect regulatory diktat. This regulatory state, as it is today, is nothing but an extended arm of the central government; not only in terms of the control but even in their design, the regulatory bodies are extremely Union-centric.

The states have very little role in this crucial area of public policy. The authority to set the regulatory standards rests with the Centre, while the state governments have to just report or at best monitor compliance. They don’t even have the authority to choose the combination of policies to meet the set standards. It is a wellestablished research finding that this form of delegation tends to be the least efficient form. In fact, the reverse form of delegation, in which state governments choose their own individual standards which the central government then decides how to collectively adhere to is seen to be the most efficient.

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