THE WEAKENING OF COOPERATIVE FEDERALISM

The government failed to give clarity of purpose to NIT! Aayog. Centre-state relationships suffered as a result. The next finance commission faces a number of consequent challenges

- KM CHANDRASEKHAR

IN 2014, the first meeting of the newly formed NITI Aayog was held. I attended, along with the then Kerala Chief Minister Oommen Chandy, in my capacity as vice-chairman of the state planning board. Behind Prime Minister Modi's seat was a poster with the words TEAM INDIA' emblazoned in bold letters.

In his first independence day address, Modi scrapped the 64-year-old Planning Commission, which he never liked as chief minister of Gujarat. He announced, in his usual impulsive style, the formation of a new institution with no name, no prior thinking or discussion. But he intended, in his words, to forge a "new direction to lead the country based on creative thinking, public-private partnership, optimum utilisation of resources, utilisation of youth power of the nation, to promote the aspirations of state governments seeking development, to empower the state governments and to empower the federal structure". He was obviously dissatisfied with the Planning Commission's role of promoting development through the federal structure.

While the PM started with the intention of cooperative federalism for development, the abolition of the Planning Commission and state and central planning had a negative effect. The Union finance ministry gained complete control over the resources of the country. While working in the finance ministry, I recall regular conflicts with the Planning Commission about the amount of money, called 'gross budgetary support', to be set aside for development, both for central ministries and for sharing with states.

The conflict for resources used to be intense and was generally settled only at the end by diktat of the prime minister.

The planning mechanism at the Centre was replicated at the state level. Here, too, there would be conflicts between the finance departments and the planning mechanisms, be it commissions, boards or departments.