UPSC Daily Editorial Analysis | Centre With States | 9th August, 2022

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What the article is about:
  • The article talks about recent comments about “cooperative federalism” in India by honourable prime minister.
 
Relevance:
  • GS2: Federalism, cooperative federalism, centre- state relations, Inter-state relations.
 
Analysis:
  • At recent meeting of NITI aayog’s governing council meeting PM narendra modi commented that country’s federal structure, shaped by “cooperative federalism” had emerged as a “model for the world”.
 
Cooperative federalism: 
  • Cooperative federalism, also known as marble-cake federalism, is defined as a flexible relationship between the federal and state governments in which both work together on a variety of issues and programs.
 
Sore points between union and states in recent times:
  • The Covid vaccination programme, where during the early days of second wave, centre shifted the burden of procurement and distribution of vaccine onto the states.
  • Disagreement on GST compensation fund between states and union.
 
GST compensation fund:
  • The Centre promised compensation to the States for any shortfall in tax revenue due to GST implementation for a period of five years. This promise convinced a large number of reluctant States to sign on to the new indirect tax regime.
  • As per the GST Act, states are guaranteed compensation for any revenue shortfall below 14% growth (base year 2015-16) for the first five years ending 2022. GST compensation is paid out of Compensation Cess every two months by the Centre to states.
 
Instances where cooperative federalism has been evident:
  • Union helped ease the financial stress on state owned power distribution companies.
  • On GST, all decisions are taken by council where states can openly voice their concern, and put for their demands.
 
Way forward:
  • At this critical juncture in centre- state relations, it in incumbent upon both to widen spaces for dialogue and negotiation.



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