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Assess State of Cooperative Federalism with an Open Mind

JUNE 17, 2019

By Naresh Minocha, Consulting Editor

"WE have invited her with all due respect and I am still hoping that she will accept my personal invitation and attend the meeting on June 15th and give us the idea as to how to improve Niti further".

Niti Aayog Vice-Chairman Rajiv Kumar stated this while responding to West Bengal Chief Minister Mamata Banerjee's decision to boycott NITI Aayog's (NA's) fifth Governing Council meeting (GCM).

She should have changed her mind and attended the meeting. The least she can do even now is to submit a detailed paper on weakened Cooperative Federalism (CF) to him.

The suggested paper should list flaws in NA's working as compared the performance of National Development Council (NDC) and Planning Commission. These two institutions, created by Jawaharlal Nehru, were wound up by Modi Government in 2015.

Other Chief Ministers from Opposition-ruled States should have latched on to Dr. Kumar's offer to give suggestions to improve NA's working.

Mamata didi has indeed erred by writing to Prime Minister Narendra Modi, who is also NA Chairman, that she would not attend the meeting. Boycott and sulk is not the solution. Participation in the meeting to put hard facts about damage done to CF is the way to go.

She should take a leaf out of late Selvi J. Jayalalithaa's book. The latter, as Tamil Nadu Chief Minister, utilized NDC forum to pinpoint injustice inflicted on States. Recall how she walked out of NDC 57th meeting during December 2012 after not being allowed to speak beyond allotted 10 minutes.

According to India Today story, she said restricting CMs' speeches to 10 minutes was a method devised by the government to stifle the voice of Opposition-ruled states. The Centre could not treat chief ministers like school children, she said. "If they did not want us to speak, they should not have called us to Delhi", said Jayalalithaa.

She & Narendra Modi, as Gujarat Chief Minister, had both cornered the UPA Government for step-motherly treatment it gave to Opposition-ruled States. On earlier occasions too, the duo had utilized NDC as platform to attack UPA for hurting CF.

At its 56th meeting held during October 2011, Jayalalithaa pressed alarm over "attempts by the Centre to weaken the States with too much interference thereby reducing them to the status of glorified Municipal Corporations".

Jayalalithaa's speech was read out by Finance Minister O. Panneerselvam in her absence. She, like Mr. Modi, made best use of NDC to make strong case against Centre's attempt to weaken & humiliate States.

Tamil Nadu Government has published a 580-page book containing Jayalalithaa's letters to Prime Minister penned during May 2011 to December 2014. These include 34 letters she wrote to Mr. Modi 2014.

The book, coupled with another compilation of her speeches, is telling commentary of sorry state of CF. West Bengal Government should also compile letters that Didi has written to Modiji. It would be interesting to know from her how many replies she got and how many issues remain pending. Why can't all chief ministers issue an yearly status report on their pending requests with the Centre? Do citizens not have right to know the actual working of Team India?

Imagine how powerful impact Didi would have created at 5thGC had she attended it to quote Modi da's speeches delivered at NDC and at Inter-State Council (ISC).

Before citing facts to show what is wrong with NA and suggest how to revive Team India Bonhomie, recall what Didi said recently.

In her letter to PM reported by media on 7th June, she stated: "Given the fact that the Niti Aayog has no financial powers and the power to support state plans it is fruitless for me to attend the meeting of a body that is bereft of any financial powers".

Didi observed: 'The experience of last four-and-half years we had with Niti Aayog brings me back to my earlier suggestion to you that we focus on Inter-State Council constituted under Article 263 of constitution, with appropriate modifications to enable ISC to discharge its augmented range of functions as the nodal entity of the country".

She added: "This will deepen cooperative federalism and strengthen federal polity. May I also reiterate that the National Development Council, which has been given a quiet burial, may also be subsumed within the broadened constitutional body of the Inter-State Council".

Apart from writing letter, she told reporters that it is "simply useless" to attend the meet as its agenda is fixed by the Centre without consulting the states. She believes Planning Commission (PC) was more effective than NITI Aayog and sought its rebirth.

Didi told reporters: "I have also written a letter to like-minded chief ministers of opposition parties raising the issue of planning commission be brought back".

Unfortunately, her two letters are not available in public domain. We thus don't know whether she has lined up facts to lend credence to her views and demands.

A comparison of information about CF as it existed under UPA and it exists under Modi Rajya shows Didi's anguish & anger is justified. Start with NA's Governing Council, which replaced NDC.

NA operates governing council (GC) in highly opaque manner. Unlike PC, it has not created a link/category on its website where speeches of all Chief Ministers are displayed along with the ones given by PM and NA Vice-Chairman. PC created weblinks for public to access all speeches delivered at each NDC meeting.

NA should thus emulate PC's transparency by looking at NDC pages available at PC's archived website.

Unlike NDC, GC does not incorporate the key points mentioned by Chief Ministers in the minutes of its meeting. In GC minutes, NA merely states: "The gist of the oral submissions and the written speeches of the Chief Ministers (CMs) are taken on record". Even though GC agenda and minutes are not classified documents, yet NITI does not upload them on its website.

PC compiled summary records of 50 NDC meeting into five volumes. The compilation of records of last seven NDC meetings is not available in public domain.

The height of NA's obsession for secrecy can be gauged from the fact that it didn't even share with CMs full report of task force on elimination of poverty. TF, which failed to agree on a "working definition" of poverty, submitted its report to PM during July 2017. NA provided only "synopsis" of the report to CMs as annexure to agenda for 3 rd GCM held in April 2017.

Modi Government's aversion to criticism is perhaps the main reason for opaque governance. It should ponder whether denial of such vital documents is impoverishing national discourse on challenges of national development. Is unwarranted secrecy on poverty a big flow to participatory democracy?

Replacement of PC & NDC with NA & GC has hindered enrichment of official discourse on sector specific issues. In the era of five year plan that Mr. Modi ended, PC used to constitute working groups (WG) for each department or key issue. Their reports used to be analyzed & enriched by a few steering committees.

In the last 12th five year plan, about 100 WG submitted reports containing valuable ideas and data. Such well-coordinated bottoms-up approach to planning is now a matter of history.

It is no wonder then that certain CMs are feeling the pain of unwarranted winding up of PC.

As reportedly put by Kerala Chief Minister Pinarayi Vijayan at 5th GCM, "I hope that my colleague Chief Ministers would agree with me that NITI Aayog in the present form has not played the much expected role of a facilitator in the last four years. There is a growing realisation that it is perhaps not a substitute for the erstwhile Planning Commission."

He also pointed out that with scrapping of five year plans model of development, States have lost the Gadgil formula under which plan funds were allocated to the States.

PC provided plan assistance to States by splitting total plan funds into two categories – normal category states (70%) and special category states (30%). In the former category, funds were distributed among States on the basis of Gadgil formula that later got revised as Gadgil-Mukherjee Formula.

After drawing curtains on 5-year planning, Modi Government operates several central schemes and centrally sponsored schemes (CSS). In many CSS, the share of funds contributed by States has been enhanced and Centre's share reduced.

The centre justified revised funding pattern of CSS on the ground that the statutory devolution of funds to States has increased substantially following implementation of recommendations of 14th Finance Commission.

There has been resentment among some States on this count. It is here pertinent to quote Bihar Chief Minister Nitish Kumar. In his speech at 5th GCM, he pointed out the State Government has to now spend more on CSS every year. And this additional expenditure on CSS keeps rising every year. This has forced Bihar to reduce allocation of funds to the "schemes of State's own priority".

Mr Kumar stated: "it is very difficult to make financial provision, to maintain accounts and to monitor schemes of centrally sponsored schemes due to contribution of the Central Government and the State Government. Not only that, the State Government is bound to participate in the Centrally Sponsored Schemes even if such schemes are not priority for the State".

He thus called for discontinuation of CSS. The Centre should only implement central schemes with its own resources. The States should be encouraged to implement schemes formulated in keeping with their priorities.

Kerala CM echoed similar sentiment. Mr. Vijayan stated: "Kerala is of the opinion that one size fits all approach of the Centrally sponsored schemes goes against the basic principles of cooperative federalism. In our view, the aspirational district programme has carried this one step further."

Similarly, Punjab Chief Minister Capt.Amarinder Singh pitched for funding of Rashtriya Krishi Vikas Yojana (RKVY) as 100-percent centrally funded scheme as was the case earlier. His speech was circulated at 5th GCM as he did not attend the meeting.

Launched in 2007, RKVY's funding pattern was changed into 60 (centre): 40 (states) ratio in 2015-16 after its conversion into CSS.

Each State has its own cup of woes. These should be debated by putting CMs' speeches instantly on NA's website. It would be better to launch a separate website on CF or Team India. It should be combined, one-stop portal for both Inter-state Council and NA's GCMs.

GST Council, another initiative in cooperative federalism, can continue to operate its separate website due to its special focus.

Modi Government should take a decisive call on converting a few CSS into 100-percent centrally funded central schemes on lines of Pradhan Mantri Kisan Samman Nidhi (PM-KISAN).

If Centre wants to operate some CSS, then they should not be converted into instruments for extracting political mileage for PM at cost of CMs' popularity. As CSS are either equally funded or 60:40 funded by Centre and States, the schemes operated under PM appellation should be revised as PM-CM scheme. Alternatively, they can operate under generic logo such as Rashtriya.

A case in point is Pradhan Mantri Jan Arogya Yojana (PMJAY), which was launched in 2018 in place of Rashtriya Swasthya Bima Yojana (RSBY). PMJAY is being funded with 60% money from Centre & 40% from the States. RSBY, on the other hand, had 75: 25 Centre-States funding ratio.

This enhanced financial burden on States caused resentment among some States. Some Opposition parties-ruled States refused to roll out PMJAY, which was marketed with personal letters to all beneficiaries from Mr. Modi with his photograph on it. Even today, certain States such as West Bengal and Delhi have refused to roll out PMJAY.

The Centre must respect States as equal partners. CMs should be respected as valuable members as it is done in any national sports team.

The best way to drive home this message is to invoke Mr. Modi's forgotten vision. His NDC speeches, delivered in his capacity as Gujarat CM, are as valid today as they were during the UPA regime.

At the last NDC's 57th meeting held in December 2012, Mr. Modi pointed out: "The States have been repeatedly urging the Centre to treat them as partners. In the 56th meeting of the National Development Council, I had urged this august body to learn from the success stories of the States as our common objective is to strengthen our economy and to have a unified concept of nationhood".

At the same meeting, he also deplored Centre's tendency to unilaterally take decisions on subjects that fall under States' domain. CSS are planned without looking at States' financial capabilities.

At NDC's 52 meeting held during December 2006, Mr. Modi observed: "The structure of the polity in India gives the Centre an overwhelming advantage in terms of resource availability. The decentralization of powers including financial powers needs much greater attention. The Centre rightly insists on the States to decentralize financial power to the local bodies, but not recognizing that they have a similar responsibility towards the States".

He continued: "The States need to be treated as equal partners in the development process in terms of policymaking and deployment of financial resources. Nation can become strong if and only if the States become strong. The Centre should leave implementation of development process to the States".

At the same meeting, he gave valuable suggestion to reboot CSS with focus on problems of each state.

Mr. Modi stated: "No State in this country, howsoever progressive, is without its own sectors of weaknesses. Plan Schemes based on macro analysis of aggregate deficiencies in the country's development can not lead to optimum utilization of Central Funds in every part of the country. It is time that Central Schemes should address issues unique to different States. One way of doing such decentralized planning at Central level could be to allow each State to identify at least three areas of acute weakness, and seek proposals from States for Central support for such schemes. This could be in the form of additional central assistance but much Larger than what it is at present. The grants for such schemes could be made outcome oriented ".

Should Mr. Modi not implement many such ideas on development planning that he pitched as Chief Minister?


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