In a federal structure it is critical that Union government responds to the needs of states and there is complete transparency and accountability in the functioning of both these organs. A well-functioning democracy has these as a very vital element of public governance. However, during the last several decades, there has been an erosion of state governments’ authority and constitutional powers. Areas of governance which are essentially local in nature are being encroached upon by the Union as electoral compulsions require greater connect with the people. Foreign policy or a G20 conference or petroleum refining, which are essentially Central subjects, do not give this. Admittedly defence forces and their success do give a shine to the Union. But an effective impact requires meeting common man’s daily needs and providing them financial resources for the basic necessities of life. Health (and this includes nutrition) being a state subject, the recent announcement by the Centre to provide free food grains to nearly 80 crore people is clearly part of this trend.
When the Indian Constitution was adopted, it had been decided that powers of the states and the Centre to legislate on various subjects will be delineated. These were mentioned separately in the Central List, State List and the Concurrent List of Schedule VII of the Constitution. The Union government could legislate on items given in the Central List while state could do so for items in the State List. In the Concurrent List both could legislate but the Central legislation had overriding powers. Increasingly, the powers of the Centre have increased, with restriction on the state’s power to frame laws. Under the 42nd amendment to the Constitution, five subjects including education and forests were transferred to the Concurrent List from the State List, thereby restricting the power of the state.
The Indian Constitution mentions that the country is a Union of States. However, considering the nature of the country and its multifarious needs, it had given an overriding power under Article 3 of the Constitution to Centre with the approval of Parliament to redraw the boundaries of states. Many new states were reorganised under this provision, the most recent being Chhattisgarh, Uttarakhand and Telangana, redrawing the boundaries of Madhya Pradesh, Uttar Pradesh and Andhra Pradesh. This was done after consultation with state governments and their assemblies had passed a resolution. The new entities created were full-fledged states. They have an assembly and exercise all the powers of any other state government.
The reorganisation of the state of Jammu and Kashmir, however, was done differently. Two union territories were created from the original state: Jammu and Kashmir, and Ladakh. The union territories under our Constitution are administered by the Centre. They may or may not have a state assembly. But these do not exercise the powers under the State List of the Constitution. Effectively, these are fully administered by Union government. There are questions that if the Union government can do this to J&K, what is to prevent it from converting or bifurcating or trifurcating other states and converting these in to union territories? It also seems to be against the law laid down by the Supreme Court in the Kesavananda Bharati case, that the basic structure of the Constitution is sacrosanct and must be preserved. While our political process is sound, the decision on J&K is worrisome for the states.
Under Article 280 of our Constitution, there is a provision for the constitution of a Finance Commission every five years. It assesses the resources of the Centre and different states and makes recommendation on transfer of funds to states based on a normative assessment. Since states have inadequate resources, the Centre makes devolution. This is to meet the requirements of health and education, apart from other financial needs. Similar arrangements exists in other federations like Australia and Canada. They have institutional arrangement for transfer of funds from the Central government based on well-specified norms.
While our Finance Commission transfers continue as contemplated in the Constitution, the Centre is gradually providing large funds outside it and encroaching on the remit of the states. Basic necessities like drinking water, housing, nutrition and poverty alleviation are areas where the states needs supplemental funds from the Centre for their own schemes. But in many areas, the Centre is has its own policies backed by funds. The states have to follow this if they wants Central funds. In some cases, funds are directly being transferred to the beneficiary account. The states, being near the point of delivery of services, are better placed to provide them. They are the ones who look to the last mile connectivity. A result of the Centre entering this field is that criticism because of poor delivery is faced by the states, who provide the services at the ground level. The credit for the scheme invariably goes to the Centre.
Take for instance nutrition. The health of citizens, including children, is the prime responsibility of the state government. Since the Centre does the public procurement of food grains, it can help by providing to the states enough financial resources and food grains to be given to the needy. Since there are a large number of people who may require support, the funds required would be large if free or subsidised food grains are to be given. With the passing of the Right to Food Act, the Union government started this process. Recent reports indicate that about 80 core people will be given free food grains for some more time. But all this is being done under the name of a Central initiative. Any deviation or additional support from the state is frowned upon. The entire approach is that it is a Central initiative and they are its architects. Being a state subject, this should have been left to states with each state adding or varying as it wished.
An important basic necessity is drinking water. This is clearly within the remit of the state. Since there may be support required in some difficult areas, the Centre can pitch in. But one finds announcement from Central leaders that every house will have piped water by a certain date. This function is to be undertaken by local bodies: panchayat, municipal boards or development authorities. It is the states who should lead the campaign and take credit or discredit.
Successive governments in the country have tried to handle the question of poverty. While the Central government makes overarching economic policies, states try to promote investment and work on policies to create employment. Considering the vast rural areas in our country, improving incomes of farmers and agricultural productivity is very critical. Agriculture is a state subject. It is the states who have the responsibility to see that farmers in their area are able to earn enough money with better irrigation facilities and technical advice. It is they who should be providing them money when in distress. Interestingly, the Centre has promised to double their incomes. To better connect with the farmers, money is being transferred directly into the accounts of farmers under a Central scheme. This clearly is an encroachment over states’ domain.
In the Canadian and Australian federations, we notice that two approaches have guided the horizontal devolution of funds to different states. First, in the area of health, funds were transferred to different states to keep health facilities comparable amongst the states. Second, in the area of education, there was transfer with a similar objective. But having devolved the funds, it is left to the states to manage their institutions and health or education of their residents. The Government in India is more involved directly in these sectors. Especially in health, there are Central schemes like Ayushman Bharat. More and more coverage is given to a large number of people to avail of its benefits and make use of private hospitals. The impression which it gives is that the Centre is providing funds for it and is directly involved in it. It is the domain of the states but there is a massive involvement of the Centre in health care.
Housing is another area where the Centre has made announcements like ‘housing for all’ in a certain span of time. Land is clearly a state subject. Housing facilities especially pucca houses are planned by the states. Many of them have schemes for it. But the Centre wants to emphasise that it is cognisant of this basic necessity. There are reports in the media mentioning a timeframe.
While defence and foreign policy, which are the remit of the Centre, are very important areas for a country in the international arena, they are less important for a common man. For him, an increase in income, healthcare facilities, a pucca house for his family and drinking water are very important. He is interested in jobs and some money in his bank to supplement his income. He needs communication in his village. Many of these areas are under the domain of states. Instead of transferring money to the states to let them plan it, the Centre puts in its funds directly.
The Centre is entering these areas by way of its various schemes. The functions which were basically of states have the Centre playing a key role. It can be argued that many Central initiatives are in the interest of the common man. But in a federal structure this is difficult to accept. The Centre and the states must act in accordance with legislative competence and the spirit of federalism. Over the years, with the reduction in the State List and expansion of the Central List, the legislative competence of states has been restricted. The recent creation of two UTs in J&K has given states cause for worry. The deployment of large Central funds in areas which are essentially of states further encroaches on their power. The division of legislative powers is now getting blurred. This is not healthy for a long term growth and stability of our federal structure.
(B.K. Chaturvedi is a former Cabinet Secretary and Member of the Planning Commission and 13th Finance Commission. Courtesy: The Wire.)
