Q. What changes has the Union Government recently introduced in the domain of Centre-State relations? Suggest measures to be adopted to build the trust between the Centre and the States and for strengthening federalism.

Model Answer:

Indian federalism is evolving towards a “cooperative-competitive” model, though recent financial, legislative, and administrative shifts have triggered significant Centre-State trust deficits.

Recent Changes in Centre-State Relations

1. Fiscal Centralization: Rising cesses and surcharges bypass the divisible tax pool, shrinking States’ net revenue share (currently ~20% of gross tax revenue).
2. Borrowing Restrictions: Stricter enforcement of Net Borrowing Ceilings (Article 293) limiting State off-budget borrowings (Kerala’s recent Supreme Court petition).
3. Legislative Dominance: Unilateral Central legislations on Concurrent/State subjects with minimal prior State consultation (GNCTD Amendment Act 2023, Farm Laws).
4. Tied Fiscal Transfers: Increased reliance on Centrally Sponsored Schemes (CSS) via Article 282 grants, severely reducing States’ discretionary fiscal space.
5. Administrative Friction: Escalating delays in gubernatorial assent to State Bills (Punjab, Tamil Nadu) and contentious deployment of central investigative agencies.

Measures to Build Trust and Strengthen Federalism

1. Revitalize Inter-State Council: Mandate regular dialogues (Article 263) for binding pre-legislative consultation on Concurrent List subjects (Sarkaria Commission).
2. Fiscal Parity: Introduce statutory caps on cesses and surcharges to protect the 16th Finance Commission’s divisible tax pool (Punchhi Commission).
3. Governor’s Accountability: Establish strict constitutional timelines for Governors to either grant assent or reserve State Bills to prevent policy paralysis.
4. Flexible Devolution: Rationalize and consolidate CSS mechanisms, replacing rigid schemes with untied block grants tailored to specific state-level needs.
5. Proactive Mediation: Empower Zonal Councils to mediate regional and administrative disputes politically, minimizing reliance on judicial litigation (Article 131).

Strengthening cooperative federalism through institutionalized dialogue and fiscal equity is not just a constitutional mandate, but a prerequisite for realizing a decentralized, resilient, and developed India by 2047.