Federal India-Burning Issues in Union-State Relations

The last decade of the 20th century has witnessed both break-up of two federations and an attempt to form a new federation. This has got some lesson for India. India is a quasi federation. Both political and financial powers are tilted in favour of the Union government. These were used by the Congress party to promote the centralisation process in political, financial and administrative spheres. This led to discontentment among the states and demand for more autonomy. The most contentious issues in regard to the Union-state relations today are: the increasing number of Centrally-sponsored Schemes, declining proportion of financial transfers on the recommendations of both Planning and Financial Commissions, attempt to centralise states' sources of revenue, refusal to revise royalty on minerals, impact of administered prices on state finances, location of Central government units in different states and the distribution of Central assistance for state Plans based on Gadgil formula. However, the states also have got some responsibility in a federation. They include, reducing the revenue and fiscal deficits, controlling non-plan expenditure, pricing of the goods and services supplied by their public enterprises, reforming the tar systems to harmonise with the national tax reforms and devolving adequate funds to the Panchayat Raj Institutions (PRIs) and Urban Local Bodies (ULBs) to enable them to function as grassischolar_mains level democratic units. All these require a more dispassionate decision making by the national and state level political leaders.