Governance Now Visionary Talks Series

Coronavirus is a test of India’s cooperative federalism

A state-led response with central support of funding and response advisory frameworks can increase efficiency and avoid fissures in centre-state relations

Manmeet Singh and Geetika Ahuja | May 6, 2020


#federalism   #lockdown   #healthcare   #narendra modi   #prime minister   #epidemic   #coronavirus   #COVID-19   #Constitution   #states  
PM Narendra Modi talking with the chief ministers during their one of their video conferences in April.
PM Narendra Modi talking with the chief ministers during their one of their video conferences in April.

In the current times, every country across the globe is engaged in a battle against Covid-19. The architecture of a country's constitution influences it’s response to this pandemic – authoritarian countries' response is quite different from that of democratic countries.

The Constitution of India provides for a federal system of government, wherein the purview/demarcation of legislative subjects of the centre and states is clearly defined. The framers of our Constitution adopted the federal system, taking into cognisance the socio-cultural diversity of the country. They believed that the federal system will serve the dual objective of efficient governance, which requires an understanding of the context, and ensuring national unity with regional autonomy.

Against the backdrop of the central and state governments dealing with the unprecedented crisis of Covid-19, this article attempts to analyze how declining federalism is weakening India’s response to this pandemic, and how decentralization can go a long way to tackle this crisis of nature.

Federalism in light of battle against Covid-19
On 24th March, prime minister Narendra Modi addressed the nation and announced a 21-day national lockdown, effective from midnight. It was done by invoking the Disaster Management Act 2005, which gives overriding power to the central government over states in terms of administration. As reported, the chief ministers of states were not consulted before implementing nationwide lockdown. This unilateral response from the government has put a mirror to some of the fault lines that exist in our federal structure.

While the move was well-timed given the gravity of the Covid-19 situation, it underlined a lack of synchronisation and communication between the central and state governments, which led to mismanagement at various levels during the lockdown execution. This translated into various governance and financial problems:

> Planning and response:
Most states which had not yet implemented a lockdown of this degree and scale were caught off guard after the announcement. With a four-hour timeframe before the lockdown, states had to do a lot of heavy-lifting to ensure that relevant policies and processes were in place.

The rapid lockdown execution required states to create a customised state response for the lockdown, catering both to the basic needs of all state citizens as well as the specific requirements of vulnerable sections such as daily wagers, who would be the hardest hit. States’ responses to the lockdown such as protocols for crowd management, guidelines for provision of essential supplies, travel, and creating social support systems took a while to be put in place, effectively bringing many places to a standstill. 

Due to the time crunch, there seem to have been more misses than hits, especially for the vulnerable sections, with instances of migrant labourers travelling back to their hometowns en masse, misinformation brewing about crop harvest collection and distressed citizens facing issues in collecting their entitlements from the government.

> On-ground management: The mitigation strategies for the lockdown involved chalking out targeted programmes, setting up infrastructure, managing logistics, etc among others. The successful execution of these required extensive coordination among governmental stakeholders. The sudden imposition of the lockdown caused information asymmetry for mid management officers (e.g. cluster and block level officers) and the frontline workers (e.g. Anganwadi workers, ASHA workers, etc) who are among the first public touchpoints for citizens. With such officers not being aware of matters such as status of critical government service delivery (e.g., ration access), micro level management suffered on the ground in the initial phase.

A longer time allowance for states would have enabled the states to communicate effectively with both government functionaries as well as citizens. Response systems such as the emergency helplines and ground level local networks, e.g., self-help groups, youth volunteers, etc., could also have been mobilised to ensure information outreach at the last mile before the lockdown was enforced.

> Fiscal preparedness: States are facing a serious financial resource crunch while addressing the lockdown. At a time when expenditure on public health and relief efforts is increasing multifold and the economy is slowing, diminishing direct revenues are acting as a big hurdle for states to battle this pandemic. A state’s direct revenues majorly consist of stamp duty on land registration and excise duty on alcohol and petroleum products. Due to the lockdown, land registration has come to a standstill, and revenue from excise duty on alcohol and petroleum products has also reduced.

The national relief package for states was only announced ten days after the first lockdown, adding to the financial distress. A state’s borrowing capacity is limited due to the Fiscal Responsibility and Budget Management (FRBM) Act, 2003. States are further financially restrained as they await their GST dues from the centre since November 2019.

Overall, the sudden lockdown without any notice had a significant opportunity cost as it led to dissonance between the centre and states, financial strains and pushed a large part of the population to the verge of poverty and starvation.

The centralising tendency of the centre government points to the lack of an open channel of communication, coordination and collaboration between the centre and the states. These cleavages in Indian federalism have come to the spotlight with Covid-19.

Increasing trend of centralization in multiple spheres
Increasing centralisation during this pandemic is not a one-off incident; it is a part of the broad trend in recent times towards surging centralisation in legislative, finance and administrative matters.

Legislative centralisation has been demonstrated through instances such as the conversion of the state of Jammu & Kashmir into union territories (UTs) without the consent of the state legislative assembly - signalling a move towards a unitary system over a federalistic one.

In the financial sphere, the states have heavy fiscal dependence on the centre as they receive a component of the direct taxes, the State Goods & Services Tax and a part of the Integrated Goods & Services Tax – all of which are collected by the centre.

Prior to the introduction of the GST, the states were able to draw a large chunk of their revenues by taxing goods and services in their geographies. The states have now lost financial autonomy on this front as they can’t raise GST rates as per their discretion.

Lessons for the future
In responding to Covid-19, while the centre has thus far taken the driver’s seat through its centralised response, we believe that it should pivot to a role in which it enables and empowers the states to steer their own roadmaps for managing the situation.

The national lockdown has proven that India is too diverse a country to be governed through a blanket decree such as a sudden national lockdown. In hindsight, a lot of mismanagement could have been avoided had the state CMs been consulted before the lockdown announcement and sufficient notice was provided. This is because states are better suited to design policy responses, tailor overarching guidelines to their context and prepare the ground considering the state’s Covid-19 burden, demographic diversity and unique challenges.

For instance, the centre could have restricted itself to laying the terms for Covid-19 testing and treatment, and defining the interstate and international movement of people and goods, and have deferred to the states for deciding upon the rest by provision of operating guidelines and advisories. This would have ensured a centralised control over critical aspects affecting all the states such as migrant travel, while also allowing states enough autonomy to tweak the guidelines as per their context and efficiently govern on their internal affairs as per the local needs. The emergence of the Kerala model shows merit in states chalking out a strategy – bearing in mind the disease burden, state capacity and citizen behaviour in the state, Kerala balanced severe restrictions with social support programmes to achieve a decline in cases. 

Increasingly, there seems to be a growing consensus among other states as well to chart out action plans as per their discretion as they are disposed towards a more nuanced, bottom-up response to the evolving Covid-19 situation. A state-led response with central support of funding and response advisory frameworks can increase efficiency and avoid fissures in centre-state relations. Australia is a case in point which is doing very well to control the spread of Covid-19 by empowering decentralized governance channels.

The recent instance of the centre sending out officers to select states for monitoring has not been well-received by states like West Bengal, and questions have been raised about the criteria of selection of particular states.

To ensure that states have confidence in the centre and its actions, it is critical for the centre to include them in the deliberation, discussion and planning. It is now more important than ever to institutionalise a structure for dialogue between the centre and states (such as an inter-state council) to ensure two-way communication, coordination and collaboration, and eliminate chances of distrust and mismanagement. This could formalise the recent video-conferences held by the union with all the states, a firm step in the right direction. It would signal the collaborative outlook of the centre towards the states which is needed to contain the outbreak.

Given the state’s high dependence on the centre in terms of revenue allocation, it is critical for states to have at their disposal revenue streams as they are the ones handling the crisis on the ground. Before the lockdown, the release of a support package and other due finances from the centre would have ensured that states had ample financial resources to spend on public health, lockdown enforcement and welfare support to mitigate the crisis from the beginning. At this juncture, the centre can still fiscally empower states through various ways – allowing them to borrow more, clearing their GST dues and GST compensation fund dues on an immediate basis and increasing the revenue allocation to the state for FY 2020-21.

In recent times, people across the globe have shown their increased faith in strong leaders who have a tendency to centralise things and consolidate power, and a situation like the Covid-19 has provided a fertile ground for further centralisation and consolidation of powers. However, as we have observed above, a one-size-fits-all approach has hampered our response to this pandemic. In a democracy like India, where many states are dominated by regional parties, we hope that this pandemic once again reignites the debate of cooperative federalism.

Manmeet Singh is a Public Policy Analyst and a MPP graduate from National Law School of India University (NLSIU).
Geetika Ahuja is a Policy and Governance consultant and is currently also working as a UN Local Pathways fellow.

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