States remind PM Narendra Modi to honour spirit of cooperative federalism

These states also urged the Centre to not penalize 'performing states' by taking Census 2011 as the base to calculate funds allocation by the 15th Finance Commission.

At the fourth meeting of the governing council of the NITI Aayog, states ruled by opposition parties urged the Centre to address the issues of agrarian distress and loss of revenue from implementing the goods and services tax (GST).

And, to not penalise ‘performing states’ by taking Census 2011 as the base to calculate fund allocation by the 15th Finance Commission.

Some of the chief ministers (CMs) highlighted the ills of demonetisation, “ill-drafted provisions” of the FRDI (Financial Resolution and of Deposit Insurance) Bill that led to a sudden cash crunch. And, for Prime Minister Narendra Modi to subscribe to the spirit of “cooperative federalism” for better Centre-state relations. 

Punjab’s Amarinder Singh urged the PM to constitute a committee of the Union government and some CMs to formulate a plan for a ‘national debt waiver scheme for farmers’. He said NITI Aayog’s governing council should consider the issue on priority.

However, Bihar’s Nitish Kumar criticised farm loan waivers as a "regressive step". And, punched holes in the Modi government’s crop insurance scheme. He also said direct transfer of subsidies should replace the practice of cooking food under the mid-day meal scheme.

At the meeting, which the PM chaired, each CM was allocated seven minutes to speak. They were to do so in the alphabetical order of the names of  states. Home Minister Rajnath Singh conducted the meeting. When he tapped the gavel at seven minutes, Andhra’s Chandrababu Naidu, the first to speak, said his was a special state with special problems and he would take more time.

Naidu, whose party walked out of the Bharatiya Janata Party-led NDA coalition at the Centre in March, spoke for 20 minutes.

He said the Centre “should provide the macro strategy and not micro-manage schemes as is currently being done”. States should be empowered with funds and the freedom to implement all schemes.

“Cooperative federalism can be achieved only if states are equal partners in the development process,” said Kerala’s P Vijayan. “Four years have passed since NITI Aayog came into being. It is time to reflect on its achievements.” Vijayan suggested the Centre constitute a committee of CMs to do this.

Vijayan said implementation of GST had “limited the freedom of states to raise financial resources”; Kerala had seen substantial revenue loss. Amarinder Singh and he also said the development efforts of their states had suffered because of the change in funding patterns of centrally sponsored schemes.

Naidu, Vijayan and Bengal’s Mamata Banerjee were among those who said the terms of reference of the 15th Finance Commission had created apprehension. Naidu said the 2011 Census as base year would penalise performing states in not only fund allocation but in eventually reducing their Lok Sabha seats. 

Amarinder Singh said the Centre should identify national transformational programmes across the sectors of agriculture, education, health, water and urban governance. These programmes should be fully funded by the Centre, with clear milestones and intended outcomes.

Telangana’s Chandrashekar Rao asked that activities allied to agriculture be treated at par with agriculture and exempted from various taxes.

Bihar’s CM supported Naidu’s demand for Andhra’s special category status; he also wanted this for Bihar. And, said farm income showed no signs of improvement. 

Kumar termed the increase in the share of states in the divisible pool of taxes to 42 per cent from the earlier 32 per cent merely a "compositional shift". He said the increase in revenue was negated to a large extent by reduction in the Centre's allocation for centrally-planned and sponsored schemes. 

Farmer help, he said, should not be via loan waivers but through input subsidy.