COOPERATIVE AND COMPETITIVE FEDERALISM IN INDIA: AN ANALYSIS

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COOPERATIVE AND COMPETITIVE FEDERALISM IN INDIA: AN
ANALYSIS
Aakshi Gupta*
Prof.(Dr.) Rajesh Bahuguna**
ABSTRACT
The two forms of federalism addressed in this research are cooperative and competitive federalism.
Demonstrate that India has taken substantial steps to improve the collaboration and
competitiveness of its federalism. The concept of cooperative federalism has been enshrined in the
Constitution of India from the very beginning. I have gone into considerable detail about the many
types of cooperative federalism that may be found in India.
In view of its changing socioeconomic condition, India aspires competitive federalism. A
reasonable degree of competition is required in many professions for any state or nation to develop.
The study focuses on three main government initiatives: make in India, NITI Aayog and Goods
and Service Tax (GST) so as to present the Government of India has used various forms of
federalism to achieve national goals.
Finally, cooperative and competitive federalism are proven to be mutually incompatible concepts.
They are the two halves of the same coin. All are based on the same fundamental principle: the
general expansion of the country. As a result, in order to accomplish development objectives and
maintain good administration, a balance between the two types of federalism must be formed.
KEYWORDS
Cooperative Federalism, Competitive Federalism, NITI Aayog, Good and Service Tax, Article
246
1.1 INTRODUCTION
India is often regarded as the world's most democratic country. On the other side, this democracy
is remarkable for having a federal structure. The Indian constitution's founders were well conscious
of the necessity to accommodate the country's great diversity while preserving a united viewpoint.
* Student LLM, Law College Dehradun, Uttaranchal University, Dehradun (UK).
** Principal & Dean, Law College Dehradun, Uttaranchal University, Dehradun (UK).

This unitary bias was unavoidable given the combustible and lethal environment of the time. The
division of powers between the Centre and the states under the Indian constitution is greatly
influenced by historical and political conditions. This examines how historical and political factors
in India promote cooperative federalism.
1
Cooperative federalism is a notion that portrays the connection between the Centre and the states
in which they both get together and tackle shared issues with each other's help. Through
cooperative and collaborative efforts, the various levels of government work together to contribute
to the country's growth. It symbolizes the union's horizontal relationship with the states,
demonstrating that none is superior to the other. To facilitate this engagement between the Centre
and the states, the Indian constitution includes mechanisms such as the interstate council, zonal
council, and 7th schedule.
2
Competitive federalism it varies from cooperative federalism. Competitive federalism, in a
nutshell, is a kind of federalism in which the federation's components fight for economic interests
in a healthy manner. The vertical interaction between the Centre and the competing states fosters
the overall expansion and advancement of the competing states.
3
Both cooperative and competitive federalism are essential for the country's progress to be
successful. It's important to strike a balance between the two.
4
The "one size fits all" philosophy
is incompatible with cooperative federalism, which has been widely criticized and has led to the
creation of new government structures such as NITI Aayog.
5
As a consequence, teamwork is
essential in addressing a wide range of economic and social issues. A good competition is always
appreciated. Despite the fact that the Union government is solely responsible for drafting
competition legislation, to attract capital and investment, states compete with one another, as well
as to improve administrative efficiency and development activities. This competitive attitude has
resulted in the establishment of new government initiatives such as Make in India, and others,
under which individual states have launched programs such as the “Vibrant Gujarat Global
Summit, the Invest Madhya Pradesh Global Investors Summit,” and etc., so as to improve their
1
Dr. S. K. Jain, Indian Federalism 52 (Kalpaz Publications, New Delhi, 1st edn., 2017).
2
Rekha Saxena , New Dimensions in Federal Discourse in India (Routledge, New Delhi, 1st edn., 2020).
3
D.D. Basu, Comparative Federalism (Lexis Nexis, New Delhi, 2nd edn., 2007).
4
K. S. Hari, "Cooperative Federalism: Implications for Social Sector Expenditure in India", 1 ISBE 15 (2018).
5
K.D. Saksena, Niti Aayog and Planning Commission: Some Reflections (Shipra Publications, New Delhi, 1st edn.,
2019).

economic and financial status.
6
1.2 HISTORICAL DEVELOPMENT AND EVOLUTION OF COOPERATIVE
FEDERALISM
The central policy of non-interference in local matters, kingdoms or empires have dominated the
Indian subcontinent from antiquity. The subcontinent's inhabitants were so different, they could
only be combined into a single empire if no attempt was made to enforce a common set of ideas.
The invader Akbar respected the subcontinent's heterogeneity and ruled with a cooperative
federalist mindset.
7
The centralized leanings of rulers like Jahangir and Aurangzeb further destroyed the Mauryas and
Mughals. Furthermore, when the Britishers chose to leave the Indian Kings alone after the 1857
Revolt and abolished interventionist laws such as the Expiration Doctrine and the restriction on
the use of cartridges greased with animal fat, they were merely cementing a historic pattern of
governance.
8
"Moreover, cooperative federalism was a crucial tactic used by the legendary Vallabhbhai Patel to
persuade and urge 492 princely countries to join the Union of India while also maintain the unity
among the nation”.
The Regulation Act, 1773 which created a system in which the British Government oversaw
(regulated) but did not gain control over the East India Company, bowed seeds of cooperative
federalism.
The Governance of India Act, 1919 established a federal, though shaky, India by establishing a
dual system of government known as "dyarchy." According to the Simon Commission also known
as the Indian Statutory Commission, the report of the committee advocated to eliminate the
diarchy, an extend of autonomy of provinces by creating representative governance in provinces.
However, it permitted the British governors of provinces to keep most of their emergency powers,
so in actuality very little autonomy was to be handed to the provinces. Most significantly the
commission's findings did not address dominion status at all. The panel also suggested to keep
6
Sandeep Raghavan, “PM's vision is to leverage cooperative and competitive federalism for all-round growth of India:
Amit Shah”, The Times of India, November 14, 2021.
7
Supra note 1 at p. 35.
8
id. at p. 42.

separate electorates as long as inter-communal animosity between Hindus and Muslims
continued.
9
According to the Cabinet Mission of 1946, the Centre shall manage foreign affairs, defense, and
communication, as well as any other issues unrelated to the Union, and the provinces should
maintain all residual powers.
10
Similarly, in Objectives Resolution of December 13, 1946, Jawaharlal Nehru reaffirmed that the
need for some uniformity in terms of national government apparatus and machinery should be
considered in "cooperation and consultation with the states," and that "all power and authority of
Sovereign and Independent India, its constituent parts and governing bodies, are derived from the
people."
11
1.3 POST INDEPENDENCE DEVELOPMENT
One party's perspective on the evolving dynamics and diverse experiences of the Indian state. The
changing components and diverse contacts that the India as a state has met (a guiding principle,
coalition, and inadequate frameworks) have resulted in a movement in government administration
from centralist to federalist and from Centre-federalist. The federalist movement has been defined
as the expansion and growth political regional parties, the success of coalition governments, the
active participation of the court, and the shift to right from left. After gaining independence, India
adopted a semi-government system. Despite the absence of the word "federal" in the constitution,
India's majority government functions in a federal fashion. The following are the three phases of
Indian federalism's operation.
12
1.3.1 Between 1947 until 1967,
A single meeting took Centre stage at this point. The Congress formed its government at the federal
and state levels, with a few outliers, such as the communist administration in Kerala in the year
1959. As both the states and the central government were ruled by the same party, there was no
serious dispute. There were rare instances, including as in Kerala, when the federal government
9
M. Asad Malik, “Changing Dimensions of Federalism in India: An Appraisal” 2 ILILR 85 (2019).
10
Cabinet Mission Plan (Cabinet Mission, 1946), available at: https://www.constitutionofindia.net
/historical_constitutions/cabinet_mission_plan__cabinet_mission__1946__16th%20May%201946 (Visited on
February 28, 2022).
11
Constituent Assembly of India Debates (Proceedings) - Volume I, available at: https://www.constitutionofindia.net
/constitution_assembly_debates/volume/1/1946-12-13 (Visited on March 01, 2022).
12
Supra note 9 at p. 92.

deposed the world's first democratically elected communist government.
1.3.2 Between 1967 and 1990,
"This is referred to as the combative federalism phase." Congress lost nine states in a single
election for the first time in history. Despite the fact that the legislature rallied in later elections,
the Centre and the multiparty-led states clashed throughout this time.
1.3.3 From 1990 until the present
"This phase is known as cooperative federalism since state parties have a role in forming
government at the federal level, such as the DMK in Tamil Nadu, the SP in Uttar Pradesh, and the
Trinamool Congress in West Bengal." As a consequence, the state's difficulties have acquired
prominence, and the Tamil Nadu issue has attracted international attention. The federal
government i.e., in our case the central government is becoming more conscious of state needs.
13
1.4 PROVISIONS IN INDIAN CONSTITUTION RELATING TO COOPERATIVE
FEDERALISM
The Political giants Dr. B. R. Ambedkar who was also the Chairman of the Drafting Committee
and Jawaharlal Nehru who was the Prime Minister of India both were favoring the unified structure
when the constitution was adopted in 1950. The Sardar Vallabh Bhai Patel was a supporter of
federal system and has also assisted in the enacting of provisions of federal system in the
Constitution.
14
Cooperative federalism is a notion that portrays the connection between the Centre and the states
in which they both get together and tackle shared issues with each other's help. It symbolizes the
union's horizontal relationship with the states, demonstrating that none is superior to the other. The
Indian constitution has measures to ensure collaboration between the central and the states. It has
maintained for a long time that partnership is necessary for the country's progress. As a
consequence, the Indian constitution has just a few sections defining the relationship between the
central and the states.
15
13
Supra note 1 at p. 84.
14
Dr. Aniruddha Babar, “Dr B.R.Ambedkar’s Contribution to Federalism Enshrined in the Constitution of India” 7
FACJ 49 (2018).
15
Dr. Madhav Godbole, India- A Federal Union of States: Fault Lines, Challenge and Opportunities (Konark
Publishers Pvt Ltd, New Delhi, 1st edn., 2021).

The following are some of them:
1.4.1 7th schedule
The Seventh Schedule, which is a list of things under the seventh schedule of the Indian
Constitution as an annexure, distributes the authority to both the central and state government lists
to legislate on. It is divided into three lists: the Union list, the State list, and the Concurrent list,
and it clearly illustrates the spirit of cooperative federalism.
16
Based on the subsidiarity concept, it distinguishes between central, state, and concurrent lists. The
Centre has retained control of the remaining electricity. Article 249 permits the parliament to make
decisions on matters within the state's jurisdiction if the council of state agrees on a resolution with
a two-thirds majority.
17
Various additional statutory entities have been established to promote Centre-State cooperation
and coordination. Among the few significant organizations are:
• University Grants Commission
• Damodar Valley Corporation
• Consultative Committee on Drugs
The Planning Commission and National Development Council were established as administrative
entities with broad authorities for economic planning consultation, allocation, and coordination.
Through the NDC, the states are granted broad rights to participate in the planning process.
1.4.2 All India Services
For the implementation to the laws enacted by the parliament and the state the provisions of
integral judiciary were formed. Another distinguishing feature of cooperative federalism is All
India Services that provide the core administrative framework of India through which the
government of the day may help formulate and execute welfare programs, developmental projects
and guarantee effective working of government machinery at the grassroots.
18
16
M.P. Jain, Indian Constitutional Law 214 (LexiNexis, New Delhi, 8th edn., 2018).
17
The Constitution of India, 1950, art. 249.
18
id., art. 312(2).

1.4.1 Full Faith and Credit Clause
Article 261
19
of the Constitution of India includes public actions, documents, and judicial
processes. Public Acts denotes an act or a legislation influencing subjects of public interest. Of
such legislation, the courts take judicial notice. This is a crucial step toward strengthening trust
and cooperation between the federal government and the states.
Article 261 (2) empowers the Parliament to regulate the manner of evidence as well as the
consequences of acts and processes between states.
20
Article 261 (3), Final judgments or decisions rendered or passed by civil courts within territory of
India should be capable of enforcement anywhere within that territory according to law.
21
The full faith and credit clause creates unity and solidarity across India's huge territory. It develops
a sense of belonging as well as national cohesion. It fosters collaboration between states and the
federal government and provides full credit to all government initiatives.
1.4.1 Zonal Council
As per the States Re-organization Act, 1951, five Zonal Councils have been created up namely the
Central Zone, the Northern Zone, the Western Zone and the Southern Zone. Zonal Council is
simply an advisory body and has no legislative or executive role.
22
The framers of the constitution recognized the necessity of cooperation between the Centre and
the states, as well as the distribution of authority between them. We can see from the many
provisions how the collaboration of states with the Centre and vice versa is useful to the country's
general, overall growth and continuous administration. Without the collaboration between the
Centre and state in policies and administration, it would be very difficult to face the common
difficulties among the Centre and the state, which may put a brake to the expansion of the
country.
23
19
The Constitution of India, 1950, art. 261.
20
id., art. 261 (2).
21
id., art. 261 (3).
22
Zonal Councils, available at: https://www.insightsonindia.com/2019/09/19/zonal-councils/ (Visited on March 02,
2022).
23
Supra note 14.

1.4.2 Inter-state Council
The Interstate Council was established under Article 263 of the Constitution to look into and
discuss topics of mutual interest among the central government and the states.
24
Parliament has the ability to resolve interstate water disputes. The Hon’ble Supreme Court ruled
in the case of T.N. Cauvery Sangam v. Union of India
25
that “once the central government
determines that the dispute raised in the state government application cannot be resolved through
negotiations, the central government must establish a court and refer the dispute to it for
adjudication. Furthermore, if the central government fails to make such a referral, the court may
grant mandamus to the central government, forcing it to carry out its statutory tasks, on the basis
of a petition filed under Art. 32
26
by an aggrieved party”.
The Hon’ble Supreme Court “endorsed the formation of council under Article 263 to evaluate and
settle central state tax problems in the case of Dabur India Limited v. State of Uttar Pradesh
27
”.
The idea of an Inter State Council (ISC) was vigorously advocated by the Sarkaria commission
and was established as a permanent body on 28 May 1990 by a presidential order. The goal of the
ISC is to debate or analyse policies, matters of common interest, and conflicts among
governments.
28
1.5 PROBLEM AND ISSUES RELATING TO COOPERATIVE FEDERALISM
The issues that have beset India's cooperative federalism have been investigated. Problems that
obstruct the primary route of it, since the most important thing is to concentrate on the processes
that lead to a good practice rather than simply the fantastic practices themselves.
The difficulties are as follows:
• First, as stated in article 263, the Interstate Council is intended to serve as a forum for
interstate cooperation and conversation. It has not, however, been granted the jurisdiction
to investigate and provide advice on interstate issues. You may only talk about and make
ideas about things that everyone is interested in. It meets seldom and has yet to realize its
24
The Constitution of India, 1950, art. 263.
25
AIR 1990 SC 1316.
26
The Constitution of India, art. 32.
27
AIR 1990 SC 1814.
28
Government of India, Report of the Sarkaria Commission (Ministry of Home Affairs, 1988).

full potential.
29
• Second, and more significantly, international treaties, which often overlook state
involvement. It should be enhanced because countries should be more active in
international treaty negotiations since its implementation will definitely have an impact on
them.
• Third, despite several hearings and judgements, Article 262, which controls interstate water
disputes, has been unable to address many of the concerns that have been brought before
it. Both structural and procedural defects are possible causes of failure. The non-binding
nature of river board recommendations, the absence of enforcement of court judgements,
and the use of ad hoc rather than permanent tribunals have all contributed to politicization
and, as a consequence, supervision. Inadequacies in the method, such as a lack of SOPs
(Standard Operating Procedures), a lack of a penalty for the parties' willful delay, and a
lack of governmental participation, result in ambiguity and discretion, resulting in
unnecessary delays.
30
• Fourth, the Governor's Problem is a cause of worry, since it is weakening the Centre-state
relationship. Governors appointed by the preceding political party are requested to retire
when the political party in power in the Centre changes. Governors should not be chosen
only on the basis of political reasons.
• Fifth, in view of the large financial transfers that cooperative federalism entails, Schedule
7 should be modified to offer states greater power.
• Sixth, the Rajya Sabha states' equal representation is another setback for cooperative
federalism.
• Seventh, state legislation that has yet to be approved by the president must be handled as
quickly as practicable. This obstructs the country's growth, and the partnership between the
Centre and the state suffers as a result.
• Eighth, there is a smear effort against the Modi government's formation of the NITI Aayog.
Despite the fact that NITI aayog was established with the goal of strengthening cooperative
federalism, its structure and operation are problematic in a number of ways. The function
29
Supra note 24.
30
Challenges to Cooperative Federalism: From Cooperative to Coercive Federalism, available at: https://thelawblog.in
/2020/08/02/challenges-to-cooperative-federalism-from-cooperative-to-coercive-federalism/ (Visited on March 02,
2022).

and authority of NITI Aayog are unclear. The state and UTs are given seats on the
governing council, enabling them to influence policy. However, there is no evidence if they
can reject, modify, or accept NITI Aayog's views.
As a consequence, although any policy encouraging cooperative federalism in India on the surface
looks to be a good concept, putting it into reality and ensuring that it works is challenging. The
following faults show that enforcement is at the heart of all of India's difficulties, which is a setback
for cooperative federalism. We must address these challenges as soon as feasible if we really wish
to enhance the connection between the Centre and the state.
1.6 COMPETITIVE AND CO-OPERATIVE FEDERALISM
1.6.1 Competitive Federalism
Competitive federalism is a notion in which the Centre competes with the states and the states
compete with one other. It refers to the relationship between regional governments (horizontal
rivalry) as well as the relationship between central and regional administrations (vertical
competition).
31
Competitive federalism is an ideology that encourages rivalry between states and the union, as
well as competition amongst state governments. More than just cooperating, the states and the
union government have begun to function in a competitive environment.
32
Such is the selection of
smart cities via competitive bidding. In addition, the 15th financial commission will create an
index to evaluate the performance of the states individually, and money will be devolved to the
states based on their performance.
States are taking steps to enhance the ease of doing business and the level of life in the modern
period. They are conducting measures in the administrative, health, and other sectors. For example,
the state-sponsored Rythu Bandhu plan in Telangana
33
and the KALIA (Krushak Assistance for
Livelihood and Income Augmentation) scheme in Orissa
34
operate concurrently with the Centre's
farmer-support schemes like as the PM Kisan Yojana.
31
Supra note 3. at p. 234.
32
ibid.
33
Rahul V Pisharody, “Explained: Rythu Bandhu, Telangana govt’s DBT scheme for fa rmers’ a ssistance ”, The Indian
Express, December 29, 2021.
34
Odisha Government’s KALIA Scheme, available at: https://www.drishtiias.com/pdf/odisha-governments-kalia-
scheme.pdf (Visited on March 04, 2022).

The Centre, on the other hand, wants states to be clever, simple, responsible, and attentive to their
citizens. The states and the Centre share the belief that innovation is critical to the country's
socioeconomic success and change. This is where competitive federalism comes into play in
building and developing the country.
1.6.2 Competitive Federalism in India
The notion of competitive federalism is forcing Indian governments to implement steps that would
make doing business in their state easier and accelerate pending project approvals. In order to
attract greater investment for state development, several governments have stepped up their
attempts to simplify procedures. The Gujarat Vibrant Summit, for example, was solely focused on
attracting development investment from other developing countries and we've seen how Andhra
Pradesh has been liberalizing its investment restrictions in recent days in order to attract as much
overseas investment as possible. As a consequence, each state is free to seek investments, funds
for its development and by competing with other states under this concept.
35
It trades in with the business, investment, and commercial ties between two or more states (rather
than between a union and a state). Since states compete for money and investment, which
facilitates and stimulates economic activity, the central government's main responsibility in this
kind of free market is to create laws. Investing in developed countries is often a top priority for
investors. The Union government distributes funding to states based on how those funds were
previously spent. As a result, states that have made the best use of previously allocated funds get
further assistance and investment (both from the federal government and from private investors).
As a result, by stimulating healthy competition in the creation of the state's physical and social
infrastructure, competitive federalism ensures minimum waste and maximum resource use.
Cooperative federalism may be stated as "no effort, no money" in layman's words. More money
needs more effort. States compete with one another for increased development funding. To foster
this kind of federalism, states are given greater power and autonomy in policymaking.
36
It helps the states to from each other and apply best solutions and practices that are appropriate for
their needs. Taking globalization and contemporary market demands into consideration, it is clear
35
Empowering Different States Equally with boost to Federalism, available at: https://www.pmindia.gov.in/en
/government_tr_rec/empowering-different-states-equally-with-boost-to-federalism/ (Visited on March 04, 2022).
36
Supra note 3 at p. 284.

that a country can only thrive if its states expand at the same rate. The Indian constitution makes
no mention of competitive federalism. The executives make the decision. And it shows up in our
policies, implementation processes, and business practices in some way.
The industry favors competitive federalism because strong state competition will provide new
investment possibilities in the future. As a result, substantial job creation and economic growth are
anticipated. A state understands what is best for it, seem to agree business, university, and
government. Central and State governments must avoid creating hindrances for each other and
should avoid adopting the rules, policies and laws that contradict each other in order to raise more
investment in their states. All states' development goals and challenges must be assessed, and
appropriate assistance must be provided.
37
1.6.2.1 Make In India Initiative
Make in India is the central government's initiative to encourage foreign and domestic businesses
to invest in India. It was founded on September 25, 2014, with the goal of attracting capital and
improving India's technology capabilities.
India has been a pioneer in national branding efforts at the annual World Economic Forum in
Davos, Switzerland. Over the years, the Make in India lounge has become a hotspot for anyone
looking to meet Indian politicians and business leaders among Davos attendees. This was the first
time a nation and a regional state stood next to one other, each promoting their own brand
statement.
38
Andhra Pradesh has built its own brand identity through Make Andhra Pradesh Your Business,
combining and mimicking the same features as the Indian national brand campaign.
Anupriya Patel, the minister of state in the Ministry of Commerce and Industry, revealed that the
Chinese imports to India has declined by 7.2 per cent. The imports from China were $65.21 billion
in 2020-21 compared to $70.31 billion in 2018-19, she also noted that Ind ia’s exports to China
have climbed from $16.75 billion in 2018-19 to $21.18 billion in 2020-21, experiencing a gain of
37
Richard M. Rossow, “Competitive federalism is working”, Mint, August 09, 2016.
38
'Best time to invest in India': PM Modi at WEF's online Davos Agenda 2022 summit, available at:
https://www.livemint.com/news/india/live-pm-modi-to-address-wef-s-davos-summit-shortly-11642428174433.html
(Visited on March 05, 2022).

26 per cent.
39
The Minister further highlighted that ''Make in India'' project has tremendous successes and today
focuses on 27 areas under Make in India 2.0. The initiatives under the Make in India concept are
also being conducted by numerous Central Government Ministries/Departments and several State
Governments. Ministries establish action plans, projects, schemes and policies for the sectors being
treated by them, while states also have their own Schemes for luring investments.
40
1.6.2.2 Vibrant Gujarat Summit
The 9th edition of the Vibrant Gujarat Summit, which was held in Gujarat from January 18 to 20
of 2019, is another example of the strategic positioning of Indian states and territories' increasing
place brands. This initiative started in 2003 and has proven to be a huge success. "Sustainable
Economic and Social Development" is the Summit's core focus and to increase the growth and
cooperation, it brought the chief ministers of the state, ministers, corporate leaders, senior
policymakers, presidents of international organizations, and scholars from across the globe on the
same stage.
41
The Success of the event has delivered a messaged to other states as well and have encouraged
them to follow as well.
The national brand in India is giving way to the state brand. “A Resurgent Rajasthan, Invest
Madhya Pradesh, credible Chhattisgarh, Happening Haryana, Odisha-New Opportunities, and a
slew of others are now competing with a resurgent Gujarat and the Sunrise State of Andhra
Pradesh”.
1.6.2.3 Global Investor and Business Summits
In 2019, "Madhya Pradesh held a Global Investor Summit, which drew significant investment. At
its most recent global business summit in January, 2022, Rajasthan highlighted the investment
commitments including the intent for investments in excess of ₹3.5-lakh crore). A $47 billion
39
Chinese imports have fallen down by 7.2% in India: Govt, available at: https://www.businesstoday.in
/latest/economy/story/chinese-imports-have-fallen-down-by-72-in-india-govt-327355-2022-03-25 (Visited on March
25, 2022).
40
ibid.
41
Gujarat government partners with US advocacy group for 'Vibrant Gujarat' summit, available at: https://
economictimes.indiatimes.com/news/economy/foreign-trade/gujarat-government-partners-with-us-advocacy-group-
for-vibrant-gujarat-summit/articleshow/65633076.cms (Visited on March 14, 2022).

investment (about INR 3.5 lakh crore) is expected to result in the creation of lakhs of employment.
"Brand India's new reality is establishing competitive federalism," as a consequence.
1.6.2.4 NITI Aayog
The NDA governed central government established the National Institution for the Transformation
of India (NITI Aayog) to replace the Planning Commission as the country's policy think tank. NITI
Aayog's mission is to urge state governments to take part in the development of national economic
policy. In forming this organization, the government used a bottom-up approach rather than a top-
down one.
42
The major objective of NITI Aayog is to build the relationship between the central government
and the state government. The Indian Union government's action moves the country closer to
cooperative federalism.
The Chief Ministers of the States and the Lieutenant Governors/Administrators of the Union
Territories make up the NITI Governing Council. NITI Aayog has developed chief ministerial
subgroups to address complex challenges or topics, bearing in mind the importance of state
governments in national decision-making. Essentially, the Chief Ministers of State have been
granted a seat on the NITI Aayog executive board, which gives them an active role as well as voice
in the aayog and enable them to bring varied viewpoints to the table, reducing distrust between the
Centre and states in planning.
43
It has also granted the states additional power by implementing the 14th Finance Committee's
recommendation to give the states 42 percent of the total divisible net tax. It has aided
economically weak countries, resulting in their strengthening. It also aids the state in formulating
policy in areas over which it has no authority.
As a consequence, the whole dynamic of Centre-state interaction has shifted. The state is no longer
at the compassion of the central government in terms of finances and resources.
This has also guaranteed the timely state of policies via partnership between the central and the
states. As a consequence, the NITI Aayog has significantly improved the Centre-State relationship
by increasing state involvement in planning. It promotes cooperative federalism and leads to
42
Supra note 5 at p. 87.
43
Overview | NITI Aayog, available at: https://www.niti.gov.in/content/overview (Visited on March 15, 2022).

"Central Planning" in the country.
1.6.2.5 Goods and Service Tax
The Goods & Services Tax (GST) is a single tax that applies to the supply of goods and services
from the manufacturer to the end user. GST is essentially a tax on value addition at each step since
credits for input taxes paid at each stage will be available at a later stage of value addition. With
set-off benefits at all previous levels, the end client will only be liable for the GST paid by the last
seller of the supply chain.
The Goods and Services Tax (GST) is a single tax levied on goods and services provided from the
producer to the end user. GST is effectively a value added tax at each level, with credits for input
taxes paid at each level available at the following value-added level. Only if compensatory
advantages are supplied at all of the aforementioned stages will the final customer be held liable
for the GST collected by the last distributor in the supply chain.
44
The 111th constitutional amendment was enacted in 2016, and it took effect on April 1, 2017.
Article 279A states that the President must establish a GST Council within 60 days of the
Constitution Amendment Act entering effect
45
. The GST concept is built on the tenet of 'One Tax,
One Nation.'
The Goods and Services Tax (GST) Council was constituted in 2017 with the promise of
cooperative federalism.
Based on these considerations, we may infer that GST will encourage cooperative federalism.
Although some states benefit from advantages such as skilled personnel, money, and
infrastructure, as well as innovative service sectors, it is unrealistic to expect all states to do equally
well in the development process. States with harsh climates, on the other hand, continue to rely on
federal support. As a result of the proposed GST, less developed states would be able to thrive
under a common tax policy in which states may help each other and the federal government
mobilizes resources equitably. It will strengthen ties between the federal government and the
states.
46
44
Brief History of GST, available at: https://gstcouncil.gov.in/brief-history-gst (Visited on March 15, 2022).
45
The Constitution of India, 1950, art. 279A.
46
GST and Cooperative Federalism, available at: https://blog.mygov.in/editorial/gst-and-cooperative-federalism/
(Visited on March 16, 2022).

1.7 CONCLUSION
For many years, the Indian government's policies have reflected this sentiment. We try to illustrate
how cooperative and competitive federalism combine to drive the Indian economy in this research.
When our country's constitution was first created, only the notion of cooperative federalism was
included. Our economy was less free back then, and the central government desired strong control
over the country's policies. However, if we look at the past and analyses the policies of that time,
we can see that they too had a competitive federalism in their mind while framing the policies." In
the Constituent Assembly, Ambedkar even voted against a proposal to restrict the amount of sales
tax collected by provinces, arguing that "states were free to collect sales tax." Despite the fact that
many "provincially reliant" resources have been consolidated in the Centre, he believes it is critical
to "at least leave a large source of income with the provinces." "As a consequence, I feel that
maintaining the sales tax in the hands of the provinces is absolutely logical," he said in response
to a discussion on the matter in the Constituent Assembly.
In his words, competitive federalism was founded because states wanted states to be independent
in some areas so that they could compete and prosper.
As we can say, the GST has been adopted, and the acceptance of both the state and central GSTs
would provide adequate freedom for the federal government and the states to carry out their goals
while also flourishing via competition and cooperation. As a result of this approach, both
cooperative and competitive federalism are encouraged.
1.8 SUGGESTIONS
• The Union Territories and States' roles in the NITI Aayog framework must be clearly
defined, and they must be empowered to reject or accept NITI Aayog policies.
• State legislation should be prioritized for approval by the president, since a faster procedure
will encourage better cooperation between the states and the federal government.
• The Sarkaria Commission
47
and the Punchhi Committee
48
believe that the Governor's
mandate should not be politically conditioned since it impedes coordination among the
central states. Since the president is the nation's governor, the president's office must be
47
Supra note 28.
48
Government of India, Report of the Punchhi Committee (Ministry of Home Affairs, 1988).

maintained apart from political activity.
• Water-related judgements must be adequately enforced in order to avoid long-term
difficulties between states. Conflict-free states will promote competitive federalism.
As a result, if these suggestions are carried out, the threat to cooperative federalism will be reduced.
Finally, cooperative and competitive federalism are not different from each other, but rather are
same and in contraposition. These may not be given greater weight than the others without causing
over centralization or decentralization. For a country's progress, both must be equally and
commonly utilized.