Re-imagining Federalism in India: Exploring the Frontiers of Collaborative Federal Architecture

Sharma, Chanchal Kumar (2015): Re-imagining Federalism in India: Exploring the Frontiers of Collaborative Federal Architecture. Forthcoming in: Asia-Pacific Social Science Review , Vol. 1, No. 15 (31 March 2015)

Abstract

This paper argues that in response to contemporary challenges, the federal governance structure in India requires fine-tuning. A directional shift is required from a cooperative model to a collaborative model of federal governance in view of various endogenous and exogenous imperatives of change, such as rising assertiveness of civil society; rising “self awareness” of regional and local political elites; globalization, privatization and retreat of the central state; and increasing reliance of the national government on intergovernmental coordination mechanisms rather than centralized/hierarchical mechanisms for policy making and implementation. Thus, we reflect on the possibility of supplementing federal practice in India (known for being “federal in form and unitary in spirit”) with collaborative institutions and deliberative processes to achieve policy coordination. Institutional reforms are required to generate the right incentives for welfare enhancing, multi-stakeholder engagement. Three suggestions offered include: expansion of the existing structural and functional horizons of the Inter-State Council (ISC) to engage, inter alia, non-state actors, enabling it to function as a “collaborative council”; offer constitutional status to the newly formed NITI Aayog to prevent it from being marred by ad-hocism; and transfer the financial allocation function to a permanent Finance Commission.

• Item Type: MPRA Paper
• Language: English
• Keywords: India, federalism, collaborative federalism, cooperative federalism, intergovernmental interactions, coordination mechanisms, NDC (National Development Council), ISC (Inter-State Council), collaborative council
• Subjects: H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H70 - General; H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H77 - Intergovernmental Relations ; Federalism ; Secession

References

Ahluwalia, M. S. (2000). Economic Performance of States in Post-Reforms Period. Economic and Political Weekly, 35(19), 1637–1648.

Ansell, C., & Gash, A. (2007). Collaborative Governance in Theory and Practice. Journal of Public Administration Research and Theory, 18(4), 543–71.

Arora, B. (2003). Federalization of India’s Party System. In A. K. Mehra, D. D. Khanna, & G. W. Kueck (Eds.), Political Parties and Party Systems (pp. 83–99). New Delhi: Sage.

Davidson, N. M. (2007). Cooperative Localism:Federal-Local Collaboration in an Era of State Sovereignty. Virginia Law Review, 93(4), 959–1037.

Debroy, B., Bhandari, L., & Aiyar, S. S. A. (2011). Economic Freedom of the States of India. New Delhi: Academic Foundation. Retrieved from http://www.cato.org/economic-freedom-india/EconomicFreedomIndia-2011.pdf

Fenwick, T. B. (2010). The Institutional Feasibility of National-Local Policy Collaboration: Insights from Brazil and Argentina. Journal of Politics in Latin America, 2(2).

Fourçans, A., & Thierry, W. (2001). Tax Harmonization versus Tax Competition in Europe: Game Theoretical Approach (No. 132).

Friedrich, C. (1964). New Tendencies in Federal Theory and Practice. Paper Presented at the 6th World Conference of the International Political Science Association.

Gamble, A. (2000). Economic Governance. In J. Pierre (Ed.), Debating Governance Authority, Steering, and Democracy (pp. 110–137). UK: Oxford University Press.

Gent, J.-E. (2003). Political Economy of India’s Fiscal and Financial Reform. In A. O. Krueger & S. Z. Chinoy (Eds.), Reforming India’s External, Financial and Fiscal Policies (pp. 157–170). Standford: Stanford University Press.

Grewal, B., & Sheehan, P. (2003). The Evolution of Constitutional Federalism in Australia: An Incomplete Contracts Approach. In CSES Working Paper No.22. Melbourne: Victoria University.

Hart, O. D. (1988). Incomplete Contracts and the Theory of the Firm. Journal of Law Economics, and Organization, 4(1), 119–139.

Keefer, P. K. S. (2005). Democracy, Public Expenditures, and the Poor. World Bank Research Observer, 20(1), 1–27. Livingston, W. (1956). Federalism and Constitutional Change. Oxford: Clarendon Press.

Magnusson, W. (1996). The Search for Political Space: Globalization, Social Movements, and the Urban Experience. Toronto: University of Toronto.

Milgrom, P. R., & Roberts, J. (1992). Economics, Organization and Management. Englewood Cliffs, NJ: Prentice Hall.

Myers, G. M. (1990). Optimality, free mobility, and the regional authority in a federation. Journal of Public Economics, 43(1), 107–121.

North, D. C. (1990). Institutions, Institutional Challenge and Economic Performance. Cambridge: Cambridge University Press.

Parsons, T. (1961). An Outline of the Social System. In T. Parsons, E. Shils, K. D. Naegele, & J. R. Pitts (Eds.), Theories of Society (pp. 30–79). New York: Free Press.

Rao, M. G., & Chakraborty, P. (2006). Multilateral Adjustment Lending to States: Hastening Fiscal Correction or Softening the Budget Constraints? Journal of International Trade and Economic Development, 15(3), 335–57.

Reinikka, R., & Jakob, S. (2004). Local Capture: Evidence from a Central Government Transfer Program in Uganda. The Quarterly Journal of Economics, 119(2), 679–706.

Rhodes, R. A. W. (1999). Control and power in Central-Local Government Relationships. Aldershot: Ashgate.

Rodden, J. (2006). Hamilton’s Paradox: The Promise and Peril of Fiscal Federalism. New York: Cambridge University Press. Saxena, R. (2002). Strengthening Federal Dialogue : Role of NDC & ISC. Contemporary India, 1(3).

Schelling, T. C. (1956). An Essay on Bargaining. American Economic Review, 46, 281–306.

Seabright, P. (1996). Accountability and Decentralization in Government: An Incomplete Contracts Model. European Economic Review, 40(1), 61–89.

Shah, A. (2004). Fiscal decentralization in developing and transition economies: progress, problems, and the promise. Policy Research Working Paper Series. Retrieved from http://ideas.repec.org/p/wbk/wbrwps/3282.html

Sharma, C. K. (2009a). Impact of Economic Reforms on Centre-State Financial Relations (Ph.D. Thesis). Kurukshetra University, Kurukshetra (Haryana, India).

Sharma, C. K. (2009b). Emerging Dimensions of Decentralization Debate in the Age of Globalization. Indian Journal of Federal Studies, 19(1), 47–65.

Sharma, C. K. (2010). Towards a Modern Federal Construct in India: The Urgency of an Institutional Response to the Ideational Turn. Journal of Political Science, 28(1), 3–32.

Sharma, C. K. (2011). A Discursive Dominance Theory of Economic Reform Sustainability: The Case of india. India Review, 10(2), 126–184.

Souza, C. (2002). Brazil: The Prospects of a Center-Constraining Federation in a Fragmented Polity. Publius: The Journal of Federalism, 32(2), 23–48.

Stepan, A. (2001). Arguing Comparative Politics. Oxford: Oxford University Press.

Watts, R. (1994). Contemporary Views on Federalism. In B. de Villiers (Ed.), Evaluating Federal Systems. Dordrecht: Juta & Co.

Wheare, K. C. (1963). Federal Government. London: Oxford University Press.

Williamson, O. E. (1985). The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting. New York: Free Press.

Williamson, O. E. (1996). Mechanisms of Governance. New York: Oxford University Press.