Maharashtra National Law University, Aurangabad
In the words of Birch, cooperative federalism is the administrative cooperation between Central and the state governments with the states being partially dependent on grants from the Centre to promote developments in matters which are constitutionally assigned to them. The article aims to highlight the contrasting approaches adopted by the Indian Prime Minister Narendra Modi to tackle this Covid-19 situation and the administrative measures adopted by the U.S. President Franklin D. Roosevelt to cope up with the severities of the Great Depression in the 1930s.
American cooperative federal system at a nascent stage
The American federal system came into existence in 1776 after the end of the revolutionary war and the declaration of independence. Once the Constitution was ratified and the union of states was established under a federal system, the nature of the union and the powers, duties, rights, responsibilities, and privileges granted to the Federal and state governments became a debatable issue. Till now this debate has been kept alive and the policies adopted by several presidents have shaped the federal system of the country and created a huge impact on the nation’s social, political, economic, and legal history.
Daniel J. Elazar, an eminent scholar of federalism observed the approach adopted by the Federal government in the 20th century which marked the presence of cooperative federalism. The cooperative programs initiated by the Federal government as a response to state demands were seen as an act that made the Federal government the “servant of the states”.
President Theodore Roosevelt’s policies aimed at expanding the powers of the Federal government. His New Nationalism initiative was to curb the highly decentralized approach and protect national welfare from local selfishness. In 1913, President Woodrow Wilson introduced the New Freedom program which highlighted the partnership between the Federal and the state governments in joint ventures while sharing common goals and pursuits. With a cooperative system of governance, the Federal and the state governments ventured upon the arenas of education, public health, construction, banking regulations, agriculture, etc.
Cooperative federalism: Franklin D. Roosevelt’s brainchild
Franklin D. Roosevelt’s presidency started with the Great Depression. At the onset of the Great Depression in 1929, the Federal government experienced tremendous pressure to stabilize the economic position as it had a very negative impact on the world economy. Prior to President Franklin Roosevelt, President Herbert Hoover’s administration created the Emergency Committee for Employment in 1930 to uplift the economy. However, the Committee lacked funding and was not successful in achieving the set goal. By 1932 the local resources were exhausted and the relief bill of $300 million signed by President Hoover was not enough to stabilize the distressed economy.
President Franklin Roosevelt’s New Deal was an effort to tackle the problems of the Great Depression. The New Deal actions hinted at a new system of governance which President Roosevelt was trying to achieve. At the time of such great financial distress, the Federal government would have been tempted to adopt a highly centralized approach and establish federal dominance over the states, but the policies adopted were contrary to such temptations. The New Deal reshaped the federal system and developed “cooperative federalism” in the U.S. The broad sharing of finances, administration, regulation, and politics between the Federal, state, and local governments at all levels were the essence behind this cooperative federal system.
In May 1933, President Roosevelt enacted the Federal Emergency Relief Act (“FERA”) as a response to the financial crisis faced by state and local governments. FERA was a nascent step taken to strengthen the partnership agreement between Federal and state governments. Through FERA the Federal government provided relief to the unemployed and ensured cooperative inter-governmental relations for public welfare. In the same year, the National Industrial Recovery Act (“NIRA”) was also passed to improve the working conditions of the labours and to promote healthy competition in the market by regulating interstate commerce. State governments were requested to pass their own respective IRAs to regulate working hours, wages, and rights of the labours. Several statutes were enacted under the New Deal to support elderly citizens and needy families, to compensate the unemployed and to stabilize prices of agricultural and manufactured goods. The Federal government used grant-in-aid as a tool for efficient implementation of the New Deal programs in all the states. Once the state and local governments had the resources it was easier for them to implement the federal policies. This developed a sense of trust and cooperation between the Centre and the states. It was a bold step by the Federal government to ease the burden of uplifting the economy from the state governments especially in a country like the U.S. as it was a perfect manifestation of dual federalism where powers and responsibilities are clearly defined between the Federal and the state governments. With inter-governmental coordination and cooperation, the paradigm of the American federal system shifted from layer-cake to cooperative.
India’s cooperative federal system during Covid-19
Indian federalism plays a significant role in maintaining unity, stability, and survival of the polity with the existence of the tenacious regionalism. The “quasi-federal” aspect strikes a political equilibrium in India because it balances shared rule and self-rule. Colonial countries embraced federalism to ensure good governance, but today federalism is not applied in the manner it was perceived in. Granville Austin in his book The Indian Constitution: Cornerstone of a Nation rejected epithets such as “statutory decentralization” or “quasi-federal”, for him Indian federalism was one of a kind and designed to meet the Indian needs of governance. He stressed the term “cooperative federalism” because India had a strong central government but this did not necessarily weaken the hold of the state governments. Federalism enlarges the scope and the very foundation of Indian democracy as it involves all parts of the country which keeps inter-governmental relations healthy and stable. The intergovernmental fiscal relations are complex in India due to the ethnic, economic and social disparities among the regions of the country.
“States are not mere appendages of the Centre” as emphasised in the landmark judgment of S.R. Bommai (AIR 1994 SC 1918), yet the Central government under the leadership of the esteemed Prime Minister Narendra Modi acted quite contrary to this notion of Indian federalism while dealing with the Covid-19 crisis. The Central government-imposed pan-India policies which were strictly under the jurisdiction of the states. The fiscal demands to maintain law and order have added a tremendous amount of pressure on the state governments. The state governments fall short financially because of various reasons, and it is not surprising that the Indian economy has not been at its best. The following measures taken by the central government weakened the foundation of both fiscal and cooperative federalism-
- In the initial phase, the state governments were not consulted before issuing notifications and orders which crippled state finances. In spite of this approach, the state governments were subservient to the diktats of the central government even when constitutionally they had the jurisdiction to regulate certain matters. After the financial weakening, in the latter phase, the state governments took measures to strengthen their positions.
- The state governments’ repeated demands to release outstanding GST compensation were unheard and the release was delayed.
- The decision to suspend Members of Parliament Local Area Development (“MPLAD”) Scheme for two years was a unilateral decision and anti-federal. The money will now be diverted to the Consolidated Fund of India. The MPLAD Scheme could have been an excellent way to provide relief in areas neglected by the central or the state governments.
- The exclusion of State Relief Funds from contributions of Corporate Social Responsibility by the Ministry of Corporate Affairs diverted funds from the states to the Centre’s PM Cares Fund.
- The planning institutions like NITI Aayog, State Planning Boards and District Planning Committees have not provided any solid solutions to come out of these problems.
In India, the post-1990s era saw a significant and unique shift to a more “realistic” federalism, which benefited the nation as it integrated the governments and strengthened its security. But the policies and regulations that we witness today denote a backflip to the pre-1990s era.
To combat Covid-19, a decentralised approach is required which does not cripple the efforts of the Centre or the state governments. The Centre has been disregarding the state governments and the elected state governments have been sleeping over their responsibilities. The reason behind putting Franklin D. Roosevelt’s administration and Modi’s centralised approach in one frame was to analyse the two different approaches adopted in order to overcome a financial crisis. We see that in the U.S. Roosevelt sought a more federal approach but the Indian Government took an approach that was not so federal, and in addition to that it was not so helpful as well. The Centre’s policies to tackle the pandemic should have relied on the information obtained by the local governments. Analysing the patterns and policies of the current Indian government it is difficult to comprehend what measures will be taken both in the long and the short run to provide financial security to the citizens.