{"id":349902,"date":"2025-11-13T19:07:53","date_gmt":"2025-11-13T13:37:53","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=349902"},"modified":"2025-11-13T22:42:46","modified_gmt":"2025-11-13T17:12:46","slug":"cooperative-and-competitive-federalism-explained-pointwise","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/cooperative-and-competitive-federalism-explained-pointwise\/","title":{"rendered":"Cooperative and Competitive Federalism – Explained Pointwise"},"content":{"rendered":"

Download PDF Daily 7 PM Initiative for the day\u00a0<\/a><\/p>\n

The States in India are no longer looking only at the Centre for supporting them, but are also competing with each other for attracting investors & pitching their case with confidence & data. Thus, the federalism in India is believed to be moving towards maturity.<\/p>\n

Federalism in India operates on two key principles: cooperative federalism<\/span> and competitive federalism<\/span>, both of which influence governance, economic growth<\/span>, and fiscal discipline.<\/span> However, the growing trend of freebies-based competitive federalism<\/span> has raised concerns about sustainability, fiscal responsibility, and the long-term economic impact.<\/p>\n

While competitive federalism fosters economic efficiency and innovation, an unchecked race to provide freebies threatens financial stability. This article explores the dynamics of cooperative and competitive federalism & their impact on governance, and their challenges.<\/p>\n

\"Cooperative
Source- Big Buzz<\/figcaption><\/figure>\n\n\n\n\n
Table of Content<\/strong><\/td>\n<\/tr>\n
What is the concept of Competitive and Cooperative Federalism?<\/a>
\nWhat is the present status of freebies Competitive Federalism?<\/a>
\nWhat is the significance of Competitive and Cooperative Federalism?<\/a>
\nWhat are the key initiatives undertaken to enhance both Competitive and Cooperative Federalism?<\/a>
\nWhat are the challenges in Competitive and Cooperative Federalism?<\/a>
\nWhat are the recommendations for Reform?<\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

<\/a>What is the concept of Competitive and Cooperative Federalism?<\/strong><\/span><\/h2>\n

Cooperative Federalism<\/strong><\/span><\/p>\n

Cooperative federalism emphasizes collaboration between the Union<\/span> and state governments<\/span>. Both levels of government share responsibilities and work together for the larger public interest. It ensures coordination and alignment of policies across the Centre and states. Examples include<\/strong>:<\/p>\n

1. Goods and Services Tax (GST) Council<\/strong>, where the Centre and states jointly decide tax rates and structures.<\/p>\n

2. Ayushman Bharat and PM-KISAN<\/strong>, which require Centre-state collaboration for effective implementation.<\/p>\n

3. Zonal Councils<\/strong>, established by the States Reorganization Act, 1956<\/span>, to resolve inter-state disputes.<\/p>\n

Competitive Federalism<\/strong><\/span><\/p>\n

Competitive federalism fosters horizontal competition among states<\/span> and vertical competition between the Centre<\/span> and states<\/span> to attract investment, enhance governance, and improve public services. The NITI Aayog<\/span> promotes competition through rankings in ease of doing business, education, and health.
\nExamples include:<\/strong><\/p>\n

1. Gujarat and Maharashtra\u2019s economic rivalry<\/strong> in the 2000s, offering tax breaks and subsidies to attract manufacturers.<\/p>\n

2. State-specific welfare schemes<\/strong>, such as Telangana\u2019s Rythu Bandhu<\/span> and Odisha\u2019s KALIA<\/span>, complementing central schemes like PM-KISAN<\/span>.<\/p>\n

3. Vibrant Gujarat Summit<\/strong>, attracting global investments.<\/p>\n\n\n\n
\n

Constitutional provisions supporting Cooperative & Competitive Federalism<\/strong><\/span><\/p>\n

1. Seventh schedule: <\/strong>It classifies legislative subjects into the Union List, State List<\/span>, and Concurrent List<\/span>, ensuring a balance of power and cooperation between different levels of government.<\/p>\n

2. Article 261 (Full Faith and Credit Clause):<\/strong> Mandates that public acts, records, and judicial proceedings of one state be recognized and upheld across all states, promoting legal uniformity.<\/p>\n

3. Article 263 (Inter-State Council – ISC): <\/strong>Provides for the establishment of the Inter-State Council (ISC) to investigate and discuss subjects of common interest among states and the Union, fostering cooperation.<\/p>\n

4. All India Services (Article 312):<\/strong> Provides for centrally-recruited officers serving in both the Centre and states, ensuring administrative cooperation.<\/p>\n

5. Goods and Services Tax (GST) (Article 279A)<\/strong>: Establishes the GST Council, where states negotiate and compete over taxation policies, striving for a favorable business environment.<\/p>\n

NITI Aayog (Executive Initiative, Replacing Planning Commission)<\/strong>: Encourages a competitive approach through performance-based rankings, incentives, and best governance practices among states.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

<\/a>What is the present status of freebies Competitive Federalism?<\/strong><\/span><\/h2>\n

1. Shift from Cooperative to Competitive Freebies- <\/strong>Instead of competing on efficiency and governance, states now engage in populist policies<\/span> that include reckless subsidies<\/span> and fiscal imprudence.<\/span> This has turned competitive federalism into a fiscal bidding war, where states offer increasingly larger cash transfers and free services to gain political mileage.
\nExamples include<\/strong>: Monthly cash transfers to women<\/span><\/strong> announced by Karnataka and Rajasthan, despite fiscal constraints.<\/p>\n

2. Unsustainable Fiscal Health:\u00a0<\/strong><\/p>\n