As Indian economy grows, Centre and states must work together


From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Paper 2- Tailored approach to cooperation and competition


The ongoing discords between the Centre and states over issues ranging from the allocation of financial resources to fixing of GST rates has once again brought to the fore issues pertaining to our federal structure, the resolution of which is essential for the country’s growth.

Combination of cooperative and competitive spirit

  • Positive competition: It is undeniable that cooperation is key to the smooth functioning of federal design.
  • However, if it is coupled with positive competition among the states, then the overall result would be large-scale economic development across the country.
  • The competitive aspect of federalism can positively be harnessed by encouraging states to adopt each other’s best practices.
  • Exclusivity and mutualism: Indian federalism today enables the Centre and states to function with both exclusivity and mutualism.
  • Vertical and horizontal level: Cooperation between the Centre and states is required at both vertical (between Centre and states) and horizontal (among states) levels and on various fronts.
  • What does it mean? This includes fine-tuning of developmental measures for desired outcomes, development-related policy decisions, welfare measures, administrative reforms, strategic decisions, etc.

Steps in the direction of cooperation

  • Recent efforts in this direction, such as according greater leeway to states in the functioning of the NITI Aayog, frequent meetings of the prime minister with chief ministers as well as with chief secretaries and district magistrates, periodic meetings of the President of India with governors, and the functioning of “PRAGATI” to review the progress of developmental efforts have generated the requisite synergy between the Centre and states.
  • Positive efforts of states towards attracting investment can create a conducive environment for economic activities in urban and backward regions alike.
  • Healthy competition coupled with a transparent ranking system would ensure the full materialisation of the vast but least utilised potential of the federal framework.
  • Sector specific indices: In this direction, NITI Aayog’s initiatives such as launching sector-specific indices like the School Education Quality Index, Sustainable Development Goals Index, State Health Index, India Innovation Index, Composite Water Management Index, Export Competitiveness Index, etc. could prove to be a great contribution.
  • Central efforts toward synchronisation of cooperation and competition can be observed in the implementation of the 14th and 15th Finance Commission reports, which have greatly contributed to resource devolution.
  • Recent reform measures in the form of the New Labour Code and other amendments/enactments by the legislature also exhibit this trend.


The rising stature of the Indian economy on the world stage can only be strengthened by a tailored approach to cooperation and competition. The mandate to marry the two would inevitably be the collective responsibility of the Centre and the states. Any ideological differences between them will have to be inevitably put on the backburner for the great Indian federal structure to succeed and prosper.

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