States’ Loss of Fiscal Autonomy in a Centralised Federal System

Prof M. Govinda Rao has penned a piece in The IndiaForum:

The response to Covid-19 has brought out the fragility of the Indian federal system. A tendency towards extreme centralisation during the pandemic and the absence of checks and balances to correct this centralisation is a matter of concern. The process of concentration that happens when a country is at war with another comes from a patriotic zeal to empower the government to fight the war. However, the pandemic has to be fought by both the centre and the states as both have stakes in protecting lives and livelihoods­—in fact, the states more so since they are in the forefront. But they do not have the fiscal strength to do so. In such a scenario, the centre is using the states’ distress situation to force them to adopt its economic and institutional agenda.


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