Centre-State Relations in India
Prime Minister Narendra Modi has urged Chief Ministers to collaborate as “Team India” to drive national progress. However, the current Centre-State relationship appears imbalanced, as the center often imposes its will on the States, making it difficult for them to express their grievances effectively.
Challenges in Centre-State Dynamics
- The NITI Aayog Governing Council and the Goods and Services Tax (GST) Council meetings are infrequent, hindering States' ability to present their issues.
- The NITI Aayog's Governing Council, aimed at developing a shared vision for national priorities, meets only once a year, which is inadequate.
- The GST Council has not convened in over five months despite regulations mandating quarterly meetings.
State Initiatives and Proposals
- Andhra Pradesh Chief Minister N. Chandrababu Naidu suggested forming three sub-groups of States to focus on:
- GDP growth and investments
- Leveraging India's demographic advantages
- Utilizing technology for governance
- Tamil Nadu Chief Minister M.K. Stalin proposed the Centre increase its tax revenue share with States to 50%, from the current 41%.
Fiscal Implications and GST Issues
- The Centre's compensation for States' GST losses was conditional on them enhancing their tax revenues, with mixed results across States.
- States' combined own tax revenues as a percentage of Gross State Domestic Product (GSDP) grew from 6.6% in 2017-18 to 7.2% in 2024-25.
- GST has yet to meet its potential, only recently surpassing pre-GST indirect tax levels, raising questions about the fairness of the current tax-sharing formula.
