Covid-19 lessons: India needs cooperative federalism of the flexible kind

Covid-19 and public health system
India needs to shed the profit logic that has dominated the sector in the pre Covid-19 period and reconstruct public sector system.

By Shiv Chhatrala

The Covid-19 pandemic has been a litmus test for India’s federal structure. The crisis saw a blame game unfolding between the Union and state governments as the caseload and deaths mounted in April-May 2021. Though health is a state subject, the Centre played an important role because it is financially empowered with vast resources. Despite being on the frontline of fighting the pandemic, the state governments and the local bodies were totally dependent on the Union government.

Universal immunisation against serious illnesses such as polio, TB and malaria is the responsibility of the Union government. But this responsibility is executed using the administrative machinery of states and local bodies. Till the Covid-19 outbreak, universal immunisation was provided by the Centre free of cost to every citizen. It had declared a free immunisation programme after the World Health Organisation (WHO) declared Covid-19 a pandemic. But once the first wave ebbed, the Centre asked states and private sector to procure their vaccine requirements through negotiation with manufacturers.

Centre-state tensions mar Covid-19 response

The Constitution specifies the administrative, legislative, and executive powers of the Union and the states. All subjects are divided into three lists mentioned under the seventh schedule – the Union list, the state list, and the concurrent list. The Union list has 100 items on which the Centre has exclusive rights for legislation. The State list has 61 items (earlier 66), on which the state can exclusively legislate. However, Parliament can make laws on state subjects through a resolution with two-thirds majority in the Rajya Sabha. Articles 249, 250, 252, and 253 mention situations in which the Union government can legislate on subject of the state list.

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Entry 81 of the Union list allots legislative field for inter-state migration and inter-state quarantine to the Centre. According to entries 1, 2, and 6 on the state list, the state has exclusive independence in legislative fields of public order, police, and public health and sanitation including hospitals. Entries 23 and 29 of the concurrent list specify the legislative rights of both the Centre and states in the field of social security, social insurance, employment, and prevention of infectious or contagious diseases or pests affecting men, animals or plants.

The executive powers of the Union and the state are in coexistence with legislative power under Articles 73 and 162. Hence, the subjects mentioned in entry 81 of the Union list, entries 1, 2, and 6 of the state list, and the entries 23 and 29 of the Concurrent list came into play during the covid-19 pandemic. However, the constitution is not clear on who will handle disasters, giving the Centre an open end to use the residuary powers given to Parliament under Article 248 to invoke rules concerning any disaster in the country.

As the pandemic is considered a disaster, the Union government has invoked the National Disaster Management Act 2005 deriving its power from entry 23 of the concurrent list. The core idea behind the concurrent list was to ensure cooperation on the subjects on the concurrent list. There are several conclusions drawn with the usage of Disaster Management Act that are both complementary and contradictory. In the initial phase of pandemic (February-March 20), the Union government advised state governments and UTs to invoke the Epidemic Act of 1897.

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Later, before declaring a nationwide lockdown, the Union government invoked the DM Act. The Epidemic Act provides responsibility to both the Centre and states to make decisions. While the DM act deals with a centralised approach, where the Ministry of home affairs is the chief administrative body. Under the DM Act, the Union government issues extensive guidelines which are expected to be followed. The states cannot nullify the central guidelines issued under the DM Act.

Additionally, states can make guidelines stricter if local situation demands. The DM Act is termed a necessity by various stakeholders while a few states consider it draconian. They argue that state disaster management authority should have the right to implement its own guidelines and not compulsorily follow the Centre’s instructions. This takes us to the discussion of the DM Act’s top-down and bottom-up approach. State disaster management authority has exclusive rights to form a state plan to fight the disaster under the DM Act, but it should be within the national plan.

The state executive committee can also consult ground level stakeholders. In this way, the DM Act provides space through which all stakeholders from top to bottom can be included. The Covid-19 pandemic challenged India’s health infrastructure top to bottom. In the initial phase of pandemic in March 20, the situation was demanding quick and collective decision making. The situation warranted the Centre and state to be on the same page. Using section 10(2)(1) of the DM Act, under the directions of NDMA, the home minister as the chairperson of NEC issued an order on March 24, 2020 to all ministries/ departments of the government of India, state governments and UTs to implement lockdown measures.

Although the DM Act has space providing features to state, it sounds like an over- centralised approach because the decision of lockdown was made with only four hours prior notice to states. Though states were together in this medical emergency, it desperately needed time to plan out its requirements. The whole migrant labourer crisis was the result of inadequate preparation by states to handle the situation. The migrant crisis tested the Centre-state, and state-state coordination. As the migrant crisis unfolded due to the sudden lockdown, the Centre issued directives to states to deal with the crisis and made the provision of special trains. But all the interstate coordination was carried out by states without any involvement of the Centre.

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Extreme centralisation to total decentralisation

There were a series of events that highlighted the over-centralised administration during the first wave of covid. The Centre’s strict implementation of lockdown and formation of micro-containment zones without consultation with states is an example. States were also not allowed to purchase medical kits without the Centre’s permission, a highly centralised way to deal with the situation. Implementation of Section 35 of the DM Act permits the Centre to constitute inter-ministerial central teams (IMCTs) and disseminate it to the states. It can issue requisite directions to the state authorities, and states are also bound to submit their reports to the Centre.

West Bengal Chief Minister Mamata Banerjee criticised this move by the Centre. The Centre dispatched one such team to Bengal in 2020, to which Mamta Banerjee said that no prior information regarding the arrival of such team was given to the state. “The selection of districts and observations made unilaterally are nothing but a figment of imagination,” said Banerjee.

Moreover, the Centre also controlled key state powers of selling liquor and public transport, which created an additional burden on state finances. There is an instance of a clear over-centralised approach when the Kerala state government was instructed to withdraw its decision to reopen restaurants in the state after local assessment. However, due to several state government’s concerns over state autonomy, the Centre withdrew its intervention on this matter. There was a shift in central stance from lockdown 1 to lockdown 4. Several states were demanding partial reopening of economic activities, so gradually more responsibility was given to states. Analysing these acts from a legal perspective seems like rational behaviour, but its success depends on various factors of implementation.

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Spat over GST compensation

Apart from administrative matters, states also raised concerns over fiscal federalism. The Centre steamrolled policies on cash-strapped states — from imposing Pan-India policy on state subjects such as public transport and ban on liquor. There was a dispute over the distribution of GST compensation cess of 2020, the central government said it is running out of budget due to the pandemic, but states were desperate for their compensation. The Centre offered to distribute Rs. 2.35 lakh crore and proposed two alternatives.

The first option provides special window in consultation with RBI for borrowing the projected GST shortfall of Rs. 97,000 crore and the amount can repay after five years of GST implementation ending 2022 from the compensation cess fund. The second option gives space to borrow the entire shortfall of Rs 2.35 lakh crore under the special borrowing window facilitated by the RBI. The Centre’s move was criticised by states by saying that the former is constitutionally obligated to provide GST compensation under any condition.

Terms of reference of 15th Finance Commission suggests if revenue deficit grants should be provided at all to states, there should be measures to control “populist measures by states. Another example of the anti-federal bias is diversion of all the funds of members of Parliament local area development schemes (MPLAD scheme) to the consolidated fund of India. This has undermined the local level approaches to control the outbreak. States are also denied funds from CSR contributions.

During the second wave of Covid-19, there were no centralised restrictions. States were given complete authority to implement restrictions according to regional needs. Both the Centre and states were not in the mood of pausing economic activities once again since restrictions can only delay the outbreak and can’t really prevent it. The Centre termed lockdowns as the last resort. This attitude towards the second wave allowed public gatherings like Kumbh Mela and election rallies.

On the other hand, state governments started imposing lockdowns as the situation was getting out of control. It seemed that the Centre, after witnessing criticism over centralised federalism during the first wave, gave up its responsibility to make states aware about new variants, as it was not quick enough in issuing the guidelines. In this way, there was a shift towards a decentralised approach. Inter-state transport was not banned centrally even though the second wave was more devastating.

Certain states, however, implemented quarantines and RT-PCR tests for people travelling across the country. The Centre came up with a different stance and instructed states to lift RT-PCR requirement for passengers travelling within states. The Centre withdrew from coordinating medical resources, medical oxygen, and testing kits during the second wave and blamed states for issuing false alarm over deficiency in medical oxygen. The weak response of the Centre over disputes relating to oxygen supply prompted the Supreme Court to intervene.

India started its vaccination drive from January 16, 2021. The Centre was solely responsible for all the vaccine rollouts. Vaccination is a domestic subject, but there are several processes at international level for vaccine procurement. The Centre could have handled it in a more practical way. Due to rising demand and limited supply, there was already excessive tension on vaccine distribution. The central government has already issued criteria like population, case positivity rate, and vaccine waste for vaccine distribution. This led to Centre-state dispute on vaccine criteria.

Several state governments wanted to vaccinate all people above the age of 18 and the same was demanded from the Center. Finally, the Centre opened vaccination for those above 18 years, creating a huge scarcity of vaccines.

Then there was a demand for decentralisation of vaccination programme. But all the states were not on the same page on direct procurement of vaccines. States like West Bengal demanded decentralised plan, while states like Punjab, Madhya Pradesh, Kerala, Telangana, Bihar and Chhatisgadh didn’t support the demand. States were given 25% share to handle that included vaccine procurement.

India is a sovereign country and it would have been better if the Centre handled vaccine manufacturers internationally. Now the state governments also started dealing with international vaccine companies in their own way. The central government while issuing decentralised plan for vaccination defined three different prices of vaccine for Centre, states and private companies. More confusion over vaccine prices, complex dealing with companies made the situation worse. Finally, state governments realised that it is not an easy task to conduct a vaccination drive, and demanded the Centre to fully handle vaccine purchase, resolving the tussle.

The Covid-19 pandemic was a huge challenge to India’s federal system. A lesson to be learnt from the crisis is cooperative federalism and decentralised policies can fight health emergencies better. Shift from over-centralisation to total decentralisation cannot really help contain the pandemic. The Centre and the states need to work in a flexible way – somewhere between the two extremes.

Legal frameworks are not sufficient to deal with pandemics, but they play a key role. There were several issues with the execution of these frameworks. To achieve the desired outcome, there must be two-way communication. Political communication was rapid from the Centre during the first wave, but during the second wave there was disrupted communication. The Union government must be ready to take charge of the situation and should avoid a blame-game that could weaken the country’s federal structure.

(Shiv Chhatrala is a student of economics and media studies at Christ University, Bangalore. He is currently interning with Policy Circle.)

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