Unpacking cooperative federalism and social policy
Budget 2015 leaves many questions on the future of the cooperative federalism agenda still unanswered
Decentralization to states and co-operative federalism has been the dominant narrative this budget season. In keeping with the recommendations of the 14th Finance Commission (FFC), the government has devolved a 42% share of the divisible pool of taxes to states. This was expected. But the big question for the future of social policy was on the implications of this shift on the central assistance to states (CAS) or plan transfers—the primary source of money for key social sector programmes over the last decade. What would be the total cut in CAS? What would be the implications of these cuts on the legally backed schemes (education, MGNREGA, etc.) that the NDA and FFC had indicated the centre would continue to finance? What is the future of Centrally Sponsored Schemes (CSS)? What would the new institutional arrangements for fiscal transfers between the centre and states look like? And above all what are the implications of all these transitions on the much-promised flexibility to states?