The very concept of cooperative federalism needs resuscitation
Centre-state relations have soured not just over the GST compensation dispute but also a lack of central assistance to the states
When growth shudders into a decline, as it has this fiscal year, all governmental coffers suffer a revenue loss. If the covid crisis had hit India’s economy before the goods and services tax (GST) was introduced on 1 July 2017, state government revenue would have crashed just as it has today. No formal compensation guarantee from the Centre for a revenue shock existed then. Indeed, no national government in any federation offers that kind of revenue insurance. Even so, states would rightfully expect some fiscal assistance from the Centre. It is the absence of that, rather than the formal GST compensation issue alone, that has soured Centre-state relations in the country.