As India has remained locked down for a month to contain the spread of the novel coronavirus diseases or Covid-19, the issue of federalism has come sharply to the fore. Given that the states are at the frontline of the pandemic response, they have jostled with the Union government, which has tried to stamp its authority on the national lockdown.

At least in one case, a bitter and ugly political fight broke out, as a Central team headed to West Bengal last week accusing the state of not implementing the lockdown well enough.

Yamini Aiyar, president and chief executive of the Centre for Policy Research, a think-tank in Delhi, has co-authored a paper which has highlighted some of these challenges and proposed a possible solution. Aiyer argues that a way out could lie in the constitution of an assembly of state governments as well as the Union – a political body where chief ministers, the prime minister and other senior ministers could meet to jointly decide the Indian Union’s response to this crisis. Aiyer calls it the National Empowered Emergency Disaster Council – or NEED Council. spoke to Aiyer about her idea and why she thinks it would be an improvement over the current, centralised system.

Yamini Aiyar.

What do you think is wrong with the current administrative architecture of battling Covid-19? The government is legally utilising the Disaster Management Act and using the Pradhan Mantri Garib Kalyan Yojana. What is deficient in those two prongs?
The Disaster Management Act by its very definition is a very centralised structure. But Covid itself is very localised. It is unfolding by cluster, district and state. For example the term hotspots has become a common term in our parlance. Even the way we are thinking of reopening the economy – it’s all by colour coded zones. This essentially means that India’s disaster response has to be quite decentralised.

What makes it more complex in the Indian scenario is that health capacity is very varied by state. Kerala has a much more robust private and public health system compared to, say, Bihar. So how Kerala responds to an outbreak and what its financial needs are will be very different from Bihar.

As a result, our response has to be a lot more agile and differential. Therefore, a centralised system doesn’t help very much.

For Pradhan Mantri Garib Kalyan Yojana, the problem dates back to a much more structural problem that has existed for decades now. Which is that matters such as health are state subjects, since the early 2000s, we see them being financed less and less using the state budget and more and more by a central government transfer system called the centrally sponsored schemes and central sector schemes.

A critical challenge with these central schemes are, they are extremely fragmented and very rigid. There are 28 Centrally Sponsored Schemes which are budgeted by line item. Which means if you [the state] get money [from the Centre] for X you cannot use the money for Y even if you need to put more money into Y. So it’s very rigid that way.

And then we have over 600 Central Sector Schemes.

Wow, 600...
Yes, it’s a crazy number. It includes all the subsidies and direct transfers and so on. When you have this kind of fragmentation you have a lot of administrative load and inevitable inefficiency. These schemes are centrally designed. And even if there is some state flexibility, it has rarely been realised.

This kind of rigidity at a time when needs are changing rapidly depending on the spread of the outbreak makes implementation very hard.

As a result, the current centralised structure actually stymies the response of the state government. And today even, what is in the popular imagination, badly governed states, have strengthened their local administration for food delivery. The obvious thing to do would be to buttress what states are already doing, rather than saying, I am going to create a scheme that then the entire state machinery has to focus on delivering without it necessarily aligning with its needs.

Those are the reasons that a centralised approach using the Disaster Management Act and Pradhan Mantri Garib Kalyan Yojana doesn’t make much sense for Covid.

You’ve co-authored a paper where you have envisaged a National Empowered Emergency Disaster Council – a forum of states and the Centre. Which you say would solve some of the issues there in the current architecture. So could you explain what is the National Empowered Emergency Disaster council and why it would be better than what we have currently?
What has consistently been missing, even before Covid, is a space for states to enter into dialogue and deliberation with the Centre. If you look back into history, states have forever been complaining of too much centralisation. This led to the decision to set up an inter-state council in the 1980s. Earlier, the planning commission also had a National Development Council which was a fora where chief ministers could deliberate with the Centre.

However, neither of these bodies had too much power. For me, the inter-state council shows promise since it is a political body of chief ministers. However, it was never given any effective administrative powers.

This has meant very little opportunity for inter-state coordination. This has been starkly born out, for example, in the migrant crisis. This may well have been better handled if we had more coordination. The whole globe is talking about Kerala and how it handled the crisis. The council could help other states learn from it. Agriculture is extremely interconnected across states. For example, Punjab and Telangana didn’t have any gunny bags which were manufactured in West Bengal. And then they have to write to Bengal to get them to start manufacturing gunny bags.

At the moment of a crisis, we need a significant amount of coordination. To add to that, the nature of the crisis means it requires a differential response across states. Which means even the fiscal response has to be agile and responsive to how the disease is going to unfold. The current home ministry-based National Disaster Management Authority structure does not allow for that.

The prime minister is starting to coordinate a lot more with the states of late. So there is an internal recognition in the system that it’s needed. But we believe it needs to be institutionalised. And that the inter-state council is the appropriate fora for this to take place since there is already an administrative structure that is linked to it.

Remember, the Covid crisis will last for some time. Which makes the urgency for consultation and coordination between states and Centre significant. Thus, we felt it was critical to use the inter-state council for Covid disaster management.

And once we are out of crisis mode, hopefully sooner than later, this would set the template for federal consensus building over the next two decades.

What you are envisaging for the National Empowered Emergency Disaster council makes it more powerful than the current inter-state council. Do you envisage that it would need a new law or ordinance?
No, I don’t think so. If the NDMA works as a secretariat for this, it is viable to do this without any legal changes, at least to our understanding.

What way do you envisage the National Empowered Emergency Disaster council getting funds?
We envisage three sources of funds. One would be the NDRMF allocations themselves. The other source of money will be diverted from Centrally Sponsored Schemes. The Government of India, as part of its own cash management has sent out an order to all line departments asking to reduce expenditure to 15% for the first two quarters [of 2020-2021]. So that money can be passed here. And all the top up money that the government is going to give for relief measures can be routed through the council rather than through individual line ministries.

But this you mean the Pradhan Mantri Garib Kalyan Yojana?
Yes. And then there are other sources for funds that the government is exploring such as international loans. These can be added here.

How do you envisage the National Empowered Emergency Disaster Council taking decisions? For example, if there is a terrible outbreak in one state, will there need to be a consensus among all the states in the union that that state should get more money?
There will need to be some more thinking on how you design the formula [for monetary allocations to states]. The simplest thing to do is to design a formula on basic parameters such as population. That’s where you begin. There will need to be a technical team that works with the Union Finance Ministry to devise the appropriate formula. But the consensus for the formula will be determined in the council.

You don’t need to invoke the council every time you need more funding. The inter-state council is just an institutionalised forum for states to have regular deliberations and discussions. Once the principles of a formula are agreed upon, then the application will take place on a need basis.

And that you envisage will happen through the National Disaster Managament Authority, as is currently happening now?
Essentially, yes. At this stage we have to be very simple about this.

The issue you flagged theoretically in your paper, we saw that come to life with the central teams sent to the states to enforce the lockdown. Especially in West Bengal there was a big row between the two governments. So while you’ve spoken a lot about how the National Empowered Emergency Disaster council will handle money. But will it also do what these central teams are doing like enforcing the lockdown? Powers that are currently all under the Union Home Ministry. Do you think this would solve the problem of the central teams ruling by diktat?
At the minimum, at least signalling that you are open to consultation, consensus-building and deliberation is really important to be able to tide over the political ramifications of the crisis. And consensus building requires a certain political maturity both in the states and in the Central government. Central teams being parachuted into states inevitably create an environment where deliberation becomes very difficult and blame games become the norm.

While the Centre setting monitoring rules is in of itself not necessarily a bad thing, but how it is done is what leads to a breakdown in trust and creates an opportunity for political opportunism on everybody’s part. I think that’s why, in part, the events of the past few days further underscore the need for this sort of consensus building. And it’s not just West Bengal. Kerala wanted to open up in a particular way but it got rapped on its knuckles. This is creating administrative headaches and confusion on the ground.

Once we have political consensus, we can create fora for better bureaucratic engagement. So think about it like this. One of the first things that were done after the lockdown was the creation of empowered groups [in the Union government bureaucracy]. It said that at the Central level, we’re not going to bother about the Health Ministry and NITI Aayog or the education department or the ministry of forest. We will basically looked at where we are getting the expertise and who are the people we can bring together to function in a cross departmental way and break away from silos.

But unfortunately this did not plug into similar systems at the state level. Many states have their own versions of empowered groups. And many have even mapped them onto the Centre’s groupings. Now what is the institutionalised mechanisms that there can be idea exchanges, deliberations and discussions between these two sets of empowered groups?

Till now, the inter-state council has been a bit of wall hanging, hasn’t it?
Yes, it has been a bit of a wall hanging. When the Modi government first came to power in 2014 there was some talk of reinvigorating it. When the Planning Commission was disbanded, there was a line of thought that revitalising the inter-state council is the need of the hour. But that was then. But nothing much happened after that.

There was this complaint that the Planning Commission was a centralising force. But one of the things we did when we disbanded it, we missed that it did create a fora. So yes states complained about coming to Delhi with their begging bowls. But still the National Development Council was a fora where chief ministers interacted with the prime minister. And some of those interactions were very useful. And now we don’t have that with the NITI Ayog.

A vacuum was being felt even in ordinary times. And now it is being felt even more.

It seems we threw the baby out with the bathwater when we disbanded the commission?
Look, I’m no defender of the Planning Commission. But now that we have seen a world without it, it is worth examining the functions it had that were perhaps important. We know that some states are able to do their own thing but some do struggle. Vijay Kelkar calls it the “developmental imbalance”. And balancing this is a critical role the Centre has to play.

Let’s look at the politics behind your plan. It envisages the Union home ministry and the Union finance ministry giving up significant powers...
Yes and no. The inter-state council is based in the home ministry. And that’s a caveat we have even in our paper. But yes, consultation and deliberation does require a certain degree of giving up of power. There’s no question. Even the Goods and Services Tax council, which is often held up as the beacon of cooperative federalism, has its challenges. The politics doesn’t disappear. But I just don’t see any other way.