NITI Aayog- Competitive Cooperative Federalism in States, GDP, Productivity & Income Redistribution (Download PDF)

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After cooperative federalism now ‘competitive cooperative federalism’ defines the relation between centre and states with onus on states to drive transformation in India. Top bureaucracy of states and union territories “to remain ever mindful of the credo of competitive cooperative federalism. ”

Image of competitive cooperative federalism

Image of Competitive Cooperative Federalism

Image of competitive cooperative federalism

  • Officers from across states to deliberate and learn best practices by visiting other states
  • A panel of seven secretaries recommended that states be the key drivers to implement these programmes.

Niti Aayog on GDP

  • According to Niti Aayog, output per worker in industry is 5 times agriculture and that in services 3.8 times agriculture.
  • Moving 1 % workers out of agriculture into industry can increase the GDP by 1.5%

Niti Aayog on Productivity

  • Underemployment is probably the biggest economic challenge India faces, the Aayog vice chairperson said, “Our enterprises are excessively small, and they have remained so. ”
  • Raising productivity requires policy environment for enterprises to grow bigger- remove policies that keep the enterprises small- Micro must grow into small, small into medium and medium into large.

Niti Aayog on Income Redistribution

  • Level of per-capita income limits the scope for redistribution- Bihar has little room for redistribution than Kerala, but even Kerala has limits.
  • Politically, redistribution is only feasible if overall income is growing rapidly.
  • India can increase the total expenditures on education, health, and infrastructure- by either cutting expenditure on or increasing the GDP. However, cutting expenditures on items other than education, health and infrastructure is extremely limited.

What is Federalism?

The power is divided between the national government and other governmental units (states). Different from a unitary government, where one unit holds the power.

Difference between Cooperative and Competitive Federalism

Table contain shows the Difference between Cooperative and Competitive Federalism

Table contain shows the Difference between Cooperative and Competitive Federalism

Main Characteristics of Ideal federalism Types

Cooperative

Competitive

tax-sharing

exclusive taxation

definition of tax base per level of government

competition for tax base

definition of competencies

common competencies

compulsory transferencies

voluntary transferences

free transferencies

earn market transferencies

compensatory transferencies to governments

transferences to individuals

- Published/Last Modified on: July 21, 2017

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