Cooperative federalism

Story hook

It is 1 January 2015. In an unusual New Year decision, Cabinet abolishes the 65-year-old Planning Commission (set up 15 March 1950 by a Cabinet resolution) and replaces it with the NITI Aayog — National Institution for Transforming India. The shift is more than nameplate: where the Planning Commission allocated funds and set 5-year targets, NITI Aayog is a think tank with no fund-allocation power, advising via cooperative + competitive federalism.

Six months later, on 3 August 2016, the 101st Constitutional Amendment clears Parliament. Goods and Services Tax (GST) is born — the single biggest indirect-tax reform since 1947. The GST Council, under Article 279A, becomes the most powerful example of cooperative federalism by design: the Centre and States vote on every rate, every threshold, every exemption — with the Centre's vote weighing one-third and the States' votes together weighing two-thirds.

A decade later, NITI Aayog publishes the SDG India Index annually, runs Aspirational Districts (since 2018) covering 112 backward districts, and ranks states on innovation, school education, water management. The GST Council has met 55+ times by 2024, navigating COVID compensation cess, online gaming levy, and GST Appellate Tribunal rollout.

For UPSC, this unit threads the institutional story of how Indian federalism is being re-engineered from command-allocation to bargained cooperation.

Why this matters for UPSC

• Prelims: 2-3 questions a year — NITI Aayog year, GST Council composition, Aspirational Districts.
• Mains GS-II: Federalism, GST, NITI Aayog — staple stems (2015, 2017, 2019, 2022).
• Interview: GST as cooperative federalism; competitive federalism rankings.