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A Call for Paradigm Shift

There are many reasons why states will be better off working with each other rather than be in perennial competition. For that to happen we need to develop institutional mechanisms and an appropriate set of incentives.

A Call for Paradigm Shift

From Competition to Cooperation

There are many reasons why states will be better off working with each other rather than be in perennial competition. For that to happen we need to develop institutional mechanisms and an appropriate set of incentives.


ndian states are operating the development agenda almost exclusively in their own territorial framework and were oblivious of the gains that could accrue from mutual coordination of activities across the borders. Such a realisation led to several critical questions: Why is competition rather than cooperation the mantra of the mindset of state system in India? How can a culture of inter-state cooperation be fostered? Which mechanism would make this possible? Ironically, while extensive literature is available on centrestate relations and publications on interstate disputes are considerable in number, writings on inter-state cooperation are scarce.

The role for coordination among states is envisaged in Article 263 of the Indian Constitution. A provision in respect of an Inter-State Council is spelt out. It is stated that “if any time it appears to the president that the public interest would be served by a council charged with the duty of: (a) inquiring into and advising upon disputes which may have arisen between the states; (b) investigating and discussing subjects in which some or all of the states or the union and one or more states have a common interest; or

(c) making recommendations upon any such subject and, in particular, recommending for the better coordination of policy and action, with respect to the subjects, it will be lawful for the president by order to establish such a council, and to define the nature of the duties to be performed by it or its organisation and procedure”. The Constitution did underline the imperative of cooperation amongst the states without compromising their autonomy.

Under the umbrella of Article 263, the Administrative Reforms Commission (1969) recommended the setting up of an Inter-State Council to settle any differences between the union and the states or among the states through mutual discussion. It remained for the Commission on the Centre-States Relations (1988), or the Sarkaria Commission, as it is popularly known, to reinforce the case for setting up of an Inter-State Council. They would have liked to call it as Inter-Government Council (IGC) in the spirit of their own assignment. The Inter-State Council was eventually constituted in 1990 [Arora 1996: 178]. It has the prime minister as the chairman and chief ministers of all the states as members. One of its objectives is to investigate and discuss such subjects in which some or all of the states or the union have a common interest. Eight meetings have taken place so far but the focus of the deliberations is invariably on centre-state rather on state-state issues [Ministry of Home Affairs 2005: 83]. The experience in respect of the National Development Council is not much different. The consensus reached at its meetings is generally what the centre has already decided [Mukerji 1995: 2177].

Feeble Beginnings

Much before the formation of the Inter-State Council, five zonal councils had been set up in pursuance of the recommendation of the States Reorganisation Commission (1956). The northern zone council, for example, covers the states of Jammu and Kashmir, Himachal Pradesh, Punjab, Haryana and Rajasthan and the union territories of Chandigarh and Delhi, as of today. These councils were obliged to take care of matters of common interest in respect of economic and social development, water disputes and linguistic minorities, among other things. Although functional till date, these have not been effective in achieving the objective for which they were constituted. One of the main reasons for the failure is “the absence of their own competent, independent secretariat” [GoI 1988: 240]. Similarly, much remains to be done to make the North Zone Cultural Centre an effective institution. The Bhakra-Beas Management Board, a multi-state arrangement functioning under the purview of Punjab since 1966, is currently in a legal controversy over the question of a competent authority of its control – Punjab or the centre?

The North-Eastern Council, created through an act of Parliament in 1971, deserves special mention. It started functioning in 1972 with an assigned role of an advisory body for ensuring coordination among the states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura in respect of their socio-economic development, with special reference to transport, communication, power and flood control projects. Subsequently Sikkim was also incorporated in this group. The council did not come up to the expectations. The government had to set up a committee in October 2003 to suggest measures for revitalising it so as to ensure active participation of the constituent states in transaction of a “regional agenda”. The committee submitted its report in June 2004. It made a case for strengthening of the North-East Council’s organisational structure, especially by way of nominating three experts, and rendering a conceptual reorientation to its planning process, particularly by involving the traditional institutions at the local level [GoI 2004].

Evidently, the few formal arrangements made to foster cooperation among various states proved fragile. The Ninth Plan (19972002) document had a chapter ‘Cooperative Federalism and Decentralisation’. It expressed concern over the aggressive competition among the states for attracting industrial investment in the context of the new economic policy. A call was made to the states, especially the neighbouring ones, to adopt a harmonious tax structure and tariffs for different services and to facilitate the inter-state flow of goods. The same message was carried in the Tenth Plan (2002-07) document which observed that competitive industrial policies of the various states do not much influence the decision on industrial location. What really matters to the private sector is the “level of infrastructural development and perceptions of governance”.

This is not to deny exchange of views and advice among politicians and administrators at a personal level. This happens in the domain of the “informal”,

Economic and Political Weekly March 11, 2006

hence it is selective and occasional. At times, the formation of an inter-state agency, such as the National Capital Region Planning Board, does bring the neighbouring states around the same table and helps in building up an inter-state perspective. On a few occasions, the courts may enforce coordination as it recently happened in the case of Punjab and Haryana. The two states were asked to jointly computerise all the decisions delivered by the Punjab and Haryana High Courts and their district outfits. Such ventures designed to create a new style are a rarity.

All that said, a culture of well-devised interaction among states does not prevail. The political as well as the administrative propensity toward that ethos is virtually absent. Across-the-state thinking on planning and development is lacking. Any initiative on the lines is viewed with suspicion and is defined as an encroachment upon state autonomy. The new economic policy, which explicitly favours competition, has made the task more difficult. States are adopting divergent policies to attract private investment, invite foreign capital and seek central funds. They are competing with each other more than ever before.

Why the States Don’t Cooperate

One may raise a question as to why the states, especially the neighbouring ones, don’t cooperate with each other? A clue to this is found in the changing administrative map of India [Krishan 2000]. The map was revolutionised soon after independence by way of recasting the former nine full or partitioned British provinces, five centrally administered areas and 555 princely states into 28 states, listed under part A, B, C and D categories. The map was again reorganised into 14 states and six union territories in 1956, primarily on linguistic basis. The process of reforming the map continued thereafter, leading to emergence of new states on the basis of culture (Nagaland), history (Goa) and again language (Gujarat). There are now 28 states and seven union territories in India. By the very mode of their formation and consequent disputes over territory and sharing of assets or resources, the states tend to fall more in the style of competition than cooperation. The mutual envy over acquisition of development and other funds from the limited national kitty adds to this effect. At times, politicians stoke the people’s chauvinistic sentiment, thereby distorting perceptions vis-à-vis the neighbours.

The territorial dispute over Chandigarh and the conflict over sharing of river waters between Punjab and Haryana is one such case. Himachal Pradesh has a grouse over not getting its due share in hydel power generated at Bhakra and Pong dams. Such issues assume criticality when political parties at the helm of affairs happen to be of different affiliation. This is bound to happen when an enlightened leadership, with the necessary vision, is not around.

Possible Cooperation

There is a growing realisation that a formalised synergy among the constituent units of the north-western region, comprising the states of Punjab, Haryana, Himachal Pradesh and the union territory of Chandigarh will not only help resolve the areas of conflict, but also promote integrated development. Here one is reminded of the observations of the State Reorganisation Commission that “these territories as carved out today form a natural area, with vital economic links within” [GoI 1956]. The integrity of the irrigation systems and power potential in the body structure of this region was also highlighted. A recommendation was made for forming a united Punjab to facilitate the process of planned development. The recommendation was not implemented on political considerations, but its relevance is sustained.

Then there are several geographical parameters of this inter-state context, which call for a collaborative effort. The Shivalik hills are common to the entire north-western region. A collaborative strategy of watershed development suits them the best. Likewise, the adjoining border districts on either side of a state border demand joint action, especially in crime prevention, urban development and traffic flow. In the same vein, management of the Ghaggar stream is best done if Himachal Pradesh, Haryana and Punjab work together to their mutual advantage. Ranjit Sagar dam can be developed into a mega-recreation site if Punjab, Jammu and Kashmir and Himachal Pradesh coordinate their tourism and transport maps. No less imperative is to promote industrial clusters close to the inter-state borders and find out the ways in which they can collectively manage the supply of inputs, marketing of the products and development of human resource. A case for an international port at Chandigarh can be a common voice for all the states in the region.

Inter-state cooperation is unavoidable in the management of ecology and upgradation of infrastructure. Meeting the challenge posed by floods and droughts, laying out irrigation systems, rationalisation of cropping patterns, designing of transport networks, and generation and distribution of power, among other things, are most profitably and effectively done on an inter-state basis. Inter-state collaboration is more desired in the sectors which have a tendency to trespass political boundaries, such as natural reserves, urban zones and crime belts.

In the early years after independence, such objectives were achieved through the major multipurpose projects, which in many cases were multi-state too. Take the case of the Damodar Valley Corporation. It was set up in 1948, with the avowed objective of carrying out a comprehensive development of the entire valley region covering parts of Bihar and West Bengal. The experiment did not prove a success because of the lack of necessary cooperation [Ramana 1992: 67-68]. The story of the Narmada Valley project is also known for its inter-state contentions rather than cooperation. As the state borders got entrenched, a collaborative utilisation of resource became difficult over time.

The ministry of home affairs, government of India, has identified 55 districts as affected by left wing extremism. These

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Economic and Political Weekly March 11, 2006


Economic and Political Weekly March 11, 2006

are spread over nine states of Andhra Pradesh, Maharashtra, Madhya Pradesh, Chhattisgarh, Orissa, Jharkhand, Uttar Pradesh, Bihar and West Bengal and form virtually a contiguous south-north belt. By no stretch of imagination the prevailing difficult situation can be overcome without a joint strategy on the part of the concerned states. This applies equally to such other law and order situations.

Along with matters of development and security, disaster management is another area which calls for inter-state cooperation. This is more compelling in situations where physiography is problematic, the transport system sluggish and health services are few and far between. Several parts of Himalayas suffer from such maladies. The spatial manifestation of a disaster does not obey political boundaries and by that token its management too has to transcend state boundaries.

It is no less essential to take cognisance of the clash of interest among neighbouring states. The inter-state disputes over territory, such as between Nagaland and Manipur and river waters such as between Karnataka and Tamil Nadu, are well known. The recent controversy between some of the north and south Indian states over fresh delimitation of parliamentary constituencies became so sensitive that the process had to be postponed till 2026.

Reflecting on the Mechanism

The most difficult task is to prepare states for working in tandem with each other. An effective mechanism has to be devised. States being autonomous entities, cooperation is likely to be more forthcoming if worked through an overseeing agency. Towards that end, the Planning Commission, New Delhi, can give preference for funding to those projects which are designed on an inter-state basis. International agencies can be persuaded to sponsor projects which seek an inter-state collaboration. This will necessarily involve pooling of financial, technical and administrative resources by the concerned states. At the same time, if incentives for attracting industry are declared by the centre, these should be offered on a zonal basis rather than for a specific state. The new industrial package announced by the centre for Himachal Pradesh in January 2003 is not without its adverse implications for Punjab. Inter-state amity gets distorted in the process.

Secondly, it will be a great help if the Indian Administrative Services are made all-India in the true sense of the word. The prevailing practice is to assign an IAS officer to the cadre of a specific state, with a mandatory stint at the union government for a limited number of years. This is likely to generate a state-centric mindset on their part. The desired psyche can be ensured if their placement is made transferable from one state to another. To begin with, an experiment of the kind can be initiated by making their posting transferable among the states/union territories comprising a given zone.

Finally, an institutional arrangement is a prerequisite for operationalising such a cooperation. A recourse may be taken to strengthening of the existing zonal level institutions. Since their inception, the five zonal councils have held only 99 meetings over a period of almost half a century [Ministry of Home Affairs 2005: 84]. Things have to improve. The zonal councils have to play a key role in promoting inter-state cooperation. This may require upgradation of their status from advisory to statutory bodies.

A parallel task is to make the outcome visible on the horizon. Any advocacy of the new culture has to demonstrate the preeminence of its benefits over the costs involved. The constraints which the states may be experiencing in absence of cooperation from their neighbouring or other states are to be highlighted. Such issues generate a meaningful agenda for policy research for which necessary funds need to be made available.


The success story of the European Union has an inspiring message: when sovereign countries can collaborate to their mutual advantage, why then should not the states within a country move in the same direction. Another case is Malayasia selling water to Singapore and the latter trading it back after treatment. Cooperation at the subnational level holds greater promise since the concerned states share a commonality of interests and similarity of objectives at the national level.

There is a need to understand and properly interpret the intrinsic ideology of the “market”. The popular perception is that the functioning of the market is synonymous with the culture of competition. Such a belief is to be corrected. Capitalism, commonly thought as competitive, would founder if it were not for vast system of economic and legal cooperation within it [Nisbet 1972: 390]. Competition cannot do without cooperation among complimentary spatial units to meet the challenge from rest of the system. That is how regional economic unions or associations are taking shape. They cooperate for competition. Such a dual nature of the market is to be harnessed for minimising the cost of production per unit and maximising the return per unit of labour or capital, with a view to generating employment, raising incomes, reducing regional disparity and alleviating poverty. The market may normally follow this route by creating optimal spatial scales and locations, but this tends to be a long time consuming process and often falls in the domain of uncertainty. Hence, the intervention by the state to stimulate and direct the mechanism of cooperation becomes necessary. The desired results will flow only when a winwin situation is created for the concerned states, opportunities are multiplied and gains are equitably distributed.



[The author expresses his deep gratitude to Rashpal Malhotra, the director-general, Centre for Research in Rural and Industrial Development (CRRID), Chandigarh, for initiating the idea, R S Srivastava, Jawaharlal Nehru University, for sharing his reflections on the theme and Anu Kapur, Indian Institute for Advanced Studies, for sprucing up the write-up.]


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and the Demands of Pluralism’ in Observer

Research Foundation, Economic Reforms: The

Role of States and the Future of Centre-State

Relations, New Delhi. GoI (1956): States Reorganisation Commission

Report, Government of India, New Delhi.

– (1988): ‘Commission on Centre-State Relations Report’, Government of India, New Delhi.

–(2004): ‘Report of the Committee on Revitalisation

of North Eastern Council’, Department of

Development of North Eastern Region,

Government of India, New Delhi. Krishan, Gopal (2000): ‘How India Stayed Integ

rated?’, Annals of the National Association of

Geographers, India, Vol 20, pp 3-9. Mukerji, Nirmal (1995): ‘Resolving Centre-State

Conflicts’, Economic and Political Weekly,

Vol L, September 2, pp 2175-77.

Nisbet, Robert A (1972): ‘Cooperation’ in

International Encyclopedia of the Social

Sciences, Vol 3, Macmillan Company and the

Free Press, New York. Ramana, M V V (1992): Inter-State River Water

Disputes in India, Orient Longman, Hyderabad.

Economic and Political Weekly March 11, 2006

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