GST, NITI Aayog, and the Politics of Cooperative Federalism: Evaluating Centre–State Policy Coordination in India

Abstract

India's transition to the Goods and Services Tax (GST) in July 2017 and the concurrent reconstitution of the planning apparatus through NITI Aayog (2015) represent two landmark institutional transformations that have fundamentally reordered Centre–State fiscal and policy relations. This paper critically studies whether these twin reforms have made the practice of cooperative federalism in India stronger or weaker. Based on primary data collected from the GST Council meetings, the Finance Commission reports (14th and 15th), and the progress reports of the NITI Aayog, the study analyzes the revenue buoyancy of the GST, compensation disputes between states, the transfer patterns between different governments, and the role of NITI Aayog in governance during 2015-2024. The results show an ambivalent picture, as the GST Council has provided a meaningful, multi-tier deliberative platform, and NITI Aayog has contributed to convergence programming through the Aspirational Districts Programme, but there are also big concerns about the cessation of compensation cess, the differential revenue performance between states, and the sense that state planning autonomy has been subsumed by the central technocratic preferences. The paper concludes that genuine cooperative federalism requires constitutionally entrenched revenue-sharing guarantees, a revitalised role for states in NITI Aayog's governance architecture, and a rules-based dispute resolution framework within the GST Council.