Cooperative Federalism is a governance concept where the Union, State, and local governments collaborate to address common challenges and achieve national development goals, emphasizing partnership over rigid division of powers. Although the term is not explicitly mentioned in the Constitution, the Supreme Court in State of Rajasthan v. Union of India (1977) predominantly characterized the Indian model of federalism as 'cooperative'. The concept's roots in modern India can be traced back to the Regulating Act of 1773, which established a framework for local governance, and the Government of India Act of 1935, which laid the groundwork for a federal structure. The framers of the Constitution adopted this collaborative style to ensure national unity and integrity while accommodating India's immense diversity.
The mechanism is enshrined through several constitutional provisions and institutions. Article 246, read with the Seventh Schedule, divides legislative powers into the Union, State, and Concurrent Lists, allowing both the Centre and states to legislate on Concurrent List subjects. Article 263 provides for the establishment of the Inter-State Council to investigate and discuss subjects of common interest between the Centre and states. Fiscal cooperation is ensured by the Finance Commission (Article 280), which recommends the sharing of taxes between the Union and states.
A significant recent change occurred on January 1, 2015, when the NITI Aayog (National Institution for Transforming India) was established by a Cabinet Resolution, replacing the erstwhile Planning Commission. The NITI Aayog acts as a policy think tank and a platform to foster cooperative federalism by involving states in the economic policy-making process using a bottom-up approach, moving away from the Planning Commission's top-down model. Another key development is the introduction of the Goods and Services Tax (GST) through the 101st Amendment Act. The GST Council (Article 279-A), which includes representatives from both the Centre and states, is a major institutional mechanism for cooperative fiscal federalism. The spirit of cooperation is also reinforced by the 73rd and 74th Constitutional Amendments, which empowered local self-governance, extending the federal principle to the grassroots level.