IAS/UPSC Coaching Institute  

30 Oct 2025 : Federalism and funds

 Editorial 2: ​​Federalism and funds

Context

State autonomy should never be reduced to a bargaining chip for accessing central funds.

 

Introduction

Kerala’s unexpected decision to join the PM SHRI scheme, aligned with the NEP-2020, stirred political debate over federal autonomy and education policy. Once a vocal critic of the NEP, Kerala’s move reflects a delicate balance between accessing central funds and preserving State control over curriculum, exposing deeper tensions in India’s Centre–State educational governance framework.

 

Background: Kerala’s Surprise Move

  • Kerala joined the PM SHRI (Prime Minister Schools for Rising India) scheme, which aligns with NEP-2020, to upgrade and brand 14,500 schools across India as model institutions.
  • The decision surprised many because Kerala, along with Tamil Nadu and West Bengal, had opposed NEP-2020, citing:
    • Encroachment on State powers (education in the Concurrent List)
    • Fear of communal bias and anti-scientific content

Political and Administrative Controversy

Issue

Details

Funding Pressure

Kerala joined partly to access central funds withheld under Samagra Shiksha (SS) scheme.

Cabinet Dispute

The MoU with the Centre was signed without Cabinet approval, causing friction within the LDF government.

Party Positions

The CPI demanded withdrawal; CPI(M) defended the move citing teacher salary arrears due to fund blockage.

Temporary Resolution

A Cabinet subcommittee will now review the MoU; implementation of PM SHRI remains frozen pending its report.

Communication to Centre

Kerala will formally inform the Centre of the suspension.

 

Context: Tamil Nadu’s Legal Challenge

  • Tamil Nadu earlier approached the Supreme Court after the Centre withheld SS funds due to its refusal to adopt NEP-linked PM SHRI.
  • The Kerala case resembles this, though it currently awaits internal review rather than legal action.

Kerala’s Education Strengths

  • Kerala already outperforms NEP-2020 benchmarks:
    • Near-universal Gross Enrolment Ratio (GER)
    • High retention rates and learning outcomes
    • Strong infrastructure and digital access
  • For Kerala, PM SHRI appears to be a cosmetic exercise — rebranding existing high-performing schools rather than real reform.

Federalism and NEP-2020 Concerns

  • PM SHRI implementation requires compliance with NEP-2020 features, including “Indian Knowledge Systems”, seen by critics as pseudoscience.
  • The Centre’s withholding of funds to compel State participation undermines cooperative federalism.
  • The judiciary, as guardian of the federal structure, must ensure that States’ autonomy is not reduced to a bargaining tool for funds.

 

Conclusion

Kerala’s brief alignment and subsequent pause on PM SHRI highlight the tension between State autonomy and central conditionalities in education policy. While the Centre must respect federal principles, States like Kerala and Tamil Nadu should explore legal avenues to safeguard their rightful share of education funds without compromising their policy independence or scientific integrity.