Federalism in India

The book A Sixth of Humanity: Independent India’s Development Odyssey by Arvind Subramanian and Devesh Kapur highlights growing concerns regarding India’s federal structure and emphasizes consensus-building as the key to sustaining national unity and balanced development.

About Federalism

Meaning

Federalism refers to:

• A system of governance where powers are constitutionally divided between:

  • Central government

  • State governments

India follows:

• A quasi-federal structure with a strong Centre

“Federalism is not merely division of powers; it is the art of balancing unity with diversity.”

Constitutional Basis of Federalism in India

Distribution of Powers

Under the Seventh Schedule:

• Union List

• State List

• Concurrent List

define legislative powers.

Features of Indian Federalism

• Written Constitution

• Supremacy of Constitution

• Independent Judiciary

• Bicameralism

• Division of powers

• Financial relations between Centre and States

Challenges to Federalism in India

1. Divergent Regional Economic Performance

Southern and western states have:

• Higher industrialization

• Better social indicators

• Faster economic growth

while some northern states lag behind.

This creates:

• Regional inequalities

• Fiscal tensions

Concern of Developed States

Economically advanced states argue:

• They contribute more taxes

• But receive comparatively lower transfers

through Finance Commission devolution.

2. Combative Federalism

Increasing unilateral decisions by the Centre have:

• Reduced consultation with states

• Weakened cooperative federalism

Example

The 2020 farm laws were criticized because:

• Agriculture is primarily a State subject

under the Seventh Schedule.

3. Democratic Deficit

Lok Sabha seat allocation remains frozen based on:

• 1971 Census

to avoid penalizing states that controlled population growth.

Result

States with effective population control fear:

• Reduced political influence in future delimitation

4. Increasing Centralization

Concerns exist regarding:

• Growing concentration of powers at the Centre

Governor’s Role

Under Article 200 of the Constitution of India:

• Governors can delay or reserve state bills

This has led to disputes in opposition-ruled states.

5. Fiscal Imbalances

States face:

• Rising expenditure responsibilities

• Limited taxation powers after GST implementation

Importance of Federalism

1. Accommodates Diversity

India’s:

• Linguistic

• Cultural

• Regional diversity

requires decentralized governance.

2. Strengthens Democracy

Allows:

• Local participation

• Regional representation

3. Improves Governance

States can:

• Design policies suited to local needs

4. Prevents Concentration of Power

Federalism acts as:

• Institutional check on excessive centralization

Institutions Supporting Federalism

1. Inter-State Council

Article 263 of the Constitution of India provides for:

• Coordination between Centre and States

2. GST Council

Article 279A of the Constitution of India created:

• Joint decision-making body for GST matters

with representation from:

• Union government

• State governments

3. NITI Aayog

Acts as:

• Cooperative policy platform between Centre and States

4. Local Self-Government

73rd Constitutional Amendment and 74th Constitutional Amendment created:

• Third tier of governance

Finance Commission and Fiscal Federalism

Finance Commission recommends:

• Tax devolution between Centre and States

Recent recommendations include:

• Horizontal devolution criteria based partly on GDP contribution

Key Committees on Federalism

Sarkaria Commission (1983)

Recommended:

• Greater state participation

• Stronger Inter-State Council

• Transfer of some residuary powers

Punchhi Commission (2007)

Focused on:

• Equitable development

• Clearer Centre-State relations

• Governor reforms

“Cooperative federalism transforms diversity into national strength.”

Solutions to Strengthen Federalism

1. Greater Consultation

Strengthen:

• Inter-State Council

• Zonal Councils

• NITI Aayog consultations

2. Balanced Regional Development

Reduce:

• Economic disparities among states

through:

• Infrastructure

• Education

• Investment support

3. Governor Reforms

Ensure:

• Political neutrality of Governors

4. Fiscal Empowerment of States

Provide:

• Greater financial autonomy

• Predictable revenue sharing

5. Consensus-Based Policymaking

Major reforms should involve:

• Wider consultation with states

especially on subjects affecting state jurisdiction.

Conclusion

Federalism remains one of the foundational pillars of India’s constitutional democracy. In a diverse country, cooperative and consensus-driven federalism is essential for balanced development, political stability, and national integration. Strengthening institutions of dialogue and ensuring equitable growth can deepen trust between the Centre and the States.