The Changing Nature of Indian Federalism: Evolution, Challenges, and the Road Ahead

Introduction

Federalism is a fundamental principle of India’s political structure, balancing power between the central government and the states. The Indian federal system, enshrined in the Constitution of India, is unique in its nature, as it incorporates both unitary and federal elements. Over the decades, the nature of Indian federalism has evolved due to various political, economic, and social factors, leading to both centralization and decentralization of power.

This essay explores the evolution of Indian federalism, the constitutional provisions governing it, the changing dynamics due to political shifts, economic reforms, judicial interpretations, and globalization, and the emerging challenges in ensuring a balanced and cooperative federal structure.

Understanding Federalism in India

Federalism refers to a system of governance in which power is constitutionally divided between a central authority and regional governments. The Indian Constitution, while incorporating federal principles, also grants strong unitary features, making it a quasi-federal system.

Key Features of Indian Federalism

1. Dual Government System: India has a clear division between the Union government and State governments, each with distinct responsibilities.
   
   
2. Division of Powers: The Seventh Schedule of the Constitution categorizes subjects under:
   
   
   • Union List (97 subjects) – Controlled by the central government (e.g., defense, foreign affairs).
   • State List (66 subjects) – Managed by state governments (e.g., police, public health).
   • Concurrent List (47 subjects) – Both central and state governments share responsibility (e.g., education, criminal law).
     
     
3. Supremacy of the Constitution: The Constitution is the supreme legal authority guiding federal relations.
   
   
4. Independent Judiciary: The Supreme Court of India acts as an arbitrator in disputes between the Union and states.
   
   
5. Single Citizenship: Unlike the USA, India provides single citizenship, ensuring unity among its people.

Quasi-Federal Nature of the Indian Constitution

The framers of the Constitution opted for a strong central government due to historical reasons, such as partition, princely states’ integration, and the need for national unity. As a result, Indian federalism leans towards a centralized model, often termed as “quasi-federal” by legal scholars like K.C. Wheare.

Evolution of Indian Federalism

Indian federalism has transformed significantly since independence, influenced by political, economic, and judicial factors.

1. Initial Phase (1947–1967): Strong Centralized Control

• In the early years of independence, India witnessed a dominant Congress party rule at both central and state levels, leading to a highly centralized federal structure.
  
  
• Article 356 (President’s Rule) was frequently used to dismiss state governments.
  
  
• Key institutions like the Planning Commission played a dominant role in economic policy, reducing states’ financial autonomy.

2. Era of Political Decentralization (1967–1991)

• The 1967 elections saw the emergence of regional parties, leading to coalition governments and a greater demand for state autonomy.
  
  
• Supreme Court judgments, such as the S.R. Bommai case (1994), restricted the misuse of Article 356, strengthening the federal structure.
  
  
• In 1992, the 73rd and 74th Constitutional Amendments introduced Panchayati Raj and Urban Local Bodies, deepening decentralization at the grassroots level.

3. Post-1991 Liberalization and Cooperative Federalism

• The economic liberalization of 1991 marked a shift towards market-driven federalism, reducing the central government’s economic control and enhancing states’ roles in attracting investments and implementing economic policies.
  
  
• The emergence of the Goods and Services Tax (GST) in 2017 redefined fiscal federalism, ensuring uniform taxation while limiting state governments’ financial independence.
  
  
• The rise of regional parties and state-driven economic initiatives further strengthened the federal spirit.

4. Contemporary Trends: Competitive and Asymmetric Federalism

• In recent years, Indian federalism has moved towards “competitive federalism”, where states compete for economic growth, investments, and development projects.
  
  
• Asymmetric federalism is evident in special provisions for states like Jammu & Kashmir, the Northeast, and Union Territories.
  
  
• The abolition of Article 370 in 2019, which revoked Jammu and Kashmir’s special status, marked a major shift in Indian federalism.

Changing Nature of Indian Federalism: Key Aspects

1. Shift from Cooperative to Competitive Federalism

• Cooperative federalism involves the Union and state governments working together for policy formulation and implementation.
  
  
• Competitive federalism, on the other hand, encourages states to compete for resources, investments, and governance rankings.
  
  
• Institutions like NITI Aayog have replaced the centralized Planning Commission, promoting competition among states for development schemes and funding.

2. Fiscal Federalism and GST

• The introduction of GST (Goods and Services Tax) in 2017 replaced multiple state taxes with a centralized tax system, improving ease of business but reducing state autonomy in tax collection.
  
  
• GST Compensation to States became a contentious issue, especially during the COVID-19 pandemic, where states demanded greater financial support.

3. Stronger Centralization of Power

• Increasing use of centralized policies such as One Nation, One Ration Card, National Education Policy (NEP), and farm laws reflect a shift towards unitary tendencies.
  
  
• The role of the Governor, appointed by the Centre, has been criticized for interfering in state governance, affecting federal balance.

4. Role of Judiciary in Federalism

• The Supreme Court and High Courts play a crucial role in interpreting federal provisions.
  
  
• The S.R. Bommai case (1994) reinforced constitutional federalism, limiting arbitrary dismissal of state governments.
  
  
• Recent judicial pronouncements, such as in the Delhi Government vs. Lieutenant Governor case (2018), have clarified the balance of power between Union Territories and the Central Government.

5. Regionalism and Identity Politics

• Demands for separate statehood (e.g., Telangana, Gorkhaland, Bodoland) reflect the regional aspirations within Indian federalism.
  
  
• The Centre’s handling of linguistic, ethnic, and cultural issues plays a critical role in shaping federal relations.

Challenges in Indian Federalism

1. Fiscal Imbalance and Financial Dependency

• States depend heavily on the Centre for financial resources.
  
  
• The 14th and 15th Finance Commissions have attempted to address this imbalance by increasing states’ share in central taxes.

2. Political Conflicts and Governor’s Role

• The Governor’s discretionary powers often lead to political conflicts between the Centre and states, especially in opposition-ruled states.

3. Regional Disparities

• Unequal economic development among states leads to imbalanced federalism. Richer states like Maharashtra and Tamil Nadu have greater financial strength than poorer states like Bihar and Uttar Pradesh.

4. Federalism vs. National Security

• Issues like insurgency in the Northeast, Maoist movements, and cross-border terrorism require strong central control, sometimes overriding state autonomy.

5. Overlapping Jurisdictions in Concurrent List

• Disputes often arise between the Centre and states over subjects in the Concurrent List, such as education, agriculture, and labor laws.

Way Forward: Strengthening Federalism in India

To ensure a balanced and dynamic federal structure, the following reforms are essential:

1. Strengthening Fiscal Federalism:
   
   
   • Ensuring timely GST compensation to states.
   • Providing greater autonomy in financial decision-making.
     
     
2. Reforming the Role of Governors:
   
   
   • Restricting Governors’ discretionary powers to avoid political conflicts.
     
     
3. Enhancing State Autonomy:
   
   
   • Giving states greater control over subjects like education, health, and infrastructure.
     
     
4. Judicial Oversight on Federal Conflicts:
   
   
   • The judiciary should act as a neutral arbitrator in federal disputes.
     
     
5. Balanced Approach to Centralization and Decentralization:
   
   
   • Encouraging cooperative and competitive federalism while respecting regional diversity.

Conclusion

Indian federalism has evolved significantly since independence, adapting to political, economic, and social transformations. While centralization has strengthened national unity and policy coordination, decentralization has empowered states and local bodies. The future of Indian federalism lies in striking a delicate balance between a strong Centre and empowered states, ensuring both unity and diversity thrive in the world’s largest democracy.