Indian federalism and Centre–State relations

Is India a federation? The Constitution never uses the word. Article 1 calls India a "Union of States". Scholars have called it "quasi-federal", a "holding-together federation" and "federal with a unitary bias". Each label captures something true: India divides power between the Union and the states, but it deliberately gives the Union a stronger hand than most federations do.

To answer GS II questions on federalism well, you need three things: the structural features, the reasons the framers chose a strong Centre, and a working knowledge of the legislative, administrative and financial relations through which the system actually runs.

Why the framers chose a strong Centre

The Constituent Assembly met in the shadow of Partition, the integration of more than five hundred princely states, and deep concerns about unity and economic planning. Ambedkar described the Union as indestructible while the states are not — Parliament can create new states and alter boundaries under Article 3. The aim was a federation that could hold a diverse country together rather than one formed by independent units coming together, as in the United States.

Federal and unitary features side by side

In S.R. Bommai (1994), the Supreme Court held that federalism is part of the basic structure, even if Indian federalism has its own distinct character.

Legislative relations

The Seventh Schedule divides subjects among three lists:

• Union List — defence, foreign affairs, banking, currency, railways and similar national subjects. Originally 97 entries.
• State List — police, public order, public health, agriculture, land and similar local subjects. Originally 66 entries.
• Concurrent List — criminal law, marriage, education, forests and others, where both may legislate. Originally 47 entries.

The 42nd Amendment (1976) moved five subjects, including education and forests, from the State List to the Concurrent List.

Where laws conflict on a Concurrent subject, the Union law generally prevails (Article 254), unless a state law reserved for and assented to by the President is involved.

Residuary powers — subjects on no list — belong to Parliament (Article 248). This differs from the United States, where residuary powers lie with the states.

When Parliament can legislate on State subjects

Administrative relations

• Article 256 — states must exercise their executive power so as to ensure compliance with Union laws.
• Article 257 — the Union can give directions to states in certain matters.
• Article 365 — if a state fails to comply with Union directions, the President may hold that the state's government cannot be carried on in accordance with the Constitution.
• All India Services (IAS, IPS, IFoS) — recruited by the Union but serving in states, they link the two levels.
• Inter-state water disputes — Article 262 allows Parliament to provide for their adjudication and to exclude the Supreme Court's jurisdiction over them.

Financial relations — fiscal federalism

This is where much of the modern debate sits. The Constitution gives the Union the more buoyant sources of revenue, while states carry large expenditure responsibilities — health, education, police, agriculture. The gap is known as vertical fiscal imbalance.

It is bridged mainly through:

• The Finance Commission (Article 280) — constituted every five years to recommend how the divisible pool of central taxes is shared between the Union and the states (vertical devolution) and among states (horizontal distribution), and to recommend grants-in-aid.
• Grants under Article 275 (statutory) and Article 282 (discretionary, used for centrally sponsored schemes).
• The GST Council (Article 279A), created by the 101st Amendment (2016). GST pooled many indirect taxes of both levels. The Council, chaired by the Union Finance Minister with state finance ministers as members, decides rates and rules — a new and much-debated form of shared sovereignty over taxation.

Institutions for cooperation

• Inter-State Council (Article 263) — set up in 1990 on the Sarkaria Commission's recommendation, to discuss matters of common interest.
• Zonal Councils — statutory bodies under the States Reorganisation Act, 1956, for regional cooperation.
• NITI Aayog (2015) — replaced the Planning Commission; its Governing Council includes all Chief Ministers, and it promotes "cooperative and competitive federalism".

Cooperative and competitive federalism

• Cooperative federalism — the Union and states work together on shared goals: joint schemes, the GST Council, disaster response.
• Competitive federalism — states compete for investment and outcomes, encouraged by rankings on ease of doing business, health, education and other indicators.

A mature federal system needs both: cooperation on shared problems, competition to drive better governance.

Points of friction today

For Mains, be ready to discuss:

• the role of Governors — appointments, assent to Bills, President's Rule;
• the use of Article 356, much reduced after Bommai;
• fiscal issues — cesses and surcharges that are not shared with states, the design of centrally sponsored schemes, GST compensation;
• central agencies operating in states, and questions of state consent;
• inter-state river water disputes;
• debates over delimitation and representation.

What the commissions said

• Rajamannar Committee (1969, set up by Tamil Nadu) — argued for greater state autonomy.
• Sarkaria Commission (1983–88) — rejected any major restructuring but recommended sparing use of Article 356, consultation on Governors' appointments and a permanent Inter-State Council.
• Punchhi Commission (2007–10) — recommended fixed tenure and a removal procedure for Governors, time limits for decisions on Bills, and localised emergency provisions.

Practice questions

1. Prelims-type: Under which Article can Parliament legislate on a State List subject if the Rajya Sabha passes a resolution? With whom do residuary powers lie?
2. Mains-type (150 words): "India is a holding-together federation." Explain with reference to constitutional provisions.
3. Mains-type (250 words): Has the GST regime strengthened cooperative federalism or weakened fiscal autonomy of states? Critically examine.