Federalism in India

Recently, a high-level committee on Union–State relations submitted its first report to the Government of Tamil Nadu. The report examines the distribution of powers and responsibilities between the Union and the States, highlighting ongoing debates regarding the balance between central authority and state autonomy. This discussion is closely linked to the concept of federalism, which forms the foundation of India’s constitutional governance.

Federalism in India

Meaning of Federalism

Federalism is a system of government in which powers are constitutionally divided between a central authority and regional governments. In such a system, both levels of government operate within their own constitutionally defined spheres of authority.

Unlike a unitary system, where power flows entirely from the centre, a federal system ensures that neither level of government is legally subordinate to the other within its assigned domain. This arrangement allows governance to function efficiently in large and diverse countries.

India’s Unique Federal Design

Constitutional Framework

The Constitution of India, which came into force in 1950, established a federal structure with a strong central government. Its design was influenced by the Government of India Act 1935, which introduced many administrative features later incorporated into the Constitution.

Several factors shaped India’s federal system, including Partition, integration of princely states, and concerns about national unity. As a result, the Constitution deliberately created a powerful Union government to maintain stability.

India is described in the Constitution as a “Union of States,” emphasizing unity while recognising regional diversity. Because the Union has stronger powers in certain areas, India’s federal structure is often described as “quasi-federal” or “federal with a unitary bias.”

Constitutional Division of Powers

Schedule VII of the Constitution

The Constitution divides legislative powers between the Union and the States through three lists in the Seventh Schedule.

Union List

Subjects under the Union List are exclusively controlled by Parliament. Important areas include defence, foreign affairs, and currency.

State List

Subjects under the State List fall under the authority of State legislatures. These include police, public order, and public health, which require local governance.

Concurrent List

Both the Union and the States can legislate on subjects in the Concurrent List, such as education, forests, and marriage laws. However, in case of conflict, Union law prevails, reflecting the need to maintain national coherence while allowing regional governance.

Core Principles of Indian Federalism

Constitutional Supremacy

India follows the principle of constitutional supremacy. Both the Union and the States derive their authority from the Constitution, and no government can act beyond its constitutional limits.

Division of Legislative, Executive and Financial Powers

Federalism in India involves the distribution of legislative, executive, and financial powers. While legislative authority defines who can make laws, executive powers determine implementation, and financial powers involve taxation and revenue distribution.

Revenue sharing between the Union and States occurs through mechanisms such as the Finance Commission, the GST Council, and various Centrally Sponsored Schemes.

Cooperative Federalism

India’s federal system ideally operates through cooperative federalism, where the Union and States collaborate to design and implement policies. Institutions such as the Inter-State Council and the GST Council facilitate dialogue and joint decision-making.

In recent years, the concept of competitive federalism has also emerged, where states compete to improve investment climate, governance efficiency, and economic performance.

Unity with Diversity

India is characterised by immense linguistic, cultural, and economic diversity. Federalism allows different states to adopt policies suited to their needs while remaining part of a unified national framework.

For example:

• Tamil Nadu pioneered the midday meal scheme.

• Kerala achieved notable success in public health and social development.

• Maharashtra experimented with employment guarantee schemes.

Asymmetrical Federalism

India also practices asymmetrical federalism, where certain states or regions receive special constitutional provisions. For instance, tribal areas in Northeast India are governed under the Sixth Schedule of the Constitution of India, allowing greater local autonomy.

Judicial Safeguards for Federalism

Federalism in India has been strengthened by the judiciary. In the landmark S.R. Bommai vs Union of India, the Supreme Court of India declared that federalism is part of the Basic Structure of the Constitution.

This means that Parliament cannot amend the Constitution in a way that destroys federalism. The judgement also limited the arbitrary use of President’s Rule under Article 356, making such proclamations subject to judicial review.

Commissions on Centre–State Relations

Several commissions have studied and recommended reforms to improve federal relations.

Rajamannar Committee (1971)

Established by Tamil Nadu, it advocated greater autonomy for states and clear limits on Union intervention.

Sarkaria Commission (1983–1988)

This commission recommended strengthening cooperative federalism, promoting consultation with states, and restricting the misuse of Article 356.

Punchhi Commission (2007–2010)

It suggested redefining the role of Governors and strengthening intergovernmental institutions to improve federal functioning.

Concerns and Challenges in Indian Federalism

Centralisation of Legislative Powers

There is concern that Parliament increasingly legislates on subjects related to state authority. Provisions such as Articles 249 and 250 allow Parliament to legislate on State List matters under certain conditions, potentially reducing state autonomy.

Misuse of Article 356

Before the S.R. Bommai judgement, Article 356 (President’s Rule) was frequently used for political purposes. Although the Supreme Court has placed restrictions, the provision remains controversial.

Role of Governors

Governors have been criticised for delays in granting assent to state bills, discretionary decisions during government formation, and political bias. These issues often lead to conflicts between the Union and State governments.

Fiscal Federalism Imbalance

States carry significant expenditure responsibilities in sectors such as health, education, and agriculture, but major taxation powers remain with the Union. This creates a vertical fiscal imbalance, making states financially dependent on the Centre.

GST and Shared Sovereignty

The introduction of the Goods and Services Tax in 2017 fundamentally reshaped India’s fiscal federalism. While GST created a unified national market, states also expressed concerns regarding loss of taxation autonomy and delays in compensation payments.

Executive Federalism

Increasingly, federal decision-making occurs through executive institutions such as NITI Aayog, the GST Council, and the Inter-State Council. This trend sometimes reduces legislative debate and transparency.

Political Centralisation

When a single political party dominates the Union government, policy-making can become centralised. Conversely, coalition governments historically promoted negotiated federalism and stronger state bargaining power.

Way Forward: Strengthening Federalism in India

Limiting Overreach on Concurrent Subjects

Parliament should exercise restraint in legislating on Concurrent List subjects, unless uniform national standards are essential.

Reforming the Role of Governors

Clear guidelines should be established for Governor appointments, timelines for bill assent, and limitations on discretionary powers. Implementing recommendations of the Sarkaria and Punchhi Commissions would reduce conflicts.

Reforming Fiscal Transfers

The use of discretionary grants under Article 282 should be clarified to ensure predictable, transparent, and rule-based financial devolution.

Recalibrating GST Governance

GST mechanisms should improve transparency, timely compensation, and limited tax flexibility for states to balance national market integration with fiscal autonomy.

Strengthening Cooperative and Competitive Federalism

India’s federal future depends on combining cooperative federalism, where governments work together, with competitive federalism, where states innovate and learn from each other.

Conclusion

India’s federal system represents a carefully balanced model that combines national unity with regional autonomy. While the Constitution provides strong powers to the Union, judicial safeguards and institutional mechanisms ensure that states remain important partners in governance. Strengthening dialogue, fiscal autonomy, and institutional cooperation will be essential to preserve the spirit of federalism in India’s democratic framework.