Students preparing through UPSC online coaching and IAS coaching in Hyderabad should note that the defeat of a recent Constitutional Amendment Bill has reignited debates on India’s federal structure.
What is Federalism?
• Federalism is a system of governance where powers are divided between the Centre and States, ensuring both levels function independently yet cooperatively.
• It balances unity with diversity, allowing states to address local needs while the Centre manages national concerns.
Democratic Deficit in Representation
• Seat Freeze: Constitutional Amendments in 1976 and 2002 froze redistribution of Lok Sabha seats based on the 1971 Census, extended until after the 2026 Census.
Impact
• Southern states such as Andhra Pradesh, Kerala, Tamil Nadu, and Telangana may lose around 23 seats if redistribution occurs.
• Northern states like Bihar, Madhya Pradesh, Rajasthan, and Uttar Pradesh may gain nearly 31 seats.
• Fertility decline in the South versus rising population in the Hindi heartland has created tensions regarding political representation.
Fiscal Transfers Challenge
• Redistribution patterns have widened over decades:
• 1960s: Hindi heartland states received nearly 20% more than their contribution, while Southern and Western states received about 20% less.
• 2023: Heartland states received almost 90% more, Southern states 44% less, and Western states 58% less relative to their contributions.
Perception
• Better performing states feel penalised for growth, industrialisation, and population control.
• Poorer states are perceived to be rewarded through redistribution mechanisms.
Structural Divergence Among States
Rapid Growth in South & West
• Since 1980, states such as Tamil Nadu, Karnataka, Kerala, Maharashtra, Gujarat, and Haryana recorded annual per capita GDP growth rates of 6–7%, comparable to China’s sustained growth period.
Lagging Regions
• The Hindi heartland (UP, Bihar, MP, Rajasthan) and West Bengal grew at slower rates of around 3–4% annually.
• This created sharp economic and demographic imbalances across regions.
Impact on Federalism
• These divergences directly affect:
• Political representation after the 2026 Census.
• Finance Commission-based fiscal redistribution
Federalism Under Strain
Political Centralisation
• Major national decisions such as:
• Demonetisation (2016)
• Citizenship Amendment Act (2019)
• Farm Laws (2020)
• New Criminal Laws (2023)
• Electoral Reforms (2025)
were undertaken with limited state consultation, increasing mistrust.
Shift in Federal Practice
• India’s cooperative federalism is increasingly being viewed as combative federalism.
• This weakens trust between the Centre and states.
Regional Grievances
• Discontent in regions such as Kashmir, Ladakh, Manipur, and Southern states reflects uneven accommodation of regional aspirations and identities.
Democratic Sensibility as a Solution
Meaning
• Democratic sensibility refers to the willingness to consult, compromise, and accommodate diverse interests, especially by those holding greater power.
GST Council Example (2018)
• When Kerala opposed taxation on gambling, the then Union Finance Minister engaged in dialogue, accommodated concerns, and preserved consensus within the GST Council.
Significance
• Such practices strengthen trust between the Centre and States.
• Consensus-based governance is essential for managing India’s diverse federal democracy.
Mechanisms for Addressing Federal Issues
Finance Commission – Article 280
• Recommends tax devolution and grants-in-aid between Centre and States every five years.
Inter-State Council – Article 263
• Forum for coordination and dialogue among Centre and States.
• Chaired by the Prime Minister.
GST Council – Article 279A
• Ensures fiscal federalism in indirect taxation.
• Decisions are largely consensus-driven.
Supreme Court
• Acts as guardian of the federal balance.
• States can invoke Article 131 in Centre–State disputes.
Rajya Sabha – Article 249
• Can authorise Parliament to legislate on State List subjects in national interest.
Zonal Councils
• Established under the States Reorganisation Act, 1956.
• Promote regional cooperation and resolve inter-state disputes.
FEDERALISM AND CONSTITUTION
- Article 1: India is a “Union of States” – emphasizing indestructible unity but flexible federalism.
- Seventh Schedule: Division of powers into Union List (97 subjects), State List (66 subjects), Concurrent List (52 subjects).
- Article 246: Defines legislative competence of Centre and States.
- Article 356: Emergency provisions, though often criticized for misuse.
- Finance Commission (Article 280): Ensures fiscal federalism by recommending devolution of taxes.
- Inter‑State Council (Article 263): Forum for resolving disputes and promoting coordination.
Supreme Court: Acts as the guardian of federal balance, e.g., Kesavananda Bharati (1973) upheld federalism as part of the basic structure.
Way Forward
• Constitution Bench clarity on representation and fiscal formulas.
• Revised fiscal compacts ensuring fairness without penalising growth.
• Time-bound redistribution of seats after the 2026 Census.
• Strengthening institutions like the Finance Commission and Inter-State Council.
• Promoting consultation, consensus, and cooperative governance.
Conclusion
India’s federalism is a dynamic and evolving system facing pressures from demographic, economic, and political divergence. Sustainable federal democracy depends on trust, consultation, cooperative governance, and balanced accommodation of regional aspirations.
This topic is available in detail on our main website.
