December 10, 2023


Syllabus– General Studies 2 (polity)

Functions and responsibilities of Union and States, issues and challenges pertaining to

the federal structure, devolution of powers and finances up-to local level and challenges



Between vaccine wars, heated debates over the Goods and Services Tax (GST), fracas over West Bengal’s Chief Secretary, and the pushback against controversial regulations in Lakshadweep, issues related to federal structure have come to the forefront.

  • The opposition parties has begun to craft an ideological narrative on State rights, by re-introducing the term Union into the public discourse and pushing back against increased fiscal centralisation.
  • This might serve to be a new opportunity for forging a new politics.

Federalism in India

  • Federalism in India has always had political relevance, but except for the States Reorganisation Act, federalism has rarely been an axis of political mobilisation.
  • This was true even in the days of coalition politics when State politics mattered to national electoral outcomes.
  • Fiscal and administrative centralisation persisted despite nearly two decades of coalition governments.
  • Electoral politics have created significant impediments in creating a political consensus for genuine federalism.

Challenges to federalism

  • Strong nationalistic sentiments: Currently entrenched centralisation of the present regime has greater political purchase. Ideologically the party in power  has had relatively little patience with federalism as a device to accommodate India’s multiple linguistic, religious, and ethnic identities.
    • To accelerate progress, India must become ‘one nation, one market’, ‘one nation, one ration card’, ‘one nation, one grid’.

In this framing, federalism as a principle necessary for negotiating diverse political contexts and identity claims risks being equated with regionalism and a narrow parochialism that is anti-development and anti-national.

  • A rhetorical commitment to federalism, the politics of federalism has remained contingent rather than principled.Federalism in this rendition is reduced to a game of political upmanship and remains restricted to a partisan tussle rather than a regions’ genuine demand for accommodation.
  • Many states often maintain silence on unilateral decisions that affect other States.
    • Take for instance, the downgrading of a full-fledged State in Jammu and Kashmir into a Union Territory in 2019, or more recently, the notification of the NCT of Delhi (Amendment) Act, 2021.
    • This blatant undermining of State’s rights hardly witnessed protest by parties that were not directly affected by these.
  •  The increased economic and governance divergence between States:
    • Across all key indicators, southern (and western) States have outperformed much of northern and eastern India resulting in a greater divergence rather than expected convergence with growth.
    • Recently the Government of India mandated the 15th Finance Commission (FC) to use the 2011 Census rather than the established practice of using the 1971 Census to determine revenue share across States.
    • This, Southern states feared, risked penalising States that had successfully controlled population growth by reducing their share in the overall resource pool.
    • With the impending delimitation exercise due in 2026, these tensions will only increase.
  • Central party’s policies: At one level, the homogenising ideological project risks creating new forms of cultural alienation and associated regional tensions as occurred during the Citizenship (Amendment) Act protests in Assam.
    • There is a very real possibility of the emergence of new forms of regional sub-nationalism.
  • Fiscal management: Weak fiscal management has brought Union government to a silent fiscal crisis.
    • The Union’s response has been to squeeze revenue from States by increasing cesses.
    • The Union insisted on giving GST compensation to States as loans (after long delays) and increasing State shares in central schemes.
    • The pandemic-induced economic crisis has only exaggerated this.
  • Sub-nationalist sentiments: The politics of regional identity is isolationist by its very nature. An effort at collective political action for federalism based on identity concerns will have to overcome this risk. Upholding federalism requires political maturity and a commitment to the federal principle. This is lacking in our politics.

Way forward:

  • On the fiscal side, richer States must find a way of sharing the burden with the poorer States. States will have to show political maturity to make necessary compromises if they are to negotiate existing tensions and win the collective battle with the Union.
  • An inter-State platform that brings States together in a routine dialogue on matters of fiscal federalism could be the starting point for building trust and a common agenda. The seeds of this were planted in the debates over the 15th Finance Commission and the GST.
  • A renewed politics of federalism is also an electoral necessity. No coalition has succeeded, in the long term, without a glue that binds it. Forging a political consensus on federalism can be that glue.

Question- Describe the emerging trends which pose a challenge to federal structure of the nation.


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