Furthering the Federal Structure

I thank the Government of Karnataka, Samruddha Bharat and NDTV for inviting me today to inaugurate this important conclave, important because it is relevant to the current public discourse in our country and also because its success would have a huge impact on our future.

Emotional and mythological discourse apart, record shows that throughout its long history India surfaced as a unified political entity only through the persuasive power of a hegemon, initiated and sustained, at least in the initial period, through use or threat of force. The ancient practice of Ashvamedha testifies to it; others adopted more direct methods. Once sovereignty was established, the ruler was expected to observe the Kautaliyan principles of ruling justly and according to the laws.

So, until the establishment of British hegemony, the Indian landmass was a collection of individual states in varying power equations with each other and with a dominant political force whenever it existed.

Our freedom struggle was a people’s movement with participants from all parts of India. Hence the opening line of the Preamble of our Constitution: We the People of India. The objectives Resolution of January 1946 proposed by Jawaharlal Nehru visualized a decentralized federation in which the States would retain residuary powers. Yet, there is no mention of ‘federation’ in the Constitution proclaimed in November 1949 and India is described as ‘a Union of States.’ This Union is indestructible and has a single citizenship. The Constituent Assembly, it has been said, ‘produced a new kind of federalism to meet India’s peculiar needs.’ Ambedkar described it as federal in normal times and unitary in extraordinary situations. The principal concern at that early stage was physical integration and the framework of Article 246 and its 3 Lists in the Seventh Schedule was considered adequate for what later came to be called ‘cooperative federalism.’

Any discussion on federalism has to consider both its intrinsic worth and its practical necessity. So the analysis has to be two fold: of institutional mechanism and its efficacy in actual practice. The Canadian scholar W.S. Livingston had noted in 1956 that ‘the essential nature of federalism is to be sought for, not in the shading of constitutional and legal terminology, but in the forces – economic, social, political and cultural – that have made the outward form of federalism necessary…federal government is a device by which the federal qualities of the society are articulated and protected.’

A sociologist has drawn a distinction in conceptual terms between federalism as ‘social contract’ resulting in settled rules of the game and a ‘negotiation’ involving mobility between several positions; he has opined that ‘federalism has to be a negotiation and not a social contract, a to and fro between positions, places and choices’ adding that ‘negotiation does not freeze choices except when language of time enters the text of federalism along with space. It is the politics of diversity rather than homogeneity.’

Scholars have identified three types of regional challenges in the functioning of Indian polity: those emanating from militant movements, those based on assertions grounded in underdevelopment, and those grounded on the general principle of devolution of powers to States.

Given these perceptions, it is not surprising that the subject of state autonomy and of centre-state relations has been raised from time to time. The political context has been the emergence of regional political parties, the changing power equations between the Centre and the States, and the impulse emanating from the former towards the creation of a consensus on nation building through a strong central government. More specifically, as an informed scholar has enquired, ‘how far does federalism in India temper majoritarian trends within our democracy?’

A look at the progress of this debate makes interesting reading:
• The States Reorganization Commission in 1955 spoke of internal cohesion and ‘regional consciousness’ and recommended linguistic homogeneity but with some exceptions.

• The 1971 Rajamannar Committee report of the Tamil Nadu government made a critical analysis of the ‘Strong Centre’ concept. It emphatically favoured maximum autonomy to States, touched upon areas of legislative competence through redistribution of entries in the Seventh Schedule by constitutional amendments and recommended obligatory consultations with States in regard to matters affecting their interests.

• The 1972 Anandpur Saheb Resolution of the Shiromani Akali Dal sought to recast the Indian constitutional infrastructure and be given a federal shape by redefining the Central and State relation to safeguard the fundamental rights of religious and linguistic minorities, and fulfill democratic traditions and pave the way for economic progress.

• In December 1977, the West Bengal Government published a Memorandum on Centre-State relations. Its suggestions included: (a) replacement of the word ‘Union’ by ‘Federal’, (b) repeal of Articles 356, 357 and 360, and (c) mandatory consent of State Government for formation of New States and alteration of area, boundaries or names of the existing States. The then Chief Minister urged that ‘a strong and united India can only be one in which the democratic aspirations and distinctiveness of the people of the different States are respected and not treated with disdain. We all are definitely for strong States, but on no account do we want a weak Centre. The concept of strong States is not necessarily in contradiction to that of strong Centre once their respective spheres of authority are clearly marked out.’

• The experience of several decades, particularly in the late 1970s, generated discontent at the Centre’s role and led in 1983 to the appointment of the Sarkaria Commission to ‘review the existing arrangements between the Centre and the States while keeping in view the social and economic developments that have taken place over the years’ taking into account ‘the importance of unity and integrity of the country for promoting the welfare of the people.’ Its Report in 1988 observed that ‘while the Union-State relations were intended to be worked on the basis of co-operative federalism and consensus in all areas of common interest, they have not been so worked and the forums envisaged by the Constitution for that purpose, have not been established’ It drew attention to excesses of centralism made over time through the use/misuse of Article 256 and recommended that it be used ‘very sparingly, in extreme cases, as a measure of last resort, when all available alternatives fail to prevent or rectify a breakdown of constitutional machinery’ in a State.

• In February 2000 the Venkatachaliah Commission was mandated to examine ‘as to how best the Constitution can respond to the changing needs of efficient, smooth and effective system of governance and socio-economic development of modern India within the framework of parliamentary democracy and to recommend changes, if any, that are required in the provisions of the Constitution without interfering with its basic structure or features.’ On the executive role vis-a-vis the Constitution, its Report in March 2002 restricted itself to the selection and role of Governor, the working of the Constitutional machinery in a State and the invocation of the Article 356 by the federal Government. In these areas it, by and large, endorsed the recommendations of the Sarkaria Commission.

• The Punchhi Commission in 2010 came to the conclusion that ‘cooperative federalism’ will be the key for sustaining India’s unity, integrity and social and economic development in future. The principles of cooperative federalism thus may have to act as a practical guide for Indian polity and governance. India today has reached that stage of development when ‘Statesmanship’ should lead ‘Politics’, where on one hand the National goals and objectives are fully respected by the political parties and the federal constituents and an equal amount of consciousness and support is shown in addressing the needs and aspirations of the States and the different communities by the Union.’

• The Sarkaria Commission had drawn attention to Article 263 of the Constitution and recommended that the Inter-State Council visualized in it be instituted. This was done in 1990 through a Presidential order. It has met 12 times in the past 28 years and its Standing Committee chaired by the Union Home Minister has met with greater frequency. In the last meeting of the Council in July 2016 Prime Minister described it as ‘the most significant platform for strengthening Centre-State and Inter-State relations.’ It had on its agenda the recommendations of the Punchhi Commission, the use of Adhar as an identifier for disbursement of subsidies, benefits and public service, improving the quality of school education, and internal security and intelligence coordination for combating terrorism and insurgency, police modernization and police reforms. Its proceedings remain confidential, Its purpose and potential clearly remains under-utilized.

• The question of financial relations between the Centre and States and claims of imbalance is a perennial one. Article 280 of the Constitution mandates the setting up every five years of a Finance Commission to recommend measures and methods on how revenue is to be distributed between Centre and States and the principles for giving out grants-in-aid to States and other local bodies. In the last meeting of the Inter-State Council, PM announced that with the acceptance of the recommendations of the 14th Finance Commission the states share in central taxes has increased from 32 to 42 percent. The terms of reference of the current – 15th Finance Commission – have been criticized by some of the States alleging that these are against the spirit of ‘fiscal federalism’ since the decision to use the census data of 2011 instead of the 1971 data weighs against the States where growth of population has slowed down to below 16% (Kerala, Andhra, Punjab, West Bengal, Orissa, Tamil Nadu, Karnataka) and give undue benefit to some others where it ranges between 20 and 25% (UP, MP, Rajasthan, Bihar, Jharkhand, Chhattisgarh). This has wider implications since over decades and for a variety of reasons the capacity of States to finance both revenue and capital expenditure from their own tax base resources has declined substantially.

• Not withstanding its intent, the devolution of authority and financial autonomy to local bodies through the 73rd and 74th Amendments of 1993 has not realized their objective since State governments have been reluctant to implement them. The devolution they seek for themselves from the Centre does not seem to get reflected in the devolution that local bodies should get in terms of the constitutional amendments.

It is clear from the above that (a) discontent with the functioning of our ‘cooperative’ federal structure has existed for several decades and (b) the institutional correctives put in place have not been sufficient. This, in the context of the ground reality of political parties of different persuasion coming to power in the States, has the potential of tensions that would not be conducive for smooth functioning of cooperative federalism and may, in fact, result in unforeseen developments.


The challenge to the polity and to its citizen body is therefore twofold:

• To register the points on stress, examine them objectively in terms of existing realities in the power structure, and
• To factor in the imperatives of the national economy, the unity of the market and the development objectives,

The current state of public and political discourse in the country does add a sense of urgency to the consideration of these questions. The secrecy surrounding the discussions in the Inter-State Council and its Standing Committee on the specific recommendations of the Punchhi Commission leaves room for speculation rather than informed debate on intricate matters like (a) fiscal transfers to States; (b) Goods and Services Tax; and (c) the Centre-State fiscal relations.

An initial point of commencement could be a clear enough definition of cooperative. In formal terms, it was defined by the American scholar A.H. Birch as ‘the practice of administrative cooperation between general and regional governments, the partial dependence of the regional governments, by the use of conditional grants, frequently promote developments in matters which are constitutionally assigned to the regions.’

A more pragmatic description, based on Canadian experience, is that it is a matter of political compromise and administrative pragmatism based on ‘a network of relationships that exist between various executives and public representatives of the central and provincial governments through which relationships mechanisms are created which allow a continuous redistribution of powers and resources without recourse to the courts or the amending process.’

Above all, inter-governmental relations in a federal system should work on the principles of (1) democracy (2) justice and fairness and (3) efficiency.

How have these broad principles actually operated in our case?

The first implies open consultation under an agreed framework. This, as suggested by the Sarkaria Commission, is the Inter-State Council. Some guidelines for its functioning, erring on the side of excess, were suggested in 1990 by the then Chief Minister of Tamil Nadu. The Commission’s other recommendation on the selection and role of Governors has been largely ignored by successive governments. The imperatives of democratic governance suggest their full implementation as also greater regularity in the consultation process of the Council.

The second principle touches a critical question in any federal arrangement. This relates to the allocation of financial resources. The operative mechanisms in our case are the Finance Commission, the central allocations through other mechanisms, and the new GST procedures. The latter is working on the basis of consensus and the weighted voting system (one-third for Centre and two-third for the States). This suggests an effort at democratic cooperation.

The principle of justice and fairness has also to extend to (a) allocation of earning from natural resources and (b) water sharing. Overtime both have led to a good deal of anguish and anger. With regard to the first, it is evident that the contribution of mining and quarrying sector is higher in some states when compared to the national average but despite their mineral wealth, these states are economically weak and in many cases have per capita income lower than the national average. Since the Constitution has assigned functions, legislative competence and fiscal powers to both Centre and States within their domains, perhaps a solution to lies in the establishment of independent bodies to determine competing claims that should go beyond royalty payments to the longer term impact of mining on ecology and on human development of the concerned populations.

This also holds for sharing of water resources. Many of our rivers traverse more than one state, leading to conflicts, and the resolution of these water disputes is essential for the functioning of India as a federal state. Water is both a Union and a State subject, figures in Union List as well as the State List of the Seventh Schedule of the Constitution as also in Article 262 pursuant to which the Inter-State River Waters Disputes Act, 1956 was enacted covering disputes relating to the waters of Krishna, Godavri, Narmada, Cauvery, Model/Mandovi/Mahadevi and Vansadhara. This mechanism of tribunals and higher court judgments has not worked; neither have political negotiations. The Sarkaria Commission had recommended that that there should be a time limit for the disputes referred to tribunals and that the awards given by the Supreme Court should be binding on the parties.

Needless to say, the efficient functioning of these mechanisms would depend on the investment of political will.

To sum up, therefore, in a polity as large, diverse, and complex as India, efficient functioning of the federal structure created by the Constitution is a substantive safeguard for democracy and must be nurtured. This would require continuing adjustment and accommodation as also an informed and discerning electorate that can distinguish between local/regional and national issues and is not swayed by periodic unitary and majoritarian impulses be it in politics or in imposing a single cultural denominator to homogenize a plural society since both can upset the balance of our society and subvert the very idea of India.

Jai Hind.