Federalism in India: Centre–State Relations and Challenges to Cooperative Federalism

Abstract

India's Constitution creates a union of states with a strong Centre, and the working of that arrangement has shaped political and economic life since 1950. This paper examines Centre–state relations in India and the challenges facing cooperative federalism, with emphasis on developments between 2012 and 2020. It uses a doctrinal and analytical approach based on constitutional provisions, Finance Commission and NITI Aayog reports, official orders and the scholarly literature on federalism. The analysis shows that the constitutional design combines federal features with unitary safeguards, that legislative and administrative relations have favoured the Centre, and that fiscal relations are marked by a vertical imbalance in which states spend more than they raise. Reforms during the period, including a higher tax devolution share, the replacement of the Planning Commission by NITI Aayog and the creation of the Goods and Services Tax (GST) Council, strengthened the institutions of cooperation. Yet disputes over GST compensation, the use of cesses, the use of emergency powers, legislation on subjects in which states have a stake, and the management of the COVID-19 pandemic reveal persistent strain. The paper concludes that cooperative federalism in India works best where the Constitution provides a forum with shared decision rules, and least well where cooperation depends on executive goodwill. It recommends stronger fiscal rules, a revived Inter-State Council, and greater state accountability.