INDIA (Republic of India) George Mathew 1. History and Development of Federalism India covers an area of 3.28 million square kilometres. With a population of about 1 billion, India is a country of a wide range of ethnic backgrounds, languages and cultures. It has 28 states and seven union territories (UTs), which differ greatly in terms of their natural resources, administrative capacity and economic performance. The country continues to have a high concentration of poverty. According to estimates in 1993, 320 million people (36 per cent of the total population) lived below the poverty line. In 2000-01, however, India was able to achieve a GDP growth rate of six per cent. In 1858 the British Crown took over administration of India after a century of colonial rule by the British East India Company. A highly centralized form of government was established in which legislative, executive and financial powers rested with the Governor-General who functioned as the agent of the British government. Difficulty in exercising centralized rule led to a devolution of powers, which was accomplished via the Councils Act of 1861 and later by the Minto-Morley Act of 1909. Provincial autonomy came into being with the Montagu-Chelmsford Act of 1919 which provided for the introduction of the principle of responsible government in the provinces, although only for certain subjects. During this period, the British government was mainly interested in containing Indian nationalism and affirming British suzerainty. The Simon Commission Report of 1930, Round Table Conferences and finally the Government of India Act, 1935 were all attempts to do this. The Government of India Act was a watershed in the present federal structure. It provided for a federation by taking the provinces of British India and the Indian states ruled by kings (known as princely states) as units. It was left to the princely states whether to join the federation or not, and when their consent was not forthcoming, the federation did not take effect as planned. The 1935 Act divided legislative powers between the provincial and central legislatures and, within their defined sphere, the provinces were autonomous units of administration with restricted powers. To this extent, the government of India assumed the role of a federal government vis-B-vis the provincial governments, although without the princely states. The arrangement came to an end with the Second World War. India achieved independence on 15 August 1947. The constitution was adopted by the Constituent Assembly on 26 November 1949 and came into force on 26 January 1950. The constitution envisaged a strong centre. The 14 states and six union territories were divided according to the historical context in which they were governed and administered. In 1955 a “States Reorganisation Commission” was established. It was proposed that there be a territorial re-organization based on the following principles: preservation and strengthening of the unity and security of India; linguistic and cultural homogeneity; and financial, economic and administration considerations. The linguistic factor—because language corresponds with socio-cultural identity—was uppermost in determining the re-organization of the constituent units. It was thought that the resulting 1956 States Reorganisation Act, which re-organized the states primarily on the basis of the languages spoken in the area, might provide the solution to multifarious problems like economic inequalities, lopsided development, and the domination of certain castes or classes. Since 1956, there have been several further adjustments to the states, the most recent being the creation in November 2000 in the northeast of three new small states—Chhatisgarh, Jharkhand and Uttaranchal—carved out of existing states. At the time the constitution was written the predominant concern of the founding fathers was the preservation of the unity and integrity of India, which had more than 600 varied princely states plus the provinces of British India at the time of independence. Nowhere in the constitution is the word “federal” mentioned—indeed, the constitution says India is a “Union of States” and it envisaged a strong centre. B.R. Ambedkar, the architect of the Indian constitution, has said that the use of the word “Union” was deliberate. The drafting committee wanted to make it clear that although India was to be a federation, it was not the result of an agreement initiated by the constituent states. During normal times India functions as a federation but it can be—and has been—transformed into a unitary state during extraordinary circumstances. 2. Constitutional Provisions Relating to Federalism India is a federal republic with a parliamentary system. It consists of 28 constituent units—three of which, as mentioned above, have only recently been created. The federal Parliament is bicameral, consisting of the Rajya Sabha, or House of States (upper house), and the Lok Sabha, or House of the People (lower house). Scholars studying India over the last 50 years have described the Indian political system as a federation without federalism, and variously referred to its federalism as cooperative, executive, emergent, responsible, parliamentary, populist, legislative, competitive, fiscal, restructured, reluctant, or “quasi”. Whatever it may be, the federal element has been an underlying principle of the Indian polity, despite several attempts by the centre to usurp the powers and jurisdiction of the states by parliamentary legislation. There are several provisions of the constitution that permit the centre to infringe on state rights. First, under Article 249, if the Rajya Sabha (the upper house of Parliament) declares, by a resolution supported by two-thirds of members present and voting, for the sake of expediency and national interest, that Parliament should make laws with respect to any matter enumerated in the State List, it could do so. Such a resolution remains valid for a year and can be extended for another year by a subsequent resolution. The Seventh Schedule of the constitution outlines the duties and division of powers between the Union government and governments of the states. There is a Union List consisting of 97 items, and State and Concurrent Lists with 66 and 47 items respectively. Some of the important items on the Union List pertain to defence, atomic energy, diplomatic-consular and trade representation, citizenship, extradition, inter-state trade and commerce, audits, currency-coinage and legal tender, and foreign exchange. The State List includes, among other things, public order, local government, public health and sanitation, communications, agriculture, fisheries, trade and commerce within the state, taxation and police. Criminal law, forests, economic and social planning, trade unions, education, and preventive detention are some of the important items in the Concurrent List. Over the years, the lists have been subjected to constitutional amendments in favour of the federal government. The second constitutional provision that allows the centre to infringe on state rights is Article 250. According to this article, Parliament is empowered to make laws on any item included in the State List for the whole or any part of India while an “emergency” has been proclaimed. (According to Article 352, the central government also has the power to determine when an emergency exists. An emergency under Article 352 was declared in: October 1962 (Sino-Indian conflict), revoked in 1968; December 1971 (war with Pakistan); and June 1975 (internal disturbances), revoked March 1977.) Making use of Article 250, Parliament has taken away five items from the State List, added five to the Concurrent List and added three to the Union List. Thus, for example, the Constitution (Third Amendment) Act, 1954, amended the Seventh Schedule, and the scope of items in the Concurrent List was widened. This related to trade and commerce, production, supply and distribution of industrial products, foodstuffs, cattle-fodder and cotton. With the Constitution (Sixth Amendment) Act, 1956, the Union government was authorized to tax a broader range of inter-state trade in goods. The Constitution (Forty-sixth Amendment) Act, 1982, gave the Union the power to tax consignments in inter-state trade and commerce. The Constitution (Forty-second Amendment) Act, 1976, made far-reaching changes in the Seventh Schedule, moving items pertaining to education, forests, protection of wild life, weights, measures and standards from the State List to the Concurrent List. Most importantly, the amendment gave the Union the power to deploy its forces in any of the states, while at the same time retaining control over the armed forces. This reduced the control of the concerned state governments over the armed forces which are deployed. The third provision which allows the centre to intervene in state jurisdiction is Article 356. Under this article, “President’s rule” (by which the central government can directly take over the government of a state) has been imposed over states more than 100 times since 1950. This has given rise to severe criticism as it violates the federal character of India, and in 1994 the Supreme Court of India ruled that the power of the central government, under Article 356, to remove a state government from office was not an absolute but a conditional power. An amendment to the Indian constitution can be initiated only by the introduction of a bill in Parliament. The bill, which can be introduced in either House of Parliament, has to be passed in each House by a majority of the total membership of that House and by a majority of not less than two-thirds of the members of that House present and voting. The amendment procedure also requires ratification by the legislatures of the states (not less than one-half of the states) after which it is presented to the President of India for his assent. Relations between the central government and the states have often been problematic, so a statutory body to deal with inter-state relations was created—the Inter-State Council. Article 263 of the constitution states that if at any time it appears to the President that the public interest would be served, he can establish a Council and define the nature of its duties. In general, the Council is charged with: (a) inquiring into and advising upon disputes which may have arisen between states; (b) investigating and discussing subjects in which some or all of the states, or the Union and one or more of the states, have a common interest; and (c) making recommendations, in particular, recommendations for the better coordination of policy and action with respect to subject under dispute. The Supreme Court of India is the guardian of the Indian constitution (Article 124). Presently, the Supreme Court consists of a Chief Justice and 25 judges who are appointed by the President. It is the final arbiter in disputes between the states, and between the Union and the states. It has been observed that the jurisdiction and powers of the Supreme Court of India are wider in their nature and extent than those exercised by the highest court in other countries. The taxation powers of the Union and the states have been separated. The Union List contains 12 items of taxation, and the State List contains 19 items. The urban and rural local bodies also have some powers of taxation. In financial matters, it may be said that the general tendency has been in favour of centralization, thus making the central government more powerful. Developments of the last 40 years show that economic institutions and trends have tended to encourage systems of administration which have not entirely been in tune with true federal concepts. Article 280 of the constitution provides for the creation of a Central Finance Commission by the President every five years. It consists of a Chairman and four other members appointed by the President. The Commission gives recommendations relating to centre-state fiscal relations. Its recommendations are based on a detailed assessment of the financial position of the central and state governments and extensive consultations with all stakeholders. A prescribed percentage of the net proceeds of all central taxes and duties is assigned to the states. While working out the share of central taxes/duties and grants-in-aid to distribute to states, the Commission considers the trends in total transfers from the centre to the states, and gives its recommendations on the basis of the premise that tax devolution and grants from the centre to the states should not exceed 37.5 per cent of total centre revenues, both tax and non-tax. The Planning Commission at the centre and the Autonomous Councils in the states (which will be discussed in Section 3) are important tools of centre-state relations. When India became independent, planning was essential to tackle the problems of poverty, illiteracy, food deficits and industrial backwardness. The Planning Commission was constituted in March 1951 to carry out the planning process and, after this, five-year plans and annual plans were drawn up and implemented within an economy where a large role was assigned to the public sector and a lesser role to a state-regulated private sector. Major projects and programs have to be approved by the Planning Commission before any budget provisions for financing them are made. The determination and allocation of plan assistance is its main task. As the aggregate plan resources are limited, and given the unequal distribution of resources among the states, sharing of resources remains a cause of friction in federal relations. 3. Recent Political Dynamics The major failure of the constitution has been that it has not been able to provide an integrated administration which works under the elected bodies from villages/towns to the centre. The reality was that by seeking justification in the need to keep India united, several provisions of the constitution were turned on their head. As a result, in the 1980s India began to face problems of violence, threats of secession, autonomy, self-determination and radical devolution of powers to the states. Given the manifold dimensions of India’s pluralistic society, the federal principle offers the only viable basis for the maintenance of a strong and united Indian state. Only in a federal polity could the unique socio-cultural diversities of the country as a whole and the states in particular be held together. India had reached a point at which the Union could not survive without recognizing the socio-political realities at different levels. Therefore, the search for institutional arrangements for improving the federal system moved to the top of the agenda of concerned intellectuals, jurists and political parties. By the late 1980s it was acknowledged that extension of the federal idea hinged on decentralization at the sub-state level. It was in this context that the Union government set up a Commission in June 1983 (Sarkaria Commission) to review the arrangements between the Union and the states with regard to powers, functions and responsibilities in all spheres, and to recommend such measures as may be appropriate. The report submitted in January 1988 did not advocate any radical change in relations, and stayed within the two-level federal frame. The Commission criticized the trend towards concentration of powers at the centre and recommended, among other things, the curtailment of centrally-sponsored schemes in the exclusive sphere of the states and restraint on the part of the Union with respect to subjects in the Concurrent List. The report made useful comments about the need to decentralize power below the state level to local elected bodies, but these fell short of multi-level federalism. The move towards multi-level federalism in the mid-1980s is perhaps the most significant trend in Indian federalism in recent years. There had been historic attempts to create lower tiers of government, but the recent trends have been more comprehensive, democratic and sustainable. The fact that village councils (panchayats) and municipalities had no constitutional status hampered not only their growth and development but also the decentralization of power. The constitution recognizes only the Union and states but, by the early 1980s, discussion about giving the local bodies constitutional status had begun. Experiments in West Bengal (1978), Karnataka (1987) and Andhra Pradesh (1987) evoked extraordinary response from the people. On 15 May 1989 a bill (64th Amendment) was introduced in Parliament by then Prime Minister Rajiv Gandhi to bring the panchayats under the purview of the constitution. This was a welcome step, but there was serious opposition to it on two grounds: (1) the bill overlooked the states and was seen as an instrument of the centre to deal directly with panchayats; and (2) it was imposing a uniform pattern throughout the country instead of permitting individual states to legislate the details according to local circumstances. There was an outcry against this bill from political parties, intellectuals and concerned citizens. Although it received a two-thirds majority in the Lok Sabha (lower house of Parliament), in the Rajya Sabha (upper house) on 15 October 1989, the bill failed to meet the mandatory requirement by two votes. At another level, perhaps with wider implications for multi-level federalism, several councils have been created, including: Darjeeling Gorkha Hill Council (1988), Bodoland Autonomous Council (1993), Jharkhand Area Autonomous Council (1994), Autonomous Hill District Council for Ladakh (1995). They are new decentralizing units, which give further impetus and meaning to a multi-level federal system and a boost to the multi-layered institutional arrangement within the Indian federal framework. In September 1991, the Congress government under Prime Minister Narasimha Rao introduced two bills—one for rural local bodies (panchayats) and another for urban local bodies (municipalities)—extending participatory democracy to the villages and municipalities. These bills were passed by Parliament on 23 December 1992 and came into force in 1993 as the 73rd and 74th Amendments after almost 10 years of discussion, debates and legislative moves at various levels. With these amendments 47 subjects were to be transferred by the states to the panchayats and municipalities. The amendments were extended to the tribal areas (Fifth Schedule areas in the constitution) in December 1996. These historic constitutional amendments meant a number of changes. First, the panchayats and municipalities became “institutions of self-government” and not just development agencies. Second, gram sabhas (village assemblies) and ward committees in municipalities became the basic units of the democratic system. Third, the amendments introduced new levels in the system—the panchayat system was made up of three tiers or levels: at the lowest level was the village, at the intermediate level was the block and at the top was the district. Fourth, the amendments broadened the democratic base of the country—seats in the panchayats and municipalities at all three levels are now to be filled by direct elections for a five-year term, and seats are reserved for hitherto excluded groups like lower castes and tribes, and women. Fifth, an independent Election Commission was created in each state for supervision, direction and control of the electoral process and preparation of electoral rolls and State Finance Commissions. And, sixth, the amendments determined the principles upon which adequate financial resources are transferred to the panchayats and municipalities, and created District Planning Committees. Grants from central and state governments constitute an important source of funding but state governments are also expected to assign the revenue of certain taxes to the panchayats. In some cases, the panchayats are permitted to collect local taxes and retain the revenue. With the constitutional amendments, a de facto third tier of governance with a wide democratic base has come into existence. Before this India had about 4,963 elected members in Parliament and the state assemblies, but today every five years three million representatives are elected. Out of this, one million are women. A large number of excluded groups and communities are now included in decision-making bodies. India is moving from a two-level federation (Union and states) towards multi-level federalism with local bodies (panchayats and municipalities) at the district level and below becoming the third level. This has made the country, as two contemporary writers on Indian federalism, Nirmal Mukarji and Balveer Arora, put it, “a cascading federalism; a federation of federations”. Some analysts claim that this process is merely strengthening “administrative federalism”, in order to facilitate and encourage delegation of administrative and financial powers from the states to local bodies. The administrative powers and the financial resources of the local bodies to exercise these powers are entirely derived from legislation that has to be passed by the state. They have no definite executive, legislative, financial or judicial power and, according to this school, constitutional status and elections do not mean they are a third tier of governance. This, however, is a limited view of the scope of the democratic and political changes that have taken place. Others believe that this trend heralds a qualitative change in the federal character of the Indian polity. Each state has become a federating unit with three layers below it—district, block and village. This is a unique federal feature and India must struggle to find a proper balance, and to create links in a democratic process from Gram Sabha (village assembly) to Lok Sabha (the lower house of Parliament). Multi-level arrangements in India represent the new and ongoing search for new modes of adaptation to the pressure created by democratic development. In order to make the multi-level federalism effective, the centre must develop a willingness to share powers with the states an on equal measure. Institutional innovations are necessary conditions for strengthening the federal framework. India’s federal polity is not static. As Rasheeduddin Khan, an expert on Indian federalism, puts it, “India is an evolving federal nation. India has crossed the half century mark as a nation and along with it has de facto entered the multi-level federal era—a change from being just a Union of States.” It is important to note one other trend in Indian federalism—the changing political party system. Until the 1977 parliamentary elections, the Congress Party dominated the political scene in India. Since then, however, coalition parties have come to stay, not only at the centre but also in the states. Thus, today even the Congress Party cannot hold power on its own and must find support from other regional parties to stay in power. (The present government of India is made up of a coalition of 24 parties.) In India there are currently over 550 registered political parties, out of which only six are recognized as national, 40 are state-level and 504 have only a local base. The regional or state-level parties wield considerable influence at the centre and thus the accountability of the centre has increased substantially. When a significant party (or parties) forming a governing coalition withdraws support—on policy matters or regional/state interests—the central government cannot survive. 4. Sources for Further Information Arora, Balveer. “Adapting Federalism to India: Multi-level and Asymmetrical Innovations”, in Balveer Arora and Douglas V. Verney (eds), Multiple Identities in a Single State: Indian Federalism in Comparative Perspective, New Delhi: Konark Publishers. Government of India, “Report of the Eleventh Finance Commission”, Ministry of Finance, Department of Economic Affairs, June 2000. Khan, Rasheeduddin, Rethinking Indian Federalism, Shimla: Indian Institute of Advanced Studies. —, Federal India: A Design for Change, Delhi: Vikas Publishing House Pvt Ltd. Mathew, George, “Federalism, Local Government, and Economic Policy” in C. Steven LaRue (ed.), The India Handbook, Chicago: Fitzroy Dearborn Publishers, 1997. —, “Institutions of Self-Government in India: Towards Multi-level Federalism”, in Review of Development and Change, Vol. II. No. 2 (July-December 1997), Chennai: Madras Institute of Development Studies. Mukarji, Nirmal and Balveer Arora (eds), Federalism in India: Origins and Development, New Delhi: Centre for Policy Research and Vikas Publishing House Pvt. Ltd., 1972. Mukarji, Nirmal, “The Third Stratum”, Bombay: Economic and Political Weekly, 1 May 1993. Santhanam, K., Union-State Relations in India, New Delhi: Indian Institute of Public Administration and Asia Publishing House, 1960.