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Federations Magazine Article
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Restructuring the centre-state relationship in India

by gurpret mahajan
It was regional disparities, historic differences and
the enormous cultural diversity of India that led the
framers of its Constitution to adopt a federal form of
government. Still, they did include several centralizing
elements: the office of the centrally-appointed governor,
the all-India administrative services (the higher civil
service, which serves both the central government and the
states), very centralized revenues, and the power to declare an
internal emergency and dismiss an elected state government.
These mechanisms enabled the central government to exercise
its influence and control over the states.
After independence, those centralizing aspects of the federal
system had been reinforced by the dominance of one party,
the Congress Party, at both the central and
the regional levels. Because Congress effectively
controlled both levels, any differences
between states (regional governments) and
between the centre and the states could be
sorted out through intervention of the party
leadership. As the Congress Party became
more centralized in its own functioning and
organizational structure, the balance tilted
even more heavily in favour of the centre.
The political context changes
In the 1960s and after, changes in the political process provided
the impetus for restructuring the centre-state relationship. As
the Congress Party’s hegemony broke down, new regional parties
came to power, demanding more fiscal and administrative
autonomy within the federation. This process, sometimes
described as the shift from centralized federalism to co-operative
federalism, began in the mid-1970s. Since the 1990s it has
been further consolidated with coalition governments being
formed at the centre. The failure of any one party to gain majority
in the central Parliament, and the growing dependence of
national parties on support from regional parties to run the
government at the centre, has given more elbow room for the
federal units to bargain and influence important decisions at
the centre.
The space that the political process created for regional players
and states vis-à-vis the centre has over the years been
formalized through a series of institutional mechanisms. This
pursuit of institutional change and innovation accelerated in
1989 when the National Front coalition, with V. P. Singh as prime
minister, assumed office at the centre. The demand for restructuring
the centre-state relationship had been gaining
momentum since 1967 when the Congress Party lost elections
for the first time in nine states. A framework for restructuring
the centre-state relationship had been prepared beginning with
the Rajmamar Committee set up by the Dravida Munnetra
Khazagam party when they were the government of Tamil Nadu
state, the memorandum on centre-state relations submitted by
the Left Front Party in 1977, and the opposition
conclave in 1983 in Srinagar. The centre
responded by setting up the Sarkaria
Commission to look into the issue. In 1988,
the commission made 247 recommendations
in its report, 179 of which have since
been accepted, paving the way for greater
consultation and co-operation between the
centre and the state.
New institutional mechanisms set up
The Constitution of India, under Article 263, envisaged the creation
of institutional mechanisms for investigating, discussing,
and advising on specific issues of concern to the centre and the
states. One of the most important of these institutions, the
National Development Council (NDC ), was set up in 1952 with
the Prime Minister as chair and the chief ministers of all the
states as members. The NDC was supposed to strengthen and
mobilize efforts in support of the five-year plans. Its role was
subsequently expanded in 1967, when, following the recommendations
of the Administrative Reforms Commission, it
became a consultative body involved in the preparation of the
plans and conducting their mid-term reviews.
In 1990, there emerged another important institutional
mechanism – the Inter-State Council (ISC), with the prime minister
as chair, chief ministers of all the states, six ministers of
Restructuring the centrestate
relationship in India
Large web of consultative bodies have enhanced the federal structure
Gurpreet Mahajan is a professor at the Centre for Political Studies of
Jawaharlal Nehru University, New Delhi.
OCTOBER | NOVEMBER 2007 Federations
cabinet rank appointed by the PM as members, and another
four ministers of cabinet rank as permanent invitees. While the
NDC involved the states in determining planning priorities,
the ISC was expected to facilitate a more comprehensive dialogue.
In recent times, the ISC has prepared an action plan on
good governance and scrutinized the implementation of the
Sarkaria Commission’s recommendations on centre-state
Over the years, several other institutions have been set up to
enhance co-operation between the centre and the states.
While most of these are advisory bodies, in the changing political
scene they have been able to play a positive role. Zonal
Councils were established under the States Reorganization Act
of 1956. With the Home Minister as chair and the chief ministers
of states in the region as members, these councils meet to
resolve differences between the
states and with the centre and to
promote balanced socio-economic
development in the
region. There are now five such
councils and they offer concerned
states an opportunity to
deliberate on issues of shared
interest; last year, the focus was
on rural development, infrastructure,
tourism, mining, and
internal security.
Besides the Zonal Councils,
there are a number of inter-state
consultative bodies that review
policies on specific issues: e.g.,
the National Water Resource
Council, the Advisory Council
on Foodgrains Management and
Public Distribution and the
Mineral Advisory Board. In addition,
institutions have been set
up under Article 263 to provide
data for policies on specific
issues. There are at present separate
Central Councils of Health, Local Self Government, Family
Welfare, Transport Development, Sales Tax and Sales Excise
Duties, and Research in Traditional Medicine. Also, from time
to time, the government sets up a finance commission to recommend
the distribution of resources from the centre to the
states. There exists, as well, a provision for the creation of tribunals
to settle disputes between states on the sharing of river
Limits of the existing structure
This large web of consultative bodies has enabled states to initiate
dialogue with the centre and with each other, and has
helped minimize tensions and enhance the co-operative
dimension of the federal structure. While the contribution of
these institutions must not be underestimated, there are nevertheless
certain concerns that need to be addressed so that
the institutionalized interactions nurture a sense of partnership,
rather than paternalism, between the centre and the
Party leaders from national and state legislatures share levity
after smearing on coloured water during the Holi celebrations
in March. The chief minister designate of Uttarkhand state, B.C.
Khanduri, right, smiles as India’s opposition leader, L.K.
Advani, leads him forward.
First, no matter how well institutions are designed, their
effective functioning is dependent upon, and can be impeded
by, the larger political context in which they operate. For example,
the ISC was set up in 1990 when the Congress Party had
been voted out of power and first met in 1992. Then, after the
Congress Party was voted back in, no meetings were held for
the next six years – thus undermining the ISC.
Second, in the period of reform, new decision-making centres
emerged and diminished the role of some of the existing
consultative bodies. This is clearly the case of the NDC . Today,
the NDC ’s approval is required for finalizing the five-year plans,
but, effectively, the planning priorities are determined by the
Planning Commission, a body of the central government.
Third, while consultative bodies are forums where political
positions of different parties can be, and often are, articulated,
the spirit of dialogue is not
always present. Therefore, the
challenge is to mould them in a
way that they become mechanisms
for genuine co-operation.
Lastly, even though mechanisms
of co-operation and
consultation have been put in
place, the centre remains powerful
politically, and in extreme
cases it can invoke the extraordina
r y me a sure known a s
President’s Rule, which allows
the central government to
assume all the powers of a state
government when that government
is deemed to not be
carrying out its functions in
a c c o r d a n c e w i t h t h e
From 1950 to 1967, President’s
Rule was imposed on 10 occasions.
From 1967 to 1983, when
the Congress Party was no longer
the dominant force, this provision
was invoked 81 times. In 1994, the Supreme Court ruled
that such proclamations of emergency are not immune to judicial
review. Since then, President’s Rule has only been imposed
around 20 times and the political barriers to this measure have
been raised. On balance, despite many institutions for co-operation
and providing independence for the states, the centre
remains a powerful influence, further strengthened by its control
of important fiscal transfers from the centre to the states for
centre-sponsored schemes.
While there are certainly challenges confronting the federal
polity, it cannot be denied that many contentious issues have
been resolved successfully through the existing institutional
arrangements. There is added reason for optimism. The central
government has recently acknowledged the need to make the
Inter-State Council a more effective mechanism for discussion
on crucial economic and social concerns. In this era of coalition
politics, it is to be expected that there will be more
validations of this kind, helping India achieve a genuinely cooperative