A federal constitution forms a dual polity, with the Union at the centre and the States at the periphery, each endowed with sovereign powers to be exercised in the fields designated by the constitution. Because it has elements of both a federation and a union, the Indian style of federalism is known as a quasi-federal system. The Constitution provides for a three-fold distribution of legislative subjects between the Union and the states, viz., List-I (the Union List), List-II (the State List) and List-III (the Concurrent List) in the Seventh Schedule. Even with clear demarcation conflict in Centre-State Relations is a common norm in Indian Polity. In this article we will discuss Issues and Challenges Pertaining to the Federal Structure which is an important part of The UPSC Indian Polity and Governance Syllabus.

Indian Federalism

• The Indian union functions on a federal structure of governance implying decentralization of power which allows power to be divided between the central government and the states.
• As stated by KC Wheare Indian federal system is a quasi-federal system containing features of both a federation and a union.
• The Constitution originally provided for a two-tier system of government, the Union Government representing the Union of India and the State governments.
• Later, the third tier of federalism was added in the form of Panchayats and Municipalities.
• Different tiers of government govern the same citizens, but each tier has its own jurisdiction in specific matters of legislation, taxation and administration.
• The jurisdictions of the respective levels or tiers of government are specified in the constitution. So the existence and authority of each tier of government are constitutionally guaranteed.
• The fundamental provisions of the constitution cannot be unilaterally changed by one level of government. Such changes require the consent of both levels of government.
• Courts have the power to interpret the constitution and the powers of different levels of government. The highest court acts as an umpire if disputes arise between different levels of government in the exercise of their respective powers. 
• Sources of revenue for each level of government are clearly specified to ensure its financial autonomy.
• The federal system thus has dual objectives such as safeguarding and promote the unity of the country, while at the same time accommodate regional diversity. Therefore, two aspects are crucial for the institutions and practice of federalism.

Issues and Challenges Pertaining to the Federal Structure

Regionalism

• It is the most alarming challenge to Indian federalism which basically implies an inculcation of a strong sense of love and respect for one’s region, ethnicity, language, and culture.
• It is this love that makes regions fight for greater autonomy within the nation and directly putting the authenticity of Indian federalism in danger.
• Regionalism establishes itself through demands for autonomy basically on the grounds of language which are usually never silent methods of request, rather they tend to take major violent forms, disrupting the political and cultural environment of the nation as a whole.
• The nation thus faces the challenge of internal security in the form of insurgency and this causes upheavals in the basic notion of Indian federation
• Regionalism started with the creation of the state of Andhra Pradesh as a consequence of the death of Potti Sriramulu in 1953 demanding a separate state for Telegu speaking people.
• Subsequently, in 1954, the States Reorganisation Committee headed by Fazal Ali recommended the formation of 16 new states and 3 union territories.
• In 2000, three more states were formed on linguistic lines namely- Chhattisgarh, Jharkhand, and Uttarakhand.
• In 2014, the state of Telangana was declared as the 29th state of the Indian Union.

Governor's Office

• The constitution of India provides the provision of a Governor for each state, who is chosen directly by the President of India and runs a tenure of 5 years.
• The President can dismiss the Governor according to his/her pleasure.
• The Governor of each state is vested with executive, judicial, legislative and financial powers.
• Article 154: The most important power of the Governor which sometimes comes in conflict with the federal structure of the country is the power vested upon him/her by Article 154 of the Indian Constitution which states that all the executive powers of the state are held by the Governor.
• The provision thus implies that the Governor can appoint the Chief Minister and the Advocate General of the State, and State Election Commissioners.
• Another executive power at his/her disposal that harms federalism is that he can recommend the imposition of constitutional emergency in a state.

Centralized Planning

• The Concurrent list contains economic and social planning as one of the items which imply that economic and social planning should be taken collectively and with equal discretion by both the State and the Centre.
• But, the Central government tends to control the national and regional planning in India without any inhibitions at all. The establishment of the erstwhile Planning Commission is one of the examples of such a tendency of the Centre.
• Hegemony over the financial planning of a country makes the Centre go against the basic federal structure of India as it becomes quite clear that Centralized planning nullifies the primary rule of a federation and its requirement of the division of power between the Centre and the State.

Single Constitution and Citizenship

• India functions only on one single constitution and the provisions as well as restrictions led down by the articles in the constitution is applicable to each state and union territory of the country equally.
• It implies that a person cannot hold dual citizenship and enjoy the rights of India as well as another country at the same time.
• The quasi-federal structure of the Indian governments requires the administration to be divided between the State and the Centre. But the inculcation of Single Citizenship and Single Constitution somewhere is in contrast to such a structure.
• The provision of Single Citizenship does not consider a citizen’s identity as a member of a particular state and it indirectly establishes that the most integral of powers still remains and shall always remain with the Centre alone.

Language Conflict

• ​ The diversity in languages in India sometimes causes problems to the federal spirit of the Constitution. The tussle for the official language in India is still an issue of concern. For example, the southern states’ opposition to Hindi as the official language of India has led to a deep-seated language crisis in India.

Centralized Amendment Power

The power of constitutional amendment in India lies with the Centre under Article 368 and other provisions whereas, in a typical federation, the power of amendment to the Federal Constitution lies on a shared basis between the federation and its units. Even though ratification of half of the states is sought for in some limited areas, the states in the Indian Union have virtually no power in the amendment procedures.

Economic Incompatibilities of the States

The differences in economic standards, relative economic and fiscal incompatibilities, etc among the states pose a threat to a federation. Subsequently, demands for financial equality of a region creates problems in a federation.

• The introduction of GST has created an atmosphere of panic among states.
• The central government is required to compensate states for any loss of revenue they incur due to GST.
• The Centre must pay this compensation on a bi-monthly basis, but over the past year these payments have been delayed by several months due to lack of funds.
• The COVID-19 pandemic and the consequent lockdown have amplified the issue manifold, with both centre and states facing a revenue shortfall, limiting the ability of the Centre to meet states’ compensation needs.
• As per the Ministry of Finance the GST compensation due for the period April 2020-March 2021 was 81,179 crore and Rs 55,345 crore, for the period April-May 2021. Compensation is due to all the States except Arunachal Pradesh, Manipur, Mizoram and Nagaland.

External Forces

• Insurgency, as well as violent forms of protest from external forces like neighbouring countries or otherwise, can pose a serious threat to the Indian federal structure.

Recent Controversies

• The recent tussle between Governor and Chief Minister in West Bengal highlighted the fragility of the Indian Federal Structure.
• The protests for Gorkhaland and Bodoland for Statehood.
• Protests by people in Lakshadweep against the draft legislation like Lakshadweep Prevention of Anti-Social Activities Regulation (Goonda Act), etc and the doings of Administrator of the Union Territory.
• The passing of The Tamil Nadu Admission to Undergraduate Medical Degree Courses Bill, 2021 reveals that the legislation on subjects in the Concurrent List (Education) has to be meet the aspirations of the states too.
• Veto Power used by West Bengal Chief Minister in case of Teesta Pact
• The Teesta River, the fourth largest transboundary river between India and Bangladesh, is actually a tributary of the Brahmaputra which flows through the Indian state of Sikkim and West Bengal to enter Bangladesh. The dispute regardring the sharing the water of the river during dry season assumed importance following the finalisation of the Ganga Water Treaty in 1996. The two countries almost concluded a water-sharing treaty in 2011 under which India would get 42.5 per cent and Bangladesh around 37.5 per cent of the water during the dry season. But the proposed treaty was vetoed by the West Bengal Chief Minister as water supply remains a state list subject in India. The problem thus became a complicated one, given the involvement of an Indian state in the matter. Since Bangladesh remains a key swing state in South Asia as far as the Chinese involvement in the region is concerned, it is important for India to come up with a deal at the earliest.

Conclusion

In Bommai case (1994), the Supreme Court laid down that the Constitution is federal and characterised federalism as its basic feature. It observed that under the scheme of our Constitution, greater power is conferred upon the Centre vis-a-vis the states does not mean that the states are mere appendages of the Centre. The states have an independent constitutional existence. They are not satellites or agents of the Centre and within the sphere allotted to them, the states are supreme.

FAQs

Q1: What is the federal structure in the Indian Constitution?

Q2: What are the primary challenges to the federal structure in India?

Q3: How does the role of the Governor affect the federal structure?

Q4: What is cooperative federalism?

Q5: How does the Finance Commission address federal challenges?

MCQs

1. Which of the following schedules in the Indian Constitution outlines the division of powers between the Union and States?

A) Sixth Schedule

B) Seventh Schedule

C) Ninth Schedule

D) Eleventh Schedule

2. What is a major criticism of the role of the Governor in India's federal structure?

A) Limited authority over financial matters

B) Interference in state administration

C) Lack of executive powers

D) Inability to dissolve the State Assembly

3. Which of the following terms refers to the collaboration between the Union and State governments for policy implementation?

A) Competitive federalism

B) Cooperative federalism

C) Dual federalism

D) Fiscal federalism

4. What is the key responsibility of the Finance Commission concerning the federal structure?

A) Distribution of defense resources

B) Resolution of state boundary disputes

C) Allocation of tax revenues between the Union and States

D) Appointing State Governors

5. What is the impact of over-centralization on the federal structure of India?

A) Strengthens state autonomy

B) Encourages local governance

C) Weakens state powers

D) Promotes cooperative federalism

GS Mains Questions and Model Answers

Q1. Discuss the challenges faced by India’s federal structure in the context of state autonomy.

Answer: India’s federal structure has been challenged by issues such as over-centralization of powers, the dominant role of the Union Government, and frequent misuse of constitutional provisions like Article 356. Governors, as Union representatives, are sometimes accused of interfering in state affairs. States also face financial dependency on the Union for resources, limiting their policy autonomy. These challenges highlight the need for strengthening cooperative federalism to ensure a balanced relationship between the Union and states.

Q2. How does the Finance Commission promote federalism in India?

Answer: The Finance Commission plays a crucial role in maintaining the federal balance by recommending the distribution of tax revenues between the Union and states. It assesses the financial requirements of both levels of government and ensures that states receive adequate resources to fulfill their governance responsibilities. This system helps address vertical and horizontal imbalances in federal finance, fostering a more balanced federal structure.

Q3. Evaluate the role of cooperative federalism in addressing the challenges of Indian federalism.

Answer: Cooperative federalism is vital for ensuring smooth governance in India’s complex federal structure. It promotes collaboration between the Union and state governments on matters like education, health, and infrastructure. Mechanisms such as the NITI Aayog foster this collaboration. However, challenges like political differences and resource disparities often hinder cooperation. Strengthening institutions for collaborative policymaking is essential to address the issues of over-centralization and ensure inclusive development across regions.

Previous Year Questions on  Issues and Challenges Pertaining to the Federal Structure

1. UPSC CSE 2019

Question. "What are the key challenges to the federal structure of India? Suggest measures to address them." 

Answer: The federal structure in India faces challenges like over-centralization of power, frequent invocation of Article 356, and financial dependence of states on the Union. The role of Governors in state politics has also raised concerns about state autonomy. Another challenge is the limited financial powers of states, which hinders their policy initiatives. To address these challenges, mechanisms for strengthening cooperative federalism must be enhanced. The Finance Commission should ensure equitable resource distribution. Promoting collaborative policymaking through institutions like NITI Aayog can also help resolve disputes and ensure better cooperation between the Union and states.

2. UPSC CSE 2017

Question. "Analyze the role of the Governor in maintaining the federal balance in India." 

Answer: The Governor, as the constitutional head of the state, plays a key role in India’s federal setup. However, their discretionary powers and frequent interference in state politics have often been criticized for disrupting the federal balance. The misuse of Article 356 to impose President’s Rule further exacerbates tensions between the Union and states. To maintain the federal balance, the Governor’s role must be aligned with constitutional provisions, focusing on acting as a bridge between the Union and the states rather than an agent of the central government. The Supreme Court’s guidelines in the S.R. Bommai case emphasize the importance of non-partisanship and constitutional morality in the Governor’s conduct, which is crucial for maintaining the integrity of India’s federal structure.