Syllabus: Issues and challenges pertaining to the federal structure
Context
- Tensions between the Centre and several Opposition-ruled States have intensified over GST decisions, central schemes, disaster relief funds, and Finance Commission allocations.
- Many issues have reached the Supreme Court, raising concerns over the health of India’s federal structure.
Evolution of Federal Dynamics
- Shifts Since the 1990s
- In the 1990s, regional parties gained national relevance and shaped federal cooperation.
- Reforms during this era had a federal character, facilitated by strong Centre–State engagement.
- After 2014, abolition of the Planning Commission reduced a critical platform for coordination.
- Rise of Single-Party Dominance
- The emergence of the BJP reintroduced a phase of dominant-party rule.
- The party’s “one nation” political narrative contrasts sharply with the accommodative politics of coalition periods.
- Regional parties have become primary voices defending deeper federal accommodation.
Fiscal Federalism Concerns
- Finance Commission Design Issues
- Southern States fear being penalised due to horizontal devolution formulas, which favour poorer northern States.
- Structural spatial inequality shapes resource distribution, not simply political disagreement.
- Rising cesses and surcharges, which are non-shareable, deepen fiscal strain.
- GST Centralisation
- States and Centre jointly surrendered taxation powers to create GST.
- Recent GST decisions appear unilateral, weakening the Council’s federal intent.
- Economic and Structural Challenges
- States now bear most infrastructure investment, as the Centre’s fiscal flexibility has declined.
- Jobless growth and uneven wage patterns reinforce regional inequality.
- Centralisation through centrally sponsored schemes squeezes State autonomy.
- Party Politics and Federalism
- Unlike earlier coalition eras, current alliances depend on few regional parties with limited bargaining power.
- Regional allies prioritise retaining control in their States, reducing willingness to challenge central dominance.
- Future Issues: Delimitation & ONOE
- Post-Census delimitation may shift power towards more populated northern States, reducing political clout of economically advanced southern States.
- “One nation, one election” is viewed as a centralising reform wrapped in efficiency rhetoric.