Federalism

What is Federalism?

**Federalism** is a system of government in which **governmental powers are divided** between a central (national) authority and constituent regional units (states or provinces), each operating within its own sphere of competence as defined by the constitution. Neither the central government nor the state governments derive their authority from the other — both derive it from the **constitution itself**.

In everyday terms, federalism means that India does not have a single all-powerful government. Instead, certain subjects (like defence and foreign affairs) are handled by the central government in New Delhi, other subjects (like police and public health) are handled by state governments, and some subjects (like education and forests) are shared between both. This division is permanent and constitutional — the central government cannot simply take over a state subject, nor can a state government legislate on a central subject.

Constitutional Framework

Article 1 — India as a Union of States

**Article 1** declares that India shall be a **"Union of States."** The Constituent Assembly deliberately chose "Union" over "Federation" to emphasise that the Indian federation is not the result of a compact between sovereign states and that states have no right to secede. However, the structure is fundamentally federal in character.

Article 246 — Distribution of Legislative Powers

**Article 246** is the cornerstone of Indian federalism. It distributes legislative powers between Parliament and state legislatures through three lists in the **Seventh Schedule**:

- **Article 246(1):** Parliament has **exclusive power** to make laws on matters in the **Union List** (List I).

- **Article 246(3):** State legislatures have **exclusive power** to make laws on matters in the **State List** (List II), subject to certain exceptions.

- **Article 246(2):** Both Parliament and state legislatures can make laws on matters in the **Concurrent List** (List III). In case of conflict between a central law and a state law on a concurrent subject, the **central law prevails** (Article 254).

The Seventh Schedule

The Seventh Schedule contains the three lists that distribute subjects between the Centre and the States:

- **Union List (List I):** Contains 97 entries (after amendments) including defence, atomic energy, foreign affairs, banking, railways, currency, telecommunications, and income tax (other than agricultural income). Only Parliament can legislate on these subjects.

- **State List (List II):** Contains 66 entries including public order, police, public health, agriculture, land, water supply, state taxes (like land revenue, stamp duty, and excise on alcohol). Only state legislatures can legislate on these subjects.

- **Concurrent List (List III):** Contains 52 entries including criminal law, criminal procedure, marriage and divorce, education, forests, trade unions, and electricity. Both Parliament and state legislatures can legislate on these subjects.

Residuary Powers — Article 248

Under **Article 248**, the residuary power of legislation — the power to make laws on any matter not enumerated in any of the three lists — vests in **Parliament**. This is a unitary feature that tilts the balance in favour of the Centre, unlike the US Constitution where residuary powers rest with the states.

Unitary Features of Indian Federalism

Indian federalism is often described as **"quasi-federal"** or **"federal with a unitary bias"** because of several features that give the Centre predominance:

Emergency Provisions (Articles 352-360)

During a national emergency (Article 352), Parliament can legislate on state list subjects. The federal structure is effectively suspended during an emergency, and the Centre assumes overriding authority.

President's Rule (Article 356)

If the President is satisfied that the government of a state cannot be carried on in accordance with the Constitution, the President can assume the functions of the state government. This provision has been frequently used and debated.

Governor's Role

The **Governor** of each state is appointed by the President (Article 155) and serves at the President's pleasure. The Governor acts as the Centre's representative in the state, which has been a source of tension in Centre-state relations.

Single Constitution and Citizenship

India has a **single Constitution** for both the Centre and the states (unlike the US, where each state has its own constitution). There is also **single citizenship** — every Indian is a citizen of India, not of any particular state.

Integrated Judiciary and All-India Services

The judiciary is **integrated** — the Supreme Court is at the apex, High Courts serve the states, and subordinate courts form the base. **All-India Services** (IAS, IPS, IFS) serve both the Centre and the states, creating administrative uniformity.

Landmark Judgments

S.R. Bommai v. Union of India (1994)

The Supreme Court held that **federalism is a basic feature** of the Constitution that cannot be altered by constitutional amendment. The Court also laid down strict guidelines for the imposition of President's Rule under Article 356, holding that it is subject to judicial review.

State of West Bengal v. Union of India (1963)

The Supreme Court examined the nature of Indian federalism and held that the Indian Constitution is not strictly federal but has important federal features including distribution of powers, supremacy of the Constitution, and an independent judiciary.

State of Rajasthan v. Union of India (1977)

The Court discussed the balance between Centre and state powers and held that while the Centre has paramountcy in certain areas, the states are not mere appendages and have their own sphere of autonomy.

When Does This Term Matter?

Legislative Competence Disputes

One of the most frequent constitutional disputes in India involves questions of **legislative competence** — whether Parliament or a state legislature has the power to enact a particular law. Courts must examine the three lists in the Seventh Schedule and determine under which entry the subject matter falls. If a legislature acts beyond its competence, the law is **ultra vires** and void.

Goods and Services Tax (GST)

The introduction of **GST** through the **101st Constitutional Amendment Act, 2016** was a landmark moment in Indian federalism. It created a unified indirect tax regime by establishing the **GST Council** (Article 279A), a joint body of Centre and state representatives that makes recommendations on GST rates, exemptions, and thresholds. The GST Council represents **cooperative federalism** in action.

Centre-State Financial Relations

The distribution of financial resources between the Centre and states is governed by Articles 268-281. The **Finance Commission** (Article 280) recommends the distribution of tax revenues between the Centre and states. Disputes over fiscal federalism — how much money the Centre shares with states — are perennial issues.

Inter-State Disputes

Federalism gives rise to disputes between states over shared resources — particularly **river water** (governed by the Inter-State River Water Disputes Act, 1956) and **boundaries**. These disputes are adjudicated by tribunals constituted by the central government.

Practical Significance

- **Laws vary by state.** Because states have exclusive power over state list subjects, laws on matters like land, agriculture, police, and local government vary significantly from state to state. What is legal in one state may be illegal in another.

- **Centre can override states on concurrent subjects.** Under Article 254, if there is a repugnancy between a central law and a state law on a concurrent list subject, the central law prevails. However, a state law that has received the President's assent can prevail over the central law in that state.

- **Cooperative federalism is the ideal.** The Supreme Court and political discourse increasingly emphasise **cooperative federalism** — the Centre and states working together in a spirit of cooperation rather than confrontation. Bodies like the GST Council, NITI Aayog, and Inter-State Council are mechanisms for cooperative federalism.

- **Understanding federalism is essential for compliance.** Businesses operating across states must navigate both central and state laws, which may differ significantly on matters like labour, land use, taxation, and environmental regulation.

Frequently Asked Questions

Is India a federal or unitary country?

India is best described as a **federal country with unitary features**, or as the Supreme Court has termed it, "quasi-federal." It has the essential features of a federation — a written constitution, division of powers, independent judiciary, and supremacy of the constitution. However, it also has strong unitary features — emergency provisions, single citizenship, integrated judiciary, and the Centre's residuary powers. The Supreme Court in **S.R. Bommai (1994)** held that federalism is a basic feature of the Constitution.

What happens when a central law and a state law conflict on a concurrent list subject?

Under **Article 254(1)**, if there is a repugnancy between a central law and a state law on a concurrent list subject, the **central law prevails** and the state law is void to the extent of the repugnancy. However, under **Article 254(2)**, if the state law has been reserved for and has received the **President's assent**, the state law prevails in that state, though Parliament can still override it by enacting a subsequent law.

Can the Centre legislate on state list subjects?

Yes, but only in limited circumstances: (a) during a **national emergency** under Article 352; (b) under **Article 249**, if the Rajya Sabha passes a resolution by a two-thirds majority that it is necessary in the national interest for Parliament to legislate on a state subject; (c) under **Article 252**, if two or more state legislatures pass resolutions requesting Parliament to legislate; and (d) for implementing **international treaties** under Article 253.

What is the difference between cooperative and competitive federalism?

**Cooperative federalism** refers to the Centre and states working together in partnership to achieve common goals, sharing responsibilities and resources — exemplified by the GST Council and NITI Aayog. **Competitive federalism** refers to states competing with each other to attract investment, improve governance, and deliver better public services, with the idea that healthy competition drives improvement. Modern Indian governance emphasises both — cooperation on national policies and competition in economic performance.