Federalism is a system of government in which powers have been divided between the centre and its constituent parts such as provinces or states.
It is an institutional mechanism to accommodate two sets of politics, one at the centre or national level and second at the regional or provincial level. Both the seats of power are autonomous in their own spheres.
Unlike a unitary state, sovereignty is constitutionally split between at least two territorial levels so that units at each level have final authority and can act independently of the others in some area. The constituent units possess certain level of autonomy depending on type of federation.
There are two types of federations:
- Holding together federation:
In this form of federation, the powers are shared among various social groups/constituent parts to accommodate the diversity present in the society. In this type of federation, the powers are somewhat tilted towards the central authority. India and Belgium follow this form of federalism.
- Coming together federation:
In this form of federation, the independent states come together to form a bigger unit and sacrifice some of their powers to be enjoyed by the central authority. The states here enjoy more autonomy as compared to the states in “holding together federation” system. Countries such as the USA, Switzerland, and Australia follow this form of federalism.
- Federalism is an institutional mechanism to accommodate two sets of polities, i.e., first is the center or national level and second is at the provincial or regional level. Both the sets of polities are autonomous in its own sphere.
- Each level of the polity has distinct powers and responsibilities and has a separate system of government.
- The details of this federalism or dual system of government are generally found in a written constitution.
- Written Constitution is considered to be supreme and also the source of the power of both sets of government.
- Certain subjects, which are the concern of a nation as a whole, for example, defense or currency, are the responsibility of the union or central government.
- On the other hand, regional or local matters are the responsibility of the regional or state
- In case of a conflict between the center and the state on any issue, the judiciary has the powers to resolve the disputes.
INDIAN MODEL OF FEDERALISM
A) Historical Aspect
Democratic decentralisation in India has a robust historical background, the stages of evolution, revival and growth starting from the ancient Vedic civilisation (1200 BC) to modern India.
- The notion of “self -rule” in rural India succeeded during the ancient period in the name of “ sabhas” which were the strong grounds for making “participatory community based decisions of self-rule” by the designated traditional village head or a group of heads.
- The Panchayats had both executive and judicial powers, including the power to decide land revenue, village administration and providing taxes to higher administrative bodies.
- Important characteristics of these Panchayats were (during ancient period) that they had been the hinge of administration, the centre of social life, an important economic force and a focus of social solidarity.
- Several policy measures were introduced by the British Government, including the government of India Acts 1919 and 1929, which paved the way for strengthening decentralized Governance in pre-independent India.
- The Government of India Act, 1919 introduced the concept of division of powers between the centre and the provincial legislatures by separating the central and provincial subjects. For the first time, it introduced bicameralism consisting of an Upper House and Lower House.
- The Government of India Act, 1935 pronounced the period of federalism by adding the conception of “Quasi -Federalism” and used the expression ‘Federation of India’.
- Indian freedom movement and the unity between different provinces and states represent the basic character of Indian federalism.
- The Government of India Act 1935 provides to establish India as a Federation of States. However, it also provided for a powerful Centre.
- Under this system, the Provinces derived their authority directly from the Crown and exercised legislative and executive powers, broadly free from Central control, within a defined sphere.
B) India Federalism
The core of India’s federal structure stems from the Seventh Schedule of Indian constitution, which has three lists—Union, concurrent and state.
Though the Indian Constitution does not use the word ‘federalism’ anywhere; however, the structure of Indian government is divided into two sets of government’s i.e.
- For the entire nation known as the ‘Union Government’ (or central government) and
- For each unit or state known as the ‘State Government.’
India is a federal system but with more tilt towards a unitary system of government. It is considered a quasi-federal system as it has features of both a federal and a unitary system.
Article 1 of the Indian Constitution states, ‘India, that is Bharat, shall be a union of states’.
The Constitution of does not mention India as a ‘federation’ but ‘Union of states’.
Article 1 of the Indian Constitution suggests that the territory of India shall be classified into three categories:
- Territories of the States
- Union Territories
- Territories that the Indian Government can acquire at any point in time
Currently, there are 29 states and 7 union territories. The government of India can acquire some states at any point pertaining to factors such as cession, occupation, conquest or subjugation. Foreign territories such as Dadra and Nagar Haveli, Goa, Puducherry, and Sikkim have had been acquired by the Indian government since the constitution started functioning.
FEATURES OF THE INDIAN FEDERALISM
- Supremacy of the constitution: Constitution is the supreme law in India. The constitution is regarded as the guide in framing policies of the government. It lays out the ideas and philosophy of the constitution framers. It secures the right of the citizens.
- Written constitution: India has the lengthiest written constitution in the whole world. The provisions of the constitution of India have been drawn from various sources. Indian constitution is a blend of rigidity and flexibity.
- Division of powers between the centre and states – there are three lists given in the Seventh Schedule of the Constitution which gives the subjects each level has jurisdiction in:
- Union List
- State List
- Concurrent List
- Vertical power sharing: The Constitution has divided the powers between the Union and the States. It helps in accommodating diversity of the country. It enables the state governments to take decision with flexibility according to the local needs. The powers in India have been, to some level, tilted towards the centre.
- Horizontal power sharing: India has three wings of the government- Legislature, Executive and Judiciary. Unlike USA, in India political executive is a part of the legislature.
- Bicameralism: The Parliament of India has two houses – Lok Sabha and Rajya Sabha. Most of the states in India do not have bicameral legislature.
- Independent judiciary: The Indian constitution provides for an independent and an integrated judicial system. The lower courts and the district courts are at the local level, high courts at the state level and the Supreme Court is the highest court of the country. All the courts in India are subordinate to the Supreme Court.
UNITARY FEATURES OF INDIA
While submitting the Draft Constitution, Dr. Ambedkar, the Chairman of the Drafting Committee, stated that “although its Constitution may be federal in structure”, the Committee had used the term “Union” because of certain advantages, These advantages, he explained to the Constituent Assembly, were to indicate two things, viz., (a) that the Indian federation is not the result of an agreement by the units, and (b) that the component units have no freedom to secede from It
Our constitution has made centre more powerful which is in resemblance to the feature of unitary government. These features are:
- The flexibility of the constitution – the constitution is a blend of flexibility and rigidity. Certain provisions of the constitution can be easily amended. In case the amendments seek to change aspects of federalism in India, the provision to bring about such amendments is not easy.
- Centre more powerful: The constitution has made centre more powerful as the Union List has more subjects than the State List. Moreover, it has empowered the parliament to override the law made by a state legislature on the matters related to concurrent list. In some cases, the parliament is also empowered to make laws on state list subjects. The residuary power are vested in the centre which are not in line with the principle of federalism.
- Unequal representation of states in Upper House: The states in India do not have equal representation in Rajya Sabha. The representation is based on the population. For example-Uttar Pradesh, Rajasthan and Goa have 31, 10 and 1 representative respectively in the Rajya Sabha. Whereas, in a federal country, the representation of each state should be equal in Upper House.
- Executive is a part of legislature: The political executive of the centre and the states are the part of the parliament and the state legislature respectively. It betrays the principle of division of powers between the different organs of the government. However, checks and balances limit the power of the executive, the legislature and the judiciary.
- Lok Sabha more powerful than Rajya Sabha: The Lok Sabha is more powerful than the Rajya Sabha. Certain bills such as money bill can only be introduced in the Lok Sabha. A no-confidence motion against the government can only be initiated in the Lok Sabha. However, Rajya Sabha has been given certain powers which are not available to Lok Sabha such as introduction of a bill for new All-India Service. Unequal powers to two houses is not in line with the features of a federation.
- Emergency Powers: The centre has been provided with emergency powers. Three types of emergency are national emergency, state emergency (president’s rule) and financial emergency. During emergency, the level of control of centre over the states increases. These provisions undermine the autonomy of states.
- Integrated judiciary: Judiciary in India, though indepent, is integrated. That means, India does not have separate judiciary at the centre and the state level.
- Single citizenship: The constitution provides for a single citizenship for the citizens of the country. It does not provide for state’s citizenship to the citizens separately. The provision of single citizenship increases the feeling of nationality among the citizens which helps in maintaining unity in spite of cultural and regional diversity. It is also in line with some fundamental rights such as freedom of movement and residence in any part of the country.
- Appointment of governor: The governor of a state is appointed by the President. The state has no role in his appointment. He acts as an agent of the central government in the state.
- All India Services: Services including Indian Administrative Services (IAS), Indian Police Services (IPS) and Indian Forrest Services (IFS) are part of All India services. The centre, through these services, intrudes into the power of the states and control the executive functions of the states. Though immediate control of these services is in hand of state but unlimate powers lies with the centre. These services provide efficiency and uniformity in administration throughout the country.
- States not indestructible: Parliament may by law, form a new State by separation of territory from any State or by uniting two or more States or parts of States or by uniting any territory to a part of any State. It can also increase or diminish the area, alter the boundaary or change the name of state. Parliament require to pass such a bill following the procedure of an ordinary bill. That means, states in India are not indestructible entity.
- Veto over states bill: The governor of a state has the authority to reserve certain types of bills for the consideration of the president. The president enjoys the absolute veto on these bills. He can even reject the bill at the second instance i.e if the bill is sent after reconsideration by the state legislature. Most of the state legislatures have single house. So, the provision empowers the President to check any arbitrary decision by the state assembly. But, this provision is a deviation from the principles of federalism.
- Integrated Election Machinery: The Election Commission of India is responsible to conduct free and fair elections at both the centre and the state level. The Chairman and the members of the election commission are appointed by the president.
- Integrated Audit Machinery: The Comptroller and Auditor General is appointed by the President. However, he audits the account of both the centre and the states. There is no separate provision for an audit machinery at state level.
- Power to remove key officials – the state government or state legislature does not have the authority to remove certain key government officials even at the state level like the election commissioner of a state, judges of the high courts, or the chairman of the state public service commissions.
Comparing Features of Federal and Unitary Governments
IMPORTANT SUPREME COURT DECISIONS RELATED TO FEDERALISM
- State Of West Bengal vs Union Of India (1962)
The case involved the question of sovereignty of individual states in India.The Supreme Court held that:
- Indian Constitution does not provide for absolute federalism. It provides to decentralize the authority, so that the large territory of India can be governed efficiently.
- Individual state has no power to amend the constitution which is vested only in the parliament.
- Constitution has divided powers between the centre and the states in such a way that the national policies and local governance could be executed by the centre and the individual states respectively
- Constitution provides supreme power to the judiciary to invalidate any law made by legislature if it violates the constitution
- R. Bommai v. Union of India (1994)
In this case, the Supreme Court discussed about the provisions of Article 356 (President’s Rule. It laid down the conditions under which it can be imposed, so that the misuse of Article 356 can be checked. The Supreme court laid down certain principles regarding Article 356:
- President has power to impose Article 356, but the decision is not immune from judicial review. The judiciary can examine whether the Proclamation was justified or it was imposed with malafide intention.
- The Supreme Court or the High Court can strike down the proclamation if it is found to be malafide or based on irrelevant grounds.
- It was held that the President has conditional power and not absolute power in regrads to imposition of Article 356.
- It was held that the Article 356 is an extreme power and is to be used as a last resort in cases where it is manifest that there is an impasse and the constitutional machinery in a State has collapsed.
- State of Karnataka v. Union of India – The Indian Constitution is not federal in character but has been characterized as quasi-federal in nature.
- Kesavananda Bharati v. State of Kerala – federalism to be a part of the basic structure of the constitution which means it can’t be tampered with.
>Importance of Federalism in India
Federalism is the most relevant factor of modern constitutionalism.
- The core objectives of Indian federalism are unity in diversity, devolution in authority, and decentralization in administration.
- Through federalism, the State pursues the goal of common welfare in the midst of wide diversity in socio-cultural, economic spheres.
- Federalism or federal form of government is the most suitable form for a vast and pluralistic country like India.
- It tries to facilitate the socio-political cooperation between two sets of identities through various structural mechanisms of ‘shared rule’.
MAJOR CHALLENGES TO THE INDIAN FEDERAL STRUCTURE
- This is the most alarming challenge to Indian federalism.
- Regionalism basically implies an inculcation of a strong sense of love and respect for one’s region, ethnicity, language, and culture and establishes itself through demands for autonomy on these grounds.
- Regionalism started with the creation of the state of Andhra Pradesh as a consequence of the death of Potti Sriramulu in 1953 after he fasted for 52 days demanding a separate state for Telegu speaking people.
- The latest protests for Gorkhaland and Bodoland are prime example of this phenomenon.These demands 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.
- Governor’s Office
- 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 by the Article 154 of the Indian Constitution which states that all the executive powers of the state are held by the Governor.
- This provision implies that the Governor can appoint the Chief Minister and the Advocate General of the State, and State Election Commissioners. The most paramount executive power at his disposal is that he can recommend the imposition of constitutional emergency in a state.
- Centre’s visible arbitrariness in misusing such constitutional office has been the subject of acrimonious debates and divergent opinions in the country.
- The imposition of President’s Rule in Arunachal Pradesh in January 2016, while there was an elected government in the State, created a bizarre incidence in the constitutional history of India.
- The abuse of the power under Article 356 by the Central Government is replete in the political history of the country.
- Centralized Planning
- The items in a state list of a country are enjoyed by the state, the items in the Union list are enjoyed by the Centre and the items in the Concurrent list are enjoyed by both the State and the Centre.
- But, Central government tends to control the national and regional planning in India without any inhibitions at all.
- The vivid example of Centre’s assumption of sole authority over the planning or Centralized planning is the establishment of a Planning Commission, now replaced by NITI Aayog.
- 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 as such nullifies the primary rule of a federation and its requirement of the division of power between the Centre and the State.
- Article 200 (reservation of State Bills by the Governor for consideration of the President),emergency provisions under Article 352, 356 and 360 and compulsory compliance by the States with the executive power of the Centre under Article 256 and 257 amount to centralizationof power which has been the major concern among the states.
- Single Constitution and Citizenship
- India as a nation 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. A person cannot hold dual citizenship and enjoy the rights of India as well as another country at the same time.
- But the provision of Single Citizenship does not consider a citizen’s identity as a member of a particular state. This indirectly establishes that the most integral of powers still remains and shall always remain with the Centre alone.
- While the provision of a Single Constitution helps the country function on the same rules thus promoting equality and unity, it definitely poses as a challenge to Indian Federation; since the states are handicapped for securing true autonomy in the way it runs and hence governs at the mercy of the Centre.
- Division of Powers
- Unlike the USA and Australia, in India distribution of power is made under Three Lists found in the Seventh Schedule of the Constitution.
- The powers of both the Central and State Governments are specifically enumerated in the Union list and State list respectively while powers mentioned in the Concurrent list are enjoyed by the two sets of governments.
- The residuary powers are vested in the Central government.
- Some matters which require the involvement of both the centre and states like criminal law, forest, economic and social planning are assigned in the Concurrent List.
- However, in the case of conflict over the legislation on any of the subjects mentioned in the Concurrent List, the Centre supersedes the States.
- Absence of Fiscal Federalism
- The Indian Constitution, while expressly vesting the Centre with greater powers of taxation, also provides for an institutional mechanism — the Finance Commission — to determine the share of the States in the Central tax revenues by way of correcting this imbalance.
- While deciding the devolution of taxes and the provisions of grants the Finance Commission is required to address both the vertical imbalance between the Centre and the States and the horizontal imbalance between states.
- At present, about 42 percent of Central revenues (tax and non-tax) is transferred to the States, and this includes the grants they get from the Planning Commission and the Central Ministries.
- Asymmetrical sharing of revenue and resource crunch at the periphery results in uneven development across the country.
- The current Goods and Services Tax measure is feared by many states to be against fiscal federalism in India.
- Many states in India demand for more financial autonomy in India.
- Unequal Representation of States
- With a view to preventing the evil of predominant influence of larger units over smaller units in a federation, most federations in the world have resorted to some constitutional mechanism like an equal representation of units or states in the Second Chamber and ratification of all amendments to the Constitution by states.
- In India, there is no such provision of an equal representation of states in the RajyaSabha, the Second Chamber and nor the states have any substantial say over the amendments done to the Constitution from time to time.
- Centralized Amendment Power
- In a typical federation, the power of amendment to the Federal Constitution lies on a shared basis between the federation and its units.
- In India, the power of constitutional amendment lies with the Centre under Article 368 and other provisions.
- Although ratification of half of the states is sought for in some limited areas, the states in the Indian Union have virtually no power in this critical area of governance.
- The Indestructible Union with Destructible Units
- Unlike successful federations, India Constitution doesn’t have the provision for the secession of states from the Union of India.
- The Union has been made indestructible with a view to protecting unity and integrity in a country like India.
- However, this typical Indian arrangement checks the growing demand for secession from the Indian Union.
- Even if it appears anti-federal in content, it has proved a blessing in disguise for if states would have given plenary power in deciding their geographical territory, there would have been much chaos and impasses leading to serious law and order problems in the country.
- All major federal democracies have in their Constitutions the provision that a state cannot be divided or merged with another state without its prior consent. This is the essence of federalism. However in India, the power of making, remaking states lies with the Union Parliament.
- However, in certain cases, states concerned are often being ignored by the Union Government in a matter of division of their geographical territory. The recent formation of the State of Telangana is a case in point.
- In the sensitive matters like redrawing the territory of a state in India the views of concerned states should be given due weightage by the Centre. Any arbitrary decision of the Centre without the consent of the State and a negotiated settlement in this regard will effectively convert states into municipalities, and India into a unitary state.
- Integrated Judiciary and All India Services
- The integrated judiciary is a typical feature of Indian federation.
- Unlike typical federations, in India Supreme Court is the apex court and all other courts are subordinate to it.
- The States don’t have separate independent courts dealing specially with state matters.
- Also, the machinery for election, accounts, and audit in India is integrated.
- The All Indian Services and central services are also considered by many states and critics as anti-federal.
- Language and Religious Conflicts
- Diversity in languages in India sometimes causes a blow to the federal spirit of the Constitution.
- Trouble arises when the strongest unit of the federation attempts to force a particular language on others. The tussle for official language in India is still a burning issue. The southern states’ opposition to Hindi as the official language of India has led to deep-seated language crisis in India.
- India is a fine example of religious heterogeneity that sometimes gives rise to turmoil to weaken the federation.
- Communal riots often result in negatively impacting the Federal Spirit of the nation
- Economic Incompatibilities of the units
- Differences in economic standards and relative economic and fiscal incompatibilities among the constituent states also pose a threat to a federation.
- The forces of imbalances in the field are demands for economic planning and development and for regional economic equality and financial autonomy of states.
- Demand for a financial equality of a region creates problems in a federation.
- In India, some states are declared as poor and on the principle of equalization, are getting grants-in-aid. But the dilemma in a federation emerges that if the principle of equalization is adhered to, the national income and the total income growth will suffer.
- Physical Environment
- Physical environment may also create hurdles for a federation by affecting communication.
- A federation in which the lines of communication are long and difficult has to face the difficulty of keeping in touch with all the units.
- It is easy for creating misunderstanding and conflict and perhaps this was one of the important causes for the separation of the east wing from Pakistan.
- Moreover, in the absence of good communication, the poorer units tend to develop a complex of neglect and feel that they are receiving less than their fair share of resources for development.
- In India, the North- Eastern states are having similar feelings and creating problems for the federation.
- External forces
- External forces also create hindrances for a federation. The tension in the North Eastern States in India is due to the interference of neighboring countries.
- China’s claim on some portion of the territory of Arunachal Pradesh on LAC threats the territorial integrity of India. The Tamil issue in Sri Lanka creates disruptive forces in India.
- The alleged Pak hand in Khalistan movement in the past also has a say in weakening the Indian federation.
- These external factors make the country go through communal divisions and thus the federal structure vulnerable to manipulation.
COMPARISON BETWEEN INDIAN AND AMERICAN FEDERAL SYSTEM
COOPERATIVE AND COMPETITIVE FEDERALISM
The traditional theory of mutual independence of the two governments,-Central and States, has given way to “co-operative federalism’ in most of the federal countries today.
- The practice of administrative co-operation between general and regional governments, the partial dependence of the regional governments upon payments from the general governments, and the fact that the general governments, by the use of conditional grants, frequently promote developments in matters which are constitutionally assigned to the regions.
- The system of federal co-operation existing under the Indian Constitution, through allocation by the Union of the taxes collected, or direct grants or allocation of plan funds
- There is a normal division of powers under which the States enjoy autonomy within their own spheres, with the power to raise revenue;
- The Constitution clearly demarcates subjects, which are under the exclusive domain of the Union and those under the exclusive of States.
- The Constitution of India (under Article 371) has given some special provisions for some States after considering their peculiar social and historical circumstances. However, most of the special provisions are related to the north eastern States (i.e. Assam, Nagaland, Arunachal Pradesh, Mizoram, etc.) largely due to a sizeable indigenous tribal population with a distinct history and culture.
- The example of GST Council clearly shows that Constitution provides an outlet for Sates to engage collaboratively with Centre so as to get its concerns addressed.
- Institutions like finance commission, National integration Council and recently the NITI aayog further the cause of Cooperative Federalism
A) Competitive Federalism
Globalization has generated a phase of ‘competitive federalism’, where provincial governments compete among themselves, and with the centre, to attract investment, capital and technology.
This idea of Competitive federalism gained significance in India post 1990s economic reforms.
- In Competitive federalism States need to compete among themselves and also with the Centre for benefits.
- States compete with each other to attract funds and investment, which facilitates efficiency in administration and enhances developmental activities.
- The investors prefer more developed states for investing their money. Union government devolves funds to the states on the basis of usage of previously allocated funds.
- Healthy competition strives to improve physical and social infrastructure within the state.
- Competitive federalism is not part of the basic structure of Indian constitution. It is the decision of executives.
B) Government Initiatives to promote competitive Federalism
The Central government has promised decentralization of power and minimum interference in the State affairs.
- Government has abolished Planning Commission and replaced it with NITI Aayog. One of the mandates of the NITI Aayog is to develop competitive federalism. State governments would not look towards centre for policy guidelines and fiscal resources.
- Share of states in central tax revenue has been increased from 32% to 42% after the recommendation of the finance commission.
- States have freedom to plan their expenditure based on their own priorities.
- States would work with centre on a shared vision of national objectives.
- Restructuring of centrally sponsored schemes.
- Financial sector bailout programme under UDAY scheme.
- Swachh Bharat Ranking
- Most of the state now organizes investors meet to showcase facilities in their state to attract business and investment. This has led to improvement in business environment in various states.
- State wise Ease of Doing Business ranking to build a huge sense of competition.
INITIATIVES THAT CAN FURTHER STRENGTHEN FEDERALISM IN INDIA
- It is important to have a clear division of labour, functions, responsibilities and regulatory role of various levels of governments.
- There is need to re-look and redistribute entries in the Seventh Schedule.
- The principle of subsidiarity can be used as a relevant guiding principle Which states, what can be done best (with minimum transaction and coordination costs) at a particular level should be done at that level and not at a higher level or lower level. This approach could be the most optimal.
- Sarkaria Commission Recommendation: Union government must consult the states before legislating on items in the concurrent list.
- Punchhi Commission Recommendation: Greater flexibility to states in relation to subjects in the state list and ‘transferred items’ in the concurrent list.
- Local Governments should have a predictable flow of untied funds with the freedom to plan and prioritize.
- It is also important to incentivize Local Governments to mobilize their own source revenue, like, property tax.
- Lessons can be learnt from Kerala which realized the operational difficulties in 73rd/74th amendments, and tried to disaggregate the subjects given under schedules XI and XII into activities and sub-activities.
- Autonomy of institutions must not be compromised.
- New mechanisms rather than tribunals should be considered as solution to the problem of Inter-State River Water Disputes in India. Focus should shift from Conflict Resolution to Enabling Cooperation.
- There has been a steady requirement of the National Development Council, that is a delegate institution of the Centre and the states, should become more energetic and effective. It should re-emerge as a verbal and effectual gadget of Centre-state discourse in matters of development. Here is an organization that has the potentiality of making the Indian federal economic structure more powerful and therefore, this instrumentality ought not to become a superfluous union.
- Reactivation of the Centre-State Council: Under Article 263, this council is expected to inquire and advice on disputes, discuss subjects common to all states and make recommendations for better policy coordination.
- A balance between both unitary and federal features of the country is a must for the proper functioning of the Indian Democracy.
- States should be autonomous in their own sphere but they can’t be wholly independent to avoid a state of tyranny in the nation. Long-term solution is to foster genuine fiscal federalism where states largely raise their own revenue.
- Creating a fiscal structure where the states have greater revenue-raising authority, as well as greater decision making power on spending.
- India needs to move away from centralization-decentralization thinking, and embrace genuine fiscal federalism by permanently creating a fiscal power centre in the states.