India is home to over 1.4 billion people, 28 states, 8 union territories, hundreds of languages, and vastly different regional needs. Governing such a country through a single, all-powerful centre would be unworkable. Yet leaving everything to individual states would risk fragmentation. The Indian Constitution solves this puzzle through a carefully designed federal structure – one that distributes power between the Union and state governments while keeping the nation firmly together. Understanding how this structure works is fundamental to understanding Indian constitutional law.
Table of Contents
- What does “federal” mean in the Indian context?
- Federal features of the Indian Constitution
- Written and supreme constitution
- Division of powers: the three lists
- Independent judiciary
- Bicameral legislature
- Administrative relations between Union and states
- Financial relations: who taxes what?
- Unitary features: why the Centre is stronger
- S.R. Bommai v. Union of India (1994): protecting federal balance
- Cooperative and competitive federalism today
What does “federal” mean in the Indian context?
In a federal system, two levels of government – national and regional – each have their own powers, guaranteed by the constitution. Neither is subordinate to the other within its own sphere. However, India’s version of federalism comes with an important qualifier. The Constitution is considered federal in nature but unitary in spirit, combining federal features like a division of powers and an independent judiciary with unitary features like a single constitution, single citizenship, and strong emergency powers vested in the Centre.
Political scientist K.C. Wheare described India’s constitutional arrangement as “quasi-federal” – a term that has stuck in legal and academic discourse. Granville Austin called it a “cooperative federation,” while Ivor Jennings described it as a federation with a strong centralising tendency. The word “federation” itself does not appear anywhere in the Constitution. Article 1 simply states, “India, that is Bharat, shall be a Union of States.” This choice of words was deliberate – it signals unity and an indestructible whole, not a contractual arrangement between independent entities.
Federal features of the Indian Constitution
Despite the quasi-federal label, the Constitution contains several classic federal features that distribute authority and prevent excessive concentration of power in any single authority.
Written and supreme constitution
The Constitution is a written document and the supreme law of the land. Every action of Parliament, state legislatures, and the executive must conform to it. Both Union and state governments derive their authority from the Constitution and are bound by it. No government can unilaterally alter the federal balance – amendments that affect the division of powers require ratification by a majority of state legislatures in addition to a special parliamentary majority.
Division of powers: the three lists
The Union List originally contained 97 subjects (now 100) on which only Parliament can legislate. These cover matters of national importance – defence, foreign policy, communications, currency, and taxation on corporations and non-agricultural income, among others. The logic is straightforward: these subjects require a uniform national policy and cannot be left to regional variation.
The State List contains 66 subjects reserved exclusively for state legislatures. States have sole legislative authority over law and order, public health, local government, agriculture, and taxation on agricultural income, entertainment, and alcoholic beverages. These are areas where regional governments are better positioned to respond to local conditions and needs.
The Concurrent List covers subjects where both Parliament and state legislatures can make laws – including criminal law, marriage and divorce, contracts, education, trade unions, and social security. When a conflict arises between a Union law and a state law on a concurrent subject, the Union law prevails. Subjects not mentioned in any of the three lists are called residuary subjects, and the power to legislate on them rests exclusively with Parliament under Article 248.
Independent judiciary
The Constitution provides for an independent and integrated judiciary. District and lower courts form the base, High Courts operate at the state level, and the Supreme Court sits at the apex – and all courts are subordinate to it. The judiciary acts as the guardian of the federal structure, ensuring that neither the Union nor state governments overstep their constitutional boundaries. It also resolves disputes between states and between the Union and states.
Bicameral legislature
Parliament consists of two Houses – the Lok Sabha (House of the People) and the Rajya Sabha (Council of States). The Rajya Sabha represents states in the national legislature; its composition is based on state populations as laid out in the Fourth Schedule, and members are elected by state legislatures. This gives states a direct voice in national law-making. Any constitutional amendment also requires a two-thirds majority in the Rajya Sabha, giving states collective influence over changes to the federal balance.
Administrative relations between Union and states
Legislative power alone does not complete the picture – the Constitution also distributes administrative authority. As a general rule, each government executes laws within its own domain. However, there are important exceptions. The Union government can give directions to states on certain matters, including ensuring that state laws do not impede the exercise of Union executive power. The Union government can also issue directions to states on subjects like the construction and maintenance of means of communication of national importance and protection of railways. All-India Services such as the IAS, IPS, and IFS serve both the Union and state governments, creating an administrative link between the two levels.
Financial relations: who taxes what?
Financial power in a federal system is as important as legislative power. Articles 268 to 293 in Part XII of the Constitution lay down the financial relations between the Union and states, covering the division of taxing powers, revenue sharing, grants, and the role of the Finance Commission.
The broad principle is that Parliament has exclusive taxation authority over Union List subjects – customs duties, excise on manufactured goods, corporate tax – while states have taxing power over State List subjects, including land revenue, agricultural income tax, and excise on liquor. The Constitution also creates a nuanced revenue-sharing framework:
Article 268 covers duties like stamp duties on certain instruments – levied by the Union but collected and retained by the states where they arise. Article 269 covers taxes levied and collected by the Union on inter-state trade but assigned entirely to the states. Article 270 is the most significant revenue-sharing provision: it provides for the sharing of centrally collected taxes – including income tax and corporation tax – between the Union and the states, with the distribution determined on the basis of recommendations by the Finance Commission.
The Finance Commission, established under Article 280, plays a central role in fiscal federalism. It recommends the percentage of central tax revenues to be shared with states and the principles governing grants-in-aid. Article 275 provides for compulsory statutory grants-in-aid to states from central resources, while Article 282 empowers both the Centre and states to make grants for any public purpose even outside their legislative competence. The introduction of GST through the 101st Constitutional Amendment significantly restructured fiscal federalism, replacing a fragmented system of multiple central and state taxes with a unified framework, though debates about states’ fiscal autonomy within this system continue.
Unitary features: why the Centre is stronger
Indian federalism tilts decisively towards the Centre in several ways. The Union has exclusive legislative power over residuary subjects. Even on State List subjects, Parliament can legislate if the Rajya Sabha passes a resolution by a two-thirds majority declaring it necessary in the national interest. Governors of states are appointed by the President, making them agents of the Centre at the state level. During a national emergency under Article 352, Parliament can legislate on State List subjects. Union territories are directly administered by the Union. There is a single constitution and single citizenship for the whole country.
The most controversial unitary power is Article 356 – President’s Rule. Article 356 allows the Central Government to impose President’s Rule in a state when constitutional machinery is deemed to have failed, dismissing the elected state government and vesting legislative power in Parliament. Before 1994, this provision was used – and frequently misused – as a political tool. It was invoked over 90 times, often on dubious grounds, to remove state governments led by rival political parties.
S.R. Bommai v. Union of India (1994): protecting federal balance
The landmark judgment in S.R. Bommai v. Union of India (1994) fundamentally changed how Article 356 could be used. A nine-judge bench of the Supreme Court ruled that the President’s power to dismiss a state government is not absolute – it is subject to judicial review. The Court also held that the majority of a government must be tested on the floor of the Assembly, not assessed subjectively by the Governor. Crucially, the Court declared that federalism is a basic feature of the Constitution – it cannot be destroyed even by constitutional amendment. The Supreme Court stated clearly that the fact that the Centre has more power than states does not make states mere appendages of the Centre. Within their constitutionally defined sphere, states are supreme.
The Bommai judgment substantially curtailed arbitrary use of Article 356 and reinforced that India’s federal structure – however tilted towards the Centre – must be respected and cannot be weaponised for political ends.
Cooperative and competitive federalism today
Contemporary discussions of Indian federalism go beyond the formal constitutional text. Cooperative federalism refers to a horizontal relationship where the Union and states work together in the public interest – pooling resources, jointly implementing policies, and coordinating on national challenges. Competitive federalism involves states competing with each other to attract investment and improve governance outcomes. Both models are increasingly relevant as states push for greater autonomy and a larger share of fiscal resources, while the Union pursues centralised schemes and policy frameworks.
The introduction of GST, debates over the devolution of central taxes, and tensions over Centrally Sponsored Schemes all reflect the ongoing negotiation between central authority and state autonomy that is central to Indian federalism in practice. Under Article 263, the President can establish an inter-state council to coordinate and resolve disputes between states and the Union – a mechanism that continues to be invoked in this ongoing dialogue.
What do you think? The Indian Constitution deliberately gave the Union government more power than state governments – was this the right choice for a newly independent and deeply diverse country, or does it undermine genuine federalism? And given that federalism has been declared a basic feature of the Constitution, should states have a formal constitutional mechanism to challenge Union overreach beyond approaching the Supreme Court?
References
- https://en.wikipedia.org/wiki/Constitution_of_India
- https://www.innovativegroupofcolleges.com/federal-features-of-indian-constitution.html
- https://byjus.com/free-ias-prep/federalism/
- https://en.wikipedia.org/wiki/Federalism_in_India
- https://www.britannica.com/place/India/Constitutional-structure
- https://polsci.institute/constitutional-gov-democracy-india/division-of-power-indian-constitution-lists/
- https://www.pw.live/banking/exams/federal-structure-of-india
- https://www.apnilaw.com/upsc/indian-constitution/financial-relations-between-centre-and-states-articles-268-293/
- https://www.gktoday.in/article-270/
- https://www.shankariasparliament.com/current-affairs/fiscal-federalism
- https://blog.ipleaders.in/centre-state-relations-financial/
- https://en.wikipedia.org/wiki/S._R._Bommai_v._Union_of_India
- https://www.lawctopus.com/clatalogue/clat-ug/case-analysis-of-s-r-bommai-v-union-of-india-landmark-case-on-misuse-of-article-356/
- https://vajiramandravi.com/current-affairs/sr-bommai-vs-union-of-india/
- https://prepp.in/news/e-492-sr-bommai-vs-union-of-india-1994-indian-polity-notes
- https://www.drishtiias.com/daily-updates/daily-news-analysis/s-r-bommai-v-union-of-india-case-1994
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