Is Federal Political System a boon or

bane for Indias economic progress?

Definition of Federalism
It is a system of government in which power
is divided between a central authority and
various constituent units of the country.
Two Levels of Government
Government for the entire country
Governments at the level of
provinces/states.
Both enjoy power independent of the
other.

Difference Between...
Coming
Together

Holding
Together

Independent states
coming together on
their own to form
bigger unit.

Large country decides to

divide power between
constitutional units and
Centre.

Increase security by
pooling sovereignty
and retaining identity.

Centre is more powerful

vis-a vis the states

All constituent states

have equal power

Constituent units of
federation have unequal
powers.

USA, Switzerland &

Australia

India, Spain & Belgium

India a Federal Country

1. Constitution has declared India as a Union of
States.
2. Three tier Federalism-Union, State and Panchayat.
3. Three fold distribution of legislative powers under
Union list, State list and Concurrent list.
4. All states in the Indian Union do not have identical
powers. Eg. Union territories.
5. Changes in power sharing has to be passed by
two thirds majority in the parliament.
6. In case of any dispute regarding division of power,
the apex court will take decision.

FEDERALISM IN INDIA
Time for a Relook?
Indias Coalition Politics since 1990s brought
forward the need for Federalism, i.e., more
power for states by regional political parties.
Eg: West Bengal on River Teesta, RPF..
Indian Constitution brought 565 odd
princely states into unity- Union List(97),
State List(66) and Concurrent List(44).
Article 249,250, 252 and 253 helps Centre
to legislate on issues in State List.

Emerging Challenges and New

Discourses!
Linguistic Diversity and Polycentric
Socio-Cultural Diversity raises
questions on Centres role?
Problems of coalition politics
unknown at 1948.
Articles 249, 250, 252, 253, 355, 356
& 357

Three Parallel Discourses

Retain the present federal structure
with some amendments
Restrict Centres power and enhance
States power for better value
unlocking within states
Impose Presidential Governance.

What undermines the spirit

of Federalism?
Centre misusing the Constitution to
dismiss the State Government that
was controlled by rival parties.
Coalition Governments led to a new
culture of power sharing and respect
for the autonomy of State
Governments.

What to DO?
Should we look at Constitution with a
pragmatic evolution rather than look
at it like a sanctified static
document?
Should we have Union of States at
present than a United States of
India?
Should we embrace Co-operative
Federalism?
Shouldnt we allow states to be the

Our Suggestions
In financial and development matters, give
upper hand to states and embrace cooperative federalism. Let states become
recipients of revenue and distribute to
centre. (Tax collection and facilitation
should be with centre)
In all other matters like environment,
strategy, foreign matters etc., Centre
should be made even more powerful.

Quality of Governance
How have Indian States
Performed?

Looking at Good Governance?

Good Governance implies that
authority must be deployed and
even necessarily based on a
larger purpose the good of the
people being governed.
Pillars of
Prosperity
In successful
Fiscal
Capacit
y
Judicial
Capacit Peace
y

democracies the
coercive powers of the
state are not very
visible, whereas in
authoritarian regimes it
is the coercive power
that is most visible.

Measuring the quality of Governance

Competiti
on

Challenges
- Complex & Multi
Dimensional
- Some dimensions are not
directly observable
- How to combine indicators
& sub indicators to a single
index

Governance

Currently WGI gives

governance ratings for
212 countries based
on 310 variables
derived from 33
different agencies,
public, private and
Ngos totalling 10,000
plus data points!!!

India: Governance Measure

Three Pillars
Executive
Judiciary
Legislature

Quality of legislature

a. Delivery of
infrastructure services
b. Delivery of social
services
c. Fiscal performance
d. Maintenance of law and
order

Delivery of legal services

Methods for calculating Governance

- Principal Component analysis
- Average of the sum of ranks
- Average of the Average of ranks

Based on 3 dimensional
analysis

Economic, Structural, Legislative and

executive, Development across key
indicators
Specific Reasons
GDP >2 times
national

1.2-2 of
national
avg
0.7-1.2 of
national avg

Less than
0.7

1. Home to Automobile
manufacturing
2. Petrochemicals
3. Financial services
4. IT and ITes
5. Pharmaceuticals.
General
Reasons
1. Investment
in Human
and Physical
capital.
2. Coastal Belt.
3. Better
Property

Future by 2025
Consuming class increase from 27m to 89m.
High performing states will contribute 52% of GDP.
Andhra Pradesh and Telangana shall come to the
High Performance category.
Punjab shall move down to performing category
and MP move up to performing
Standard of living in very high and high performing
states shall be equal to high and middle-income
nations.
Very high performing states will have purchasing
parity of Spain as on today.

Future 2025 continued

Performing states ( Chhattisgarh,
Odisha, WB, Rajasthan and MP) will
have the GDP of high performing
states as on today.
There will be a shift from need for
food to need for white goods,
automobiles and educational
services.
Bihar, UP and Jharkhand will remain
in low performing.