State vs Centre Disputes: Federalism Under Strain?

Author : Sarthak, National Law University

India's constitutional framework is based on a novel model of cooperative federalism, combining a strong Centre with empowered States. Recent years, though, have seen an escalation of conflicts between State governments and the Union, especially on matters of administrative control, fiscal autonomy, and legislative competence. This has created increasing apprehensions that the constitutional balance of federalism is under threat, and there are doubts regarding the robustness of Indian federalism in the context of growing centralisation.

The Constitution of India follows a quasi-federal pattern of government, with provisions like Articles 246 and Schedule VII defining the divisible powers of the State and Union legislatures. Although the framers of the Constitution visualized a strong Centre for maintaining national unity and integrity, they endowed the States with a wide measure of autonomy in administering affairs. Tensions have been fanned, however, by Union encroachment on the areas traditionally under State jurisdiction. For instance, the deployment of central investigating agencies such as the CBI and ED in states without their permission, or the use of Article 356 to impose President's Rule, has been considered an encroachment on State autonomy.

One of the major flashpoints in recent years has been the struggle over fiscal federalism. The coming into force of the regime of Goods and Services Tax (GST) in 2017 was greeted as a significant reform, but it radically transformed the States' revenue-raising authority. Though the GST Council was formed to make decisions collectively, differences regarding compensation payment and rate-fixation have made States feel economically disadvantaged and reliant on the Centre. The delay in compensation disbursal of GST funds amid the pandemic further strengthened the cynicism. There is another bone of contention and that is legislative in nature. The passage of agricultural laws such as the three farm laws that were subsequently rolled back following national-level protests illustrated the Centre's foray into topics that have a place within the State List. Parallelly, the National Education Policy 2020 and modification of environmental and labour laws have been in the spotlight for their handling, raising issues regarding State prerogatives in critical areas. The interventions seem to water down the cooperative federalism spirit and imply rising bias towards centralisation.

The judiciary has frequently been a balancing force for these confrontations. In State of NCT of Delhi v. Union of India (2018), the Supreme Court emphasized the significance of federalism as a component of the basic structure of the Constitution and highlighted that States need to have the autonomy to operate within their domains. Yet, prolonged litigation regarding control of administrative services and institutions such as the Delhi Services Ordinance indicates that political battles tend to dominate constitutional morality.

The increasing number and severity of Centre-State conflicts indicate a changing dynamic where the federal bargain is being strained. Genuine federalism needs not only constitutional provisions but also a political culture of respect and discussion. The inclination to centralize decision-making, particularly through executive orders and ordinances, threatens to isolate regional voices and erode the foundational premises of Indian democracy.

To safeguard the federal spirit, there is a pressing need to return to institutional structures such as the Inter-State Council and empower those that allow cooperative dialogue. Through real decentralisation and co-governance alone can the pressure on federalism be relieved so that India's unity keeps prospering through its much-celebrated diversity.