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Introduction

The coalition era’s politics of accommodation enabled negotiation, power-sharing, and institutional dialogue between the Centre and States. The emergence of single-party hegemony, however, has revived concerns that India’s federal architecture is being strained, particularly through expanding fiscal centralisation and weakening institutional mechanisms of cooperative engagement.

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How Single-Party Hegemony Has Strained Federal Architecture

• Fiscal centralisation through GST structure: GST diluted States’ fiscal autonomy as decision-making is concentrated with the Centre.
  Eg: GST Council voting structure enables the Centre to overrule States.
• Rising cesses and surcharges undermining devolution: Non-shareable cesses have expanded, shrinking the divisible pool and deepening mistrust.
• Erosion of institutional platforms for Centre–State negotiation: Abolition of the Planning Commission removed a key cooperative forum.
  Eg: Post-2014, Finance Ministry centrally dictates scheme allocations, reducing institutionalised consultation.
• Finance Commission formulas generating perceptions of bias: Horizontal devolution criteria are viewed as penalising high-performing States.
  Eg: Southern States argued that the inverse-income formula and population weightage disproportionately benefit northern States.
• Central dominance in centrally sponsored schemes (CSS): The Centre uses CSS design and conditional funding to extend policy influence over State subjects.
  

Why Strain May Not Be Solely Due To Single-Party Dominance

• Structural spatial inequality: Fiscal disputes arise from long-standing regional income disparities.
  Eg: Even during coalition years, poorer States required higher transfers under Finance Commission formulas.
• GST was a consensus-based ‘grand bargain’: States voluntarily surrendered tax sovereignty for a unified market.
• Centralisation during Congress era: Planning Commission–driven command economy left limited autonomy in sectoral planning.
• Conflicts driven by developmental needs: Tensions often emerge from resource scarcity or demands for disaster funds.
• Regional parties retain leverage: Coalition at the Centre includes strong regional actors.
  Eg: TDP and JD(U) continue to shape bargaining on issues like special packages or infrastructure funding.

Solutions For Cooperative Federalism

• Rebuild a structured consultation forum: Creation of a permanent “Inter-governmental Council 2.0”.
  Eg: A re-imagined coordinating body could plan CSS allocation transparently.
• Improve GST Council decision rules: Ensure mandatory deliberation before announcements; increase State voting weight.
  Eg: Adoption of consensus-first principle like the early GST years.
• Cap and rationalise cesses and surcharges: Introduce a constitutional limit or periodic parliamentary review.
  Eg: Bringing part of cess revenue into a divisible pool to restore trust.
• Revisit Finance Commission formulas: Incorporate metrics of equity + efficiency + demographic dividend.
• Strengthen fiscal capacity of States: Provide long-term infrastructure grants, not tied schemes.
  Eg: Productive investment support for job creation to reduce southern–northern inequalities highlighted by Kalaiyarasan.

Conclusion

India’s federal tensions stem not only from political dominance but also from deeper structural inequalities and weak coordination forums. A renewed commitment to institutional dialogue, fair fiscal design, and genuine cooperative federalism is essential to ensure that central authority does not erode the Constitution’s carefully balanced federal spirit.

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