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Introduction

In recent years, India’s federal landscape has shifted as states move from relying on central patronage to taking proactive initiatives. By attracting investment, implementing local reforms, and competing constructively, states are redefining Centre‑state relations, promoting balanced development, accountability, and governance while reducing dependence and curbing populist policies.

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Redefinition of India’s Federal Dynamics

• States shifting from dependence on the Centre: States now act proactively, not waiting for central patronage but seeking investment, shaping their own destinies.
  Eg: According to the NITI Aayog, “states can determine their own destiny… the Centre-state relationship has moved from donor and receiver.”
• Use of data-driven investor outreach by states: State governments compile and present data to attract investors, rather than only relying on central schemes.
• Greater autonomy in state-specific policy reform: States design reforms suited to their local conditions rather than implementing uniform central diktats.
• Vertical and horizontal competition among governments: The nature of federalism is evolving ,i.e., vertically between Centre and states, and horizontally among states.
• Institutional mechanisms reinforcing state-role in federal design: Platforms like Zonal Councils, NITI Aayog indices, etc., reinforce state participation and monitoring, redefining Centre-state dynamics.
  Eg: The role of Zonal Councils has been changed from advisory to action-platform to empower states.
  

Healthy Inter-State Rivalry for Balanced Growth & Avoiding Populism

• Competition to attract investment and improve ease of doing business: Healthy rivalry pushes states to build infrastructure, ease regulation, making regions more competitive.
• Benchmarking and performance-based state accountability: States are ranked on indices (education, health, innovation) and this benchmarking drives improvements across regions.
  Eg: NITI Aayog’s website mentions indices like the School Education Quality Index, State Health Index, etc., to promote competition among states.
• Spread of development reducing regional imbalance: As multiple states strive to improve, growth is less concentrated, fostering more balanced regional development.
• Policy innovation over freebies/populist hand-outs: Rivalry prompts states to focus on structural reforms (investment, governance) rather than only populist measures (freebies).
• Encouraging good governance and transparency as competitive tools: States competing for investments emphasise governance, political stability, low corruption rather than unsustainable populist schemes.

The shift towards proactive state initiatives and healthy inter‑state rivalry has strengthened India’s federalism, fostering innovation, accountability, and balanced regional growth. By prioritising investment, governance, and transparency over populist measures, states are shaping a more competitive, self-reliant, and equitable development framework across the country.

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