The return of coalition politics in India will bring questions of federalism and Centre-state relations back to the fore. The BJP’s greater reliance on its regional allies, and its expanded stake in southern India, offers the potential for a federal reset. But whether this will happen is unclear.
Since 2014, the BJP has introduced a number of changes in the domain of Centre-state relations. In Modi 1.0, the government began by abolishing the Planning Commission and establishing in its place Niti Aayog with a mandate for strengthening cooperative federalism. It went on to establish the Goods and Services Tax, arguably the most significant reform to fiscal federalism since the promulgation of the Constitution. In Modi 2.0, the government began its term in office with the abrogation of Article 370, a move that underlined a turn towards a deeper degree of centralisation and the use of a secure parliamentary majority to pursue one-nation policy ideas that often rode roughshod over the interests of states. The poll-eve pledge to proceed with “One nation, one election” was to be a continuation of this agenda.
Yet, going into the election, the tensions over the future of federalism were clear. The pending exercise of delimitation was the focal point for a brewing north-south divide in which less populous, Opposition-dominated southern states feared a radical redistribution of parliamentary representation to more populous BJP-dominated northern states. This threatened to throw open central elements of India’s fiscal federal pact to destabilising partisan conflict. The legitimacy of the redistributive model of fiscal federalism through which taxes collected in richer southern and western states are redistributed to poorer northern states was at stake.
The return to coalition government, including regional parties as key power-brokers, as well as the BJP’s greater electoral stake in south India (and the Opposition’s in the north), is an inflection point at which trust and balance could be restored in matters of federalism.
Governing in coalition will introduce multiple centres of power, pushing against the centralisation of decision-making in the Prime Minister’s Office. But we shouldn’t assume that regional parties themselves are strong votaries for strengthening federalism.
Regional parties in the national coalition government seek to advance the interests of their parties (with negotiation over cabinet and ministerial positions) and of their states (such as the demands for special status being asserted on behalf of Andhra Pradesh and Bihar). They have also raised questions of national interest such as the caste census, but so far little has been said about their vision for Centre-state relations or federalism.
Special-interest regional politics — if it is the price for coalition in 2024 — may threaten a wider federal bargain if it bolsters the impression that partisanship rather than principles determine the distribution of resources across regions within India. It could simply serve to extend the idea of a “double engine” sarkar from the BJP to the wider NDA coalition.
It is also unclear how far coalition partners will diverge from the BJP’s “one nation” vision for federalism. For instance, following the abrogation of Article 370 in 2019, one TDP MP welcomed the fact that India would now be “one nation with one flag and one Constitution”. The JD(U) has given its support to “one nation, one election”. There is no prima facie reason to expect that the presence of regional parties in government will strengthen advocacy of the interests of all states vis-à-vis the Centre.
However, this period of political change could also be a point of reflection for a vision for a renewed federalism that resets zero-sum equations between the central and state governments. Such a reset would be in the long-term interests of all parties. With the changed north-south electoral map and the BJP/NDA’s greater stake in the south, now is the moment for a more genuine, pan-India federal bargain; one that could start to strengthen trust between the Centre and the states after a period in which this has been severely eroded.
On many occasions since 2014, Prime Minister Modi has appealed for more cooperative working between the Centre and the states in India’s national interest. Strengthening the institutional space for dialogue and decision-making between the Centre and all states, not just NDA-governed states, should be a priority.
The simplest way to do this would be to empower the Inter-State Council, established following the Sarkaria Commission on Centre-state relations in the late 1980s, but which has largely fallen into abeyance. Currently, the Inter-State Council is located within the Ministry of Home Affairs which has prevented it from developing its own identity and authority as a body trusted by both Centre and states. Giving it greater independence and statutory responsibilities would strengthen the space for both Centre-state, and inter-state, dialogue.
An independent body would have greater legitimacy in convening discussions on matters in which both levels of government have an interest. Empowering the Inter-State Council would support dispute resolution, enable greater policy learning across states and provide a platform for inter-governmental cooperation around policy areas that cannot be tackled by one level of government alone.
Further, and to build trust over the delimitation exercise when it occurs, there could be an announcement over a process to be followed to enable genuine consensus building among all states rather than a centrally imposed decision. Finding a federal solution that respects principles of representation and redistribution, without reducing the voice and autonomy of states, is in the interests of all parties. There are precedents that might be followed here such as the long process of inter-state dialogue and consensus building that led to indirect tax harmonisation, first via state-level VAT in the early 2000s and then the introduction of the Goods and Services Tax.
Harnessing this moment to offer a new vision for federalism, in which the Centre and states can build trust and work together, would be to the benefit of all parties as India looks to the future.
The writer is professor of Politics at King’s India Institute and author of Indian Federalism (Oxford University Press, 2019)
