Federalism and Center-State Relations
FEDERALISM AND CENTER-STATE RELATIONS
FEDERALISM AND CENTER-STATE RELATIONS The achievements of Indian federalism are quite astounding and counterintuitive. Despite the multiplicity of social and ethnic divisions, federal institutions have survived. In the 1940s and 1950s, language was a divisive issue, but since the implementation of linguistic states, language movements have been domesticated and multilinguism and bilinguism can be found in most regions of the country. Secessionist movements in Punjab and in the Northeast region have evolved into movements of regional autonomy, seeking recompense from the central government rather than independence. Despite fiscal stresses and strains, central revenue capacity continues to hold in India; tax revolts of the kind witnessed in Russia or Brazil are unheard of. A majority of India's regional units have well-developed democratic systems with regular elections, party competition, and regional parties. Regionalization of the polity has proceeded in tandem with democratization, so that new regional forces representing hitherto unprivileged sections of society—for example, the Bahujan Samaj Party—have acquired strong roots in some states such as Uttar Pradesh, and new parties—Lok Shakti in Karnataka, for example—have arisen to challenge the monopoly of political power enjoyed by existing political formations. Most citizens' strong regional identities coexist with their pan-Indian identities; in India there is no zero-sum relation between national and regional identities. Did federalism play a major role in these transformations? Federalism is ultimately a formal institution insofar as it refers to a set of constitutional provisions, but in the Indian case, its ethnic and socioeconomic roots give it a substantive and societal basis not necessarily found in other federations. Also, in the 1990s, federalism has become livelier and more dynamic, embedded within larger political and economic changes currently underway in India.
Ideas about Regional Autonomy, Central Power, and Federalism
Federalism in India is not merely a set of institutions, but a set of evolving ideas and practices about how the balance of central and local power should be organized, and subnational movements perceived. At the center of the discourse around regional autonomy and central authority are the notions of state stability, the political unity of India's boundaries, and the concept of the Indian nation.
During the formation of India's Constitution, debates concerning relations between the central government and the provinces were contentious and extensive. India's Constituent Assembly debated whether to institutionalize a strong center or strong states, and what procedures were to govern the relations among them. The nature of pre-independence religious conflicts organized across territory (Punjab, Kashmir, and Bengal) and partition played major roles in generating and shaping ideas about the federal Constitution in India.
One dominant theme of India's Constituent Assembly was whether giving power to regional units would threaten the unity of India, and whether the principle of cultural autonomy and self-determination was contradictory to "national unity." Some argued that India needed to embody "one corporate nation, a homogenous nation," while others suggested that cultural autonomy and national unity could be made consistent with each other. B. R. Ambedkar, the leader of the Dalit community and the chairman of the Drafting Committee of the Constituent Assembly, argued that while he was an advocate of a "strong united Centre," in the present circumstances, "it would not be prudent, it would not be wise," since the problem was "how to make the heterogeneous mass we have today" make a decision "in common."
In December 1946 the Objectives Resolution moved by Prime Minister Jawaharlal Nehru affirmed that the Constitution of an "undivided country" would allow the regional units to "retain the status of autonomous units" in a substantial manner. Immediately after Viceroy Lord Mountbatten announced his partition plan on 3 June 1947, the Constituent Assembly decided in favor of writing a Constitution with provisions for a strong center. Earlier, the term "Federation of India" had been used, but it was replaced by the term "the Union of India." This terminology was meant to clarify that the federation was not the result of an agreement by the states to join the Union; therefore, no states had the right to secede from the Union.
After independence, concepts of national integration and "unity in diversity" continued to animate discussions of federalism. Unfortunately, the issue of regional demands was understood as one that challenged the government and national unity. Thus, the central government sought to discipline such demands as well as make them discursively unacceptable. So, regional autonomy movements—in Kashmir, Assam, or Punjab—were framed by the government as challenges to the integrity of the state, and the enhancement of central government authority was seen in a zero-sum relationship to regional autonomy. In the 1980s, this created enormous strains in managing center-state relations. Since then, the language of terrorism has been inserted into the discourse, and India has instituted many terrorism-related laws, such as the Terrorist and Disruptive Activities Act and the Prevention of Terrorism Act. Thus, the discursive economy of state power was and continues to be negative toward regional movements, although the state has negotiated much more effectively with intransigents and "terrorists" in recent times.
Formal Institutions of Indian Federalism
India's federalism, similar to that of Canada and Germany, and in contrast to that of the United States, is framed within a parliamentary system. The Constitution of India is the foundational text that lays out the structure of center-state relations. In addition, certain juridical and legislative initiatives have created institutions that mediate center-state relations.
India's Constitution has been described as "quasi-federal," in that it frames many centralist features within a federal framework. The primary articles (Seventh Schedule of the Constitution) demarcate authority between the states and the center: a Union List, a State List, and a Concurrent List. While most key subjects such as defense and national infrastructure are controlled by the Union government, many important subjects are controlled by the states: law and order, agriculture, and health. Residual powers remain with the central government.
This center-state allocation of powers was dominated by a highly centralist provision—Article 356, referred to as President's Rule—that allows the national cabinet to disband a state legislature under certain conditions. A related constitutional provision that seeks to ensure central control is the role played by the governor, the appointed head of each regional government. In the 1970s and 1980s, the role of the governors became controversial as central rulers used their services to discipline states ruled by the political opponents of the Congress Party.
It is notable that in the 1990s, the provision of President's Rule has been challenged, and after a crucial judicial ruling, its institutional force to meddle in the democratic rights of states has declined substantially. In the S. R. Bommai judgment in 1994, the Supreme Court ruled against the misuse of Article 356. The unanimous judgment by the nine-judge constitutional bench, delivered on 11 March 1994, further held that any proclamation under Article 356 would be subject to judicial review, thereby giving the federal compact a new institutional force. This, combined with the changes in India's party system, has given some leeway to the president to refuse to impose President's Rule. President K. R. Narayanan in October 1997 returned the Union cabinet's recommendation to impose President's Rule in Uttar Pradesh. Again, in 1998, Narayanan refused to support such a recommendation for Bihar. Thus, with changes in India's party system and the political context of federalism, the power of the provision of President's Rule to constrain the autonomy of states has been significantly attenuated.
One interesting centralist feature of the Indian Constitution that has nevertheless operated to accommodate regional demands and substate movements can be found in Articles 2, 3, and 4, according to which the national Parliament has extensive powers to reorganize the boundaries of states. These provisions "enable Parliament by law to admit a new state, increase, diminish the area of any state or alter the boundaries or name of any state." Seemingly a centralist provision, this has allowed a rare flexibility at the heart of Indian federalism so that central institutions can respond to pressure to create new states. In 1955, after the Linguistic Commission gave its recommendation, the provision was used for the first time to create language-based states. Since then, this provision has been used many times, most recently in 2000 to create three new states of Chhatisgarh, Uttaranchal, and Jharkhand, reconstituting Madhya Pradesh, Uttar Pradesh, and Bihar, respectively. The formation of the new states did arouse some concern that there would be an intensification of demands for the creation of additional states in other parts of the country: Telengana in Andhra Pradesh and Vidarbha in Maharashtra have already staked their claims. Yet, these assessments have lost the power to challenge the basis of central power in India. This means that movements are able to address their demands of regional expression without challenging the integrity of the nation-state; thus, a centralist feature has acquired important decentralizing consequences, making Indian federalism stable. Another distinctive set of institutional features of Indian federalism is a set of asymmetric rules regarding some states, called "Special Category" states. Article 370 gave provincial autonomy to Jammu and Kashmir, and other provisions regulated the affairs of the Northeast states. Each of these provisions has given stability to India's federal institutions.
In addition to such constitutionally mandated rules, some institutions were created in response to demands and pressures from regional elements. In 1983, for example, the Sarkaria Commission was set up to study federal relations in India. The Sarkaria Commission invited responses by all regional governments and opposition parties. It concluded that India's center-state relations suffered from "administrative over-centralization" and offered moderate changes in India's institutional design. This commission became both a signpost of troubled center-state relations as well as the central government's desire to address some of those problems by a comprehensive assessment. Yet, most of its recommendations (except two) were not implemented.
Cyclical Movements from Centralization to Decentralization
Despite these centralist features, the Indian experience of federalism has moved from strong centralization imperatives to decentralizing ones, and the balance between national and local power has shifted over time. From 1947 to 1964 the central and national institutions held sway, although regional actors and subnational institutions were not trampled over, but rather aggregated in a different combination with central institutions. The dominance of the inheritor of the national movement—the Congress Party—and its ability to integrate and represent provincial interests was crucial to this integration. The relationship between national and local leadership was a mutually dependent one. In developmental terms, the state with its national plans and "rational" allocation across different regional units created a national market and a national development agenda, howsoever imperfect. From 1964 to 1969 the regional impulses held sway, as transitional instability after the death of Nehru and an economic crisis at the state level (food crisis) allowed regional elites—largely strong Congress state leaders—to lay claims on shaping the policies of the national government and the national Congress Party. Thus, tendencies toward localization, factionalization, and ruralization dominated the period between 1964 and 1971.
Yet, Indira Gandhi reasserted executive and personal authority, reorganized the Congress Party, and rearticulated the developmental vision of the central government toward populist policies. She was able to craft a new national majority coalition that, at face value, undermined the power of regional powerbrokers. Thus, from 1971 to 1977, centralization tendencies again seemed dominant in India's polity. After a brief decentralizing interlude, when the Janata government was in power (1977–1980), with Indira Gandhi's return to power, the power of the central government and the Congress Party again seemed dominant. The prime minister intervened violently to control the resurgent Khalistan movement in Punjab and tried to undermine the regional party—the National Conference—in Jammu and Kashmir. Yet many of these centralist attempts backfired and made reconciling regional autonomy with expanding central power imperative. In the 1980s her centralization attempts were of a different quality, linked with regional concerns and interests more systematically than before; trampling over regional interests was proving more difficult than before in the face of regional resurgence. Thus, the pendulum swings between centralization and decentralization in India's polity were not equally balanced; the center of gravity had begun to shift to localization and decentralization. In a similar vein, the process of consolidating central power always remains tenuous and begins to disintegrate soon after such attempts. In the 1990s, the trend certainly shifted much more toward decentralization or "decentering" (Echeverri-Gent). Changes in India's party system contributed to this shift; it clearly seems that the regionalization imperative in India's policy and political economy has become a stable feature.
The Changing Party System and Federalization
The 1990s witnessed unprecedented changes in the party system: the era of one-party dominance (1947–1989) seems to be over; instead a competitive multiparty system seems here to stay. What is interesting is that the dominance of the Congress Party has not been replaced by another national party (the Bharatiya Janata Party, or BJP, for example) or multiple national parties, but rather by the rise of coalitional politics and the national importance of regional or single-state parties. In 2004, even when the Congress Party returned to power, it did so in a coalitional arrangement. India is undergoing a process of federalization or regionalization of its party system. This process of federalization encompasses multiple dimensions. First, as is apparent from the Table 1, the simple physical presence of regional parties has increased in the national Parliament.
Regional parties have become important in national government formation. Both national parties—BJP and the Congress Party—need the support of regional parties and alliances with regional parties to form a government (this is also apparent after the 2004 elections). Third, national parties have themselves acquired regional personas. This is true of the BJP and the Communist Party of India (Marxist) as well as most other national parties. The Congress Party, a national party par excellence, too has had to accommodate to regional pressures in Maharashtra, Tamil Nadu, Uttar Pradesh, and West Bengal, where regional formations such as Nationalist Congress Party, Tamil Manila Congress, and Trinamool Congress have weakened its base and national scope.
This emergent reality must be understood as mutually self-enforcing: party system change at the national level (the displacement of Congress party dominance) has evolved in a dialectical relationship with the regionalization of India's polity. While both have independent sources
|Percentage share of regional parties' seats and votes in the Parliament in the 1990s|
|Lower house election year|
|Notes: These figures do not total 100 percent, as many small parties and independents are not included.|
Regional and single state parties: Telugu Desam, Samajwadi Party, Shiv Sena, DMK, AIADMK, Biju Janata Dal, National Congress Party, Trinamool Congress, Rashtriya Janata Dal, PMK, Indian National Lok Dal, J& K National Conference, MDMK, and RSP.
Other national (multistate) parties:
1991: JD (Janata Dal), JP (Janata Party), LKDB (Lok Dal-Bahugana), CPM, CPI, and ICSS (Indian Congress Socialists)
1996: CPM, CPI, Samata, Janata Dal, AIIC (Tiwari), and Janata Party
1998: CPM, CPI, Samata, Janata Dal, and BSP
1999: CPM, CPI, Janata Dal (U), and BSP
|SOURCE: Author's calculations from Butler, David, Ashok Lahiri, and Prannoy Roy, India Decides: Elections 1952–1995, New Delhi: Books and Things, 1995; election commission web site available at <http://eci.gov.in>; and Rao, G. V. L. Narasimha, and K. Balakrishnan, Indian Elections: The Nineties, New Delhi: Har-Anand Publications, 1999.|
|Other national (multi-state) parties||20.9||24.7||18.8||20.0||11.8||6.6||13.3||14.1|
|Subtotal of national parties||85.6||81.3||74.2||69.1||71.2||58.0||67||66.2|
|Regional (single state) parties||6.9||9.3||20.4||17.7||26.3||26.4||26.8||23.5|
and origins, they have begun to acquire a mutually reinforcing effect in the late 1990s. Regionalization has speeded up the process of party system change, while the opening up of the national governmental system in the form of coalition governments has allowed important spaces to regional parties, who deploy their national roles and participation to regional ends; this accelerates the process of regionalization even more.
Identity Politics in India's Regions
Indian federal relations have seen an abundance of ethnic and secessionist movements at the subnational level. In the 1940s, the Dravidian movement arose in South India seeking a separate Dravidian state; since then, Punjab, Kashmir, and the Northeast states (Assam, Manipur, and Nagaland) all have witnessed strong quasi-separatist movements organized around territory, identity, and ethnicity. Many have transformed into regional parties that seek to govern their states (Tamil Nadu, Ghorkaland in West Bengal, and Jharkhand, among many others) by articulating a regional cultural identity; others have continued to be violent and confrontational (Manipur, Kashmir). Most analysts have explained these movements separately.
Economic explanations fail to explain the persistence of regional movements in states such as Punjab and Assam: while one state has the highest per capita income in India, the other has been one of the most backward states in the country. The level of development (in Punjab) did not prevent confrontational and mobilization movements against the central government; the economic deprivation of Assam and its exploitation by the central government and by economic elites within the state did play a role in enhancing the sense of relative frustration that sparked the rise of an anti-Bengali subnationalist movement. In the late 1980s the United Liberation Front of Assam described India's relationship with Assam as "colonial" and demanded that multinational companies and Indian-owned companies do more for the development of the state. Yet, the Khalistan movement in Punjab arose soon after the "Green Revolution" in a prosperous state. Thus, the rise and persistence of subnationalist movements across different regions needs better explanations and answers.
First, while cultural roots must be incorporated in any analysis, identities in India are not given or ascriptive, but rather can be created and mobilized by political entrepreneurs. Thus, the role of parties and politicians in shaping and activating identities can be important. These instrumental political actors, consciously or unwittingly, not only articulate regional aspirations, but also create or make available new social spaces for "the reproduction of subnational meanings and political projects" (Baruah 1997, p. 511). Second, understanding the role of society or what is fashionably called "civil society" may be necessary. Yet, analysis of civil society must not be seen as opposed to the role of party and ethnic entrepreneurs. The relationship between party (political organizations) and society may be the key to understanding the nature of and the changing prospects of ethnic regionalist movements. In Tamil Nadu, DMK (Dravida Munnetra Kazhagam) and its various inheritor parties played a major role in shaping Tamil identity over time. Similarly, in Assam, two organizations, the Asom Sahitya Sabha (the Assam Literary Society) and the All Assam Students Union, proved to be crucial. Moreover, the rise of subnationalism is not unrelated to economic processes: urbanization, expansion of communications, literacy, educational institutions, and industrialization. This has been true in Assam, Jammu and Kashmir, and Punjab. It is the process of modernization that activated feelings of relative deprivation and frustration among the mobile population of these regions. It is not a coincidence that students played a major role in both Assam's and Kashmir's movements. Despite the interactive effects of economic change on cultural identities, economic change has had an independent logic in shaping center-state relations.
Economic Change and Federalism in India
The fiscal structure of the Indian Constitution is quite centralized, as the central government collects most of the taxes and then distributes them to the regional states through the finance commissions that are constituted once every five years for that purpose. The revenue sources of the provinces are limited and inelastic, although the states have been politically constrained not to tap agricultural taxes, further limiting their revenue base. Despite a fiscally centralist Constitution, rapid changes in federal economic relations urge attention to ways in which the economic liberalization process has affected federalism and vice versa.
Federalism and subnational governments have played a major role in shaping the nature of economic liberalization underway in India. First, federalism made economic reform politically sustainable by displacing opposition to reform at the state level. The "energies of economic interests" were dispersed in twenty-six states, leading to fragmentation of opposition along regional lines. This is true for both business interests and labor unions, whose actions, opposition, or protests tend to get "quarantined" within states. Second, federalism encouraged new supporters of reform to emerge from India's regions. As subnational governments renewed their efforts to reregulate the central policy of liberalization, they created new coalitions, new interests, and new incentives in favor of reform. Many chief ministers themselves became aggressive supporters of economic reform (for example, Andhra Pradesh's Chandrababu Naidu, Tamil Nadu's J. Jayalalitha, and Digvijay Singh of Madhya Pradesh). Regional capitalists or capitalists concentrated in one region of the country began to support liberalization more forcefully than national-level capitalists. This is true of the software capitalists (Infosys, Wipro, and others) based in Karnataka. Interestingly, reform of subnational governance mechanisms was stimulated by these processes.
Simultaneously, economic liberalization further accelerated the process of federalization, prompting "a change in federal relations from intergovernmental cooperation towards interjurisdictional competition among the states" (Saez, p. 135). Basically, competition unleashed by economic liberalization took an interstate form insofar as states began to compete with each other to offer concessions to global and national business actors. While this dynamic had some negative consequences in undermining regional states' revenue capacities, it ensured some scope for market competition and the disruption of monopoly power of national business classes as well as the national bureaucracy. Both regional business classes and the regional bureaucrats were more supportive of reform than the national civil servants and national business interests.
Thus, economic liberalization has begun to affect the nature of center-state relations quite substantially. New supporters of reform—regional elites—seek participation in the national government and national politics as a means of getting crucial benefits from the liberalization process. The national area continues to be an important site for their interaction with national resource-rich institutions, as well as access to global actors, such as the World Bank, and global capital. Second, economic reform has unleashed a fiscal crisis that has crucial center-state components. The central government has withdrawn from some of its functions by displacing its public goods responsibilities to the regional states; this creates strong hunger for resources and revenues at the regional level. At the same time, federal transfers to the regions are declining; this implies that the asymmetry between revenues and expenditures at the regional level continues to grow. Fiscal deficits of states in India grew quite substantially in the 1990s, constituting almost 40 percent of the total fiscal deficit. This phenomenon has been stimulated by the ongoing economic reform in India. Further, a "race to the bottom" effect is evident after the onset of economic liberalization, as regional elites shed their public expenditure responsibilities. Thus, the provision of health, education, and irrigation infrastructure, the responsibility of states in a federal system, suffers much more in federal India than it would in a unitary system undergoing liberalization.
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