This case study examines how India’s federal balance has shifted over time. The Constitution continues to give states an important role, but the Centre has increasingly used law, money, institutions, and elections to strengthen its own position. The result is a system that still appears federal on paper but often operates in a more centralized and coercive manner.

The case study examines six areas of change: the weak and uneven implementation of local self-government; the replacement of planning institutions that once gave states a meaningful voice; the growing use of the Concurrent List and other legal tools to expand central control; the use of the Governor’s office to delay or block state legislation; the tightening of fiscal controls through cesses, borrowing limits, and conditional grants; and the electoral reforms that could reduce the political influence of states at the national level. Taken together, these developments suggest a steady move away from cooperative federalism and toward a more coercive model.

Background and Context

The Federal Architecture of the Indian Constitution

The Indian Constitution, adopted in 1950, was designed to balance national unity with regional autonomy. Granville Austin described it as a system of cooperative federalism, and that description still captures much of its original logic. The Constitution divides legislative power among the Union, the states, and the concurrent domain, and it gives the Finance Commission a central role in deciding how tax resources are shared.

The structure is clearly federal, but it is also deliberately asymmetrical. The Union has greater powers in several important areas, and the Constitution gives it a stronger role in emergencies and in the overall maintenance of the Union. That bias was meant to protect the country as a whole, not to justify permanent central dominance. The question is whether that original flexibility has now been stretched too far.

Defining Coercive Federalism

Coercive federalism describes a form of intergovernmental relation in which the Centre uses its stronger position to reduce the practical autonomy of states. It is not only about constitutional amendments or direct rule. It also includes fiscal leverage, regulatory control, administrative pressure, and the use of institutions to secure compliance. In India, the issue is not simply that the Centre is more powerful. It is that this power is increasingly used to make states follow national priorities even when those priorities do not reflect local needs or political choices.

Section I: The Illusion of Grassroots Decentralisation

Case Background: The 73rd and 74th Constitutional Amendments (1992)

The 73rd and 74th Constitutional Amendment Acts of 1992 were landmark reforms. They created a constitutional third tier of government through Panchayati Raj Institutions and Urban Local Bodies. They also introduced regular elections, reservations for women and marginalized communities, and a clearer role for local bodies in governance.

The Architectural Flaw: Discretionary Devolution

The weakness of these reforms lay in implementation. The Constitution gave local bodies a place in the system, but it did not guarantee that they would actually receive powers, funds, and staff. In practice, that meant the third tier remained dependent on state governments, which often kept real authority concentrated at the higher level.

As a result, local representatives often had political legitimacy without administrative power. The system looked democratic on paper, but it functioned more like a layer of implementation than a genuine tier of self-government.

Fiscal Dependency and the Tied Grant Problem

Local bodies remain heavily dependent on grants from higher levels of government. They generate only a small share of their own revenue, and much of their spending is shaped by conditions attached to transfers. This weakens their ability to respond to local needs, especially where those needs differ from national priorities.

The 15th Finance Commission, for example, recommended substantial grants for rural local bodies, but a large part of those funds was tied to centrally defined programs such as drinking water, rainwater harvesting, and sanitation. The intention was reasonable, but the effect was to turn local bodies into delivery agents for Union schemes rather than institutions with independent policy choices.

Bureaucratic Interference and Judicial Ambivalence

State governments and officials often continue to dominate local governance. District collectors and municipal commissioners can shape or override decisions made by elected representatives. This undermines the authority of Gram Sabhas and weakens local democracy from the inside.

The judiciary has not always protected that democratic space. In Rajbala v. State of Haryana (2015), the Supreme Court upheld state rules that imposed educational and financial disqualifications on candidates for panchayat elections. The result was to exclude many poorer and more vulnerable citizens from local political life.

Case Finding

The 73rd and 74th Amendments created local democracy in form, but not fully in substance. The third tier exists, yet it often operates as an instrument of higher-level control rather than as a genuine sphere of self-government.

Section II: The Institutional Redesign of Planning — From the NDC to NITI Aayog

Case Background: The Planning Commission (1950–2015)

For decades, the Planning Commission was the main institutional link between the Centre and the states in matters of development. It worked with the National Development Council, which brought the Prime Minister and the chief ministers together. That forum provided a regular space for negotiation over priorities and allocations.

The Dissolution and the Creation of NITI Aayog (2015)

The Planning Commission was replaced by NITI Aayog in 2015. The new body was presented as a more modern and flexible institution. Its supporters argued that it would bring more state-specific input into planning and reduce the rigidity of older models.

The Critical Institutional Loss: Financial Allocative Power

The problem was that NITI Aayog did not replace the Planning Commission’s financial role. It was not given the power to allocate resources. That power remained with the Union Ministry of Finance, which meant that the states lost the institutional forum through which they had once negotiated development funding.

The shift therefore had a paradoxical effect. The rhetoric was about cooperative federalism, but the structure made states more dependent on centrally designed frameworks. States that already faced structural development constraints were increasingly judged through performance-based models that rewarded some regions more than others.

Case Finding

The replacement of the Planning Commission weakened the institutional basis of federal negotiation. States were no longer co-authors of development policy in the same way, and they became more dependent on central direction and conditional financing.

Section III: Legislative Centralization and the Concurrent List

Case Background: The Seventh Schedule and the Doctrine of Repugnancy

The Seventh Schedule was meant to create a shared constitutional space between the Union and the states. The Concurrent List was intended to allow both levels of government to legislate in areas of common concern. In practice, however, it has increasingly become a channel for central dominance.

Article 254 gives the Centre the final word when a central law conflicts with a state law in a concurrent subject. That was meant to ensure uniformity, but it also tilted the balance in favour of the Union whenever the two levels disagreed.

The 42nd Amendment: A Watershed Moment (1976)

The 42nd Constitutional Amendment transferred several subjects from the State List to the Concurrent List. That widened the Union’s legislative reach. Over time, Union legislation began to penetrate sectors such as agriculture, electricity, and criminal law with increasing frequency.

The Sarkaria Commission and the Punchhi Commission both recommended that the Centre consult states more meaningfully before acting in such areas. Those recommendations were rarely followed in a serious way.

Case Study in Overreach: The Ministry of Cooperation (2021)

The creation of the Union Ministry of Cooperation in 2021 is a clear example of this tendency. Cooperative societies are a matter that falls primarily within the State List, but the Centre created a ministry to intervene in this area through policy, finance, and administrative coordination.

The move was defended as an effort to support a large and important sector. Critics saw it as a way to extend central control into a field that the Constitution had largely left to state legislatures. The Supreme Court had earlier struck down a similar attempt through the 97th Constitutional Amendment, but the Centre continued to exert influence through schemes and administrative mechanisms.

Case Finding

The Centre has used several methods to expand its reach in areas that are formally within state competence. The pattern is not limited to one law or one ministry. It is a broader strategy of incremental encroachment.

Section IV: Executive Weaponization — The Gubernatorial Crisis

Case Background: From Article 356 to Article 200

The most obvious tool of central dominance in the past was President’s Rule under Article 356. That power was used too often in earlier decades, and the Supreme Court later restricted it in S.R. Bommai v. Union of India (1994).

After that judgment, the focus of federal conflict shifted to the Governor’s role under Article 200. Governors in opposition-ruled states increasingly used the power to delay or block legislation. In effect, they turned constitutional procedure into a tool of political pressure.

The Pocket Veto and the Tamil Nadu Crisis

Article 200 allows the Governor to grant assent, withhold assent, return a bill for reconsideration, or reserve it for the President. Because the Constitution did not set clear deadlines, Governors could use delay as a form of de facto veto. The Tamil Nadu case made this problem visible.

The Supreme Court later held that Governors could not keep bills pending indefinitely and that a re-passed bill had to be assented to. That ruling was an important corrective, but it did not settle the larger issue.

Special Reference No. 1 of 2025: The De Facto Union Veto

The Supreme Court’s advisory opinion in Special Reference No. 1 of 2025 weakened those protections. It suggested that gubernatorial and presidential powers in this context were largely discretionary and not easily reviewable by courts. The effect was to give the Union a powerful indirect veto over state legislation.

This matters because the Governor can now reserve a re-passed bill for the President, and the President’s decision can be delayed or withheld without a clear and enforceable time limit. In practical terms, state legislation can be blocked without a strong judicial remedy.

Case Finding

The move from S.R. Bommai to Special Reference No. 1 of 2025 shows how the federal balance has shifted. A device once used through direct emergency rule has now been reframed through executive discretion and advisory constitutional law.

Section V: Fiscal Defederalization — Strangling State Autonomy

Case Background: The Vertical Fiscal Imbalance

Fiscal autonomy is central to any real federal system. States need both revenue and spending discretion if they are to respond to local needs. In India, however, the Union controls most of the major taxes, while states carry much of the spending responsibility. That imbalance has become one of the main sources of central leverage.

Mechanism 1: The Shrinking Divisible Pool — Cesses and Surcharges

The Union has used cesses and surcharges to reduce the share of tax revenue that is available for sharing with states. These levies are not part of the divisible pool, which means they are kept outside the normal formula for tax devolution.

Over time, this has lowered the effective share of taxes reaching the states. The 16th Finance Commission kept the state share at 41 percent, but the broader trend remained clear: the Centre was widening its own fiscal room while limiting the states’ ability to act independently.

Fiscal Indicator Early 2010s 2020–21 (Peak) 2023–24
Share of Divisible Pool in Gross Tax Revenue ~87% ~78% ~78%
Cesses & Surcharges as % of GTR 10.4% 20.2% 14.5%
Cess/Surcharge Revenue as % of GDP ~1.2% ~2.0% ~1.8%

Source: Derived from CAG reports and Finance Commission data

Mechanism 2: Net Borrowing Ceilings and the Judicialisation of Article 293

States have also faced tighter limits on borrowing. Article 293 gives the Centre significant leverage over state borrowing because it requires Union consent in certain situations. The dispute over the Net Borrowing Ceiling showed how far that leverage can reach.

In State of Kerala v. Union of India, the Supreme Court allowed the Centre to impose strict limits on the borrowing capacity of states. The decision strengthened the view that Union fiscal policy can effectively constrain state development choices.

Mechanism 3: The Hegemony of Centrally Sponsored Schemes

Centrally Sponsored Schemes have become another major instrument of central control. They allow the Centre to fund programs in areas such as health, education, and rural development while attaching conditions that states must follow.

These schemes often require matching contributions from states and come with detailed rules on design, branding, and implementation. The result is that states often spend their own limited resources to carry out priorities set by the Centre rather than their own governments.

Case Finding

Fiscal federalism has moved from a system of shared resources to one of conditional dependence. States are not simply receiving funds; they are being asked to implement a national agenda on terms set elsewhere.

Section VI: Asymmetric Federalism — The J&K Precedent and Investigative Breakdown

The Jammu & Kashmir Reorganisation (2019): A Federal Rubicon

The reorganisation of Jammu and Kashmir in 2019 was a major constitutional turning point. The Union government revoked the special status of the region and converted it into Union Territories. That move had consequences beyond the region itself.

It signalled that statehood itself could be redefined or weakened through Union action. For other states, the message was clear: the constitutional status of a state is not as secure as it once seemed.

The Collapse of Investigative Coordination

The breakdown in Centre-State trust is also visible in the relationship between the Union and investigative agencies. The CBI, for example, needs state consent to operate in a state unless special circumstances apply. In recent years, several states withdrew that consent, citing concerns about political misuse by the Centre.

This has made coordination far more difficult. The result is a more adversarial relationship between the Centre and the states in matters of law enforcement and investigation.

Case Finding

The Jammu and Kashmir experience and the CBI consent issue show the same underlying change. The Centre is no longer acting only as a coordinator or partner. It is also acting as a powerful and sometimes intrusive controller.

Section VII: Electoral Restructuring — The Final Frontier of Defederalization

“One Nation, One Election” — A Structural Threat to State Mandates

The proposal for simultaneous elections has been presented as a way to reduce costs and limit the disruption caused by frequent election cycles. That argument has some practical merit. But the federal consequences are serious.

If state elections are synchronized with national elections, the political life of states may become more closely tied to national narratives. That could weaken regional parties and reduce the ability of voters to judge state governments on their own terms. The proposal also raises the risk that state governments may be forced to operate under a timeline set by the Centre rather than by their own democratic mandate.

Delimitation 2026 — The Demographic Penalty and Bicameral Imbalance

The proposed delimitation exercise could also reshape federal power. The freeze on seat allocation based on the 1971 Census was designed to encourage population control and to prevent the largest states from gaining a permanent advantage. If seats are redistributed on a later census, some states may gain more seats while others could lose relative influence.

The likely result is a political penalty for states that have controlled fertility and achieved stronger development outcomes. This could create a difficult tension between contribution to national revenue and political representation.

State Current Seats (543 Total) Projected Seats (~850 Total) Impact on Relative Power
Tamil Nadu 39 ~59 Loss of relative influence
Kerala 20 ~30 Loss of relative influence
Andhra Pradesh 25 ~38 Loss of relative influence
Uttar Pradesh 80 ~120 Massive relative gain
Bihar 40 ~60 Massive relative gain

Source: Delimitation Bill 2026 projections; PRS India analysis

The Bicameral Crisis

The expansion of the Lok Sabha would also change the balance between the two Houses. If the Lok Sabha grows much larger while the Rajya Sabha remains capped, the upper house would become less effective as a forum for protecting regional interests. That would weaken one of the central institutional safeguards of federalism.

Case Finding

One Nation, One Election and the 2026 delimitation exercise are potentially the most durable threats to federal balance. They would change the political arithmetic of the country in ways that are hard to reverse.

Cross-Cutting Analysis: The Architecture of Coercive Federalism

The Systemic Logic of Centralization

These changes do not stand alone. They reinforce one another. Fiscal dependence makes states more vulnerable to central pressure. Legislative encroachment narrows the space for state action. Gubernatorial delays weaken state law-making. The weakening of planning institutions removes a key forum for negotiation. Electoral changes could reduce the ability of states to challenge the Centre politically.

The Role of the Judiciary: From Guardian to Enabler

The judiciary has played a mixed role. In some cases, it has protected federal balance. In others, it has accepted arguments that strengthen central power. The most important concern is that courts have sometimes failed to provide a clear and enforceable shield against executive or political overreach.

The Rhetoric-Reality Gap

A recurring feature of these developments is the gap between rhetoric and outcome. The Centre often presents reforms as modern, efficient, or progressive. Yet the effect is often to strengthen central control and weaken state autonomy.

Conclusion

This case study shows that the weakening of federalism in India has not come from a single event. It has been built through decades of institutional change, legal interpretation, fiscal design, and political strategy. Local bodies remain weak, planning institutions have lost much of their negotiating role, the Centre has widened its legislative reach, governors have become more powerful tools of delay, and fiscal transfers are increasingly tied to central conditions.

The constitutional idea of India as a Union of states remains intact, but its practical meaning has been narrowed. If this trend continues, the country may become more centralized than its constitutional design suggests. The key question is whether Indian democracy has the institutional strength and political will to reverse this course before the damage becomes harder to undo.

Policy Recommendations

The following reforms would help restore a healthier federal balance.

Institutional Reforms

  • Create a stronger and more functional Inter-State Council with real powers to consult states before major Union legislation.
  • Rebuild a statutory forum for Centre-State fiscal negotiation that can play a role similar to the old planning framework. Fiscal Reforms
  • Limit the use of cesses and surcharges so that the divisible pool does not shrink over time.
  • Reduce the dependence of states on conditional grants and tied transfers.
  • Set clearer and more transparent criteria for borrowing limits under Article 293. Legislative and Executive Reforms
  • Set strict timelines for gubernatorial and presidential assent.
  • Restore stronger judicial oversight where executive delay blocks state legislation.
  • Place constitutional limits on the creation of new central ministries that intrude into areas reserved for the states. Electoral Reforms
  • Rework or reject One Nation, One Election if it would weaken state mandates.
  • Develop a delimitation formula that protects states that have achieved development gains while also reflecting population.
  • Strengthen the Rajya Sabha so it remains a meaningful forum for protecting regional interests.

References

This case study draws on the following source documents, judicial decisions, and policy materials:

  • Granville Austin, The Indian Constitution: Cornerstone of a Nation
  • S.R. Bommai v. Union of India (1994)
  • Rajbala v. State of Haryana (2015)
  • Union of India v. Rajendra N. Shah (2021)
  • State of Tamil Nadu v. Governor of Tamil Nadu (2024/2025)
  • Special Reference No. 1 of 2025 (Supreme Court Advisory Opinion, November 2025)
  • State of Kerala v. Union of India (2024)
  • Sarkaria Commission Report (1983)
  • Punchhi Commission Report (2007)
  • 15th Finance Commission Report (2020–25)
  • 16th Finance Commission Report (2026–31)
  • Delimitation Bill, 2026 and Constitution (131st Amendment) Bill, 2026
  • Constitution (129th Amendment) Bill, 2024 (ONOE)
  • Jammu and Kashmir Reorganisation Act, 2019
  • CAG Report on State Finances (2024–25)
  • RJ Wave: “The Quiet Transformation of Indian Federalism: From Cooperative to Competitive to Coercive Governance”
  • Vidhi Centre for Legal Policy: “Fiscal Federalism and Centrally Sponsored Schemes: Rethinking Article 282”
  • NIPFP Working Paper 447, 2026: “Fiscal Consolidation and the 16th Finance Commission”
  • NUJS: “Preserving Fiscal Autonomy in the Indian Social Policy Landscape”
  • I·CONnect Blog: “Cooperative Federalism to Coercive Federalism: How Gubernatorial Discretion is Rewriting Indian Federalism”
  • Economic and Political Weekly: “Rethinking India’s Federalism” (2017)

Case study prepared for academic and policy research purposes. All constitutional article references are to the Constitution of India unless otherwise stated. Please inform the authors for any corrections or additional information needed using Contact