April 16, 2021

Asymmetric Federalism in India: With special Reference to North East States and Jammu and Kashmir

Introduction

There can be a variety of motivations for various units to come together to constitute a federation. The political and economic theories of federalism attempt to understand the rationale for the “coming together” to form federations and once they are formed, analyse the conditions for “holding together”. Each federating unit will try to bargain terms advantageous to it to join the federation while the federation will try to attract entry and control exit. In this situation, symmetry in intergovernmental relationships may not be possible. “Asymmetric federalism” is understood to mean federalism based on unequal powers and relationships in political, administrative and fiscal arrangements spheres between the units constituting a federation. Asymmetry in the arrangements in a federation can be viewed in both vertical (between centre and states) and horizontal (among the states) senses.[1]

The Constitution of India since its inception reflects the idea of being a federal constitution, though having some unitary features, but certain states have been given special status due to their cultural diversity and there socio political situation, thus India has always been a case of asymmetric federalism. This Paper will discuss at length that how the Indian Federation is distinct and unique; and how it beautifully illustrates asymmetry in its federal structure, especially with regards to North Eastern States and Jammu and Kashmir. It also briefly discusses the recent abolition of Article 370.

Before we begin with the paper, it’s important that we discuss some important features of Indian Federalism.

Some Distinctive Features of Indian Federation

  • Unlike the classical federations like the USA, Indian federation is not an ‘indestructible union of indestructible states’. Only the union is indestructible and the states are not. Article 3 of the Constitution vests the Parliament with powers to constitute new states by separating territories from the existing ones, alter their boundaries, and change their names.
  • The federation is not founded on the principle of equality between the Union and states either. The central government in India has the powers, and it actually does invade the legislative and executive domains of the states.

It may also be desirable to have special powers and asymmetric arrangements to accommodate diverse group interests and identity and therefore, has an important role in ‘coming together’ federalism as well as ‘holding together’ federalism. But such accommodation can only be at the margin and cannot violate the basic fabric of equality and fair treatment of jurisdictions.

Federalism is an outcome of rational bargain among various constituents. The bargain may be for political or economic gains. In the political bargain, the constituents give up political autonomy for security from external threat. The economic bargain is to enable a common market and to ensure optimal provision of public services by reaping economies of scale and catering to diverse preferences. However while striking the bargain, the constituents try to preserve their valued identity and seek special status. Motivation for special status may be purely for expanding economic opportunities and securing freedom from exploitation by larger and more powerful members of the federation. The objective may be purely political — of enhancing freedom and representation to constituents or to maximize political power and influence. It may also be cultural or religious — of preserving group identities.[2] It may simply be a means of accommodating diverse group interests within a unified framework.[3] If federalism were an outcome of rational bargain among constituent units, differences in bargaining strength would be a source of asymmetry. If the issues at stake have general applicability to majority of units, then collective bargaining strength could result in greater decentralisation and all subnational units getting greater autonomy. If on the contrary, the issues at stake have applicability or relevance to specific units and if they have the necessary strength to secure the special dispensation, then this could result in asymmetric arrangements in the federation. Such special arrangements may be de jure – enshrined in the constitution itself or established by tradition, or may be actually observed in practice (de facto) in the working of the federation. Such arrangements may be evolving. In many cases, special arrangements are accorded until the units are assimilated into the federation. In other cases, bargains may have to be struck by giving special status for holding the federation together. Yet other cases of asymmetry may arise purely by political alignments in a democratic polity.[4]

Problem

The debate regarding the ideal kind of federal structures never gets old in the global perspective. In such a situation, Indian federalism marks its own unique presence giving special status to some of its states. This Paper tries to analyse the benefits given to those states (specifically North Eastern States and Jammu and Kashmir) and the impact it has on other states. The Paper tries to analyse both sides of the coin, in finally coming to conclusion whether asymmetric federalism is a better form of federalism in Indian context or not.

Objectives

Nature of the study and sources of the data

This project work is analytical as well as doctrinal in approach. Both original and secondary sources have been largely used to gather information and data. Books and other reference as guided by the faculty of have been primarily helpful in giving this project a firm structure.

Limitations of the study

The study is limited to understanding asymmetry with respect to North Eastern States and Jammu and Kashmir only. The reference to Union Territories is only made incidental.

Contribution of the study

This Paper tries to analyse with the help of statistics about financial assistance and other benefits given to the special states. It also discusses in brief the scrapping of Article 370 currently as well as tries to understand that how asymmetric feature is gift given the diversity of our country.

Evolution of Asymmetric Arrangements in Indian Federalism

Historical Background

The distribution of power between the centre and states on the one hand and the treatment of different states on the other in the Indian constitution owe much to historical and political factors.[5] Although the Cabinet Mission sent by the British Government in 1946 saw no virtue in partitioning undivided India into two different independent nations, it also recommended that the independent country should be governed by a federal constitution with the central government dealing with only foreign affairs, defense and communications, remaining vested with two groups of provinces, one predominantly Hindu, and the other predominantly Muslim.[6] However, the insistence of the Muslim League to have a separate nation for the Muslims led to the formation of Pakistan comprising Muslim majority regions of the north-west part of the subcontinent and eastern part of Bengal. In the event, it was no longer necessary to create a weak federal government. Instead, the founding fathers of the constitution decided to have a federation with a strong 8 central government to hold together the diverse economic, linguistic, and cultural entities and to avoid fissiparous tendencies. Centralisation was also found desirable to unify the country, comprising regions directly ruled by the British and 216 princely states and territories.[7]

Asymmetric Structure at Independence

Thus, asymmetric arrangement in Indian federalism has a long history and goes back to the way in which the British unified the country under their rule and later the way in which the territories under the direct control of the British and various principalities were integrated in the Indian union.[8] While the territories ruled directly by the British were easily integrated into the Union, the treaties of accession signed by individual rulers covered the integration of different principalities. The provinces ruled directly by the British had a modicum of autonomy and rudimentary form of parliamentary government as the British loosened the grip gradually from 1919 onwards. The Constitution that was adopted in 1951 it classified the states into four categories.[9] The provinces directly ruled by the British were classified as Part `A’ states. The princely states which had a relationship with the Government of India based on individual treaties signed were classified as Part `B’ states. These included the states of Hyderabad, Mysore, Jammu and Kashmir and 5 newly joined unions of princely states.[10] In the case of Jammu and Kashmir, the powers special powers were given in the terms of accession. The remaining princely states acceding to the union were grouped under Part `C’ states. Finally, the territories ruled by other foreign powers gaining independence (French and Portuguese) and areas not covered in the above three categories were brought under the direct control of the union to form Part `D’ states or Union Territories.[11] Thus, the Union of India in 1947 began with a major asymmetry between British India and the princely states and even among the latter, the terms of accession differed depending on the bargaining strength. In almost all cases, the princely states surrendered whatever notional sovereignty they had to the new country of India, in exchange for a guaranteed revenue stream: their “privy purses”.[12] The nature of this bargain was clear – security and money in exchange for giving up authority or residual control rights.[13] This is close to the standard view of federation as a political bargain, with the difference that the successors of the British in India, the Indian National Congress, were in an extremely strong bargaining position, even relative to the coalition of the princes. This was illustrated in the case of the exceptions to voluntary accession, such as Hyderabad, where military force (the authority over which was also inherited from the British) ensured integration into the new union.[14]

Assimilation of Units after Independence

While many of the former princely states, particularly the Part `B’ states continued as administrative units after their integration into India, this continuation was not an essential part of the bargain.[15] Furthermore, reorganization of state boundaries from 1953, freely permitted to the centre by Article 3 of the constitution, gradually eroded this status.[16] The Constitution allowed sub-state structures for regions closely tied to some former princely states, but this had little practical import as the states became almost the sole significant sub national units of governance.[17] Thus, in general, the princely states ceased to matter as geographic entities. In this respect, the outcome was completely different from the standard case of federation, where the constituents of the federation would normally retain their identities. Broadly, the asymmetric arrangement was recognition of the different set of institutions and administrative standards in the country, which over the years, was unified. The asymmetries present in 1947 with respect to almost all the princely states disappeared from Indian federalism.[18]

Asymmetries in Practice in Indian Federalism: A Case Study

Before going on to discuss asymmetric practices in Indian Federation, it becomes imperative to discuss how Jammu and Kashmir, North Eastern States and Union Territories gain importance. Brief history of States has already been discussed in the previous Chapter. Also, focus of this Chapter will be on asymmetries with respect to these special states.

Special Position of Kashmir

The sole exception, of course, was the state of Jammu and Kashmir.[19] While this state included several diverse populations and regions, the overwhelming majority of population in the Kashmir valley was Muslim, and the state bordered the new nation of Pakistan.[20] The history of the conflict over Kashmir has been written on extensively, even though there is no consensus on the interpretation of events in 1947-48.[21] Here, we merely note that the state acceded to the Indian union under very special terms, which were subsequently incorporated in the famous Article 370 of the Constitution.[22] This article provided the state with a unique position in the Indian union, with its own constitution, a title interpreted as the equivalent of Prime Minister for its chief executive, and a special assignment of functional responsibilities.[23] Specifically, the jurisdiction of the centre was restricted to foreign affairs, defense and communications, with the state’s legislature having residuary powers.[24] This was a striking contrast to the situation of other states, where the centre’s assignment of responsibilities was much more extensive, and where the centre retained residuary powers.

Even though the provision was included in the last part of the Constitution under the head of ‘Temporary Provisions’ but in an observation by Supreme Court, the Court held that it has acquired a permanent status.[25]

Although recently the special status of the state has been taken and from now onwards all the provisions of the constitution shall be applicable to the state without any restrictions. But this poses various questions onto the federal scheme of the country as the manner in which the provision of Article 370 has been invoked i.e. without the consent of the state legislature which indicates strong centralizing tendencies towards Union and imposition of majoritarian view on a state without its consent by bypassing the explicit safeguard provided under the Constitution.[26] This led us to an important question as to whether majoritarian Union can impose its will on a state compromising its autonomy and against the federal structure as was envisaged by the constitution drafters. The question remains open to the interpretation of the judiciary.

Integration of North-Eastern Hill States

The process of administrative reorganization of India focused on the creation of new boundaries based on the main principle of language. Typically, separate religious, caste, ethnic or tribal identities within these boundaries were not the basis for further divisions. One major exception to this has been the north-eastern part of India, where there is a distinct difference in ethnicity from the rest of India, and several strong divisions based not only on language, but also on culture and other traditions.[27] This part of India contains the states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura.[28] Of these, only Assam has a population comparable to other typical Indian states.[29] Most of these states were upgraded from the status of Union Territories, this reclassification giving them, at one level, a political status equivalent to that of larger states such as Bihar, Madhya Pradesh, and Uttar Pradesh.[30] Each state carries equal weight in mustering the 50 percent of states required to ratify an amendment to the constitution. Furthermore, there are various clauses in Article 371 which accord special powers to north-eastern states.[31] These provisions have been introduced through amendments, typically at the time of conversion of a union territory to a state, or in the case of Sikkim, after its accession to India. The safeguards provided to these states through these special provisions include respect for customary laws, religious and social practices, restrictions on the ownership and transfer of land, and restrictions on the migration of non-residents to the state.[32] State legislatures are typically given final control over changes in these provisions. Thus, there are various provisions in the Indian Constitution to protect group rights, and to compensate for initial inequalities in the social system.[33] Thus the Constitution, while recognizing the idea of fundamental human rights at the individual level, does not assume an idealized initial condition of equality, either in pure economic terms or otherwise. Thus there are allowances for separate laws to govern different religious groups, and there are provisions for various kinds of “affirmative action” for extremely disadvantaged groups.[34] The first kind of provision simply respects diversity. The second attempts to correct for specific inequities, recognizing that legislative equal treatment from very unequal initial conditions would not achieve desired equity goals.[35] Conceptually, at this level of ethical or normative judgment, there is no difference between these provisions and the ones for the indigenous residents of northeastern states, except that the latter happen to be geographically concentrated into reasonable administrative units. If that is the case, then the relationship to federalism is not essential.[36]

Formation of Union Territories

Besides these asymmetries at the state level, there are some sub-state asymmetries in the Indian Constitution that may be synoptically noted here. Indian federalism relates to a special kind of federating units that are called the union territories (UTs). The seven UTs have been created at various points in time. The reasons for their creation were varied. These areas were either too small to be states or too difficult to merge with neighboring states on account of cultural differences, interstate disputes, specific needs of the National Capital Territory, or far-flung isolated location on the coasts.[37] Originally, they were all administered directly by the union through a centrally appointed administrator. None of these had a legislature but all were represented by at least one seat in the lower house of Parliament. Two new types of UTs were created, namely, Pondicherry[38] and Delhi[39] . A common feature of these two territories is that they have been granted unicameral legislatures whose members are directly elected by the people. The Pondicherry legislature is partly elected and partly nominated. There is also a council of ministers responsible to the legislature in both the territories. The head of the state in both Delhi and Pondicherry is a Lieutenant Governor appointed by the union to perform formal executive functions of the government. Both the territories also have governments headed by chief ministers accountable to their respective legislatures. However the Chief Minister of Delhi is appointed by the President of India on the recommendation of the Lieutenant Governor. This is presumably in view of the fact that Delhi is in the National Capital Territory. The legislature of Delhi enjoys only concurrent jurisdiction as in the case of conflict in regard to laws made by it and those made by Parliament, the latter prevails. Pondicherry is represented by one seat each in the Lok Sabha and Rajya Sabha. Delhi has seven Lok Sabha and three Rajya Sabha seats. Despite being called a state, Delhi is really a semi-state as some vital subjects like land, police and civil services are vested in the union government. The Government of Delhi enjoys only concurrent jurisdiction in other subjects. Hence, there has been a long standing demand of full statehood for Delhi. In the case of Pondicherry, land, police and civil services are under the jurisdiction of the state government.

Recently, 2 new Union Territories, Jammu and Kashmir and Ladakh are carved out by dissolving status of state of Jammu and Kashmir.

Now that we have seen the structure of asymmetric states, we’ll discuss how this asymmetry works.

Some Specific Asymmetries

First, there are specific asymmetries with regard to administration of tribal areas, intra-state regional disparities, law and order situation and fixation of number of seats in legislative assemblies in relation to states of Maharashtra, Gujarat, Assam, Manipur, Andhra Pradesh, Sikkim, Arunachal Pradesh and Goa in the Constitution of India.[40] Second, the governors Maharashtra and Gujarat have a “special responsibility” for the establishment of separate development boards for certain backward regions of these states with equitable allocation of development funds and provision of facilities for technical education, vocation training and employment opportunities. Third, the president of India is under the constitutional obligation to ensure the setting up of a committee of the legislative assembly in the states of Assam and Manipur consisting of members elected from tribal/hill areas to look after the welfare of those communities. Fourth, the president of India is to ensure “equitable opportunities and facilities”[41] for the people in different regions of Andhra Pradesh in respect of public employment and education and the establishment of a central university in the state. Fifth, the legislative assemblies of Sikkim and Goa “shall consist of not less than 30 members”. The governor of Sikkim is under certain “special responsibility for peace and for an equitable arrangement for ensuring the social and economic advancement of different sections of population” of the state. Sixth, the governor of Arunachal Pradesh has “special responsibility with respect to law and order” and to act in his “individual judgment” after consulting the council of ministers.[42]

An observer of the Fifth and Sixth Schedules[43] has found some aberrations in these institutions but has concluded that the constitutional protection to the minorities and other deprived groups has enabled the state to accommodate diversity in a meaningful way…. [and] sustained the plural character of India and its rich cultural mosaic over the five decades of constitutional mode of notion building.[44] In the debate in federal theory as well as in the context of its application to India regarding its impact on the working of federal systems in practice, Tarlton believes that asymmetrical federal arrangements are fraught with separatist and secessionist potential, whereas Barry is critical of them due to the creation of two classes of citizenships, one for nationality based units and the other for merely regional units. On the other hand, Kymlicka, Taylor, Requejo, Gagnon and Gibb argue that constitutional asymmetrical status is equitable and necessary for countries that are not merely multicultural but are multinational for the protection of community or minority rights in the context of identity politics of recognition.[45]

Economic Asymmetry

The coming together of units with diverse history, resources, policies and institutions in a bargain to form a federation would certainly entail de facto asymmetry in terms of inter-state differences in geography, demography, and economy. It is seen that in terms of area the biggest state, Rajasthan is 90 times bigger than the smallest state, Goa. Similarly, in terms of population size, Uttar Pradesh, the state with largest population is 308 times bigger than the smallest state, Sikkim. The density of population varies from 13 in Arunachal Pradesh to 901 in West Bengal. Maharashtra, the state with the highest Net State Domestic Product (NSDP) had 284 times that of the state with the lowest NSDP, i.e., Sikkim. There are significant variations in per capita incomes as well. In 2000-01, Goa, a small state in the western coast had the per capita NSDP of Rs. 44613, which was almost 9 times that of Bihar with Rs. 4813.[46] For the sake of convenience of analysis, the states have been classified into special category states and non-special category states. The former states are those that are given a special status in dispensing plan assistance by the central government. The non-special category states in turn are classified into high-income, middle-income and low income states based on their per capita NSDP. The importance of non-economic factors in determining the structure of federalism is underscored by the fact that most of the special category states are not economically viable. Even among non-special category states, there are states that are too large like Madhya Pradesh, Bihar, and Uttar Pradesh even after carving out the three new states of Chhattisgarh, Jharkhand, and Uttaranchal respectively from the territories of these states in 2000. Within the non-special category states, there are wide variations in area, population, and income levels. The high income states with about 18-19 percent area and population generated 29 percent of NSDP whereas the low income states with 43-45 percent of geographic area and population accounted for only 28 percent of income.[47] There are wide variations in the sizes and income levels within each of the categories of states as well. On the whole, among the non-special category states, the most populous state (Uttar Pradesh) had 123 times the population of Goa, the least populous state and the income differences between the highest and lowest income state was 36 times.[48]

The above discussion brings out that economic viability has never been a consideration in demarcating the states in India. Nor has it been a factor in reorganization of the states despite the fact that the constitution empowers the central government to reorganize them.[49] Thus, to begin with, intergovernmental relationships are placed on an uneven economic keel. Naturally, uniform assignment system in an unevenly endowed federating system results in large differences in fiscal capacities. Varying sizes of states in terms of area and population, demographic compositions, different terrain and topography cause significant variations in the unit cost of providing public services varying expenditure needs and places a heavy burden of equalization on the intergovernmental transfer system. Thus, unlike other states, Sikkim has the power to levy income tax and federal income tax cannot extend to Sikkim.[50] Third, the small size of jurisdictions in these states implies that they cannot reap economies of scale in providing services. Besides, hilly and inhospitable terrain in these states means that the unit cost of providing public services will be higher than in other states. It is thus not surprising to see overwhelming dependence of special category states on central transfers. Thus, in 2001-02, non-special category states on average raised revenues to finance over 50 percent of their current expenditure whereas in special category states it was just about 20 percent. Thus, central transfers financed more than 80 percent of the expenditures of special category states. In per capita terms, transfer to special category states is more than four times that of the average transfer received by general category states.[51]

Asymmetric Design of the Transfer System

Thus, the different position of special category states is reflected not only in structural asymmetries and fiscal arrangements, but very importantly in the methods and patterns of central transfers to states.[52] In some respects, the small size of these states is an advantage in this dimension. Transfers that are high in per capita terms for these states may not place a significant cost on the rest of the nation. In fact, even the entire group of these states has a population share that is just about five percent and the rest of the members of the federation may not perceive this as a significant cost. Also, this small size encourages these states to combine politically for some purposes, in councils that allow them to coordinate policies, or to collectively negotiate with the centre. This is in contrast to the insignificance of zonal councils for other states. To understand the asymmetry, it is necessary to refer briefly to the transfer system in Indian federalism. There are three sources of transfers from the centre to states. The first is the statutory transfers made on the recommendation of the Finance Commission appointed by the President of India every five years. The second channel of transfer is the assistance given for plan purposes by the Planning Commission. Finally, individual central ministries design transfers to enhance outlay on specified services in the states as desired by them. These central sector and centrally sponsored schemes are in the nature of close-ended specific purpose transfers with or without matching requirements and are included in the plan schemes. There are over 200 such schemes initiated and administered by various central ministries.[53] The allocation of resources in different states is also influenced by regional policy followed by the central government including the direct central investments. The framers of the constitution intended that transfers to states should be based on the recommendations of an impartial semi-judicial body appointed by the President every five years, namely, the Finance Commission. So far eleven Finance Commissions have made recommendations. However, over the years, with the centralized 18 development planning gaining focus, the Planning Commission gained importance as a dispenser of both grants and loans. Thus, the scope of the Finance Commissions has been confined to examining the non-plan requirements of the states and providing transfers to meet these requirements, and the Planning Commission has been assigned to deal with the plan requirements. Initially, the volume of central assistance for state plans as well as its grant-loan composition was determined on the basis of the approved plan projects in different states. Since 1969, however, the allocation is determined on the basis of a formula determined by the National Development Council (NDC).[54] However, over the years, with increased earmarking of central assistance for specific schemes, formula based component of central assistance for state plans has been reduced and in 2002-03, it is estimated at just about 46 percent. In addition, the central ministries exercised discretion in transfers by increasing them under the central sector and centrally sponsored schemes. The Finance Commissions transfer about two thirds of the transfers and this has remained broadly constant since the early 1970s. However, transfers given for both plan schemes and specific purpose transfers for central sector and centrally sponsored schemes have increased over time.[55] What is more important, increasing proportion of assistance for state plan schemes has been kept outside the formula based distribution scheme and the proportion of normal assistance distributed according to the formula is just about 46 percent of the total state loan assistance in 2002-03.[56] Thus, on the whole discretionary element in the transfer system has shown a steady increase over the years. These are discussed in greater detail below.[57]

Finance Commission Transfers

Finance Commission transfers comprise of tax devolution and grants. The Commission’s methodology is to assess fiscal position of centre and states, projecting revenues and non-plan expenditures of the states for the ensuing five years, augmenting the projected revenues by recommending share of central taxes to individual states based on the chosen general economic indicators and filling the remaining gap between non-plan expenditures and revenues with grants in aid. This is called the “gap-filling” approach.[58]

Discretionary elements even enter into the formula based transfers of the Finance Commission. The Commissions determine the shares of the centre and states in central taxes broadly on the basis of judgments pertaining to their relative requirements, but mostly on the basis of past shares. For the period 2000-05, the Eleventh Finance Commission recommended that 29.5 percent of the net collections from 20 central taxes should be transferred to the states. The relative shares are determined on the basis of general economic variables with weights assigned. It is in the process of choosing the variables and assigning weights for them that relative shares of the states may be influenced. This, however, need not necessarily be a source of unacceptable asymmetry as the formula used by the Commission is transparent.[59]

It is because of this that the framers of the constitution intended that the distribution of transfers should be mainly undertaken through the Finance Commission which is supposed to be a statutory semi-judicial authority. However, the constitution of the commission, and the approach and methodology adopted by them and their recommendations has been a subject of controversy in recent times. Notable among the criticisms is the use of poverty ratio as a criterion for distributing the tax shares of the states by the Ninth Finance Commission.[60]

It was argued that poverty alleviation is not an objective of general purpose transfers, and this should be taken care of by the direct anti poverty interventions initiated by rural development and urban development ministries. It is also argued that the transfer system should not be used to reward a state not making enough effort to alleviate poverty.[61]

The discretionary transfer made by the Ninth Finance Commission for the slum clearance in Bombay and Calcutta was also criticized. The Tenth Finance Commission was similarly criticised for making transfers for one state (Andhra Pradesh) as a compensation for the loss of revenue by following the prohibition policy. In fact, serious deterioration in states’ finances seen in recent years is in part attributed to the transfer system. More important criticism from the viewpoint of asymmetry is that in the case of special category states over 80 percent of their revenues accrue from central transfers. Inability to reduce the deficit may be due to reduction in central transfers and this will be seen as the state’s poor performance.[62]

Asymmetry in State Plan Assistance

Asymmetric design in the transfer system in favor of special category states is seen very clearly in the distribution of plan assistance. Until 1969 plan assistance for state plan purposes was given according to the various plan schemes approved. To impart greater objectivity, the NDC approved the formula in 1969 and the assistance has been distributed to the states according to this formula modified by the NDC from time to time.[63] The asymmetry in the plan assistance is seen mainly between the special category states and non-special category states.

This arrangement cannot be entirely justified on equity grounds. They may reflect higher costs of providing the goods and services in remote mountainous areas, owing to diseconomies of scale and scope arising from small sizes of these states, and their internal diversity.[64] Higher transfers may also be needed to meet the special expenditure requirements, such as higher levels of security that are not required in other states. Thus, these 23 states may to some extent be acting as agents of the centre in the provision of national public good of strategic stability and defence. A part of the reason for higher transfers to these states may be because, as they are located in international borders, the centre has not allowed foreign investments to flow into these regions and therefore has the responsibility of strengthening the regions to have domestic investments. More important reason for large transfers in these states has to be found in the political bargain that brought these areas firmly into the Indian union, and keeps them there. This kind of reasoning is particularly clear for such formal, separate induction into the union as Sikkim, and for the case of Kashmir, but it also applies to cases such as Nagaland, where a long insurgency after Indian independence was finally brought under some control through the granting of statehood with special provisions, and where an implicit political bargain may require continuing transfers beyond the average.[65] A notable feature of the state plan assistance is the steady increase in its discretionary component. Although transfers are supposed to be given according to the NDC formula, over the years, increasing proportion of the assistance has been earmarked for specific schemes and kept outside the formula based assistance. To some extent, this is also a consequence of features of the political bargain that restrict non-residents of the state from certain kinds of ownership of property in the state, thus acting as a restriction on investment.

Asymmetry can result from the volume of loans allocated to each state and the extent of interest rate repression. Referring to the issue of states’ indebtedness was only a convention that was established and not a constitutional necessity. In recent years, however, the central government has written off states’ loans in Punjab, Jammu and Kashmir and more recently proposes to write off loans of Nagaland without referring the issue to anybody, on a discretionary basis. The reasons advanced for this relief was that these states fought the nation’s battle on terrorism/insurgency and in the process have had to suffer loss of economic activity and revenues, and therefore need to be compensated.[66] They also had to create additional infrastructure to fight terrorism and a part of the loan spent on this should be written off. Whatever are the merits of these arguments, such practices have serious moral implications and the arbitrary manner in which the central government decides to write off the loans of the states creates asymmetry and scope for discrimination, which may not be in the long term interest of Indian federation.

Other Sources of Asymmetry

Another recent example of price – quantity control system impacting on the resource distribution in asymmetric manner is the allocation of subsidized food grains to different states. The central government has the discretion to allocate food grains to states for distribution in fair price shops according to a formula determined by it, but it can exercise considerable discretion in distributing food grains for regions affected by drought and flood. It can render substantial relief to states ruled by the “friendly” parties and make token releases to those ruled by “unfriendly” ones. These examples can be multiplied. Another important policy instrument that can discriminate between the states is through regional policies, particularly the policy regarding the location of central public sector enterprises and their head office and regional/zonal offices.[67] In a planned economy, locational decisions are not taken necessarily on the basis of economic considerations. In Indian case, during the first few plans, major investments in steel and coal industries were made on the basis of backward and forward linkage considerations. However, in more recent years, the issue of locating central industrial units has been a subject of controversy. Similarly, the location of regional offices of railways has also been a subject of much discussion. Surely, this can be an important source of discrimination between the states.[68]

Conclusion

This paper has attempted to bring out asymmetric arrangements in Indian federalism. Asymmetry in administrative, political and economic spheres in federal systems is unavoidable and in fact, may be necessary not only to ‘come together’ but also to ‘hold together’. However, while transparent asymmetric arrangements that can be justified on grounds of overall gains to the federation contribute to nation building, the discriminatory policies followed purely on short term political gains can be inimical to the long term interests and stability of federalism. The rationale for asymmetry arises from the premise that inter alia, federalism is a rational bargain of various units. Thus, the terms of joining the federation depend on the bargaining strength. Further, even in a federation with no provision for exit, political alignments determine the bargaining strength of governments at different units in their interaction with centre and this may result in discriminatory treatment of various units.

Asymmetrical Federalism: Debate That Revolves Around

There is a difference of opinion in scholars whether asymmetric federalism is federalism in real sense or not. Some believe that in a centralized federation, the central government has considerable scope to discriminate among the units.[69]However, according to traditional view it leads to secession of states. But in case of India, it is its most unique feature.

Asymmetric federalism is need of the hour as federalism in strict sense is not possible especially with the cases such as India where there is a huge margin of imbalances between the states with respect to their geographical location, socio-economic status of the residents of the state. In order to bring out parity and inclusive development certain states needs to have a necessary push so that they could prosper at a pace as others, even the preamble of the constitution provides for a socialist state working for the welfare of public at large and one of the effective mechanism to achieve the desire result is the model of asymmetric federalism.

GST is considered as epitome of Co-operative federalism particularly fiscal federalism, as it sought to achieve harmony between the Union and the States in imposing any financial liabilities and Taxes appropriation. The GST regime provides for special provision for certain states due to their geographical and economical condition[70], which actually brings out asymmetry in the tax collection and appropriation. This helps the state in meeting with financial liabilities and deficits thereby incentivizing them to be a part of such federal structure and co-operate with the Union in required manner, otherwise it could lead to a situation wherein the state would be highly vulnerable to a collapse. Apart from the states which are vulnerable the GST regime also provides for the state that have lost revenue due to centralization of tax collection such as Gujarat, Maharashtra, etc. The 101stConstitutional amendment includes provision for the compensation to states for the loss of revenue on account of introduction of goods and service tax[71]thus providing them with the incentive to be a part of new federal scheme. Therefore, asymmetric federalism is not just limited to the states posing financial weakness and vulnerability but also to wealthy states and inducing them for higher co-operative and strengthening of co-operative federalism.

Bibliography

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  • M.P. Jain, Indian Constitutional Law (7th ed. 2016).

Articles

M. Govinda Rao and Nirvikar Singh, Asymmetric Federalism in India, Shodhganga accessed on 7 October 2019.

Kham Khan Suan Hausing, Asymmetric Federalism and the Question of Democratic Justice in Northeast India, India Review, Volume 13, 2014.

Manish Tewari and Rekha Saxena, The Supreme Court of India: The Rise of Judicial Power and Protection of Federalism, University of Toronto Press, 2017, accessed on 7 October 2019.

Rekha Saxena, Is India a Case of Asymmetrical Federalism?, Economic and Political Weekly, 2012, accessed on 7 October 2019.

Shubham Nider, Federalism in India: A Critical Appraisal, https://www.academia.edu/24049710/Federalism_in_India_A_Critical_Appraisal, accessed on 11 October 2019.

Dr. Chanchal Kumar, Federalism in India: A Critical Appraisal, Journal of Business Management & Social Sciences Research (JBM&SSR), Volume 3, No.9, September 2014, accessed on 4 October 2019.

P. Ishwara Bhat, Why and How Federalism Matters in Elimination of Disparities and Promotion of Equal Opportunities for Positive Rights, Liberties and Welfare?, Indian Law Institute, 2012, accessed on 6 October 2019.

Balveer Arora, “Republic of India,” in Diversity and Unity in Federal Countries, ed. Luis Moreno and César Colino, 201–26 (Montreal and Kingston: McGill-Queen’s University Press, 2010), accessed on 5 October 2019.

Louise Tillin, Unity in Diversity? Asymmetry in Indian Federalism, Oxford University Press, 2007, accessed on 6 October 2019.

The Royal Society of Canada, “Who’s Afraid of Asymmetrical Federalism?”, https://rsc-src.ca/print:php?long_id=1&page%2520id=196, accessed on 08/10/2019.


[1] Louise Tillin, Unity in Diversity? Asymmetry in Indian Federalism, Oxford University Press, 2007, accessed on 6 October 2019.

[2] P. Ishwara Bhat, Why and How Federalism Matters in Elimination of Disparities and Promotion of Equal Opportunities for Positive Rights, Liberties and Welfare?, Indian Law Institute, 2012, accessed on 6 October 2019.

[3] Ibid.

[4] Louise Tillin, Unity in Diversity? Asymmetry in Indian Federalism, Oxford University Press, 2007, accessed on 6 October 2019.

[5] M.P. Jain, Constitution of India, 7th Edition, 2016, Lexis Nexis.

[6] Shubham Nider, Federalism in India: A Critical Appraisal, https://www.academia.edu/24049710/Federalism_in_India_A_Critical_Appraisal, accessed on 11 October 2019.

[7] Balveer Arora, The Indian Republic: Redefining Diversity, accessed on 11 October 2019.

[8] Rekha Saxena, Is India a Case of Asymmetrical Federalism?, Economic and Political Weekly, 2012, accessed on 7 October 2019.

[9]Ibid.                                   

[10] Balveer Arora, The Indian Republic: Redefining Diversity, accessed on 11 October 2019.

[11] Dr. Chanchal Kumar, Federalism in India: A Critical Appraisal, Journal of Business Management & Social Sciences Research (JBM&SSR), Volume 3, No.9, September 2014.

[12] Rekha Saxena, Is India a Case of Asymmetrical Federalism?, Economic and Political Weekly, 2012, accessed on 7 October 2019.

[13] Balveer Arora, The Indian Republic: Redefining Diversity, accessed on 11 October 2019.

[14] Shubham Nider, Federalism in India: A Critical Appraisal, https://www.academia.edu/24049710/Federalism_in_India_A_Critical_Appraisal, accessed on 11 October 2019.

[15] Balveer Arora, The Indian Republic: Redefining Diversity, accessed on 11 October 2019.

[16] Ibid.

[17] Rekha Saxena, Is India a Case of Asymmetrical Federalism?, Economic and Political Weekly, 2012, accessed on 7 October 2019.

[18] Balveer Arora, The Indian Republic: Redefining Diversity, accessed on 11 October 2019.

[19] The Royal Society of Canada, “Who’s Afraid of Asymmetrical Federalism?”, https://rsc-src.ca/print:php?long_id=1&page%2520id=196, accessed on 08/10/2019.

[20] Louise Tillin, Unity in Diversity? Asymmetry in Indian Federalism, Oxford University Press, 2007, accessed on 6 October 2019.

[21] Rekha Saxena, Is India a Case of Asymmetrical Federalism?, Economic and Political Weekly, 2012, accessed on 7 October 2019.

[22] Louise Tillin, Unity in Diversity? Asymmetry in Indian Federalism, Oxford University Press, 2007, accessed on 6 October 2019.

[23] Article 370, Constitution of India, 1950.

[24] Shubham Nider, Federalism in India: A Critical Appraisal, https://www.academia.edu/24049710/Federalism_in_India_A_Critical_Appraisal, accessed on 11 October 2019.

[25] State Bank of India v. Santosh Gupta and Another, Civil Appeal Nos.: 12237-12238 of 2016.

[26] Article 370(4), Constitution of India, 1950.

[27] P. Ishwara Bhat, Why and How Federalism Matters in Elimination of Disparities and Promotion of Equal Opportunities for Positive Rights, Liberties and Welfare?, Indian Law Institute, 2012, accessed on 6 October 2019.

[28] Louise Tillin, Unity in Diversity? Asymmetry in Indian Federalism, Oxford University Press, 2007, accessed on 6 October 2019.

[29] Ibid.

[30] Ibid.

[31] Article 371, Constitution of India, 1950.

[32] Rekha Saxena, Is India a Case of Asymmetrical Federalism?, Economic and Political Weekly, 2012, accessed on 7 October 2019.

[33] Ibid.

[34] P. Ishwara Bhat, Why and How Federalism Matters in Elimination of Disparities and Promotion of Equal Opportunities for Positive Rights, Liberties and Welfare?, Indian Law Institute, 2012, accessed on 6 October 2019.

[35] Ibid.

[36] Louise Tillin, Unity in Diversity? Asymmetry in Indian Federalism, Oxford University Press, 2007, accessed on 6 October 2019.

[37] Rekha Saxena, Is India a Case of Asymmetrical Federalism?, Economic and Political Weekly, 2012, accessed on 7 October 2019.

[38] 14th Constitutional (Amendment) Act, 1962.

[39] 69th Constitutional (Amendment) Act, 1991.

[40] Articles 371, 371B, 371C, 371D, 371E, 371F, 371H, 371I, Constitution of India, 1950.

[41] P. Ishwara Bhat, Why and How Federalism Matters in Elimination of Disparities and Promotion of Equal Opportunities for Positive Rights, Liberties and Welfare?, Indian Law Institute, 2012, accessed on 6 October 2019.

[42] Dr. Chanchal Kumar, Federalism in India: A Critical Appraisal, Journal of Business Management & Social Sciences Research (JBM&SSR), Volume 3, No.9, September 2014, accessed on 4 October 2019.

[43] Constitution of India, 1950.

[44] Balveer Arora, “Republic of India,” in Diversity and Unity in Federal Countries, ed. Luis Moreno and César Colino, 201–26 (Montreal and Kingston: McGill-Queen’s University Press, 2010); and Rekha Saxena, “Is India a Case of Asymmetrical Federalism?,” Economic and Political Weekly, 14 January 2012, accessed on 5 October 2019..

[45] Rekha Saxena, Is India a Case of Asymmetrical Federalism?, Economic and Political Weekly, 2012, accessed on 7 October 2019.

[46] Ibid.

[47] Dr. Chanchal Kumar, Federalism in India: A Critical Appraisal, Journal of Business Management & Social Sciences Research (JBM&SSR), Volume 3, No.9, September 2014.

[48] Manish Tewari and Rekha Saxena, The Supreme Court of India: The Rise of Judicial Power and Protection of Federalism, University of Toronto Press, 2017, accessed on 7 October 2019.

[49] Article 3, Constitution of India, 1950.

[50] Kham Khan Suan Hausing, Asymmetric Federalism and the Question of Democratic Justice in Northeast India, India Review, Volume 13, 2014.

[51] Dr. Chanchal Kumar, Federalism in India: A Critical Appraisal, Journal of Business Management & Social Sciences Research (JBM&SSR), Volume 3, No.9, September 2014, accessed on 4 October 2019.

[52] Manish Tewari and Rekha Saxena, The Supreme Court of India: The Rise of Judicial Power and Protection of Federalism, University of Toronto Press, 2017, accessed on 7 October 2019.

[53] Rekha Saxena, Is India a Case of Asymmetrical Federalism?, Economic and Political Weekly, 2012, accessed on 7 October 2019.

[54] Shubham Nider, Federalism in India: A Critical Appraisal, https://www.academia.edu/24049710/Federalism_in_India_A_Critical_Appraisal, accessed on 11 October 2019.

[55] Manish Tewari and Rekha Saxena, The Supreme Court of India: The Rise of Judicial Power and Protection of Federalism, University of Toronto Press, 2017, accessed on 7 October 2019.

[56] Rekha Saxena, Is India a Case of Asymmetrical Federalism?, Economic and Political Weekly, 2012, accessed on 7 October 2019.

[57] Rekha Saxena, Is India a Case of Asymmetrical Federalism?, Economic and Political Weekly, 2012, accessed on 7 October 2019.

[58] Rekha Saxena, Is India a Case of Asymmetrical Federalism?, Economic and Political Weekly, 2012, accessed on 7 October 2019.

[59] Ibid.

[60] Ibid.

[61] Manish Tewari and Rekha Saxena, The Supreme Court of India: The Rise of Judicial Power and Protectionof Federalism, University of Toronto Press, 2017, accessed on 7 October 2019.

[62] Rekha Saxena, Is India a Case of Asymmetrical Federalism?, Economic and Political Weekly, 2012, accessed on 7 October 2019.

[63] Rekha Saxena, Is India a Case of Asymmetrical Federalism?, Economic and Political Weekly, 2012, accessed on 7 October 2019.

[64] Manish Tewari and Rekha Saxena, The Supreme Court of India: The Rise of Judicial Power and Protection of Federalism, University of Toronto Press, 2017, accessed on 7 October 2019.

[65] Shubham Nider, Federalism in India: A Critical Appraisal, https://www.academia.edu/24049710/Federalism_in_India_A_Critical_Appraisal, accessed on 11 October 2019.

[66]Kham Khan Suan Hausing, Asymmetric Federalism and the Question of Democratic Justice in Northeast India, India Review, Volume 13, 2014.

[67] Manish Tewari and Rekha Saxena, The Supreme Court of India: The Rise of Judicial Power and Protection of Federalism, University of Toronto Press, 2017, accessed on 7 October 2019.

[68] Rekha Saxena, Is India a Case of Asymmetrical Federalism?, Economic and Political Weekly, 2012, accessed on 7 October 2019.

[69] M. Govinda Rao and Nirvikar Singh, Asymmetric Federalism in India, Shodhganga, accessed on 7 October 2019.

[70]Article 379 A of Constitution of India, 1950.

[71]Section 18 of Constitutional (One Hundred and First Amendment) Act, 2016.

Author Details: Swati Bhargava (Advocate, MP High Court)

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