Polity

• The Union Public Service Commission (UPSC) serves as the central recruiting agency in India and is responsible for conducting examinations and selecting candidates for various government posts.
• The Constitution of India directly created this body, highlighting its significance and constitutional mandate.
• The provisions related to the UPSC are outlined in Articles 315 to 323, which fall under Part XIV of the Indian Constitution.
  • Article 315 establishes the UPSC and outlines its composition, functions, and powers.
  • Articles 316 to 319 detail the appointment, removal, suspension, prohibition to hold office after ceasing to be member and term of office of members of the UPSC, ensuring their independence and impartiality.
  • Article 320 empowers the UPSC to conduct examinations for appointments to civil services and other positions, ensuring a merit-based selection process.
  • Article 321 provides for the power to extend the functions of Public Service Commission.
  • Articles 322 and 323 deal with the expenses and annual reports of the UPSC

• UPSC consists of a Chairman and other Members appointed by the President of India. 

• The Constitution hasn’t specified the strength of the Commission & left the matter to the discretion of the President.
• No qualifications are prescribed except that one-half of the members of the Commission should be persons who have held office for at least ten years, either under the Government of India or the Government of a state.
• The Constitution also authorizes the President to determine the conditions of service of the Chairman and other members.  

The Chairman and members of the Commission hold office for

• Term of 6 years or 
• Until they attain the age of 65 years

Whichever is earlier. 

However, members of the UPSC have the option to relinquish their positions at any time by submitting their resignation to the President of India.

• The manner of removal of members of the UPSC ensures their independence, as they can only be removed on the grounds mentioned above, safeguarding their security of tenure.
• Conditions of service for UPSC members cannot be altered to their disadvantage after their appointment, ensuring stability and protection against arbitrary changes.
• The entire expenses of the UPSC are charged on the Consolidated Fund of India, ensuring financial autonomy.  
• The Chairman of UPSC (on ceasing to hold office) is not eligible for further employment in the Government of India or a state.
• Member of UPSC (on ceasing to hold office) is eligible for appointment as the Chairman of UPSC or a State Public Service Commission (SPSC), but not for any other employment in the Government of India or a state.
• Neither the Chairman nor a member of the UPSC is eligible for reappointment to that office.

• The UPSC conducts examinations for appointments to the All-India Services, Central Services, and Public Services of centrally administered territories, ensuring merit-based selection.
• It assists the States in Joint Recruitment for any services for which candidates possessing special qualifications are required.
• It serves the needs of a state at the request of the State Governor and with the approval of the President of India.
• It is consulted on matters related to personnel management (like suitability of candidates, promotions, transfers, extension of service etc. of civil servants).
• The jurisdiction of UPSC can be extended by an act made by the Parliament.

The UPSC annually presents a report on its performance to the President. The President places this report before both Houses of Parliament, along with a memorandum explaining the cases where the advice of the Commission was not accepted and the reasons for such non-acceptance. 

The following matters are kept outside the functional jurisdiction of UPSC. In other words, the UPSC is not consulted 

1. While making reservations of appointments or posts in favour of any backward class of citizens.
2. While taking into consideration the claims of SCs & STs in making appointments  
3. Posts of the highest diplomatic nature and a bulk of group C and D services.
4. With regard to the selection for temporary  post (less than a year.)

The President holds the authority to exempt certain posts, services, and issues from the jurisdiction of the UPSC. However, any regulations established by the President for this purpose must be presented before both Houses of Parliament for a minimum of 14 days. Parliament retains the power to modify or revoke these regulations as deemed necessary.

• The Constitution of India (Article 149) provides for an independent office of CAG 
• CAG is the head of the Indian Audit and Accounts Department
• CAG is the guardian of the public purse at both levels—Centre and State. 

• CAG is appointed by the President of India by a warrant under his hand and seal. 
• CAG holds office for a period of six years or up to the age of 65 years, whichever is earlier.  
• He can also be removed by the President on the same grounds and in the same manner as a judge of the Supreme Court.

• CAG is provided with the security of tenure. He can be removed by the President only in the same manner as the Judge of the Supreme Court. Thus, the CAG doesn’t hold his office till the pleasure of the President, although the President appoints CAG.
• CAG is not eligible for further office under the Government of India or any state after he ceases to hold his office (controversy erupted when former CAG Vinod Rai was appointed as Head of Bank Board Bureau )
• Neither his salary nor his rights regarding leave of absence, pension, or age of retirement can be altered to his disadvantage after his appointment.
• Administrative expenses of the office of the CAG are charged upon the Consolidated Fund of India.  

Article 149

Constitution (Article 149) authorises the Parliament to prescribe the duties and powers of the CAG.  Accordingly, Parliament enacted CAG’s (Duties, Powers and Conditions of Service) Act, 1971. The Act was amended in 1976 to separate accounts from audits in the Central government.

The duties and functions of the CAG  

• CAG audits the accounts related to all expenditures from 
  • Consolidated Fund of the Union of India and each state 
  • Contingency Fund of the Union of India and each state
  • Public Account of the Union of India and each state  
• CAG audits the balance sheets of the departments of the Central Government and state governments.
• CAG can audit the accounts of any other authority when requested by the President or Governor. For example, audit of local bodies

Earlier, CAG used to compile and maintain accounts of the Central Government as well. In 1976, he was relieved of his responsibility to compile and maintain accounts of the Central Government due to the separation of accounts from Audit.

Article 150

• CAG advises the President with regard to the prescription of the form in which the accounts of the Centre and states shall be kept.

Article 151

• CAG submits the audit reports related to the accounts of the Centre to the President, who shall, in turn, place them before both Houses of Parliament  

He acts as a guide, friend and philosopher of the Public Accounts Committee of the Parliament.

• The role of the CAG is to uphold the Constitution of India and the laws of Parliament in the field of financial administration. The audit reports of the CAG secure accountability in the sphere of financial administration of the executive.  
• CAG is an agent of the Parliament and conducts an Audit of expenditure on behalf of the Parliament. In addition to legal and regulatory Audit, CAG can also conduct the propriety audit; that is, he can look into the ‘wisdom, faithfulness and economy’ of expenditure and comment on the wastefulness and extravagance of such expenditure. However, legal and regulatory Audits are obligatory, but propriety audit is discretionary (but CAG can’t audit Secret service expenditure).
• The Constitution of India visualises the CAG as the Comptroller as well as the Auditor General. However, in practice, the CAG is fulfilling the role of an Auditor-General only and not that of a Comptroller, as the CAG has no control over the issue of money from the Consolidated Fund and is concerned only at the audit stage when the expenditure has already taken place (unlike Britain)

The theory of presumptive and notional loss involves calculations by the CAG to estimate the potential revenue lost by the Government due to irregularities or lack of adherence to proper procedures in resource allocations, such as natural resources like spectrum and coal.

Using the Theory of Presumptive and Notional Loss 

• In the case of the 2G Spectrum Allocation, the CAG calculated a notional loss of Rs 1.76 lakh crore due to the use of a “first come, first served” policy instead of an auction, which could have potentially generated higher revenue.
• In the Coal Scam, the CAG initially estimated a notional loss of ₹10 lakh crore, later revised to Rs 1.86 lakh crore, highlighting discrepancies in the allocation process.

However, in December 2017, a Special CBI Court acquitted A Raja and Kanimozhi and rejected the presumptive loss theory proposed by the CAG. 

It’s also important to recognize that the Government’s objectives extend beyond profit maximization; considerations such as socio-economic factors and job creation also play a significant role in decision-making. 

Hence, CAG has failed to accommodate the changing dynamics of doing business in the LPG Era

Status of Water in the Constitution

When a water dispute arises between two states, Article 262 is invoked & in pursuance of Article 262, two Acts were passed by the Parliament. 

River Boards Act,1956

The Act is designed to regulate and facilitate the development of inter-state rivers to ensure effective water resource management. The key features of the River Boards Act 1956 are

• Establishment of River Boards: These boards are instrumental in coordinating efforts to regulate and develop rivers that flow through multiple states.
• Board Establishment on State Government Request: River Boards are not unilaterally imposed but are established based on requests from State Governments.

Inter-State River Water Disputes Act,1956

The Inter-State River Water Disputes Act of 1956 provides a mechanism for resolving disputes related to the sharing of river waters between different states in India.

• Initiation of Tribunal: If a Riparian State believes that its interests are adversely affected by the actions or plans of another state, it can request the government of India to establish a Tribunal to address the dispute.
• Timeline for Tribunal Setup: The government of India is mandated to set up the Tribunal within one year of receiving such a request. 
• Composition of Tribunal: The Tribunal comprises three members, each of whom must be a Judge of either the Supreme Court or a High Court. 
• Final and Binding Decision: The decision rendered by the Tribunal holds ultimate authority and is deemed final and binding. The Supreme Court or any other court don’t have any jurisdiction in this regard.  

A total (9) such tribunals have been established till date. Important ones are

1. Ravi & Beas: Involving Punjab and Haryana, formed in 1986 and still pending the award.
2. Kaveri:  Involving Karnataka, Tamil Nadu, Kerala & Pondicherry, with time period 1990-2007
3. Mahanadi: The most recent tribunal, formed in 2018, involving the states of Odisha and Chhattisgarh.

• Agriculture and Water Scarcity: Riparian states depend on river water for agriculture. Such issues intensify during low rainfall seasons. Examples include disputes over the Kaveri, Krishna, Ravi, and Beas rivers, primarily revolving around sharing water for agricultural purposes.
• Multipurpose Projects and Dams: Conflicts often arise between upstream and downstream states regarding multipurpose projects and dams. The Mahanadi issue serves as an illustration of such disputes.
• River Joining: It is usually done to divert river water from sufficient to deficient river basins, but many issues arise, such as environmental assessment, submergence of surrounding lands, etc. Mahadayi/ Mandovi (Goa vs Karnataka) is an example of such a dispute.
• Unborn States Share: Disputes arise when a tribunal’s judgment on a contested river involves states that later undergo division or creation. The Krishna water tribunal is an example where the parties were Andhra Pradesh, Maharashtra, and Karnataka. But as the new state Telangana has come into being, it approached the Supreme Court for its right to get a proper share. 

Article 262 of the Constitution lays down that the Parliament may by law provide for the adjudication of any dispute with respect to any Inter-State River (ISR). Accordingly, the Parliament enacted the Inter-State River Water Dispute Act 1956, which provides for the reference of such a dispute to a Water Tribunal. The said Act bars the Supreme Court or any other Court from exercising jurisdiction in respect of any water dispute.

The main reasons for keeping River Disputes out of the purview of the court’s jurisdiction were that (the whole of the Constituent Assembly agreed that there is a need for Tribunals to settle Inter-State River Disputes (but there wasn’t unanimity on Permanent Tribunal or Temporary Tribunals)) : 

1. Speedy Disposal: The Act ensures the swift resolution of Inter-State River water disputes by making the tribunal’s decision final and binding, thereby avoiding prolonged legal processes.
2. Technical and Scientific Expertise: Since the resolution of Inter-State River disputes hinges upon heaps of technical and scientific data, the resolution of such disputes by specialized tribunals would allow for a better appreciation of such data.
3. Flexible and Informal Proceedings: Unlike courts bound by strict legal procedures, tribunal proceedings are relatively informal. This flexibility allows for deliberative decision-making and discretionary measures, fostering the potential for mutually negotiated settlements.

In this context, it can be argued that the rationale behind excluding the jurisdiction of courts was fairly well-intentioned.

The following changes have been proposed in the Inter-State River Water Disputes Act of 1956 to resolve the deficiencies the present mechanism faces.

Single Permanent Tribunal

• Establish a single, Permanent Tribunal for adjudicating all inter-state river water disputes.
• Awards will be notified automatically.  
• Composition of the Tribunal: Chairperson, Vice-Chairperson, and not more than six other Members
• Members from both judicial (3) and technical backgrounds (3).
• Even in Constituent Assembly debates, the setting of the Permanent Tribunal to resolve Inter-State River Water Disputes was greatly favoured, and BR Ambedkar was in favour of the Permanent Commission. The act favouring the Temporary Commission was favoured on the basis of experience that such issues would not come up. This is not the case now, and such disputes are rising very frequently.  

Dispute Resolution Committee (DRC)

• DRC will handle disputes prior to the tribunal, with a resolution timeline of one year.
• Most disputes will get resolved at the DRC’s level itself. But if the state is not satisfied, it can approach the tribunal.

Data Agency

• Establish an agency to collect and maintain updated water data in each river basin in the country.
• The collected data will aid in the timely resolution of water disputes

Timeline

• The Tribunal must give a decision within two years, with a possible extension of one more year.
• The decision of the Tribunal shall be final and binding. 

The division of taxing powers is as follows

There is a difference between the power to levy taxes, collect taxes & appropriate the proceeds of taxes. For example, the income tax is levied and collected by the Centre, but its proceeds are distributed between the Centre and the states.

The Indian Constitution has placed various restrictions on the state’s taxing powers. These are as follows:-

1. Tax on Professions, Trades, Callings, and Employments: State legislatures can levy taxes on professions, trades, callings, and employments, but there’s a cap of ₹2,500 per year on the total amount imposed on any individual.
2. Prohibition on Taxing Goods and Services: State legislatures cannot impose tax on goods or services in two instances: (1) when the transaction happens outside the state and (2) when it occurs in the course of import or export.
3. Tax on Consumption or Sale of Electricity: States have the authority to levy taxes on the consumption or sale of electricity. 
   • No tax can be imposed on electricity consumed or sold to the Centre
   • No tax can be imposed on electricity utilised in the construction, maintenance, or operation of railways  
4. Tax on Water or Electricity by Interstate Authorities: State legislatures can levy taxes on water or electricity generated, consumed, sold or distributed by authorities established by Parliament for regulating or developing interstate rivers or river valleys.

Major changes in the scheme to distribute tax revenue between the Centre and the States were introduced by the 80th and 101st Constitutional Amendments. 

80th Constitutional Amendment, 2000 (Alternative Scheme of Devolution)

• The 80th Amendment was passed to implement the 10th Finance Commission’s suggestion of allocating 29% of specific central taxes and duties to the states. 
• It was retroactively applied from April 1, 1996, and brought various central taxes, including corporation taxes and customs duties, in line with income tax regarding their constitutional sharing with the states.

101st Constitutional Amendment

• The 101st Amendment enables the implementation of a new tax system, Goods and Services Tax (GST), in the country. It grants both the Parliament and State Legislatures the authority to enact laws for imposing GST on transactions involving the supply of goods or services.
• The proceeds of GST are divided between the Center and the state on the recommendation of the GST Council. 

The present situation regarding tax distribution between the Centre and states is as follows

1. Article 268 (Taxes levied by the Centre but collected and appropriated by States): It includes stamp duties on cheques, bills of exchange, promissory notes, insurance policies, transfer of shares, and similar transactions.
2. Article 269 (Taxes levied and collected by Centre but assigned to States): There are two categories of taxes under this category
   • Taxes on interstate sale or purchase of goods (excluding newspapers) 
   • Taxes on the consignment of goods in interstate trade.
3. Article 269-A (Levying and Collecting of GST in the Course of Inter-State Trade): The responsibility for levying and collecting this tax rests with the Centre. However, the distribution of this tax between the Centre and the States is determined by Parliament based on the recommendations of the GST Council.
4. Article 270 (Taxes Levied and Collected by the Centre but Distributed between the Centre and the States): This category includes all taxes and duties listed in the Union List, excluding those mentioned in Articles 268, 269, and 269-A, surcharge on taxes in Article 271, and specific-purpose cess. Based on the Finance Commission’s recommendation, the President determines the distribution of the net proceeds of these taxes and duties.
5. Article 271 (Surcharges for the purpose of the Centre): The Parliament has the authority to impose surcharges on certain taxes and duties mentioned in Articles 269 and 270. The funds generated from these surcharges are allocated exclusively to the Centre. However, the Goods and Services Tax (GST) is exempted from such surcharges.
6. Taxes Levied, Collected, & Retained by the States: These include taxes enumerated in the state list (18 in number). 

The Centre can give money to States via Grants in Aid. These are of two types

1 . Statutory Grants

• General Provision: Under Article 275, Parliament can give money to states which need financial assistance on the recommendation of the Finance Commission. They are charged on the Consolidated Fund of India. 
• Specific Provision: The Constitution has provisions for specific grants aimed at enhancing the well-being of scheduled tribes within a state or improving the administrative standards of scheduled areas in a state, including the State of Assam.

2. Discretionary Grants

• Under Article 282, the states & centre can make grants even if it is not in their Legislative competence. For example, the Central Funds given on the advice of the Planning Commission.
• They are discretionary because the centre is under no obligation.
• These grants serve a dual purpose: firstly, to assist the state in meeting its financial obligations for achieving plan targets, and secondly, to provide the Centre with a means to influence and coordinate state activities in line with the national plan.

3. Other Grants

• These grants, stipulated by the Constitution, were temporary in nature. 
• For the initial 10 years following the commencement of the Indian Constitution, a provision of grant was made in lieu of export duties on Jute products to states of Assam, Bihar & Orissa & were charged on Consolidated Fund.

• GST Council is a Constitutional Body made under the provisions of Article 279-A. 

Membership of GST Council

• Its membership is as follows 
  1. Headed by Union Finance Minister
  2. Union Minister of State of Finance / Revenue 
  3. 1 Minister from each State and Union Territory with the Legislative Assembly
• Weighted Voting Powers: 1/3rd of Voting Power is with the Union and 2/3rd with States.
• In order to implement any decision, at least a three-fourths majority is necessary, which translates into votes of the Union and a minimum concurrence of 20 states.

Functions of GST Council

• Determine the inclusion of Union and State Taxes, Cess, and Surcharge under the GST regime.
• Establish standard rates for CGST, SGST, and UTGST within the GST framework.
• Set the effective date for including Crude Oil, Petrol, Diesel, Aviation Turbine Fuel, and LPG under the GST regime, until which the Union and individual States will unilaterally determine Excise and State VAT on these hydrocarbons.
• Define the categories of ‘Exempted Goods and Services’ under GST.
• Determine ‘Special Rates’ applicable during calamities, exemplified by the GST Council allowing Kerala in January 2019 to impose a 1% Calamity Cess on Intra-State trade for the subsequent two years for the rehabilitation of flood victims from 2018.
• Address dispute settlements within this system involving conflicts between states or between a state and the Union.

• Article 280 establishes the Finance Commission as a quasi-judicial entity.
• The President forms the Finance Commission every five years, or sooner if necessary.

The Finance Commission is required to make recommendations to the President of India on the following matters:

1. Distribution of the divisible pool of taxes between the Centre and states (Vertical Distribution) and among states (Horizontal Distribution).
2. It provides recommendations on the principles guiding grants-in-aid from the Centre to the states.
3. The Finance Commission suggests measures to enhance a state’s consolidated fund for supporting Panchayats and municipalities.

It can address any other finance-related matter referred to it by the President.

The Constitution permits the Finance Commission to make broader recommendations in the interest of sound finance.

Borrowing

• Centre can borrow either within India or outside upon security of the Consolidated Fund of India within the limit fixed by Parliament (no limit fixed yet)
• State Government can borrow within India (& NOT ABROAD) upon security of the Consolidated Fund of State

Loans

• The central government can make loans to any state or give guarantees regarding loans.
• The state can’t raise a loan without the consent of the centre if any part of a loan made by the centre to the State or in which the centre has guaranteed is still outstanding.

National Emergency

• During a National Emergency, the President can modify the Constitutional distribution of revenues between the Centre & and the State.
• Modification continues until the end of the financial year when emergencies cease to operate.

Financial Emergency

During Financial Emergency, the centre can give direction to states

• Observe specified canons of financial propriety
• Reduce the salaries & allowances of all classes of persons in states
• Reserve money bills & financial bills for consideration by the President.

There are certain rules of IMMUNITY FROM MUTUAL TAXATION

1. Property of the centre is exempted from all taxes imposed by the state or any authority within the state like Panchayat, Municipal Corporation, etc.
2. Property & income of the state is exempted from central taxation.
3. Property & income of local bodies like panchayat are not exempted from central taxation.

Competitive Federalism refers to the concept in which states compete among themselves and also with the Centre for benefits. This idea gained significance in India after the 1990s economic reforms in a free-market economy when states were trying to woo private investment in their territory. 

Different states try to make their own policies in a competing spirit to 

• Attract more investment, 
• Provide more jobs to its residents.
• Increase the standard of life of people living in its territory. 

Competitive Federalism follows the bottom-up approach as it brings change from the states. 

• In India, the government replaced the Planning Commission by establishing NITI Aayog, with one of the mandates to develop Competitive Federalism in India.
• Indian states are making legal reforms for ease of doing business in their state and attract private companies. E.g., Labour Reforms
  • Gujarat: Making it more difficult for utility workers to go on strike 
  • Karnataka: Allows establishments to be open longer and allows women to work at night.
  • Rajasthan: Allow companies employing up to 300 staffers to lay off workers or close down without getting the government’s prior approval
• Different states are organizing their investment summits to woo investors to invest in their states. E.g., 
  • Gujarat’s – Vibrant Gujarat 
  • Punjab’s – Progressive Punjab 
• DIPP is releasing the Ease of Doing Business Report of States

The impact of competition for attracting investments to the states can be understood at two levels.

• On the one hand, states are under pressure to provide good governance and manage their finances prudently. 
• On the other hand, they are aware of the negative impact of many of these reform measures on their electoral popularity. 

The concept of federalism is where the governments at various levels, i.e., central, state, and local levels, work in synergy with each other for the larger public interest, bypassing the differences between them. 

1. Proclamation of Emergency under Article 356: Post-1977, the arbitrary use of Article 356 to impose President’s Rule in states has been a persistent issue. 
2. Union Dominance in Legislative Matters: The Union’s dominance in legislating over the concurrent list and its interference in the state list are also in special cases, such as while ratifying international agreements. 
3. Governor Appointments without State Consultation: States have no say in the appointment of the Governor.
4. Centrally Sponsored Schemes: The imposition of centrally sponsored schemes under the ‘One-Size-Fits-All’ approach has been a source of tension. States often find themselves obligated to implement schemes without considering regional variations, leading to inefficiencies. 
5.  Fiscal Responsibility and Budgetary Management (FRBM) Act: Forcing states to follow the dictates of the Fiscal Responsibility and Budgetary Management (FRBM) Act before the basic public services of ordinary citizens in States are met.
6. Deployment of Paramilitary Forces without State Consent: Instances of deploying paramilitary forces in states without their consent, such as the use of central forces in Jammu and Kashmir
7. Enquiries against Chief Ministers for Personal Reasons: The initiation of inquiries against Chief Ministers for personal or political reasons has been a source of tension. 
8. Non-Devolution of Powers to Local Governments: The reluctance of states to devolve powers to local governments, particularly in matters under Schedule XI & XII, remains a hurdle. 

• Consensus Building: Encouraging dialogue and collaboration among states and the central government. For Example, The Goods and Services Tax (GST) was implemented after extensive deliberations and consensus-building among states.
• Reactivation of the Inter-State Council: Strengthening the constitutional body will facilitate cooperative decision-making between the Centre and the States.
• Protection of State Interests: Ensuring that on issues such as international treaties, World Trade Organisation obligations, or environmental concerns, the interests of affected states are safeguarded.
• Greater devolution of power to states: Ideally, the Union should have only those powers which the state can’t handle and require national unity in the form of matters like defence, communication, foreign policy, etc.  
• Formation of NITI Aayog after scrapping Planning Commission. NITI Aayog has increased the participation of states in its functioning & decision-making.  
• States’ Involvement in Governor Appointments: Allowing states to have a say in the appointment and removal of Governors to enhance mutual respect
• Reform of Schedule XI & XII: Abolish Schedule XI & XII & instead work towards a new local list outlining activities and sub-activities under Local Bodies within Schedule 7 itself. 

The idea of federalism as an organizing principle between different levels of a state is quite old. Greek city-states had it. Lichchhavi kingdom of northern India in the 6th century BCE is a celebrated example of a republican system.  European Union is a recent example of the idea of federalism being implemented at a trans-national level.  

• The term “federation” is derived from the Latin word “foedus,” meaning treaty or agreement.
• A federation can be formed in two ways.
  • Integration, i.e. Coming Together Federation: When two or more weak states come together to form a strong union, e.g., USA.
  • Disintegration, i.e. Holding Together Federation: When a Big unitary state is converted to a federation by granting autonomy to provinces, e.g., Canada and India.
• Federal Polity is a system of governance in which sovereignty is constitutionally shared between the centre & states.

Federal system is adopted so that

The federal system is adopted so that 

• States & their diversity can flourish with autonomy. 
• For multicultural societies, federalism is an attractive option.  It enables minorities to become majorities in sub-national units  
• Political Motives
  • The Federal System provides security from external & internal threats.
  • Additional central assistance, when required, can be provided by the centre in the Federal System.
• Economic Motives
  • The Federal System provides access to the larger national market 
  • Transfer of resources from other states in case of an underdeveloped state. 
• India has a Federal system, but the term federation is mentioned nowhere in the constitution; instead, Article 1 describes India as a Union of states

Centralized administration often refuses to decentralize, thinking it will undermine its integrity. But the opposite is true. Decentralization leads to stability, and those who refuse to decentralize often crumble under their weight.

• India is holding together federation different from the USA, which is coming together. 
• The holding together model was adopted for the sake of the unity of the country & national integration – The constituent assembly prescribed the federalist model so that the country could face the challenges of Centrifugal forces effectively. 

Features of the Indian System of Federation

• Dual Polity: India follows the concept of a dual polity, with the Union at the Centre and the States at the Periphery.
• Division of Powers: There is a well-defined division of powers between the Union and the States, elucidated in the 7th Schedule of the Constitution. 
• Supremacy of the Constitution: The Indian Constitution establishes the supremacy of the Constitution itself. All laws must conform to its provisions, and any law inconsistent with the constitution is declared void. 
• Rigid Constitution: The constitution is rigid in its structure, and the method of amendment is also rigid. Provisions concerned with federal character can be amended by joint action of state and centre.
• Independent Judiciary: The judiciary in India is independent and not under the influence of the Union government. 
• Bicameralism: The Indian Parliament follows a bicameral system, where the Rajya Sabha represents the states of the Indian Federation, and the Lok Sabha represents the Indian people as a whole. 
• Asymmetric Federalism: India has Asymmetric Federalism in the sense that the rights and responsibilities of all the states are not the same. The special nature and needs of certain regions are defined constitutionally via various sub-clauses of Article 371

Architect of the Indian Constitution, Baba Saheb Ambedkar, believed that for a culturally, ethnically and linguistically diverse and heterogeneous country like India, federalism was the ‘chief mark’, although with a strong unitary bias. This understanding, which was shared by Pt. Jawaharlal Nehru, Sardar Patel and other national leaders, stood at sharp variance with Gandhi’s idea of federalism, who was a votary of decentralization and devolution of power to the lowest unit of Panchayat. 

All federal systems, including the American system, are placed in a tight mould of federalism. No matter the circumstances, it cannot change its form and shape. It can never be unitary. On the other hand, the Indian Constitution can be both unitary and federal according to the requirements of time and circumstances. In normal times, it is framed to work as a federal system. But in times of distress(e.g. National Emergency), it is designed to make it work as a unitary system.

India’s constitutional framework raises the intriguing question: Is India a federal or unitary state? The answer lies in the nuanced understanding of the features embedded in the Indian Constitution.

• Although there are large unfederal features that are essentially incorporated for the unity and integrity of the country, it is equally important to recognize that all the fundamental federal features are present in the Constitution. The presence of strong unitary elements has led some scholars to categorize India as a “Quasi-federal” state. 
• Although  Article 1 states that India is a Union of states, this doesn’t mean India isn’t a federation. No particular significance is to be attached to the word union because the word union is used in the Preamble of the USA, too, and citing this, BR Ambedkar said the description of India as a Union, although it is a Federation, does no violence to its usage. 
• At the time of Independence, traumatized by the partition and violence, the Constituent Assembly wanted to ensure the unity and integrity of the new nation. Hence, the framework departed significantly from all existing models of federalism.  

When India adopted this system, In the absence of any track record of India in federalism and the tendency to compare all federal states with the US model, jurists found it difficult to certify that the system was indeed federal. It was therefore declared ‘Quasi-Federal’. This description is no longer valid today because the federal principle has taken root and further developed on Indian soil.  

After the 73rd & 74th Amendments & formation of the Panchayati Raj, a new era was started in the chapter of Indian Federalism.