Erosion of state autonomy evident from diminishing financial independence of states: P. Wilson

P. Wilson

Federalism, designed to promote cooperation between the Central and state governments, is increasingly facing challenges that threaten its very foundation. Many believe that the integrity of this vital structure is gradually fading, leaving it shrouded in uncertainty and darkness. There are various factors contributing to this decline.

The Indian Constitution envisions a delicate balance of power between the Union and the states. Dr B.R. Ambedkar, speaking in the Constituent Assembly in 1948, envisioned a system where India would have a ‘Union at the centre and the states at the periphery’, with each entity vested with sovereign powers in their respective domains as assigned by the Constitution.

This vision of cooperative federalism was intended to ensure both unity and diversity—a framework that allows for centralised governance while respecting state’s autonomy. This duality aimed to safeguard unity in a diverse nation. When the Constitution came into force, the people of this country were assured of the due respect and importance of the state’s autonomy. Historical and contemporary developments, however, reveal that this balance has repeatedly skewed in favour of the Union, placing state autonomy under relentless attack and undermining the federal fabric of the nation.

One of the most visible indicators of the erosion of state autonomy is the diminishing financial independence of states. Economic policies and resource allocation are key areas where the Union government wields disproportionate power over the states. Southern states, which contribute significantly to the national GDP, often receive disproportionately low returns on their tax contributions.

This economic subjugation extends to the allocation of funds for state development projects. States that do not align politically with the ruling party at the Union often find themselves deprived of adequate resources. Such fiscal discrimination not only weakens state autonomy but also stifles regional development, widening the economic divide between states. While the 14th Finance Commission recommended an increase in states’ share of tax revenue, this has been offset by reduced allocations to Union-sponsored schemes and an increase in cess and surcharges that are not shared with the states.

The Goods and Services Tax (GST) was intended to consolidate multiple state and Central taxes into a unified system. It has failed, however, to fulfil the assurances made to the states at the time of its enactment. The GST has disproportionately empowered the Union government, diminishing the states’ capacity to generate independent revenue. Notably, the cess and surcharge, which make up 23 per cent of the Union’s gross tax receipts, are excluded from the divisible pool, leaving states with no share of these funds. Furthermore, the Union government has imposed strict borrowing limits on states, further restricting their fiscal autonomy.

Policies such as ‘One Nation, One Election,’ which focuses predominantly on the Lok Sabha while undermining state legislatures, reflect a push for uniformity that neglects the regional diversity that federalism aims to protect. This trend poses a serious threat to the vibrant democracy of our country. While this initiative emphasises administrative efficiency, it does so at the expense of democratic diversity.

Institutions designed to facilitate Centre-state relations, such as the Inter-State Council and the National Development Council, have become mere formalities and are largely ignored. The replacement of the Planning Commission with NITI Aayog signifies a shift toward centralisation, which reduces the roles of states in planning and resource allocation.

Education and employment, traditionally managed by states, have also been affected by transferring education from the state list to the concurrent list. UGC has become a means to undermine state-funded universities through unreasonable regulations that seek to control and implement the Union’s agenda.

The Union government is forcing state governments to accept specific policies by withholding funds—a situation evident in the Samagra Shiksha Scheme, where funding is withheld for non-acceptance of certain provisions of the National Education Policy.

India’s linguistic diversity is a defining feature of its federal structure, yet this too faces increasing threats. Article 348 of the Constitution permits the use of English for legislative purposes alongside Hindi, respecting the linguistic preferences of non-Hindi-speaking states. The Union government’s tendency to pass bills solely in Hindi disregards this constitutional provision. This growing trend of Hindi imposition undermines the cultural and linguistic identities of states in southern and northeastern India.

Language is not just a means of communication; it is a fundamental aspect of identity and governance. By prioritising Hindi over other languages, the Union government weakens the principles of cooperative federalism and alienates large sections of the population.

The erosion of state autonomy is also evident in the Union government’s approach to social justice and reservation policies. The refusal to conduct a caste census is another glaring failure, reflecting the Union government’s reluctance to address structural inequities. The last caste census, conducted in 1931, is outdated and fails to capture the realities of modern India. By refusing to update this data, the Union government hinders states’ efforts to implement targeted welfare policies.

In conclusion, the erosion of federalism poses significant challenges for India, threatening both regional autonomy and social equity. Reflecting on these issues as we celebrate the Constitution’s 75th anniversary is crucial for safeguarding the principles of democracy and governance in our diverse nation.

P. Wilson is DMK member of the Rajya Sabha