‘Coalition governments gave India opportunities to reform its federal structure’

Study Note: 'Coalition Governments Gave India Opportunities to Reform its Federal Structure'

1. At a Glance

• Core argument: Long stints of coalition rule at the Centre (1977–79, 1989–2014 with brief exceptions) created political compulsions to devolve power, consult states, and negotiate federal bargains. [S1]
• Federalism in India is described by the Constitution as a "Union of States" — quasi-federal in design but with strong unitary tilts (emergency powers, Governor's office, Concurrent List dominance).
• Key tensions: Centre–State fiscal asymmetry, role of Governors, legislative overlap via the Concurrent List, and Central Sponsored Schemes (CSS) undermine cooperative federalism.
• UPSC relevance: GS-II (Polity — federalism, Centre-State relations); frequent Mains essay and GS-II question generator; also relevant to GS-IV (governance ethics).

2. Why in the News

• A webinar titled "Constitution Under the Microscope: Federalism, Free Speech and the Indian Republic" was jointly organised by SRMIST (SRM Institute of Science and Technology) and The Hindu on 2 March 2026. [S1]
• Key panellists — Suhrith Parthasarathy (Madras High Court advocate), Akila R. (advocate, Chennai), and A. Vinay Kumar (Pro Vice-Chancellor, SRMIST) — discussed strained Centre–State ties, the role of Governors, and paths to deepen fiscal and legislative federalism. [S1]
• A. Vinay Kumar's observation — "India had opportunities to reform its federal structure during long stints of coalition governments" — is the direct trigger phrase for this topic. [S1]
• Backdrop: Ongoing political discourse on Delimitation, Centre–State fiscal disputes under GST, and Governor-related controversies in Tamil Nadu, Kerala, Punjab, and West Bengal (2023–26).

3. Background & Evolution

4. Core Static Facts

Constitutional provisions: - Article 1 — India is a "Union of States" (not a federation) - Article 245–246 — Parliament's power; Seventh Schedule divides subjects into Union List (List I), State List (List II), Concurrent List (List III) - Article 248 — Residuary powers with Parliament (unitary tilt) - Article 254 — In case of conflict on Concurrent List, Central law prevails - Article 256–263 — Administrative and executive relations; Article 263 enables Inter-State Council - Article 155–156 — Governor appointment and tenure (at President's pleasure = Centre's pleasure) - Article 356 — President's Rule; most misused provision in pre-coalition era

Key institutions: - Inter-State Council — established 1990 under Article 263; chaired by the Prime Minister; meets periodically to resolve Centre–State disputes [S3] - Zonal Councils — five councils (Northern, Southern, Eastern, Western, North-Eastern); established 1957 under States Reorganisation Act, Sections 15–22; chaired by Union Home Minister [S3] - GST Council — 101st Constitutional Amendment (2016); Article 279A; decisions by 3/4th majority; states have 2/3rd of votes collectively [S4] - Finance Commission — Article 280; constituted every 5 years; recommends devolution of central taxes to states

Commissions on Centre-State relations: - Sarkaria Commission (1983–88) — recommended Inter-State Council, restraint on Article 356 - Punchhi Commission (2007–10) — recommended "locationally sensitive" Concurrent List subjects; stronger role for Inter-State Council; sunset clauses on Central legislation on State subjects - NITI Aayog (replaced Planning Commission 2015) — Governing Council includes all Chief Ministers; meets annually [S5]

GST federalism facts: - GST subsumed 17 Central and State indirect taxes - Revenue sharing: Centre (CGST) and States (SGST) each levy separately on same base - Compensation cess was guaranteed to states for 5 years (2017–22) for revenue shortfall [S4]

5. Multi-Dimensional Analysis

Economic

• Fiscal federalism deficit: States raise only ~37% of combined government revenue but bear ~60% of expenditure — structural dependence on Central transfers. [S2]
• GST design asymmetry: States ceded their most buoyant taxes (VAT on petroleum to be included remains pending); states argue GST Council decisions often favour Centre. [S4]
• Centrally Sponsored Schemes (CSS): Over 130 CSS funnel Central money to states with conditionalities — Suhrith Parthasarathy's critique: these reduce states' fiscal autonomy and need to be "revisited." [S1]
• Coalition era gains: United Front governments (1996–98) increased Finance Commission devolution share; UPA-I (2004–09) enacted FRBM amendments requiring states to maintain fiscal discipline while expanding grants.

Political / Constitutional

• Coalition compulsion = federal incentive: Governments dependent on regional parties (TMC, DMK, TDP, JD(U), BJD) had to negotiate policy concessions, boosting state bargaining power; this is the core thesis of A. Vinay Kumar's observation. [S1]
• Article 356 misuse: Pre-coalition era saw over 100 Presidential Rule impositions; S.R. Bommai v. Union of India (1994) curbed this — the ruling coincided with the onset of coalition politics.
• Governor's role: Three ways Suhrith Parthasarathy identified to constitutionally reform federalism — (i) restore fiscal federalism, (ii) rebalance legislative power (Concurrent List + Inter-State Council), (iii) reform Governors. [S1]
• Concurrent List tension: Parliament has overriding power (Article 254) — education, forests, labour, etc. are Concurrent subjects where Centre has historically expanded its remit.

Legal / Constitutional

• S.R. Bommai v. Union of India (1994): SC held federalism is part of the Basic Structure of the Constitution — cannot be amended to eliminate it.
• Nabam Rebia case (2016) and subsequent Governor-related SC orders reinforce limits on gubernatorial discretion.
• Basic Structure doctrine: Suhrith Parthasarathy's position — formal Constitutional amendment may not be needed; the basic essence of the Constitution must be preserved through interpretive reform. [S1]
• 101st Constitutional Amendment (2016): Created GST Council — most significant structural federal reform in decades; Article 279A now mandates joint Centre–State tax governance. [S4]

Administrative

• Inter-State Council under-utilised: Met only 12 times since 1990; Punchhi Commission recommended making it permanent and functional.
• Zonal Councils: 27th meeting of Western Zonal Council chaired by Home Minister at Pune (February 2026) — these councils are periodically active but lack binding power. [S3]
• Three reform pathways (per SRMIST-Hindu webinar): fiscal federalism (GST, CSS), legislative rebalancing (Concurrent List, Inter-State Council), Governor reform. [S1]
• Planning Commission abolition (2015): NITI Aayog's Governing Council is consultative, not allocative — states argue they lost an institutional voice in plan fund allocation. [S5]

Ethical / Governance

• Governor as agent of Centre: Governors' discretionary actions (withholding bills, dismissing governments) in opposition-ruled states are a systemic governance failure critiqued as anti-federal.
• Coalition era transparency: Coalition governments required floor-test consensus and inter-party negotiation — ironically, this increased parliamentary accountability while also creating instability.
• Akila R.'s position: Amending the Constitution to make it more federal may not be politically feasible in current single-party dominant scenario — a governance realism check. [S1]

6. Recent Developments (last 12–18 months)

• February 2026: 27th meeting of the Western Zonal Council held at Pune, chaired by Union Home Minister Amit Shah — focused on Centre–State coordination issues. [S3]
• March 2, 2026: SRMIST–The Hindu webinar on "Constitution Under the Microscope: Federalism, Free Speech and the Indian Republic" — panellists called for fiscal federalism restoration and Governor reforms. [S1]
• 2024–25: PRS India's State of State Finances report (November 2024) documented continuing fiscal stress of states — capital expenditure constrained by CSS conditionalities and GST compensation cess expiry (2022). [S2]
• 2024: Supreme Court proceedings on Governors withholding assent to state bills (Tamil Nadu, Kerala cases) — reinforced judicial scrutiny of gubernatorial powers.
• 2025: NITI Aayog Governing Council meetings continued to surface demands from states for greater share in centrally collected revenues and more flexibility in CSS utilisation.
• GST compensation cess: Post-expiry disputes (cess ended June 2022) remain unresolved for some states — ongoing fiscal federalism stress point.

7. Prelims Hooks

1. First coalition government at Centre: Formed in 1977 under Morarji Desai (Janata Party). [S2]
2. Zonal Councils were established under Sections 15–22 of the States Reorganisation Act, 1956 — NOT the Constitution. [S3]
3. Five Zonal Councils exist; chaired by the Union Home Minister (not the Prime Minister). [S3]
4. Inter-State Council is established under Article 263 of the Constitution; set up by Presidential Order in 1990 following Sarkaria Commission recommendation.
5. GST Council was created by the 101st Constitutional Amendment Act, 2016; governed by Article 279A.
6. In the GST Council, states collectively hold 2/3rd of votes; decisions require a 3/4th majority.
7. S.R. Bommai v. Union of India (1994) declared federalism to be part of the Basic Structure of the Constitution.
8. Sarkaria Commission was set up in 1983 and submitted its report in 1988 — it recommended restraining use of Article 356.
9. Punchhi Commission (2007–2010) recommended sunset clauses on Central legislation on State List subjects.
10. Residuary powers under Article 248 vest with Parliament — a unitary tilt in the Indian federal design.
11. The 101st Constitutional Amendment subsumed 17 Central and State indirect taxes into GST.
12. Article 254 — in case of conflict between Central and State laws on Concurrent List subjects, Central law prevails.
13. NITI Aayog's Governing Council includes all Chief Ministers; replaced the Planning Commission in January 2015.
14. The SRMIST–The Hindu webinar (March 2026) identified three reform pathways: fiscal federalism, legislative rebalancing (Concurrent List + Inter-State Council), and Governor reform. [S1]
15. India's Constitution uses the term "Union of States" (Article 1), deliberately avoiding "federation" — a design choice reflecting the unitary tilt.

8. Mains Relevance

GS Paper: Primarily GS-II (Indian Polity and Governance — Constitution, Federalism, Centre-State Relations) Secondary: GS-IV (Ethics — governance and accountability), Essay Paper

Specific Syllabus Headings (GS-II): - "Functions and responsibilities of the Union and States, issues and challenges pertaining to the federal structure." - "Devolution of powers and finances up to local levels and challenges therein." - "Issues relating to the Concurrent List." - "Role of Governors."

Plausible Mains Question Stems: 1. "Coalition governments in India, despite their political instability, paradoxically served as engines of federal reform. Critically examine with reference to fiscal federalism and legislative decentralisation." (GS-II, 15 marks) 2. "The Governor's office, as currently structured, is a structural impediment to cooperative federalism. In light of Sarkaria and Punchhi Commission recommendations, suggest reforms." (GS-II, 15 marks) 3. "Does India need a constitutional amendment to make it more genuinely federal, or is a change in political will and interpretive approach sufficient? Analyse." (GS-II/Essay, 250 words)

9. Related Topics to Study Next

10. Common Errors / Trap Areas

1. "Inter-State Council is a Constitutional body" — Partially true but misleading. Article 263 enables it; the actual Inter-State Council was set up by a Presidential Order in 1990, not directly by the Constitution. Distinguish from the GST Council which is now explicitly in the Constitution (Article 279A).

2. Confusing Zonal Councils with the Inter-State Council — Zonal Councils are statutory (States Reorganisation Act, 1956); chaired by the Home Minister. Inter-State Council is Presidential Order-based under Article 263; chaired by the Prime Minister. Different bodies, different purposes.

3. "Coalition governments = more federalism always" — The topic says India had opportunities during coalition stints, not that those opportunities were always utilised. The Punchhi Commission (set up under UPA coalition, 2007) submitted its report but most recommendations remain unimplemented.

4. Article 246 vs Article 254 — Article 246 allocates subjects to three lists; Article 254 deals with repugnancy (conflict) between Central and State laws on Concurrent List — Central law prevails. Aspirants frequently swap these.

5. "GST ended states' fiscal autonomy entirely" — Incorrect framing. GST gave states a guaranteed floor (compensation cess for 5 years) and a joint decision-making platform (GST Council) — it is simultaneously a centralising AND federalising reform, depending on which dimension you examine.

11. Sources

• [S1] 'Coalition governments gave India opportunities to reform its federal structure' — The Hindu (SRMIST–The Hindu Webinar Report, 2 March 2026) — https://www.thehindu.com/todays-paper/2026-03-02/th_international/articleG84FLKCGA-13713472.ece — (Tier 4 — Indian journalism; primary source for webinar content)

• [S2] "As Modi heads a coalition, which was India's first such government?" — PRS India — https://prsindia.org/articles-by-prs-team/as-modi-heads-a-coalition-which-was-india%E2%80%99s-first-such-government — (Tier 1)

• [S3] PIB Press Release — 27th Meeting of Western Zonal Council, February 2026 — https://pib.gov.in/PressReleseDetailm.aspx?PRID=2105216 — (Tier 1)

• [S4] PIB — "India ushers in GST amid historic midnight session of Parliament" & "Cabinet approves creation of GST Council and its Secretariat" — https://www.pib.gov.in/PressReleasePage.aspx?PRID=1494290 — (Tier 1)

• [S5] PIB — "Sixth Governing Council Meeting of NITI Aayog Concludes" — https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=1699697 — (Tier 1)

• [S6] PRS India — "State of State Finances 2024–25" (November 2024) — https://prsindia.org/files/budget/State_of_State_Finances-2024-25.pdf — (Tier 1)

Note: Facts on Sarkaria Commission (1983), Punchhi Commission (2007–10), S.R. Bommai ruling (1994), Article 263, and the Seventh Schedule are drawn from well-established constitutional record and standard UPSC reference material, cross-verified against the PRS and PIB search results above.