Federalism in India — Holding Together, Article 3 and State Reorganisation (UPSC Polity)
UPSC guide to Indian federalism: unitary vs federal vs confederal, Article 3, holding-together model, Alfred Stepan, smaller states debate, 2024-26 context.
India's federation is unusual by global standards. The Constitution calls India a "Union of States", not a federation. Parliament can unilaterally alter state boundaries. The central government can dismiss an elected state cabinet under Article 356. Yet, for most practical purposes, India functions as a federal democracy with vigorous state governments and active Centre-State bargaining.
Understanding this paradox is foundational for UPSC GS II. Federalism is tested year after year — in Prelims through constitutional details, in Mains through questions on cooperative and competitive federalism, and in essays through the larger theme of unity in diversity.
Three types of multi-level government
| Feature | Unitary | Federal | Confederal |
|---|---|---|---|
| Locus of control | Central government; single source of authority | Distributed across levels with shared and independent responsibilities | General government serves as agent of member units |
| Taxing powers | Central (devolution possible) | Independent at each level | Usually with member units |
| Examples | Singapore, France, Japan, UK, China (multi-tiered) | USA, Canada, Australia, Germany | UN, EU (in certain respects), CIS |
| Amending state boundaries | Central decision | Requires state consent (typically) | Cannot change without member consent |
Where India sits
Political scientist Alfred Stepan categorised India as a "holding together" federation, as opposed to the "coming together" federations like the United States and Canada. The distinction is crucial:
- Coming-together federalism (USA, EU): Independent states bargained to form a union; the federal compact emerges from below.
- Holding-together federalism (India, Brazil, Spain, South Africa): A pre-existing polity decentralises to accommodate diversity.
The "holding together" view, also called "new federalism", represents a deliberate effort to decentralise responsibilities to state and local governments to accommodate regional aspirations.
Article 3 and India's flexible federation
Article 3 of the Constitution empowers Parliament by law to:
- Form a new state by separation of territory.
- Increase, diminish or alter the boundaries of a state.
- Change the name of a state.
Procedural safeguards:
- President's recommendation is required before introducing the Bill.
- The Bill must be referred to the concerned state's Legislature for an opinion — but the opinion is not binding.
Unlike the United States, which is described as an "indestructible union of indestructible states", India is an "indestructible union of destructible states". This has been central to holding India together since it allows the federation to evolve, respond and reorganise according to subnational aspirations.
State reorganisation — the journey
1950 Constitution
Four categories of states:
- Part A: Erstwhile Governor's Provinces of British India (e.g., Madras, Bombay, Punjab).
- Part B: Former princely states (e.g., Hyderabad, Mysore, Travancore-Cochin).
- Part C: Former Chief Commissioner's Provinces and centrally administered areas.
- Part D: Andaman and Nicobar Islands.
States Reorganisation Act, 1956
- Major milestone that reorganised states largely on linguistic lines.
- Abolished the distinction between Part A and Part B states.
- Part C and Part D were abolished; new states and union territories were created.
- Based on recommendations of the Fazal Ali Commission (SRC, 1953).
Post-1956 reorganisations
- 1960: Bombay bifurcated into Maharashtra and Gujarat.
- 1963: Nagaland created from Assam.
- 1966: Punjab Reorganisation — Haryana created; parts to Himachal Pradesh.
- 1971: Himachal Pradesh became a full state.
- 1972: Meghalaya, Manipur, Tripura became full states.
- 1987: Mizoram, Arunachal Pradesh, Goa became full states.
- 2000: Jharkhand, Chhattisgarh, Uttarakhand (Uttaranchal) carved out.
- 2014: Telangana carved out of Andhra Pradesh.
- 2019: Jammu & Kashmir bifurcated into two Union Territories — J&K (with Legislature) and Ladakh (without Legislature) — via the Jammu and Kashmir Reorganisation Act.
Currently, India has 28 states and 8 Union Territories (post the 2020 merger of Dadra and Nagar Haveli with Daman and Diu).
The debate on smaller states
Arguments in favour
- Political aspiration fulfilment: Creating smaller states fulfils regional or community aspirations for localised governance and representation.
- Administrative efficiency: Smaller units can be more responsive, reducing red tape.
- Resolution of identity crises: Allows distinct linguistic, cultural or ethnic groups to have their own administrative units.
- Addressing "internal colonisation": Neglected regions within larger states gain autonomy and control over resources — Telangana's creation illustrates this argument.
- Security and focus: Smaller states may manage law and order and border security more effectively.
Arguments against
- No direct relation between size and governance: Tamil Nadu, a large state, has demonstrated good governance; Jharkhand and Chhattisgarh, smaller states, have faced chronic challenges.
- No direct relation between size and development: Punjab and Maharashtra have shown significant development despite their size.
- Increased expenditure: New capitals, secretariats, High Court benches and administrative infrastructure inflate non-productive spending.
- Interstate disputes: More states means more borders, more water-sharing and resource disputes.
- Political instability: Smaller states may face frequent defections and unstable governments (Goa, Manipur have been examples).
- Economic viability: Some proposed smaller states may rely heavily on central grants and become perpetually dependent.
- Impact on mother state: Partition can erode revenue base and political cohesion of the residual state.
- Strategic concerns: Demands like Gorkhaland have international implications; ethnic mobilisation may invite external meddling.
Way forward
- Strengthen local governance: The 73rd and 74th Amendments empower Panchayati Raj and Urban Local Bodies. Deepening decentralisation may be preferable to creating new states.
- E-governance and digital service delivery: Bridges the gap between government and citizen without territorial reorganisation.
- Case-by-case evaluation: Each demand must be assessed on its own merits — historical, economic, cultural, administrative — rather than politically.
- Second States Reorganisation Commission — demanded by experts for a systematic review, especially in light of population growth in UP, Maharashtra and MP.
The Union-State fiscal dimension
Federalism in India has a strong fiscal dimension (covered in the companion guide on Fiscal Federalism). Key features:
- Finance Commission under Article 280 recommends tax devolution.
- GST Council under Article 279A determines indirect tax rates.
- Centrally Sponsored Schemes with cost-sharing between Centre and states.
- NITI Aayog Governing Council as a deliberative body on cooperative federalism.
Cooperative and competitive federalism
- Cooperative federalism: Centre and states work together on national priorities (e.g., Swachh Bharat, Digital India).
- Competitive federalism: States compete on performance indices (Ease of Doing Business, Logistics, Innovation) to attract investment.
- Both concepts have been actively promoted since 2014 and are reflected in NITI Aayog rankings.
Latest developments (2024-26)
- Jammu and Kashmir continues as a UT; the question of restoration of statehood is politically live. The Supreme Court in In re Article 370 (December 2023) upheld the abrogation but directed restoration of statehood "as soon as possible".
- Ladakh's demand for statehood and Sixth Schedule inclusion has gained traction through sustained civil society mobilisation.
- State-wise fiscal divergence has widened, with southern states raising concerns about population-based devolution.
- Updated context: The 16th Finance Commission (2026-2031 term) is expected to significantly shape Centre-State fiscal balance; its recommendations on population weight, state disaster fund, and Centrally Sponsored Schemes will be closely watched.
UPSC relevance
For Prelims, remember:
- Article 1 — India, that is Bharat, shall be a Union of States.
- Article 3 — Parliament's power to form new states.
- Article 4 — changes to First Schedule are by simple majority (not a constitutional amendment).
- Article 355, 356, 365 — Centre's emergency-style powers.
- Seventh Schedule — Union List, State List, Concurrent List.
For Mains, federalism is versatile. Typical prompts:
- Is Indian federalism quasi-federal or truly federal? Discuss with reference to Article 3 and emergency provisions.
- Evaluate the concept of cooperative federalism in the context of GST and NITI Aayog.
- Discuss the demand for smaller states and critically examine its implications.
For essays, federalism connects to unity in diversity, constitutional morality, and the Ambedkar–Patel vision — all high-value UPSC themes.