A very silly debate has started in intellectual circles about the future of Indian federalism because, earlier this week, the Supreme Court ruled that there was nothing constitutionally wrong with the Central Government’s decision in August 2019 to abrogate Article 370 of the Constitution. This article gave Kashmir special status, whereby most Indian laws didn’t apply to it.

In a sense that made Kashmir a sovereign territory within the Indian union. It was a peculiar situation born in peculiar circumstances. Those circumstances are no longer there. However, Article 370 is now being projected as an epitome of federalism. Some people are also saying that Indian federalism is under attack merely because an anomaly no longer exists.

The Supreme Court, however, has described the situation as asymmetric federalism. What that means is that all States are equal, no need for special dispensations. When the dust settles down what will remain is this new principle which the intellectuals have missed, namely, that the States list in the Constitution is enough. There’s no need for any special status beyond what’s contained in it.

This list contains subjects on which the States alone can legislate. Police, education and health are its most important constituents. There are many other important subjects also.

Two key aspects

Two things need to be kept in mind about this revival of the federalism debate which has actually been going on since 1950 when the Constitution was adopted. Both these things feed into each other.

One, by having a Concurrent List, the Constitution itself limited the scope of federalism. This list allows the Central Government to legislate on subjects contained in the States list and, moreover, its legislation supersedes any State legislation on that subject. It’s game, set and match to the idea of a unitary government.

Two, the matter was fully settled in the early 1960s when the Supreme Court ruled that India was indeed a ‘unitary state with federal features’. This automatically limited the scope of States’ rights.

So both the Constitution and the Supreme Court have the same view that the freedoms which the States enjoy is a highly circumscribed one. They can rail and rant as Tamil Nadu — and only Tamil Nadu — does. But constitutionally it’s pointless. Politically it is a different matter. But Tamil Nadu has and has never had any support amongst the other States.

That said, it’s not a great system that we have. The Centre has way too much power, especially financial. Article 370 had nothing to do with that. If it’s a federation we want with unitary features rather than the other way round, the States must be given more power.

The best way of doing it is to transfer most items out of the Concurrent List to the States list. This can be a matter of discussion and consensus.

Collection of income tax

The other reform that’s needed is to allow the States to impose and collect their own income tax. The Centre need not be a collection agent, as it is now. The only constitutional requirement should be that the total income tax collected by the Centre and the States not exceed 40 per cent. The breakup could be Centre 30 per cent and States 10 per cent.

The short point is this. If India needs to be a genuine federation, special status is not the answer. The States need more financial and regulatory powers. Mr Modi, as he has been a chief minister, knows this as well as any other chief minister.

Published on December 15, 2023