Dynamics of Indian Federalism: A Comprehensive Historical Review

DYNAMICS OF INDIAN FEDERALISM

A Comprehensive Historical Review

Mokbul Ali Laskar

Notion Press

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First Published by Notion Press 2015

Copyright © Mokbul Ali Laskar 2015

All Rights Reserved.

ISBN: 978-93-5206-239-3

This book has been published in good faith that the work of the author is original. All efforts have been taken to make the material error-free. However, the author and the publisher disclaim the responsibility.

No part of this book may be used, reproduced in any manner whatsoever without written permission from the author, except in the case of brief quotations embodied in critical articles and reviews.

PREFACE

This book is based on my post-doctoral research on Indian federalism. Successful completion of this book has been possible due to several institutional and individual helps, supports and co-operations. I am very much thankful to Indian Council of Social Science Research (ICSSR) for granting me the fellowship and opportunity to carry on my post-doctoral research. I am thankful to my employer Indira Gandhi National Open University (IGNOU) for granting me the extraordinary leave with lien for the purpose of undertaking my post-doctoral research under ICSSR fellowship. I am also thankful to Jawaharlal Nehru University (JNU) and more specifically to the Centre for Comparative Politics & Political Theory (CCPPT) at JNU for the permission to affiliate and allowing me to continue my fellowship under JNU.

I am extremely thankful to my post-doctoral research supervisor Professor Kamal Mitra Chenoy of CCPPT for his generous support and help in completing my research study in time. Despite having a very busy schedule he was ready to help me at any moment I asked for. I also got enormous encouragement, support and co-operation from my doctoral research supervisor Professor Ajay Kumar Singh of Centre for Federal Studies (CFS) and I am very much thankful to him for the same. I am very much thankful to the library staffs of JNU, IGNOU, CFS, Nehru Memorial & Museum Library (Teen Murti Library), National Social Science Documentation Centre (NASSDOC), and the Indian Law Institute (ILI) for their kind help and support in collecting information resources for my research study. I am thankful to Syeda Jolly Kazi for helping me in collecting information resources from the online information databases of JNU library. My special thanks go to my wife who whole-heartedly supported and co-operated with me throughout the period of my research study.

This book has made a detailed overview of the institutional and historical trajectory of Indian federalism, including both territorial and non-territorial aspects of Indian federalism. An extensive analysis has been made of the various federal policy measures adopted under the British colonial rule - such as the impact of the Government of India Act 1935 and the role of princely states in Indian federalism. The book has also made a critical analysis of the Constituent Assembly Debates on Indian federalism and the role of political leaders in the shaping of Indian federalism. More specifically, a critical analysis has been made about the changing nature and dynamics of Indian federalism in the post-independent India, including the contemporary debates on various aspects of Indian federalism and the symmetrical and asymmetrical nature of the federalism.

The book is an important compendium for those wishing to have first-hand information on Indian federalism and may be very useful for scholars interested in centre-state relations. It can be an important guide for researchers in identifying various research questions for further study on Indian federalism. Most importantly, it can be a very useful course book for students or professionals for whom the existing shorter introductions to the subject may not suffice. In fact any undergraduate student who needs to undertake an advance level study on Indian Politics and Government or Indian federalism will find the book very useful. International readers of comparative politics will also find the book useful. Additionally, the book may be useful for those who are interested in Indian Administrative Services (IAS) and for the politicians as well.

Views expressed in the study, not specifically attributed to others, are mine and do not reflect the views of the Government and the agency sponsoring my fellowship.

Mokbul Ali Laskar

ABBREVIATIONS

Contents

Title

Copyright

Preface

Abbreviations

Introduction

1. Federalism – The Conceptual Interpretation

2. Historical Basis of Federalism in India

3. Constitutional Basis of Indian Federalism

4. Role of Political Leaders in Federalism

5. Critical Analysis of Federalism in Post-Independent India

Conclusion

Bibliography

Index

INTRODUCTION

Differences in race, language, culture, ethnicity, religion, or civilization are not the necessary foundations of the state, but in the modern world they have tended to become so. These differences in fact pose serious challenge to the modern (nation) states and make the functioning of the union or federation of states extremely difficult. Overwhelming majority of the nation-states in the world is facing the challenge of significant internal cleavages based on ethnicity, language, race, religion, or such other communal groups. Within a nation-state there are also significant regional variations and disparities in terms of social and economic status of different territorial and non-territorial communities. All these have far-reaching consequences for the social and political processes for the modern nation-states.

Most of the federal countries of the world are today de facto faced with complex issues of sub-national identities. Sub-national identities are in fact becoming more complex due to the incredible advances in human mobility and communication. The much celebrated westphalian system of ‘nation-states’ are fast disappearing. It is argued that states are ‘failing’ in the face of challenges by sovereignty-seeking nationalities, sub-national regions or minority ethnic groups.¹ To quote Peter G. White

…most countries are no longer nation states, but today include members of several nations in the classic sense – as well as members of many other identifiable groups that do not constitute traditional nations, but that claims political rights nonetheless. It is the exceptional country that is today inhabitated by a single homogeneous political group.²

It is a fact is that there is hardly any country in the world which possesses a population of homogeneous nationality. Almost all the countries possess certain minority or other identity-based groups in one form or the other. Many (countries) have active national minorities and other have latent ones.³ According to Human Development Report 2004, more than 150 countries have significant minority ethnic or religious groups, and only thirty countries do not have a religious or ethnic minority that constitutes at least ten percent of the population.⁴ This means, countries across the world are increasingly confronted with identity-based groups, demanding special rights and recognition of their specific cultural and distinct identities. Within a country there are not only certain recognized minority groups claiming or bargaining rights for the members of their groups but there are various other non-significant and un-recognized minority groups, including numerically and socially disadvantaged groups, minorities within minorities (internal minorities), which are not in a position to claim or bargain such rights for the members of their groups as they as a group are yet to be properly organized and constituted as recognizable sub-national groups within a nation.

All modern liberal societies de facto experience a broad diversity of religious and communal affiliations, including the diversity based on languages, ethnic origins, sexual orientations (such as gays, lesbian, homosexuals, etc.), distinct lifestyle or ways of life, etc. Many of these diversities do not crystallize into regional majorities with claim and aspiration to self-government. In fact, most of the diversities (including the traditionally territorially-linked language and ethnic diversities) are now found to be spread and scattered across the whole length and breadth of a society or country. It is argued that federal solution of collective autonomy and representation should be extended to all the different kinds of diversity in a society.⁵ It is also argued that the effective management of identity-based societal conflicts requires assurance to minority groups of their physical and cultural security. According to David A. Lake and Donald Rothchild,

…demonstartion of respect, power-sharing, elections engineered to produce the interdependence of groups and the establishment of regional autonomy and federalism are important confidence-building measures that, by promoting the rights and positions of minority groups, mitigate the strategic dilemmas that produce violence.⁶

There is growing demand for effective participation of the minorities in the public life of the state. For Max van der Stoel⁷, one way of enabling the effective participation of minorities in public life is to devote resources for self-governance, by way of which minorities may have a measure of control over specific matters that concern them alone or predominantly. Stoel is of the view that the same can be achieved through regimes of territorial autonomy where minorities may be concentrated; and where minorities are dispersed, regimes of personal autonomy or cultural autonomy (in the form of corporate federalism) may achieve the same end.

Many of the federal countries (including India) have successively accommodated linguistic, ethnic, cultural and religious minorities for decades or even centuries. There are many instances in which it can be found that religious, cultural, linguistic and other national minorities enjoy special rights which assist them in preserving their language or culture and thus protect them from the pressures of assimilation. But there are significant variations across the countries that have instituted measures to accommodate all these different minority or identity-based groups. The nature of minority problems and the rights of minorities vary from country to country. In many instances, the accommodation of minorities is based on historical arrangements (such as the accommodation of linguistic minorities in India, Belgium and Canada), whereas in some instances, group rights have been recognized in order to correct historical injustices meted out to certain groups(as is the case of castes in India). At the same time ethnic minority groups themselves have become more assertive in demanding autonomy or government support in order to protect their culture and identity. Ignorance of the rights claimed by minority groups led to violence and instability in a number of instances. Attempts to solve problems of one communal or regional group spark demands by others to revisit arrangements for accommodation of minorities and to recognize new groups claiming special rights. This has led to redrawing national boundaries and even led to the rethinking and reframing the purposes of federalism in a number of countries.⁸

State builders and political reformers frequently seek a federally organized political system;⁹ but the moment a federal state (or union) is formed or founded there emerges a dilemma regarding maintenance of a politically strong federal state (or union) and maintenance of political power and authorities within the constituent units at the same time. It has been argued that while federalism may turn out to destabilize and weaken the political basis of a strong federal union various decentralizing measures can in fact play important role in sustaining a unitary political system intact and at the same time promote federal principles within the unitary system. In this regard, Kent Eaton states as follows:

Unitary countries continue to outnumber federations by far in today’s world, but the federal principle has become more important even in countries that eschew the federal label. Many national actors in unitary countries have embraced decentralization as a way of defusing what they believe to be more threatening demands for federalism…. Decentralization and federalism are distinct concepts, but the popularity of the former has pushed many countries toward the latter.¹⁰

There has been a fairly persistent pattern of demands by [religious and ethnic] minorities for group-differentiated rights, including right to political autonomy, demand for exemption from the requirements and rules of the central political authority on religious or cultural grounds and demands for self-arrangements. Those defending federal-based minority group recognition are of the view that federation can provide a means of managing inter-group conflicts that might otherwise develop into violence and can lead to the proliferation of mini-statelets of limited viability.¹¹ Graham Smith observes that the desirability of structuring federal governance to accommodate national or ethnic minority-defined constituent units and the compatibility of such governance with a defensible form of distributive justice contribute to provoke considerable debate.¹² He says that those opposed to structuring federal governance along national minority lines focus on two sets of arguments:

first, institutionalizing the federation along such line is more likely to promote a primordial nationalism, which in politically unstable polities increases the likelihood of inter-ethnic violence and even civil war; and secondly, it is argued that by empowering particular national minorities such a federal arrangement is likely to impose limits on genuinely pluralist interests, since the demands and concerns of other groups or individuals will be downgraded or hidden from the gaze of federal politics.¹³

Smith of course argues that federation is a means of accommodating minority demands for political recognition and group liberty. For Smith the retention of group rights through federal support is defended as an antidote to majority-group cultural assimilation.¹⁴ Karl Renner and Otto Bauer, the late nineteenth century Austrian social democrats, argued that group rights of the territorially non-represented should also be supported in addition to a purely territorial one. This argument later led to the development of what is often referred to as ‘corporate federalism’ i.e. the corporate distribution of power in the form of consociational arrangements to allow accommodation of (non-territorial) minorities or other identity-based non-territorial communities.

It is argued that constitutional engineering in the form of federalism and decentralization can create structural framework in order to accommodate ethnic and national minorities. But constitution is basically a durable or fundamental structure and is designed for any long term solution; and, it is contentious and difficult to define fundamental public laws involving rights of different communal or minority groups within the constitutional structure. It is particularly more difficult in a highly diversified and plural society, where there are always scopes for growth of new identity-based groups. The relationship between the federal organization of a state and the protection of fundamental rights within that state is also characterized by ambiguity. Some will argue that federalism divides power and multiplies the loci of democratic decision-making, which can only be to the benefit of fundamental rights protection. They may add that federalism favours the preservation and development of the cultural, religious and linguistic identity of minority groups within the state, by granting them decision-making power over matters that concern them. Yet others will counter this by pointing out that the multiplication of centres of power and their reduction in size makes them more vulnerable to being overtaken by anti-democratic majorities. It is also argued by some others, such as Jack Snyder, that federalism has the potential to institutionalize and politicize ethnic differences and is not desirable in multi-national democratizing countries.¹⁵ Snyder is of the view that democratizing states should try to promote civic identities and generate rights at the individual level.¹⁶ Moreover, it is argued, the cultural, religious or linguistic homogeneity of the constituent entities of the federal state may lead to pressure on the fundamental rights of minorities subsisting within these collectivities.¹⁷

As far as the Indian federation is concerned it is important to highlight that the Constitution of India does not specifically define it as federal. The term ‘federal’ or ‘federation’ was very much part of debate and discussion during the making of the Constitution of India; but the same did not get favour in the final adoption of the Constitution. Instead, the Constitution declares India as union. Nowhere in the Constitution of India has the word ‘federal’ been used (perhaps with deliberate intention of not using the word). Still India is recognized as a federal country in the world; and various aspects of federalism are in fact visible within the otherwise un-defined federal India.¹⁸ The size, environment, and social conditions of India constitute forceful arguments for federalism.¹⁹ The Supreme Court of India has held the ‘federal character’ as one of the basic features of the Indian Constitution. It has also been argued that federalism and democracy are intrinsically linked in the Indian context.²⁰

Federal India is, however, finding it increasingly difficult to address various political issues involving both territorial and non-territorial communities. Considerable amount of tension exists between the centre and the constituent units as well as within the constituent units. There is a strong presence of what may be called ‘federal dilemma’. The centre-state relation is marked by several ambiguities. Blood-letting events in the wake of several communal riots (more particularly, the Ayodhya controversy and the communal carnage in Gujarat), sons of the soil movements, growing demands for separate statehood, frequent attacks on minorities and the ways that these incidents are handled clearly exposes the fact that there is a clash between constituent units and the overall Indian federal structure and its federal principles.

Prevention of deadly communal conflicts and addressing the question of terrorism, naxalism, and national security with consequential intervention of the central government in the affairs of the state governments are tending to change the fundamental federal structure of India, downplaying the constitutionally delineated power for the federal and constituent unit governments. Against this, the constituent state governments of the Union of India frequently invoke federal argument in their relations with the central government, citing law and order (including policing) as state subject under the Constitution. As a result, the central and state governments are often found engaged in collusion courses trying to put the blames on one another for any wrong doing. Federalism is being used as a shield by a constituent unit (including the Union of India) to justify its wrongful action, including the intervention/non-intervention to rectify the wrongful action.²¹ Although politicians in charge of the constituent units of the federation are in support for more autonomy and power they seem to oppose central government intervention irrespective of the fact whether it is in the interest of public or not. They see this as curtailment of their power, benefits and status. This brings in focus the William Riker’s individual aspects of federalism as bargain, under which federalism is defined by political and ethnic elites/leaders for their own vested interest. The emergence of coalition politics in India has fundamentally changed the federal bargain in favour of the constituent units, challenging the constitutionally strong position of the Central government.

The Constitution of India has acknowledged and recognized significant asymmetry among the constituent units of the India federation. As far as the centre-state financial relation is concerned there appears to be wide gaps between the resources and capacities of the constituent federal units. There is a general preference for a more centralized or unionized federal structure as the fiscal federalism and the tax structure are largely controlled by the central government. Developments of constituents units have increasingly been tied to the central government. There is significant asymmetry in the pattern, growth and development of the different units of the Indian federation. In view of the constitutional recognition of asymmetrical federal provisions the federal and the constituent units are able to define and re-define powers and functions on their own, including demand for more autonomy. Since independence, Indian federation has been witnessing pressure from various centrifugal forces – it has seen the enormous pressure from forces based on ethnicity, religion, language, culture, etc. India is in fact characterised by a plethora of territorial and non-territorial communities, which are now very frequently claiming separate constitutional rights, giving rise to federal problems and difficulties in handling of political crisis.

While the territorial federalism in India and the power distribution on territorial line have helped in resolving many ethnicity and language based issues of identity question immediately after independence addressing various contemporary issues involving non-territorial communities (such as religious, caste, and other cultural/communal communities) have become far more important for maintaining political stability. However, when we speak of federalism in India today we still generally presume that it mainly involves issues concerning the distribution of powers and function between different organs of the government and distribution of the power and functions among different constituent unit governments. In our discourse on federalism in India we generally tend to link federalism with functional and territorial aspects. We often ignore the various aspects of governance and power distribution involving large number of non-territorial and socio-cultural communities, including community political participation and representation.

The federal debate or federalism has nevertheless generated a new wave of public discourse in India in recent times. This discourse will remain unfruitful unless we make a historical account of the growth and emergence of federalism in India. Going by our contemporary political discourse it is very much apparent that federalism has an important role to play in the future of India. It may be recalled here that federalism as a principle involves adoption of policies for accommodating the political aspirations and demand of political power by different territorial, non-territorial, functional and other corporate groupings of people. It covers socio-cultural communities within its ambit. However, most studies on federalism in India are limited to the federal institutional structure and a constitutional perspective on federal distribution/division of power and functions of governments, comparative study of federalism or fiscal federalism. Federalism has largely been defined on or limited to territoriality. The broader understanding of federalism has intentionally been missed out in its major political discourse.

It is also frequently argued that India is having its own model of federalism – with its own unique federal features. Federalism in India is significantly different from other models of federalism. The Indian federal structure is in fact marked my certain distinct features – such as the existence of federal sub-structures and super-structure. Unlike any other federal features, there can be seen the existence of a centralized power structure that determines the powers and functions of the multitude of territorial and non-territorial groups within its ambit. The centre-state relations and the political power distribution are largely controlled by a centralized power structure. This is very much against the basic tenets of most of the other models of federalism. In fact, in recent years, we could see that parallel to the increasing federal bargains by the constituent state governments or other sub-structures of local political constituencies the centralized power structure has become more dominant.

Federalism is a dynamic process and it adjusts and changes itself according to geography and history in order to suit particular countries and institutions.²² The changing political scenario in India in fact reinforces the need to understand federalism in the Indian context. India being a unique federal country there is a need to understand the dynamics and the historical growth and development of the unique federal features in the Indian context and also a need to understand as to why Indian federalism is still a dilemma despite the fact that India is a federation and federal principles continue to dominate Indian political structure and contemporary political discourse. The unique feature of Indian federalism has evolved over a long historical period. However, there is a lack of study of federalism in India in a historical perspective. While new and emerging political leadership and power structure have been trying for quite some time to re-define and re-structure federalism in India there

is lack of any coherent study on Indian federal politics from the perspective of the new and emerging elite structure.²³

In order to understand the growth and development of federalism in India, an attempt has been made in this book to understand the various aspects of federal and confederal arrangements of the pre-colonial, colonial and post-colonial periods, with more emphasis on the growth and development of the federal political institutions in post-independent India. The book has made attempted to make a broader understanding of federalism, involving both territorial and non-territorial communities within its ambit. The role of political leadership in the evolution of a federal idea for India and the subsequent influence of the political leaders (including the influence of new political leaders that emerged since late 1960s) in the shaping of Indian federal structure in the post-independent period have been covered. The constituent assembly debate on federalism has been covered extensively. It also covers how the emergence of coalition politics and the new economic policies have made significant impact on federalism in India.

The book is based on research study involving both primary and secondary sources of information. The research study carried out for the purpose of writing this book extensively relied on various historical documents/books on federalism, including the analysis of constitutional developments in India. It relied on reports of various committees & commissions of both pre-independent and post-independent India. Various historical aspects of the development of the federal principles as they emerged through constitutional developments during British rule and thereafter have also been taken care of. It has made extensive use of the constituent assembly debates on federalism. Various issues raised by the Sarkaria Commission on centre-state relations, the Administrative Reforms Commissions, and the Punchhi Commission on centre-state relations and the findings and observations of the National Commission to Review the Working of the Constitutions have been analysed critically.

The study has been organized and divided into five broader Chapters and a Conclusion. Chapter 1 on ‘Federalism – The Conceptual Interpretation’ makes a theoretical and critical analysis of the various facets of federalism. It makes a comparative assessment of the traditional and classical models of federalism. It analyzes the various aspects of territorial and non-territorial federalism, including the practical operation of the concept of ‘corporate federalism’ as an aspect of non-territorial federalism. Further, the role of federalism in the management of conflicts has been analyzed.

Chapter 2 on ‘Historical Basis of Federalism in India’ makes an assessment of the various federal and confederal measures in ancient and medieval India. It analyzes the growth and development of federalism under the British colonial rule, including the growth and development of constitutional history of India that paved the way for a federal India under the British rule and the role played by the Indian National Congress (INC) in the same. The federal structure under the Government of India Act 1935 has been analyzed critically. The role and impact of the princely States in the federal structure have also been analyzed in details. Most importantly, this chapter makes an extensive review of the constituent assembly debates on federalism.

Chapter 3 on ‘Constitutional Basis of Indian Federalism’ makes an analysis of the detail provisions of the constitutional division of powers among the constituent units of the Indian federation, including an analysis of the unitary and federal provisions. The asymmetry and special federal arrangements under the Constitution of India have also been highlighted. It also highlights the various non-territorial federal provisions under the Constitution of India.

Chapter 4 on ‘Role of Political Leaders in Federalism’ highlights the role of political leaders in the shaping and re-shaping of federalism in India. It describes how national political leaders during the constituent assembly debates played a key role in molding a strong centralized Constitution for independent India with several federal features, including the key roles played by Sardar Vallabhbhai Patel and B. R. Ambedkar in making a united federation of India. It analyzes federalism under the leadership of India’s first Prime Minister Jawaharlal Nehru and the impact of Indira Gandhi’s role on India’s federal structure. Role of other national and regional leaders have also been highlighted in this chapter.

Chapter 5 on ‘Critical Analysis of Federalism in Post-Independent India’ makes a comprehensive analysis of the dynamics of federalism in post-independent India and covers the following aspects of the Indian federation: (i) Territorial re-organization of states; (ii) Non-territorial and consociational federal arrangements (including federal accommodation of minorities and socio-cultural groups); (iii) Emerging pattern of centre-state relations with an emphasis on (a) The impact of emergencies on federal structure, (b) Governor as a factor in centre-state relations, (c) Judiciary as a factor in centre-state relations, (d) Impact of national security on federal structure, (e) Fiscal federalism, and (f) Re-invention of local self-governing institutions and decentralization; (iv) Impact of coalition politics on the federal structure; and (v) Impact of new economic and developmental policies on federal polity.

Conclusion is the summary of the whole study. It includes certain inferences/ observations which can be arrived at on the basis of the whole study. Additionally, it includes certain normative/prescriptive measures for the success of federalism in the Indian context.

CHAPTER 1

Federalism – The Conceptual Interpretation

INTRODUCTORY

Pierre-Joseph Proudhon prophetically wrote in 1863 that the twentieth century will open the age of federations, or else humanity will undergo another purgatory of a thousand years.²⁴ Almost hundred years later, in 1964, William Riker produced his most seminal work on the politics of federalism – Federalism: Origin, Operation, Significance – whereby at the very first page he has written: this is an age of federalism.²⁵ In 1984, Daniel J. Elazar observed that the federalist revolution is one of the hidden revolutions of our times, despite the fact that few have paid attention to it.²⁶ Federalism has, in fact, remained a defining feature of many national systems of government and is spreading to others.²⁷ According to a corporate publication of the Forum of Federations, at the beginning of the twenty first century there are about twenty five countries in the world (constituting more than forty percent of the world’s population) that can be considered or claimed to be federal.²⁸ We are, indeed, living in an increasingly federalized world.²⁹ Federalism is considered essential for sustaining inter-state and inter-group relations. It is an essential principle for organizing heterogeneous societies into a viable pattern of political power-sharing, by reconciling the twin processes of political unification and social diversity of commonality for certain purposes and specificities for others.³⁰

Federalism is a means of political organisation of government and the society at large. It is proclaimed that federalism is a political structure of unity in diversity, in which both the values of unity and diversity are equally legitimized, respected and linked in an overarching political system.³¹ According to Ingram, the salient idea for political federalism is the pluralist attitude to the dispersal of power plus the unity of the entire social order.³² It is argued that there are several political benefits that flow from the adoption of the principle of federalism – it helps avoid/prevent conflicts in divided societies and protects the rights and interests of various ethnic, linguistic and other territorial communities.

In both academic and policy-making worlds, one of the increasingly popular proposals for defusing conflicts in societies is the creation of a federation and one of the key decisions that a community must face when writing its constitution is whether to structure itself as a federation or not.³³ There are instances in which the already written constitutions have been restructured to accommodate federal features or elements. Not only that, there is also a renewed interest in political theory of federalism (particularly among the theorists of multiculturalism) in order to resolve the growing tension arising out of assertive group-identity. Attempts have been made, from time to time, to understand the strengths and weaknesses of federal solutions as a means of resolving political problems. Against the potential role of federalism in resolving political and other societal conflicts, many scholars of federalism have also warned that federal arrangements are quite delicate; and many federal systems have, in fact, collapsed.³⁴ This has resulted in a considerable scholarly literature attempting to reassess the nature of federalism and to understand such issues as the theory and practice of federalism, the design and operation of various federal systems, and the processes of political integration and disintegration.³⁵

Constitutional politics and institutional design seemed to have dominated the recent empirical literature on federalism. Most of the contemporary literature on federalism is mainly about federal institutional arrangements; and do not deal much with the theoretical and other practical aspects of the application of federal principles.³⁶ All along, federalism as a theoretical inquiry was not taken up seriously. Even at practical level, federalism was not given as much importance as it required. Much of the literature emphasizes strategic considerations and associated problems of fiscal discipline, the efficient and effective division of political powers (executive, legislative and judicial powers of the different branches of government) or territorial division/devolution of powers. According to Kyle Scott,

We understand how federal systems operate on a case-by-case basis, but we lack a coherent understanding of how federalism as a concept operates and lack an understanding of what institutions and mechanisms are necessary to make it operate as it should.³⁷

For Scott, there is a lack of any concrete theory of federalism. Additionally, there are only a few scholarly literatures that deal with federalism as instrument of managing societal conflicts, differences in language, culture, ethnicity and other cultural values and traditions. Much of the available literatures on federalism fail to deal with rights of the non-territorial minority groups within the federal principle.

The lack of a coherent understanding of federalism, however, has not deterred countries in applying federal principles in resolving identity-based conflicts. Cultural differences within most of the countries that have adopted federation as the political basis of governance were much deeper and in many instances such differences even reached the level of ethnic nationalism within the jurisdiction of a country. Some forms of federal or confederal arrangements were important for the culturally diverse countries in order to contain ethnic nationalistic pressure or political fragmentation of countries.

There is no doubt that fundamentally mono-cultural federations such as the United States, Australia, and Germany have faced fewer difficulties.³⁸ However, multi-ethnic federations have been among the most difficult to sustain, as the cases of Nigeria, Pakistan, India, Malaysia, former Soviet Union, Czechoslavakia, Yugoslavia, Canada, Belgium, and Spain, as well as the effort to federalize Europe, have illustrated. With the collapse of the former Soviet Union, Czechoslavakia, Yugoslavia, there is a renewed questioning of the desirability of the federal systems. This has led some commentators, such as Daniel J. Elazar (1993), to question whether federations composed of different ethnic units simply run the risk of eventual civil war.³⁹ There is also a debate going on whether federal systems and federations in the long run encourage integration or, by emphasizing regional interests and autonomy, induce political divisiveness. Fear of the latter has made some statesmen devising new constitutional arrangements, for instance in South Africa and Britain, hesitant to adopt a full-fledged federation or even increased devolution.⁴⁰ To quote Daniel J. Elazar,

…there is almost a paradox here. Where federalism has worked, often it has been proclaimed as something else. Where federalism has been formally introduced as a solution to peace-making it has more often than not failed or at the very least disappointed. It is almost as if the term federalism demands too much of the parties involved and federal arrangements can only be used successfully in conflict situations when they are masked as functionalism or autonomy or decentralization or whatever.⁴¹

There is of course no doubt that many of the multicultural countries have been able to sustain as successful multi-ethnic federations for quite long time. In fact, for success of some of the multicultural countries the idea of federation was inevitable necessity. Given that the management of ethnic nationalism is one of the most common arguments for federation or confederation today, there is a need for comparative studies of the difference between multi-ethnic and ethnically homogeneous federations, and of the particular structures and processes required to enable federations and confederations to accommodate ethnic nationalism in the long term.⁴² However, scholars of federalism still differ on how powers ought to be shared by different constituting communities, the degree of autonomy to be accorded to the regional/constituent units, the degree of centralization and decentralization and finally, why a country should choose a federal form of governance over other forms. In view of these conflicting arguments the following sections of this chapter makes a theoretical and critical analysis of the various facets of federalism. An attempt has been made for comparative assessment of the traditional and classical models of federalism. Various aspects of territorial and non-territorial federalism, including the practical operation of the concept of ‘corporate federalism’ as an aspect of non-territorial federalism have also been analyzed. Further, the role of federalism in the management of conflicts has been analyzed.

1.2 Federalism in Theory and Practice

Federalism is a contested concept.⁴³ Despite having a long history and a plethora of literature, there is a lack of any general or global theory of federalism. P. Riley argues that the theory of federalism is in a state of confusion.⁴⁴ The term ‘federalism’ has variously been used to refer federal states, international governments, autonomous units (guaranteed by constitution) and systems of social pluralism and corporatism.⁴⁵ Many experts and political scientists have made several attempts in order to explore the theoretical nature of federalism; but, no one has come up with a theory of federalism that is remotely as ambitious or as powerful as any other political theories are.⁴⁶ There is, in fact, no set theory of federalism; its concept and practice vary in different political systems and also within the same political system at different times.⁴⁷ A Bosco comments thus: In the field of political science, federalism has not yet achieved definite status….The concept of federalism is still quite vague in the common domain and it is used to refer to quite different political ideas.⁴⁸ There are divergent views among political scientists about the concept and meaning of federalism. As mentioned earlier, most of the studies on federalism have made comparisons of federal systems as an important method to develop the theory of federalism.⁴⁹ Different academic approaches have been adopted, by the scholars on comparative federalism, for understanding the nature, concepts and meaning of federalism; thus, leading to a variety of ‘autonomous’ definitions of federalism.⁵⁰ The meaning of federalism differs according to the perspectives of constitutional law, political science or economics.⁵¹ Geoffrey Sawer (an eminent Australian exponent on federalism) considers that any attempt to define the word ‘federalism’ is likely to be futile.⁵² More often than not, the scholars of federalism have the tendency of using the terms ‘federalism’, ‘federal’, ‘federation’, decentralization, etc, without making any distinction. The concepts and meanings involved within these terms have often been used interchangeably, wherein, in reality all the terms are distinct, and as such convey different concepts and meanings.

Etymologically, the word ‘federal’ is derived from the Latin foedus which means covenant and the federalism that we know is one expression of the federal idea.⁵³ The political understanding of federalism was initially a religious one, which was based on the idea of applying the ‘principle of covenant’ and was actually meant for the political organization of different religious group; for the peaceful co-existence of different religious groups and to protect religious diversity in a variety of ways.⁵⁴ Elazar, in fact, relies on the religious basis for the origin of federal idea and strongly argues that federalism is the practical application of the covenantal way to the organization of political authority and power. Historically, federalism has in fact been linked to association by covenant.⁵⁵ It denoted a ‘coming together’ (in contrast, for example, to a ‘binding together’) by mutual agreements; most typically between relatively autonomous political communities for rather limited purposes, without a loss (but perhaps with a new sense) of individual identity.⁵⁶ In ancient times, each ‘traditional’ community had its own Law (and often its own God or Gods from whence the Law was derived)⁵⁷, and establishment of peaceful relations between communities posed serious challenge. Federalism, a ‘process of unification’⁵⁸, provided one of the only available means for peaceful relations between traditional communities. The emergence of the westphalian nation-state was perhaps the strong basis for growth of the political basis of federalism. In the sixteenth and seventeenth centuries such political federalism tried to modify the triumph of national states, to limit the spread of centralized monarchies by making local units of federal systems into ‘states’.⁵⁹

As there is no universally accepted definition of federalism, it has been historically subjected to varying contextual applications and usages. For some, such as King, ‘federalism’ is a normative and philosophical concept involving the advocacy of federal principles, whereas ‘federation’ is a descriptive term referring to a particular type of institutional relationship.⁶⁰ For others, such as Daniel J. Elazar, both the terms are descriptive and for them, ‘federalism’ refers to a genus of political organization encompassing a variety of species, including federations, confederacies, associated statehoods, unions, leagues, condominiums, constitutional regionalization, and constitutional home rule.⁶¹ In this schema, ‘federation’ refers to one species within the wider genus of federalism. According to Elazar, federalism is both a form of polity and a means of ordering political communication, a structural consideration and a way to conduct the business of government.⁶²

K. C. Wheare, credited to have made truly path-breaking studies on comparative federalism, defines federalism⁶³ in term of system of governance. He defines federalism as that system of government in which the federal and the regional governments are both coordinate and independent.⁶⁴ It implies "constitutional limits on state power, through either functional or territorial division of governmental roles and offices" (italics mine).⁶⁵ For Kyle Scott, federalism requires that government authority be divided into constituent parts where each part maintains autonomy within its realm but the possibility of collaboration between constituent parts remains.⁶⁶

In his book on Federalism, Finance and Social Legislation (1955), A. H. Birch pointed out that the tremendous growth of concurrent powers…has brought about an overlapping of governmental functions so that it is difficult to see the various levels of government restricted to their own spheres.⁶⁷ Birch, accordingly, suggests that from the ‘coordinate and independent’ phrase in Wheare’s definition the word ‘independent’ be dropped. In other words, he feels that the general and the local governments can still have a coordinate status although they can no longer hope to be ‘independent’ of each other. He, therefore, defines a federal system of government as:

one in which there is a division of powers between one general, and several regional authorities, each of which, in its own sphere, is coordinate with others, and each of which acts directly on the people through its own administrative agencies.⁶⁸

Following A. H. Birch, M. J. C. Vile defines federalism as follows:

Federalism is a system of government in which central and regional authorities are linked in a mutually interdependent political relationship; in this system a balance is maintained such that neither level of government becomes dominant to the extent that it can dictate the decision of the other, but each can influence, bargain with and persuade the other. Usually, but not necessarily, this system will be related to a constitutional structure establishing an independent legal existence for both central and regional governments, and providing that neither shall be legally subordinate to the other. The functions of government will be distributed between these levels (exclusively, competitively or cooperatively), initially perhaps by a constitutional document, but thereafter by a political process involving, where appropriate, the judiciary; in this process the political interdependence of the two levels of government is of the first importance in order to prevent one level from absorbing all effective decision-making power.⁶⁹

There are some important factors that are vital to the working of any federal government. Among them are the party system, the role of pressure groups and political movements, and the effect of political attitudes on the system.⁷⁰ In the practical operation of federal relations, it is important to maintain that one level of government should not become wholly and continuously subordinate to the other.

Several normative arguments have been put forwarded linking federalism with the concept of sovereignty. It has been argued by many that only territorial sovereign entities can enter into a federal arrangement of a larger sovereign entity. Against this, many arguments have also been put forwarded stating in clear and unambiguous term that the Jean Bodin’s conception of indivisibility of sovereignty in not applicable in the case of federalism. Sovereignty cannot be portrait as negation of federalism. In fact, a new concept of internal sovereignty has been developed in order to justify federalism through division of sovereignty. For a federal system to work, sovereignty must be divided among the constituent parts while still binding the parts to the whole.⁷¹ Johannes Althusius (father of federalism) refuted Jean Bodin’s theory of indivisible sovereignty as follows:

Bodin’s conception of sovereignty, as belonging to the king, is contrary to the natural order. First, the king dies, and therefore his sovereignty dies with him. Law does not die with a single person; therefore, its superiority over the king is partly attributed to its longevity. Second, the power of many is greater than the power of one. If the people choose to do so, they can overthrow the king…the king cannot be sovereign if he can be overthrown.⁷²

According to M. Ramaswamy, irrespective of the position from the standpoint of philosophical theory, the more reasonable and practical view of the matter is that sovereignty, especially if we look upon it as a bundle of powers, is capable of division. In fact, division of sovereignty is key to sustaining the foundation of federalism. It helps in providing autonomous policy and decision-making power to the smaller political units within a larger political entity. In order to justify the possibility of the division of sovereignty M. Ramaswamy cites Sir Henry Maine’s minute on Kathiawar in 1864, which stated as follows:

Sovereignty is a term which, in international law, indicates a well ascertained assemblage of separate powers or privileges. The rights which form part of the aggregate are specifically named by the publicists who distinguish them as the right to make war and peace, the right to administer civil and criminal justice, the right to legislate and so forth. A sovereign who possesses the whole of this aggregate is called an independent sovereign; but there is not, nor has there ever been, anything in international law to prevent some of those rights being lodged with one possessor, and some with another. Sovereignty has always been regarded as divisible…. It may perhaps be worth observing that according to the more precise language of modern publicists sovereignty is divisible, but independence is not.⁷³

Robert A. Dahl defines federalism as a system of dual sovereignty "in which some matters are exclusively within the competence of certain local units – cantons, states, provinces – and are constitutionally beyond the scope of the authority of the national government and where certain other matters are constitutionally outside the scope of the authority of the smaller units."⁷⁴ A federal system, according to Martin Diamond, "combines states which confederally retain sovereignty within a certain sphere, with a central body that nationally possesses sovereignty within another sphere; the combination creates a new and different thing to which is given the name federal."⁷⁵ These two definitions of Dahl and Diamond also seem to link federalism with the concept of sovereignty; but, against this, Patrick Riley has tried to link federalism to a theory of anti-sovereignty. According to Riley,

All federalisms, to the extent that they oppose absolute concentration of power… are doctrines of anti-sovereignty. But at the same time that they oppose sovereignty they ascribe it to themselves, and that is precisely the source of the oddity of federal theory. Federalism ought to have been a pure theory of anti-sovereignty.⁷⁶

Carl J. Friedrich is of the view that we have federalism only if a set of political communities co-exist and interact as autonomous entities, united in a common order with autonomy of its own.⁷⁷ Friedrich too says that no sovereign can exist in a federal system. According to him,

to speak of the transfer of part of the sovereignty is to deny the idea of sovereignty which since Bodin has meant indivisibility. No one has the last word. The idea of a compact is inherent in federalism, and the constituent powers, which makes the compact, takes the place of the sovereign.⁷⁸

Friedrich is of the view that federalism can be more fully understood if it is seen as a process, an evolving pattern of changing relationships rather than a static design regulated by firm and unalterable rules.⁷⁹ To quote Carl J. Friedrich,

federalizing being either the process by which a number of separate political units, be they states or other associations (churches, trade unions, parties, and so forth), enter into and develop arrangements for working out solutions together, that is to say, making joint decisions and adopting joint policies on common problems or the reverse process through which a hitherto unitary political community, as it becomes differentiated into a number of separate and distinct political sub-communities, achieves a new order in which the differentiated communities become capable of working out separately and on their own decisions and policies on problems they no longer have in common.⁸⁰

Friedrich’ definition is broader and is intended to cover all kinds of communities (including the non-territorial communities) within its ambit. However, the simplest and yet broadest possible definition of federalism has been offered by Elazar when he defines it as ‘self-rule with shared-rule’. Based on his ‘self-rule with shared-rule’ principle, Elazar further describes federalism as

a polity with a strong overarching general government whose constitution is recognized as the supreme law of the land and which is able to relate directly to the individuals who are dual citizens in both the federation and their constituent states. The position and autonomy of the latter are constitutionally protected.⁸¹

Elazar’s ‘self-rule with shared-rule’ principle seems to have influenced the next generation of the federalism theorists. For example, Ronald L. Watts says that federalism provides a technique of constitutional organization that permits action by a shared government for certain common purposes, together with autonomous action by constituent units of government for purposes that relate to maintaining their distinctiveness.⁸² Similarly, John Kincaid defines federalism as

…both a structure and a process of governance that establishes unity on the basis of consent while preserving diversity by constitutionally uniting separate political communities into a limited, but encompassing, polity. Powers are divided and shared between constituent governments and a general government….The constituent units also have broad local responsibilities and sufficiently autonomous self-government to carry out their responsibilities on behalf of their own people in concert with the whole people of the federal polity.⁸³

Although the term ‘federalism’ connotes a broader political idea of self-rule and shared-rule in most of its usages federalism has very often been defined narrowly, emphasizing distinctions between federal and other forms of political autonomy; and division of legislative powers or arrangement of institutions. In its practical operations, federalism largely remained as territorial in nature and a kind of institutionalized political arrangement on the basis of the territorial nature of federalism. The broader societal perspective was missing in most of the discourse on federalism. Thus, for a broader understanding of federalism, we need to take into account the idea of others theorists, who incorporate the socio-political elements into their conceptualization of federalism.⁸⁴ In fact, if we look at the origin of the federal principles from a historical perspective, we can observe that the traditional or historical conceptualization of federalism incorporates the socio-political element into its ambit. The broad conceptualization of federalism involves three fundamental principles, namely - one, the pluralization of governance; two, the consent requirement and three, the normative commitment to social solidarity.⁸⁵ To quote Hueglin, the pluralization of governance implies a process of multilevel governance among a plurality of spatial and social collective actors.⁸⁶ The key point to be acknowledged here is that the smaller units retain their autonomy, that is, their rights of self-government and their representation at the center is secured through various federal institutions. The consent requirement, to quote Hueglin again, regulates the joint decision-making process among plural collective actors.⁸⁷ It requires the unanimous consents of the units or sub-units when amending the original contract or the term of the ‘covenant’, agreed as a part of the formation of a federation. The principle of the normative commitment to social solidarity stresses that the consent can only be reached if material benefits of the policies are fairly and equitably available to all. This principle includes –

Regional equalization through fiscal federalism (equalization here refers to the removal of major disparities, if any. It does not necessarily means equalization in all respects)

Respect for diversity at the societal level through the recognition of regional identities extending beyond economic differences

Denis de Rougement argues that federalism is essentially an attitude, which comprises four basic principles: diversity, interdependence, responsibility and efficiency.⁸⁸ Burgess and Gagnon point out that federalism is the accommodation of human associations in which unity and diversity are balanced and maintained.⁸⁹ According to Robinson and Simeon, federalism is about the co-existence of multiple loyalties and identities and about shared and divided authority.⁹⁰ Mario Albertini provides a more inclusive and comprehensive definition of federalism by

identifying within federalism an aspect of value (the choice of peace), one of structure (the federal government), and a social-historical one (a stage of historical process in which the division of mankind into antagonistic classes has already been overcome and the division of mankind into antagonistic nations is going to be overcome).⁹¹

A federal society lays the foundational basis for the definition of federalism.⁹² More recent perspective, embraced by Daniel J. Elazar and others, also seems to suggest a more inclusive definition of federalism. To quote Daniel Elazar⁹³, federalism is a broad genus … embracing a variety of species, of which the classic federal state (or federation) is merely one. Federalism rejects the power pyramid and centre-periphery models in which the periphery is ruled by the elites that occupy the centre.⁹⁴ By removing sovereignty from any single institution, and investing it in the people in their various organized forms, federalism stands in opposition of the idea of the reified state.⁹⁵ In line with Friedrich, Elazar seems to agree that federalism is a political process that unites separate polities within a more comprehensive political system, which is characterized by bargaining and negotiated co-operation among several power centres.⁹⁶ For John McGarry, federalism is equivalent to the ‘institutional toleration of diversity.’⁹⁷

In its broadest terms, federalism can best be described as an ideology which holds that the ideal organisation of human affairs is best reflected in the celebration of diversity through unity.⁹⁸ It involves some combination of self-rule and shared rule. In confederations, a premium is placed somewhat more on the self-rule of the constituent units than in federatons and shared rule is more circumscribed, but they both must still be present and effective. In general, federalism emphasizes relationships, especially constitutional ones, of which the self-rule – shared rule relationship is the most important.⁹⁹ It is a combination of self-rule and shared rule in compound politics, which is characterized by identity politics based on multiplicity of culture and identities and in which there exist several constituent governments and a general government.

While there is a tendency to link ‘federalism’ with ‘decentralization’, it is amply clear that the terms ‘federalism’ and ‘decentralization’ are different and have different meanings and concepts, both theoretically and practically. A theory of federalism, as opposed to a theory of decentralization, must explain how sub-national institutions can actually be provided with certain decision-making powers in certain domains.¹⁰⁰ Federalism recognizes the existence of sovereign authority and a governmental unit has a reliable prospect of asserting its assigned authority and defending it when challenged.¹⁰¹ A decentralized regime, however, may not possess the necessary power to assert sovereign authority and may not be able to defend the same when it is challenged; and, as such a decentralized regime can be non-federalist as well. Federalism is an insufficient substitute and unnecessary condition for decentralization.¹⁰² While federalism involves division of power, decentralization is basically used to refer to devolution of power. In toto, we can say that federalism necessarily involves decentralization; but not all forms of decentralization constitute federal systems.¹⁰³

Deviating from all the conventional or other existing definitions of federalism, William Riker¹⁰⁴ has given a totally different concept and meaning to the term ‘federalism’. For Riker, federalism means the existence of different levels of governments within a political system, with each having independent decision-making authority. In his 1964 seminal work, he wrote:

The essential institutions of federalism are…a government of the federation and a set of governments of the member units, in which both kinds of governments rule over the same territory and people and each kind has the authority to make some decisions independently of the other.¹⁰⁵

Riker says that a constitution is federal if (1) two levels of government rule the same land and people, (2) each level has at least one area of action in which it is autonomous, and (3) there is some guarantee (even though merely a statement in the constitution) of the autonomy of each government in its own sphere.¹⁰⁶ Writing in 1975, he defined federalism in a similar way:

Federalism is a political organization in which the activities of government are divided between regional governments and a central government in such a way that each kind of government has some activities on which it makes final decisions.¹⁰⁷

The most important aspect of Riker’s federal theory is that it considers individuals as unit of analysis; and is essentially based on the assumption that federalism is an outcome of institutional bargaining among