Cooperative Federalism
Constitutional Framework and Contemporary Tensions
India's federal structure is described as "quasi-federal with a unitary bias" — the Constitution assigns residual powers to the Centre (unlike the US, where residual powers rest with states). Fiscal federalism is governed by: Article 246 (legislative lists — Union, State, Concurrent), Article 268-281 (revenue assignments — GST with the GST Council; Article 279A), and Article 280 (Finance Commission). Inter-governmental fiscal transfers in India have four components: Finance Commission devolution, Centrally Sponsored Schemes (CSSs), Central Sector Schemes, and discretionary grants. States often criticise: the proliferation of CSSs (which carry conditions and matching contribution requirements), the compression of Plan-period unconditional grants, and rising revenue from cesses not shared with states.
- Articles 268-281: Revenue assignment framework (taxes assigned to states, taxes shared, duties levied by Centre/collected by states)
- Article 279A: GST Council; Centre-state joint decision-making on GST rates and structure
- CSSs: ~100+ active schemes; funded with Centre-state cost-sharing; often impose conditionalities
- Cess vs. shared taxes: Cess (e.g., Health & Education Cess @4% on income/corporate tax) stays with Centre; excludes divisible pool
- Kerala's GSDP: ~Rs 11 lakh crore (one of highest per-capita income states); receives lower FC share
● Tracked since February 17, 2026 · last seen June 11, 2026 · updates as the daily brief publishes