Continuity and change in contemporary Indian federalism

Abstract

Changing the formal structure of Indian federalism may have been difficult, given that altering the Indian constitution requires super-legislative majorities which are harder to mobilize in a fragmented party system than in a one party dominant one. The dynamics of Indian federalism underwent significant change due to the transformation of the Indian party system and economic liberalization. Decentralized spending with centralized financing through grants, from a public finance perspective, serves to help central governments implement redistributive programs. The effect of party politics on federalism is felt most intensely in those sectors of government which are open to direct party political influence. Economic liberalization built on central deregulation and party system fragmentation is likely to generate centrifugal tendencies. With it comes the expectation of more policy divergence across the states.