Modi@12: Continuity, Change & Contestation in India's Federal Compact

Few ideas have been invoked more frequently during Narendra Modi's tenure than "cooperative federalism". Yet few aspects of Indian governance have generated as much debate as the growing concentration of power in New Delhi. Twelve years after the promise of "Team India", India's federal compact finds itself pulled between two competing impulses: deeper national integration and greater centralization.

When Modi entered office in 2014, he did so as a former chief minister who often argued that states deserved a stronger voice in national policymaking. The Planning Commission was replaced by NITI Aayog, cooperative federalism became a governing slogan, and states were promised a greater role in shaping development priorities. Yet the evolution of Centre-state relations since then reveals a paradox. While India's federal system has become more integrated and coordinated, political, fiscal and institutional authority has increasingly gravitated towards the Centre.

This tension is not entirely new. India's Constitution created a federation with a strong Union government. The question after twelve years of Modi is whether that balance has shifted further towards centralization in ways that may outlast the current political moment.

From Cooperative Federalism to Coordinated Federalism

The Modi government's early years were marked by an effort to redefine Centre-state engagement. NITI Aayog replaced the Planning Commission's command-and-control structure with a more consultative framework, while competitive federalism encouraged states to improve governance and attract investment.

The Goods and Services Tax (GST) became the most visible manifestation of this approach. The GST Council was celebrated as a rare forum where the Union and states jointly shaped policy through negotiation rather than unilateral action. Digital governance further deepened coordination through Direct Benefit Transfers, Aadhaar-enabled welfare systems and nationwide schemes that strengthened the Centre's capacity to deliver services across the country.

Supporters argue that these changes reduced fragmentation and created a more coherent national market. Yet coordination and centralization are not always easily distinguishable.

The Return of the Strong Centre

The defining feature of the Modi era has been the re-emergence of a strong Centre as the principal driver of policy and governance.

This shift has been aided by a political reality largely absent since the late 1980s: sustained single-party dominance. Coalition-era governments often depended on regional parties that exercised significant leverage over national policymaking. The BJP's rise as a genuinely pan-Indian political force has reduced that necessity, allowing New Delhi to pursue national priorities with greater coherence and fewer political constraints.

The result has been a governance model in which major initiatives increasingly originate at the Centre and flow outward to the states. Programmes such as PM Awas Yojana, Jal Jeevan Mission and Ayushman Bharat depend heavily on state governments for implementation, yet public visibility and political ownership often remain concentrated at the national level. Critics argue that this has gradually transformed chief ministers from policy partners into implementation agents. Supporters view it as a necessary feature of effective national governance.

Fiscal Federalism and the Question of Autonomy

The shift in power is perhaps most visible in fiscal relations.

GST strengthened the national market but also required states to surrender significant taxation powers. Compensation disputes during the pandemic exposed underlying tensions within the federal arrangement, with several states arguing that they had become increasingly dependent on decisions taken by the Centre.

The growing use of cesses and surcharges has intensified these concerns. Unlike ordinary taxes, these revenues are not shared with states. In 2024-25, the Centre collected nearly ₹5.4 lakh crore through cesses and surcharges, including about ₹3.87 lakh crore from cesses and ₹1.53 lakh crore from surcharges. These collections are significantly higher than a decade ago, enabling the Centre to retain a growing share of tax revenues even as overall collections have expanded.

At the same time, performance-linked incentives and reform-linked borrowing limits have increasingly tied financial support to compliance with centrally determined priorities. The Centre sees such mechanisms as tools of accountability and efficiency. Many states view them as evidence of a more conditional form of federalism. The debate is no longer simply about how much money states receive but about who controls the terms under which it is allocated and spent.

Article 370 and the Limits of Federal Consent

No decision better illustrates the constitutional dimension of centralization than the abrogation of Article 370 in 2019.

Supporters regarded the move as the completion of national integration. Critics focused on the process through which Jammu and Kashmir was reorganized into two Union Territories while under President's Rule. The episode marked the first time a full-fledged state was downgraded into Union Territories and raised broader questions about the limits of parliamentary authority and the future of asymmetric federalism.

Although the Supreme Court upheld the decision, the debate it generated continues to shape discussions on Centre-state relations.

Governors, Agencies and Institutional Friction

Federalism depends not only on constitutional provisions but also on conventions, restraint and trust.

Over the past decade, relations between Governors and opposition-ruled states have become increasingly contentious. In Tamil Nadu, Governor R.N. Ravi's delays in granting assent to legislation repeatedly brought Raj Bhavan into conflict with the elected government. Kerala witnessed similar disputes over university appointments and administrative powers, while comparable tensions emerged in Punjab, Telangana and West Bengal.

These developments have revived concerns first highlighted by the Sarkaria and Punchhi Commissions regarding the role of Governors in India's federal structure. Similar debates surround the use of central investigative agencies. Opposition parties have frequently accused the Centre of deploying institutions such as the Enforcement Directorate and the CBI against political rivals, while the government maintains that investigations are conducted according to law. Whatever the reality, the perception of institutional asymmetry has become a recurring feature of contemporary federal politics.

Federalism Beyond Finance

Federalism is not merely an administrative arrangement; it is also a mechanism for accommodating India's linguistic, cultural and political diversity.

Resistance from Tamil Nadu to aspects of the National Education Policy, periodic concerns regarding Hindi promotion, and debates over recruitment examinations and the three-language formula reflect long-standing anxieties about cultural centralization. While the Union government has consistently emphasized multilingualism and national cohesion, several states continue to view federalism as a safeguard against cultural homogenization.

Similar concerns surround proposals such as One Nation, One Election. Supporters argue that synchronized elections would reduce costs and improve governance continuity. Critics contend that such reforms could further centralize political discourse and diminish the visibility of regional issues. Together, these debates underscore a broader challenge facing the Indian federation: how to strengthen national cohesion without weakening regional identities and political diversity.

The Federal Question After Modi@12

The Modi era may ultimately be remembered not for dismantling Indian federalism but for redefining it. The federation that has emerged since 2014 is more integrated, more coordinated and undeniably more centralized. National welfare delivery is more efficient, infrastructure planning more coherent, and policymaking less fragmented than during much of the coalition era.

Yet the cumulative effect of GST-related changes, the growing use of cesses and surcharges, reform-linked funding, gubernatorial activism, the reorganization of Jammu and Kashmir and the expanding reach of central institutions has altered the balance between the Union and the states.

India undoubtedly needs a strong Centre. The more consequential question is whether a strong Centre can coexist with strong states. The durability of the Republic has always rested on its ability to reconcile national unity with regional diversity. Twelve years after the promise of "Team India", preserving that balance remains the defining challenge of India's federal future.

Whether cooperative federalism evolves into a genuine partnership or settles into a more hierarchical relationship between the Centre and the states will shape not only Centre-state relations but also the future character of the world's largest democracy.