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VOL. 7, ISSUE 4 (2025)
Competitive federalism in India: Concept, evolution and challenges
Authors
Arush Khanna
Abstract
This paper critically examines the conceptual
foundations, historical evolution, and institutional dynamics of competitive
federalism in India, framing it within classical theories from K.C. Wheare’s
legal-institutional model to William Riker’s bargaining framework and Daniel
Elazar’s covenantal approach. It posits that competitive federalism in India is
predominantly a post-1991 phenomenon, catalysed by economic liberalization,
fiscal decentralization, and the decisive shift away from Nehruvian central
planning towards market-oriented governance. This transformation has been
institutionalized through key mechanisms, including the Goods and Services Tax
(GST) regime and the replacement of the Planning Commission with NITI Aayog,
which collectively redefined Centre-State relations by fostering
performance-based accountability and inter-jurisdictional competition for
investment and resources. Case studies reveal the dualistic effects of this
shift. Initiatives like the Business Reform Action Plan (BRAP) rankings
successfully incentivized regulatory efficiency among states but simultaneously
risked widening pre-existing regional disparities. Similarly, the GST Council,
conceived as a cooperative federal body, has exhibited centralizing tendencies
through its majoritarian decision-making processes. Inter-state river disputes
further expose institutional weaknesses, demonstrating how adjudicatory bodies
like water tribunals are often ineffective and how resource conflicts become
politicized within the federal framework. The analysis identifies persistent
structural challenges, including jurisdictional ambiguity between Union and
State competencies, fiscal asymmetries exacerbated by centrally sponsored
schemes, and a concerning decline in intergovernmental trust. Technocratic
reforms, such as the proposed River Basin Management Bill, often prioritize
infrastructural efficiency at the expense of participatory governance and
ecological sustainability. The paper concludes that while competitive
federalism holds the potential to foster sub-national innovation and
accountability, it currently risks entrenching inequities and reinforcing
central dominance. A recalibration is essential, grounded in equitable fiscal
devolution, consensus-oriented institutions, and ecosystem-based resource
management. Ultimately, the study proposes reimagining inter-state competition
as a structured mechanism for inclusive growth, balancing autonomy with
cohesion and efficiency with equity, thereby contributing to broader debates on
adapting federal systems in pluralistic democracies to align competitive
dynamics with cooperative principles.
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Pages:50-60
How to cite this article:
Arush Khanna "Competitive federalism in India: Concept, evolution and challenges". International Journal of Sociology and Political Science, Vol 7, Issue 4, 2025, Pages 50-60
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