“Double-Engine Sarkar” And Constitutional Challenges To Federalism

Context

The article examines the “double-engine government” slogan and its implications for India’s federal structure, focusing on fiscal federalism, gubernatorial roles, and institutional balance.
Source: ‘Double engine’ — cute slogan, a serious federal question, The Hindu

Concept of “double-engine government” and its implications

Core idea: Same party ruling at Union and State levels ensures faster development through coordination
Cooperative federalism claim: Alignment presented as facilitating smoother governance
Underlying implication: Suggests preferential development for politically aligned States

Constitutional vision of federalism

Federal structure: Union and States are partners within constitutionally defined spheres
Non-partisan Union role: Union represents the entire Republic, not specific political interests
Fiscal neutrality principle: Public funds collected through taxation belong to the Union of India, not the ruling party
Equal citizenship: Resource distribution must not depend on political alignment of States

Fiscal federalism and institutional safeguards

Finance Commission (Article 280): Ensures rule-based distribution of Union revenues among States
Objective criteria: Includes income levels, population, geographic size, and fiscal capacity
Core principle: Fiscal transfers must remain insulated from political considerations

Emerging fiscal concerns and federal tensions

Population-based allocation issue: Southern States fear penalisation for successful population control
Cesses and surcharges: Increasing use reduces divisible pool, limiting funds shared with States
Fiscal centralisation: Greater Union control weakens financial autonomy of States
Structural grievance: States express concerns over dependence on discretionary transfers

Political implications of fiscal imbalance

Perceived discrimination: States governed by opposition parties fear reduced access to funds
Federal strain: Concerns expressed by southern States including Tamil Nadu, Kerala, Karnataka, Andhra Pradesh, Telangana
Equity issue: Distribution of national resources linked to governance performance vs political alignment

Legislative federalism and role of Governors

Gubernatorial delays: Instances of prolonged inaction on Bills passed by State legislatures
Pattern of conflict: More frequent in opposition-ruled States
Constitutional concern: Governor’s role should not undermine elected legislatures

Judicial interventions to protect federal balance

State of Punjab vs Principal Secretary (2023): Governor cannot stall legislation through inaction
State of Tamil Nadu vs Governor (2025): Prolonged delay in assent is constitutionally impermissible
Judicial stance: Reinforces legislative sovereignty of elected State assemblies

Case study: Delhi governance conflict

Institutional friction: Disputes between elected government, Lieutenant-Governor, and Union
Judicial involvement: Courts intervened to resolve governance deadlock
Broader lesson: Federal mechanisms can be used to constrain political opponents

Historical context: evolution of federal tensions

Article 356 misuse: Earlier frequent dismissal of State governments
S.R. Bommai judgment: Imposed limits on arbitrary use of President’s Rule
Contemporary shift: From overt dismissal to subtle control through fiscal and administrative tools

Need for structural reforms in federal governance

Binding fiscal mechanisms: Strengthen enforceability of Finance Commission recommendations
Gubernatorial accountability: Introduce fixed timelines (e.g., 3 months) for assent to Bills
Inter-governmental coordination: Revitalise Inter-State Council (Article 263) as effective forum
Institutional strengthening: Ensure cooperative federalism through rules, not political alignment

Normative conclusion: safeguarding constitutional federalism

Equality principle: Development must not depend on political alignment
Institutional primacy: Governance should be driven by constitutional rules and fairness
Democratic integrity: Federal balance essential to preserve equal citizenship

Emerging Fiscal Concerns and Federal Tensions

Population-based allocation and perceived penalisation:

Issue of 2011 Census usage: Southern states (Tamil Nadu, Kerala, Karnataka) argue that reliance on the 2011 Census penalises their success in population control.
Impact on tax devolution: Lower fertility rates reduce their relative population share, leading to a decline in their share of central taxes compared to northern states.
16th Finance Commission response: Redefines “demographic performance” to reward lower population growth between 1971 and 2011 rather than only TFR.
Demand for economic criteria: States seek inclusion of economic contribution (e.g., GSDP) to balance equity with efficiency.

Cesses and surcharges and shrinking divisible pool:

Exclusion from divisible pool: Cesses and surcharges are not shared with states under Articles 270 and 271.
Gap in effective devolution: Despite a 41% recommendation, actual transfers fall to around 30–32%.
Rising share in tax revenue: Increased from ~9% (2014–15) to over 20% during the pandemic, and around 14% in 2023–24.
State-level demands: Calls for capping such levies (5–10% of GTR) or increasing devolution to 50%.

Fiscal centralisation and reduced financial autonomy:

GST-induced dependency: Subsumption of taxes like VAT has made states dependent on the GST Council for rate-setting.
Borrowing constraints: Limits of around 3% of GSDP and conditional borrowing are viewed as restrictions on fiscal sovereignty.
Centrally Sponsored Schemes burden: Require 40–50% matching contributions, reducing untied fiscal space of states.

Dependence on discretionary transfers and trust deficit:

Shift in transfer structure: Movement from statutory Finance Commission transfers to discretionary grants by the Union.
Rise of tied funds: Increasing share of grants with strict usage conditions limits state flexibility.
Transparency concerns: CAG observations highlight that cess proceeds are not fully transferred to designated funds.
Outcome: Growing trust deficit between the Union and states in fiscal federal relations.

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