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A Comparative Study on Cooperative Federalism in India and Beyond

Federalism is proved to be one of the finest mechanisms for the governance of a country. It signifies the distribution of sovereign powers and functions between Central and State governments. But as time passes the strict principle of Federalism is nowhere in practice. Many historical events have proved the necessity of cooperation among Center and States; therefore, almost all Federal governments of the world have adopted Co-operative Federalism over the strict principle of Federalism, even America who happened to be the progenitor of Federalism.

Co-operative federalism signifies the cooperation between the Central and State government for the governance of the country. In India, Cooperative federalism is deep-rooted, unlike the USA. Therefore this article tries to have a comparative study on Co-operative Federalism prevailing in India and beyond.

"The method of dividing powers so that general and regional governments are each within a sphere co-ordinate and independent."-- Sir K. C. Wheare

The concept of federalism is originated from the Constitution of the USA and over time many countries have adopted this concept such as Canada, Australia, India many more. Though many countries have adopted this concept it cannot be regarded as one is the replica of the other. Each country has some variation concerning the concept of federalism. Federalism means a governance mechanism where powers are being divided between the center and the states for the administration of the country. Their powers and functions are demarcated precisely; one cannot encroach upon the power of the other.

However, it cannot be said that the governments work in isolation, they have to work in cooperation to secure the smooth functioning of the governance, and when both governments assist each other, such form of governance is called cooperative federalism. Co-operative federalism can also be understood as when both central and state government works together for the common goal that can be termed as co-operative federalism.

Objectives: The main objectives of this paper are as under
  1. To study in detail the meaning of cooperative federalism.
  2. To study the status of cooperative federalism in the USA, Australia, etc.
  3. To study the status of cooperative federalism in India.
  4. A comparative study of cooperative federalism in the USA and India.

Research Methodology:
This study is based on the doctrinal method and the secondary data collected from various sources like books, journals, the internet, magazines. It is necessary to rely on the primary legal sources which include legislation, regulations, policies, etc.

Meaning of co-operative federalism:
The federal constitution provides sovereignty between Centre and state concerning their area of function; their powers are divided by the constitution itself. But it is not practicable to say that both governments are independent. They need each other for the functioning. Therefore federal constitution provides certain provisions for division of powers in such a way that promotes coordination between center and state. This form of cooperation between central and state governments is known as cooperative federalism.

Co-operative federalism reduces the collision between the center and the state and promotes cooperation to achieve the national goal. Practically also it is seen as that under federation various governments are interdependent and they work in consonance for the welfare of the people instead of making laws distinctly. To achieve this end co-operative federalism strong institutions and mechanisms are prerequisites for inter-relation.

In brief, the main feature of cooperative federalism is the clear allotments of functions among various levels of government for coordination, discussion, and dispute resolution. This can be achieved through harmonious relations between governments.

Co-operative federalism in the USA:
Before the creation of the federation, all the states were sovereign and they are not entitled to follow the laws and judicial dictums of others. To have the nationwide application of laws and the Full Faith and Credit Clause was inserted in the U.S. Constitution. In the USA the concept of cooperative federalism came into play during the time of President Roosevelt with his program of New Deal 1930. Under this program, both levels of government coordinated to help in curbing the economic hardship of the Great Depression and this coordination gave birth to a new concept of federalism i.e., cooperative federalism in the USA.

Earlier to the Great Depression, the financial relations between the federal government and state governments were very distinct. In terms of financial aid, economic rights, and social benefits the federal government offered very little aid to states. But after the New Deal program, had brought new various new changes in the prevailing tradition of governance, it provided unemployment insurance; old-age pension, agricultural subsidies, and many other public services were created during the administration of Roosevelt.

Further, the role of the federal government in society extended even more during the time of President Lyndon Johnson. He took significant steps such as school nutrition program, Medical aid, medical care, etc. He further enacted various legislations to ensure the welfare of the people. For example, the Head Start preschool program 1965, Elementary and Secondary Education Act, 1965, Higher education Act, 1965 were passed to provide educational opportunities. The Clean Air Act,1965, Highway Safety Act, 1966, Civil Rights Act,1964, Voting Rights Act, 1965, etc., conferred powers to enforce civil rights to the federal government throughout the country.

So, during this period the idea of co-operative federalism expanded to a greater extent, and also the coordination between the federal government and state governments was also strengthened. During this time social insurance, social welfare programs created through New Deal were being administered by both state and federal authorities.

This era of cooperative federalism has added two attributes to the federalism of the USA. They are as follows:
  1. Nationalization of Politics:
    It is the outcome of the active role of the federal legislature in addressing issues of the nation such as social and political inequality, poverty, marketplace inefficiencies, etc. It increases the grants from the federal government to states and local governments.
  2. Administrative Flexibility:
    The states were given flexibility in terms of the application of the social welfare program of the federal government.

Therefore we can say that in the USA the intergovernmental coordination mostly developed with the system of conditional grants made by the federal government to the states for various schemes sponsored by the Center.

Co-operative Federalism in Australia:
In Australia also the coordination between the federal government and state governments developed with the Commonwealth Grant Commission, 1927. This ensures financial grants by the center for states to curb financial difficulties suffered by the states. Another institution that has supplemented in ensuring coordination between center and states concerning borrowing program with Australian Loan Council, 1927.

This council assembles once a year and is headed by the Prime Ministers of center having two votes to cast and states having one vote to cast. All loans are set out by the center and distributed among the states according to the agreed formula. This system has minimized the competition for funds and loans among the various state governments and with this now the funds are being utilized more beneficially than ever before. Besides these, income-tax sharing between centers and states, constitutional grants, etc., has also encouraged inter-governmental cooperation.

The Canadian government has also adopted some sort of techniques to develop cooperative federalism. The Central government took various steps in this regard, for example; delegation of power, central grants, referential legislation.

Co-operative Federalism in India:
The framer of the Indian constitution realizes the emerging trend of cooperative federalism. Therefore we have the provisions for coordination and co-operation between centers and states under the constitution itself. Article 1 of the Constitution of India has specifically mentioned that India is the union of states. Constitution provides the division of powers and jurisdiction in the exercise of functions between Center and states. Part XI includes the 7th schedule and Part XII of the Constitution precisely mentions the legislative, administrative, and financial relations between central and state governments.

To promote coordination between the center and states various mechanisms are created by the constitution and other legislation. For example, Article 263 of the constitution of India provides the provisions of establishing an inter-state council for inquiring into, advising on the dispute, making recommendations for better coordination between center and states.

The provision for allowing the Parliament to legislate on the request of the two or more states on state matters, the provision for financial relations between center and state, grant-in-aid under Art. 282, All India Service, provisions for administrative relationship are some of the provisions to encourage co-operation between the union and the states and also added some necessary flexibility in the rigid federal governance system.

Apart from the above few more examples of co-operative federalism are being discussed below:

Inter-State Council

  • Established under Article 263 of the Indian Constitution.
  • Purpose: Promoting inter-governmental cooperation.
  • Advisory role, dealing with legal and non-legal issues.
  • Facilitates consultation on areas like agriculture, education, and public health.
  • Helps in coordinating development plans.
  • Not established as of now.

Zonal Councils

  • Created under the States Re-Organisation Act, 1951.
  • Five Zonal Councils covering different regions of India.
  • Comprise Union Ministers and State Chief Ministers and ministers.
  • Meetings held in rotation in each state within the zone.
  • Discuss matters like economic planning, water disputes, and state reorganization issues.
  • Promote inter-state cooperation for the benefit of regions and the nation.

River Water Disputes

  • India has many inter-state rivers and tributaries.
  • Parliament has the power to resolve disputes related to these rivers.
  • No state can claim exclusive rights over a river.
  • Central government mediates and resolves water disputes among states.
  • Ensures fair allocation and utilization of water resources.
Particularly Article 262 of the Constitution of India conferred ultimate power to the Parliament to adjudicate the disputes arising among states. Article 262 runs as follows-

Adjudication of disputes relating to waters of inter-State rivers or river valleys:
  1. Parliament may by law provide for the adjudication of any dispute or complaint concerning the use, distribution, or control of the waters of, or in, any inter-State river or river valley.
  2. Notwithstanding anything in this Constitution, Parliament may by law provide that neither the Supreme Court nor any other court shall exercise jurisdiction in respect of any such dispute or complaint as is referred to in clause (1).

Concerning the above provision of the Constitution, the Parliament has enacted the Rivers Boards Act, 1956. This Act provides for the establishment of River Boards for the regulation of inter-State rivers and river valleys. The powers and function of this board are to advise the disputing governments regarding the specified river or river valleys to have an amicable settlement of the matter. The main object of this board is to promote inter-State coordination.

d. Financial Relation::
"No system of the federation can be successful unless both Union and the State have at their disposal adequate financial resources to enable them to discharge their respective responsibilities under the constitution".[1]Therefore the makers of the Constitution have made the explicit provision under the Constitution itself for the financial relation under Art. 264-291 of the Constitution. "No other federal Constitution makes such elaborate provision as the Constitution of India concerning the relationship between Union and the States in the financial field. In fact, by providing for the establishment of Finance Commission to allocate and re-adjusting the receipts from certain sources, the Constitution has made an original contribution in this extremely complicated aspect of Federal relationship."[2] The provisions under the constitution of India for Centre and States financial coordination and co-operations are as follows-
  • Article 265 of the Constitution of India provides that,
"No tax shall be levied or collected except by authority of law." Therefore the law which imposes a tax, such law must be by the appropriate authority and that is under the valid law. It was held in the case of New India Industries vs. Union of India,[3] that Tax illegally levied must be refunded. The doctrine of "unjust enrichment" has to be applied after having regard to the facts of each case.
  • Article 268 provides that stamp duties and duties on excise on medical and toilet preparations mentioned in Union List shall be levied by the Centre and states has to collect the same within which such duties are levied.
  • Article 269 provides for the taxes levied and collected by the Union but assigned to the states. It includes taxes on sales and purchase of goods and taxes on consignment of goods. "the expression 'taxes on the sale and purchase of the goods' shall mean taxes on sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-state trade or commerce."[4]
  • Article 270 of the constitution of India provides the Taxes levied and distributed between the Union and the States. The 80th amendment of the constitution has substituted a new Article under Art.270. The new Article provides that "All taxes and duties referred in the Union List, except the duties and taxes referred to in [articles 268 and 269], respectively, a surcharge on taxes and duties referred to in article 271 and any cess levied for specific purposes under any law made by Parliament shall be levied and collected by the Government of India and shall be distributed between the Union and the States in the manner provided in clause (2).

Clause (2) provides that such percentage, as may be prescribed, of the net proceeds of any such tax or duty in any financial year shall form part of the Consolidated Fund of India, but shall be assigned to the state within which that tax or duty is leviable in that year, and shall be distributed among those States in such manner provided in clause (3).

Clause (3) provides that, the word prescribed means:
  • Until a Finance Commission has been constituted, prescribed by the President by order, and
  • After a Finance Commission has been constituted, prescribed by the by order after considering the recommendations of the Finance Commission.
  • Article 271 provides that the Parliament may at any time add more surcharges on the subject mentioned in Art. 260 and 270 for the Union and such surcharge collected shall be the part of the Consolidated Fund of India.
  • Grant-in-aid: There are a total of three kinds of grants are mentioned under the Constitution of India. They are as follows:
    1. Under Article 273- a grant-in-aid will be given to the states of Assam, Bihar, Orissa, and West Bengal on export duties of the jute product as prescribed by the President in consultation with the Finance Commission for 10 years from the commencement of the Constitution.
    2. Under Article 275- Parliament is empowered to make such grants as per the needs of the States out of the Consolidated Fund of India. The sum may vary as per the needs of the State. The Constitution also has a provision of special grants for the welfare of the scheduled tribe in a State or to uplift the level of administration in the scheduled areas.
    3. Under Article 282- "The union or a State may make any grants for any public purpose, notwithstanding that the purpose is not one for which Parliament or the legislature of the state, as the case may be, may make laws." For example, grants to schools and hospitals are given by Union Government.
  • Finance Commission: Although the Constitution attempts to distribute every feasible source of money to either the Union or the States, the distribution is board-based. The Constitution establishes a Finance Commission under Art. 280 to allocate specific sources of revenue between the Union and the State Governments. The President of India is permitted under the Constitution of India to convene a Finance Commission every five years to provide recommendations on the distribution of financial resources between the Union and the States.
  • Functions of the Finance Commission:
    The Finance Commission has to make recommendations to the President as to:
    1. The distribution and allocation of the net proceeds of taxes which are to be, or maybe, divided between Union and State;
    2. The rules for the Centre for governing the grants-in-aid of the revenues of the State out of the Consolidated Fund of India;
    3. The measures needed to augment the Consolidated Fund of State to supplement the resources of the Panchayats in the State based on the recommendations made by the Finance Commission of the State.
    4. The measure needed to augment the Consolidated Fund of a State to supplement the resources of the Municipalities in a State based on the recommendations made by the Finance Commission of the State.
    5. Any other matter conferred to the Commission by the President.
  • The Commission shall have the autonomy to determine their procedure and their functions as Parliament may by law confer on them.
  • Apart from the above, there are some statutory provisions which fueled more in the cooperation between Union and the State.

    They are being discussed below:
    1. a. National Development Council:- This council was enacted under the provisions of the Planning Commission. It was constituted as an agency to help in the execution of the five years plan. This Council played a significant role in promoting Centre-State coordination as it comprises of Prime Minister, Union Cabinet Ministers, Chief Ministers of all states, representatives of all Union territories. However, this institution stands dissolved after the creation of NITI AYOG in 2014.
    2. b. NITI Aayog:- Niti Ayog stands for National Institution for Transforming India; it has been comprised to manifest the important goal of cooperative federalism and to empower good governance in India. On the reason that strong states make the strong nation., Niti Ayog acts as the representative platform for the Government of India by bringing States together to work towards the national development goal as 'Team India'.

To promote cooperative federalism, many steps have been taken by Niti Aayog. Such as meetings between the Prime Minister/Cabinet Ministers and all Chief Ministers; subgroups of Chief Ministers on subjects of national importance; sharing of best practices; policy support and capacity development of State/UT functionaries; launching of the Aspirational District Programme for development of backward districts; theme-based extensive engagements in various sectors; framing model laws for land leasing and agriculture marketing reforms; and area-specific interventions for the North-Eastern and the Himalayan States and island development (AAYOG).

The role of NITI Aayog is advisory. It advises Center, States, and UTs. NITI Aayog has also established models and programs for the development of infrastructure and to reignite and establish a private-public partnership, such as the Centre-State partnership model Development Support Service to States and Union Territories (DSSS); and the Sustainable Action for Transforming Human Capital (SATH) program (AAYOG).

We have seen Constitution of India has made the provision for separation of power. But many provisions under the Constitution itself promotes cooperation and coordination between Centre and States. There is much legislation that has also been enacted to further this end. So, now in India Federalism is no longer a point of contention in Centre-State relations, but rather the definition of a new team India relationship.

Co-operative federalism in USA and India:
For the proper functioning of the State, both levels of government have to work in cooperation. Therefore the trend of cooperative federalism has been adopted by almost all the federal governments of the world. However, if we see the oldest federation i.e., the U.S.A. has made the provisions for the separation of powers, both Federal government and State government are independent in terms of their powers and function.

There is no Constitutional provision for their coordination and co-operation for a common purpose. But over time both levels of governments are compelled to co-operate for the common good, particularly it started after the First World War and followed by the Great Depression and has paved the way for the development of Co-operative federalism in the U.S.A. Many Acts and schemes of the federal government and judicial pronouncements have molded the strict principle of federalism to Co-operative Federalism in the U.S.A.

Though India has borrowed the idea of federalism from the U.S.A. the federalism of India has certain distinguishing features which make it different from the U.S.A. If we observe the governmental functions in India it is federal, all powers and functions are demarcated clearly under the Constitution per se, but Constitution itself again provides certain provisions which require co-operation between Centre and States; which makes it different from America.

Apart from the Constitution, many legislations have been enacted which promote cooperation and coordination between Central and State Governments. The makers of the Indian Constitution have framed Constitution in such a way that keeps the Centre and States attached. Comparatively, the Central government has got more power than the States, which is however necessary for the prevention of Competitive Federalism.

Since its inception, Federalism has proved to be one of the most successful mechanisms for the administration of the country. America is considered to be the progenitor of Federalism. Many countries of the world have borrowed this idea for the governance system from America, but it shall not be understood that each one is the replica of the other; every federation has some variation and distinct identity. However, with time the concept of Federalism has got various dimensions, such as quasi Federalism, competitive federalism, co-operative, and many more. Now even in America, the idea of Federalism is not the same as earlier, it is converting into Co-operative Federalism.

If we compare India with America, then we may be able to say that the makers of the Indian Constitution were aware of the need for cooperation between Central and State governments for the smooth and beneficial functions of the government for the development of the country; therefore they have included various provisions for this end. Hence, we may conclude by saying that cooperative federalism is the need of the hour and it has been proven to be the ideal system of governance.


  • Pandey, J.N. Constitutional Law of India (2016), Central Law Agency, 30-Dl-1, Motilal Nehru Road, Allahabad-2
  • Jain, M.P., Indian Constitutional Law, Lexis Nexis, DLF Cyber city, Phase-11, Gurgaon, Haryana, India
  • Gandhi, B.M., and Banerjee B.P., Dr. Durga Das Basu Comparative Federalism, Lexis Nexis, DLF Cyber city, Phase-11, Gurgaon, Haryana, India

  • India, N. A. (n.d.). niti aayog. Retrieved from
  1. Basu, D. D- Introduction of the Constitution of India, p.141
  2. Pylee-Constitutional Government in India, p. 544.
  3. AIR 1990 Bom 239(FB)
  4. Pandey, J.N., Constitutional Law of India, p.676
  5. Inserted by the Constitution (73rd Amendment) Act, 1992 (brought into force w.e.f. 20-4-1993).
  6. Added by the Constitution (74th amendment) Act, 19932 (brought into force w.e.f. 29-4-1993).

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