Reviewing the Role of Inter-governmental Relations in Policy-making

Policy-making in a country as vast and diverse as India is never a one-way street. Every major programme, whether it is MGNREGA in a village, a GST reform at the national level, or a metro project in a growing city, passes through multiple layers of government. The quality of that journey, how smoothly policies travel from paper to people, depends on the relationships between the Union, the states, and local bodies. These relationships, known as inter-governmental relations (IGRs), form the invisible wiring of the federal system. When the wiring works, governance feels seamless. When it frays, policies stall, blame games begin, and citizens bear the cost.

What inter-governmental relations really mean 🔗

Inter-governmental relations refer to the web of interactions, consultations, and dependencies among different levels of government and the agencies that operate within them. The concept was given intellectual shape by scholars like Deil Wright, who argued that federalism is not just a static division of powers but an ongoing political activity that demands cooperative relationships across the system. In simpler terms, federalism requires policy to be made through negotiation among all the actors involved, so that decisions and their implementation are genuinely shared.

In the Indian setting, IGRs operate along two axes. The vertical axis connects the Union with the states, and both with urban and rural local bodies. The horizontal axis links states with each other, and local bodies with neighbouring jurisdictions. Together, these axes shape almost every policy outcome, from how a vaccine drive reaches a remote hamlet to how inter-state river waters are shared.

The constitutional tilt towards the Union 🔗

The Constitution of India establishes a federal structure, but with a distinctly strong central tilt. Scholars often describe it as centralised federalism because the framers, working in the aftermath of Partition, prioritised national unity over symmetrical power-sharing. The Constitution gives the Centre an upper hand in creating state boundaries, controlling financial resources, exercising legislative powers, and imposing emergency rule.

This dominance shows up clearly in the Seventh Schedule. The Union List, State List, and Concurrent List distribute subjects among the two levels, but the Union enjoys legislative supremacy not just over its own list. Parliament can legislate on the Concurrent List with overriding effect, exercise residuary powers, and under Article 249, even make laws on State List subjects in specified circumstances. The Union also controls taxation powers, All-India Services, judicial administration, and the amendment process itself.

Why the tilt creates friction 🔗

The predominance of the Centre is not just a theoretical feature. It produces real tensions whenever states feel their autonomy is being diluted. Revenue collection illustrates this well. The Centre collects the bulk of high-yielding taxes like income tax and corporation tax, while states are left with a smaller base of property tax, land revenue, and agricultural tax. GST compensation delays and the Centre’s effective veto power in the GST Council have sharpened these fiscal anxieties in recent years.

Flashpoints in Union-state relations 🔗

A review of IGRs in India cannot ignore the recurring flashpoints that shape everyday policy-making. Three of them stand out.

The office of the Governor 🔗

The Governor is constitutionally the head of the state, but because the office is appointed and removable by the Union, it often ends up acting as an arm of the central government. The Governor’s post was originally intended to be politically neutral, with a figure cut away from party politics serving as an impartial link. In practice, that ideal has been tested repeatedly.

Conflicts tend to surface on three fronts. First, Governors have held back or delayed assent to bills passed by state legislatures, creating legislative deadlocks. Second, in hung assemblies they have exercised discretion in inviting parties to form governments, often in ways that the state ruling party perceives as partisan. Third, their role in recommending President’s Rule under Article 356 has historically been used in ways that many consider political. The Supreme Court’s intervention in State of Tamil Nadu v. R.N. Ravi is only the latest in a long line of judicial efforts to clip discretionary powers and push Governors back towards a more neutral role.

Control over All-India Services 🔗

The IAS, IPS, and Indian Forest Service are recruited and trained by the Union but serve in the states. This dual character is deliberately designed to promote national integration, yet it also generates friction. The Sarkaria Commission strongly defended the All-India Services, opposing any move to disband them or allow states to opt out, calling such proposals harmful to the nation’s broader interests.

Nevertheless, states frequently argue that central cadre controls limit their ability to discipline or deploy officers as they see fit. When officers seem to respond more to Union instructions than to state priorities, policy implementation at the ground level suffers. The compromise, as most commissions have recommended, lies in better consultation mechanisms rather than dismantling the services.

Financial dependence of states 🔗

Fiscal federalism is perhaps the most sensitive nerve. States depend heavily on central transfers, both tax devolution and grants-in-aid, to meet their expenditure responsibilities. The Finance Commission, constituted under Article 280, is the primary constitutional mechanism that recommends the distribution of net tax proceeds and the principles governing grants. Yet the states’ own tax base remains narrow, and conditional grants often tie their hands on how money can be spent.

The result is a persistent demand for greater fiscal autonomy, echoed by successive commissions. As scholarly analysis puts it, when you look at the combined impact of emergency provisions, the Governor’s role, and financial dependence, states have been more sinned against than sinning.

Institutional mechanisms that try to bridge the gaps 🔗

Recognising these tensions, the Constitution and successive governments have created multiple platforms for dialogue. These mechanisms are the working surface of inter-governmental relations.

The Inter-State Council 🔗

Established under Article 263 by a Presidential Order in 1990, the Inter-State Council was set up on the recommendation of the Sarkaria Commission. Its mandate is to make recommendations for better coordination of policy and action, and to deliberate on matters of general interest referred by the Chairman. The Council is chaired by the Prime Minister and includes Chief Ministers of states and union territories with legislatures, along with six Union Cabinet Ministers.

However, the Council has suffered from irregular meetings and a recommendatory status. The Punchhi Commission in 2010 called for it to be substantially strengthened, meeting at least thrice a year on an agenda evolved through consultation with states, and suggested that it be empowered to follow up on the implementation of its decisions.

Zonal Councils and sectoral bodies 🔗

The five Zonal Councils, created under Part III of the States Reorganisation Act, 1956, bring Chief Ministers and senior ministers of a region together under the chairmanship of the Union Home Minister. They provide a platform to resolve inter-state problems, foster balanced regional development, and build harmonious Union-state relations. The North-Eastern Council, constituted in 1972, performs a similar role for the region.

Finance Commission and NITI Aayog 🔗

The Finance Commission handles the vital task of vertical and horizontal resource sharing. NITI Aayog, which replaced the Planning Commission in 2015, was designed to foster cooperative federalism through a more consultative planning process. Whether it has succeeded in giving states a genuine seat at the policy table remains a subject of ongoing debate.

Inter-state water and sectoral coordination 🔗

Water is a particularly tense domain. Under Article 262 and the Inter-State River Water Disputes Act, 1956, Parliament legislates on inter-state river disputes and can establish tribunals whose decisions bind the states. Delays in tribunal awards and questions about the Centre’s neutrality have made cases like the Cauvery dispute drag on for decades.

The third tier: local self-government 🔗

A review of IGRs would be incomplete without the third level of government. The 73rd and 74th Constitutional Amendments of 1992 gave constitutional status to Panchayati Raj Institutions in rural areas and Urban Local Bodies in cities and towns, turning them into what was envisioned as a genuine third tier. The 73rd Amendment established three-tier rural institutions, mandated regular five-year elections, reserved one-third of seats for women, and envisaged the devolution of 29 functions listed in the Eleventh Schedule.

Local bodies matter for IGRs because they are the final mile of policy implementation. Schemes in health, sanitation, water, education, and rural employment depend on Gram Panchayats and municipalities to reach citizens. When local institutions are empowered, policy becomes responsive. When they are starved of funds and functions, even the best-designed schemes falter.

Gaps between intent and reality 🔗

The promise of the third tier remains partly unfulfilled. More than three decades after the 74th Amendment, a CAG report found compliance to be weak, with only 4 of the 18 functions expected to be devolved to urban local bodies actually transferred with full autonomy. Financial devolution is patchy, elected representatives often lack capacity, and Ward Committees in cities have largely remained non-functional. Strengthening inter-governmental relations, therefore, means not just better Union-state dialogue, but also taking the state-local relationship seriously.

Commissions that have reviewed the system 🔗

Over the decades, several high-powered commissions have examined Centre-state relations. The Administrative Reforms Commission of 1967 proposed an early model for an active Inter-State Council. The Sarkaria Commission (1983-88) suggested that the Union should occupy only as much of a concurrent subject as is essential for national uniformity, leaving the rest for state action, and recommended a fixed five-year tenure for Governors with removal only through impeachment-like procedures. The Punchhi Commission (2007-10) went further, recommending functional independence and quasi-judicial status for the Inter-State Council.

Each of these reports reads like a diagnostic of the same chronic issues, with slightly different prescriptions. The Second Administrative Reforms Commission even suggested that the Inter-State Council be empowered to resolve inter-state and Union-state conflicts, moving it beyond a purely advisory role.

What effective inter-governmental relations demand 🔗

Reviewing the Indian experience, a few lessons stand out. First, clarity of roles is essential. When obligations among Union ministries, state governments, district administrations, and local bodies are ambiguous, coordination collapses. Second, institutional forums must meet regularly and not only in crises; the Inter-State Council being convened sporadically is a symptom, not a solution. Third, financial devolution must match functional devolution. States and local bodies cannot deliver policies if they do not control the resources needed to implement them. Fourth, the character of constitutional offices, especially the Governor, must be de-politicised so that they serve as bridges rather than battlegrounds.

Effective IGRs are ultimately about trust. Policies succeed when different levels of government believe the system gives them a fair hearing. Every time a Governor withholds assent without reason, a tax share is delayed, or a local body is bypassed in planning, that trust erodes. Rebuilding it is slow work, but it is the core task of reform.

What do you think? Should the Inter-State Council be given a stronger, statutory role with binding powers to resolve Union-state disputes, or would that tilt the federal balance too far towards negotiation at the expense of parliamentary sovereignty? And how can the third tier of government be given real voice in national policy conversations that today are dominated by the Centre and the states?

References

1. https://link.springer.com/chapter/10.1007/978-1-349-23452-3_11
2. https://www.orfonline.org/expert-speak/inter-governmental-institutions-a-key-instrument-for-strengthening-indias-federal-dialogue
3. https://theiashub.com/free-resources/mains-marks-booster/centre-state-relations-in-india
4. https://www.jurist.org/news/2025/04/india-dispatch-government-governor-conflicts-in-southern-states-deepen-fault-lines-and-regional-tensions/
5. https://vajiramandravi.com/upsc-exam/sarkaria-commission/
6. https://egyankosh.ac.in/bitstream/123456789/25658/1/Unit-10.pdf
7. https://en.wikipedia.org/wiki/Inter-State_Council
8. http://interstatecouncil.nic.in/commission-on-centre-state-relations/
9. https://www.orfonline.org/expert-speak/decentralisation-75-how-the-third-tier-institutions-have-deepened-indias-democracy
10. https://sociology.institute/india-democracy-development/limitations-73rd-74th-amendments-india/
11. https://vajiramandravi.com/upsc-exam/centre-state-relations/