Federalism is a constitutional concept and institutional mechanism that divides sovereign power between a central government (Union) and regional governments (States), with each level independent in its own sphere. The Indian Constitution, however, describes India as a "Union of States" in Article 1, leading scholars to term the system quasi-federal due to its strong central bias.
The foundation for this structure was laid by the Government of India Act, 1935, which proposed a federation and introduced a division of legislative powers. Post-independence, the framers chose this model to manage India's immense diversity while ensuring national unity and integrity, a critical problem following the Partition.
The core mechanism is the distribution of legislative authority under Article 246 and the Seventh Schedule, which contains three lists: the Union List (exclusive central power), the State List (exclusive state power), and the Concurrent List (shared power, where Union law prevails in case of conflict). The system connects to the Basic Structure of the Constitution, meaning it cannot be destroyed by amendment. It also connects to the Emergency Provisions (Articles 352, 356, 360), which allow the federal structure to temporarily become unitary. The concept of cooperative federalism is fostered by institutions like the NITI Aayog and the Finance Commission (Article 280).
The federal balance has changed recently, notably with the implementation of the Goods and Services Tax (GST) via the 101st Amendment Act, 2016, which significantly altered fiscal federalism by unifying indirect taxation. Furthermore, the Supreme Court's landmark judgment in S.R. Bommai v. Union of India (1994) introduced judicial review over the imposition of President's Rule (Article 356), limiting the Centre's power to dismiss state governments. The 42nd Amendment Act of 1976 also shifted five subjects, including education and forests, from the State List to the Concurrent List, increasing central legislative scope.