unit 18 cooperative

8/8/2019 Unit 18 Cooperative

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UNIT 18 UNITARY AND FEDEML

SYSTEMS: PATTERNS AND

TRENDS IN FEDERAL SYSTEMS

Objectives

I~itrod~ction

Distinguishing Feati~resof Unitary and Federal Systems

18.2.1 Purposive Deccntralisiltio~i

18.2.2 Centr;rliuotion

18.3.3 Source ot' I'o\ver ;ind its Arrsnpc~ncnt \.ithi11 thc Systctn

Esaniyles of Fcdcral Political Arrarigcnicnts

18.3.1 The Oonccpt of 1:cdcr:ltion

18.3.2 Deccntraliscd Union

18.3.3 Candomi~iiutn

18.3.4 Other Arrangelncnts

Changing Nature of Federalis111

18.4.1 Johannes Altht~sii~sn Federalisln

18.4.2 American Fedenllists and the Theor?, of Dual I;cJcn~lis~n

18.4.3 Cooperative Federalism

18.4.4 Ititerdependelit Fcdcralisni

Distributioli of Pow ers in Fedcra tio~is

18.5.1 Legislative Distributioli

18.5.2 Distribution ol' I'inclnccs

Let u s Slllll u p

sollle U S C ~ U I B O O ~ S

Answers to Clicck Your Progress Escrcise~

18.0 OBJECTIVES

Tlie main objective of this unit is to tell you about the basic features of unitaryarid federal systems. After going through this unit, you will be able to:

distinguish between unitary and federal systems:

discuss different tvpes of fcdcral political arrangements;

describe the distribution of powers in fcdcrations; arid

cornnient on charlgilig nature of fcdcralism.6

'18.1 INTRODUCTION

Tlie present unit deals with the unitan and fcdcral typcs of political

arrangements. The disti~ictioribct\\cen the two is oftcn not clear even to

specialists and so, a r ~ ffort has bccn made here to clearly explain the contrastbctween the bvo typcs. As you \\fill learn, the distinction between the unitary h d

the federal political systeliis essentially rcsts upon the mode of distribution ofpowers. Then, there are variations within the two systems. More of these are

given in the following pages.



111htituti011s all11 FO~IIIS 11'<;II\C-~IIIIIL+II~ 18.2 DISTIN GU ISHING FEATCJRES O F UNITARYA N D

F E DE RAL S YS T E M S

Thcrc is no univcrsaIl\~accepted definition o f the tcrrii 'unitnn.' and 'federal'.

This i s bccnusc tlicrc lia\lc cmcrgcd \rarictics o f poli tical nrrnrigc~iicrits ike unions.

co~isti tt~tionall~~ccciitrnliscd unions. fcdcrntions. confcdcrntions. fcdcrncics.

associated states. condo~iiinru~iis.cagucs. h!,brids ctc.. \\h ich sliarc or coii ibii ic tlic

structural tkati~rcso f botli thcsc t\\o. Also in tlicir actual \\orkings ninn! i~n i tac

mid fcdcral s!.staiis hnvc dc\clopcd or dclibcratcl! included tlic fcnturcs of eachot ie r.

18.2.1 Purposive Decentralisation

One tinds 'Purposi\,c Dcccntralisntion' - a process through \\.liich the cciitrnl or

the national go\/crnmait trn~isfcrs ts authorit! to the locnl/provincinl govcrn~iic~its

in a gi\,cii jur isdictio~i \vitliin an othcnvisc unitan. s!.stc~ii such as tlic U . K . niid

Frnncc. Dccc~itrnlisatio~i n\r be cffcctcd cithcr through for~ual onstitutional

nmcndmcnts. scckiiig foniinl and irrcvcrsiblc devolution o f po\\,crs or through

iiicrc csccuti\:c orders pro\,iding for tcmpornn dclcgntioii o f cc~ it ra l utliorit!..

Similarl\~. vc ~ioti cc iin rkcd c~itralisatioiio f po\vcrs \vitliin fcdcrnl politics likc the

U.S.A. and India.

18.2.2 Centralisation

Ccntrnlisation. in this contest. rckrs to a gro\\t li in tlic abilit!. o f tlic fcdcrnl

go\crnmcnt to cscrcisc its ai~tliorit!. niid co~ it ro l ll tlic nrcns. \vhicli hnvc bee11

traditio~ iall! rcscn.cd for pro\*incinl compctcncc. Ccntrnlisatioii is due to the

implied po\\vrs, citlier Jiidicinll!. coi istn~ctcd s in the case of the U.S.A.. or as

pro\,idcd in [he Constitutions o f India mid Canada. o f fcdcrnl govcrlimcnt to seek

~intio~ial~nifor~iiit!.n polic! making b!. the provinces. cspccinll\. on subjects likc

health. cducntion. cnvironmcnt and forest mnnagcmcnt. water rcsourccs trade niid

cco~io~iiiccvclopmcnt ctc.. \\h icli have inter-state implications and pan-nationalbearings. Tlic fcdcral gowriinicnt docs this cithcr through for~i ia l rniisfcr o f

sub.jccts frolii pro\~incialurisdictions to concurrent or fcdcrnl jurisdiction. or

through csteiisio~i f its csccutivc authority to pro\/idc guidclincs to the provi~iccs

as to Iiodv to lcgislatc and \\,lint to includc \vitIiin t lic laws framed b ~ .lic State.

Tlic fcdcral Constitution o f Gcr~i ian\. as spccificall!. cmpo\\crcd the fcdcrnl

go\.cr~i~iicnto enact f ra~i ic\vork cgis latio~ibrondl!. co\,cring the nbo\c ~i ic~i ti oi icd

sub.jccts for tlic Lcgislntioii o f the Stntcs. Article 75 o f its coiistitiltioii provides "ifthe Federation adopts framc\\ork Icgislntion. the Stntcs arc bound to adopt the

ncccssan. Stntc statutes \\.i tbin an ndcquatc ti ii ic frnmc stipulated b?. tlic

Icgislntion." Thus. it i s on tlic pretest o f scckirig rii ininii i~i iinifor~iiit !. o f la\\. arid

policy-plpnning that the fcdcrnl govcrnmcnts in man! fcdcrnl states have

cncroacllicd iipori tlic nutoao~ii!. of tlic fedcrating units.

Yet. \\ c call broadly attcmpt to difkrcnt iatc unitan. t-roni fcdcral on tlic basis o f

\an. ing mctliods o f nllocation o f poucrs aiid its arrangaiic~its \.i hin tlic s!*stcm.

But for a neat distinction bct\\ccn tlic (\to. \\ c Iia\lc firsti!. to look at tlic source

o f po\\ cr.

18.2.3 Sources of Power and its Arrangement within the System

Usually \\ithi11 n fcdcral s!.stcm. it i s the \\.rittcn constitution. \\.liicli nllocatcs

poivcrs. authority and co~iipctc~iccso cacli Icvcl of go\:criimcnt (fcdcral n ~ id



regional govcrnmcnts). Co~npctc~iccsicrc rcfc'r to tlic relative autononiy of I ~ ~ i t c ~ r )I I I ~ : F ~C I 'D

S y s t r ~ ~ ~ n :'11tt~r11sIIcgislation and csccution b ~ . go\cnimcnt on tlic sub.jccts assigned to it b\. the ~ r c . l l t ~ sll Frtlrrel S J * ~constitution. It is. tlicrcforc. non-caitralisation that is tlic most iliiportalit feature of i

a federal s\*stcm.

Non-caitralisation is quite different fro~iidcccntralisation in tlic scnsc that tlic

latter c~ivisagcsa poucr-caitrc. (i~si~allycntral govcni~iicnt) 1.1iich according to

its need. may citlicr dcvolw or dclcgatc authority to tlic lower or subordinate

units of government, or \vlicn tlic ~iccdarises. it niaj. rcccntralizc tlic power

again. Therefore. deccntralisatio~i s always conditional and limited. Contrary to

this. non-centralisation is a constitution-based diffusion of poucr aniong plurality ofself-sustaining centres \\itliin a fcdcral s!.staii. In this ~iiodc f distribution.

co~iipctc~icef a regional govcr~~mcntan liardl!. be abrogated or takc~iover b . b

tlie federal govcr~uiiait.Both tlic Ic\.cls of go\cr~i~iicntrc coordinate authorities

c~i.jo\.ing elati\ c indcpcndcncc and autono~ii>~f decision making. Any change in

the constitutional scliaiia of distribution of po\\crs can be ctTcctcd onl!. \\.it11

~iiutualconsent of cacli go\cr~i~iiait.nd that too tliroi~glia \e n. con~plcsprocess

of constitutional' amcndmcnt. Non-cc~itralisatio~is usuall\. acli~cccdand secured

through the doctri~icof separation of poncrs uith cliccks and balances.

On tlic contraq. caitralisation and liicrarcli\. arc t \\o cssc~itial eatures of a .

i~~iitaq.!.steni. Tlic po\\crs arc licavil~. onccntratcd \\ itliin tlic ccntral or national

govcrnmcnt. Unlike tlic fcdcral prc-requisite of a \ \ rittcn constitution. tlic unitary

s\.stcm not ncccssaril>. nccds a foniial \\ rittcn constitution. Ihc sou rcc of po\vcr

is not the constitution. but to dran tlic U.K. cspcricncc. it is the -King-in-

Parl iama~t' froni \vhicli c~iia~iatcll tlic po\\crs. Tlic local govcrnliicnts draw

tlicir authority from tlic cc~itralgovcrnmait. Also \vitIiin a unitan. systaii. po\\ crs

arc arranged hicrarcliically \vlicrc each subordillate structure of tlic governmait

acts as a11 cstcndcd anii of tlic superior apes authorit). i.c.. tlic cc~itral

govcrruiiait. Tlic rcgionall local ad~iiinistration i.jo!-s only li~iiitcd ilnctiolial

autonom!.. As a matter of fact, auto~lomy vitIiin a unitan. s!.stan is a liiattcr of

fu~ictionalconvcniaicc. ratlicr being an essential constitutional principle of 'po\vcr-

sharing' and 'self-n~lc'.1-licrcforc. tlic cstc~it f fi~~ictionaliltonom!. is rclati~co

the dcgrcc of administrati\c-political dcccntralisation at a gi\.cn point of ti~iic

\tithin a unitan. s\ stem. Administrati\,c dcccntralisation is o~ic f tlic mcchanisms

of devolution tlirougli \\liicli tlic central authorit! 'otf-load' so~iic f its fi~lictions

to the local govcni~iic~itor tlicir bcttcr management. and to ensure a11 cfficic~it

national service dclivcq. s!stc~ii. Thus. it is only i n tlic 'off-loaded' area 111icrc

tlie regional governnicnt c~ijoys utonom~~nd indcpcndc~icc f decision-making.

Another noticcablc diffcrcncc bct~vccnunitay and fcdcral s!.stcm lies in tlic

nianlier and purpose of territorial dcli~icatipnof administration. While in a unitay

s).stcrn. tcrritori;ll administration is fonnd purely froni functibnal pcrspcctivc and "

broadly to scrvc as an agency of tlic ccntral govcrnmcnt. territorial forniation of

pol it ics \\~itIiin fcdcral s~. st c~ iis i~itcndcd o accolii~iiodatcpluralism \\ itliin a

fcdcral state. It is probabl!.. tlic reason that tlic territorial units enjoy considcrablcconstitutive autononi~and com pctaiccs. *

Check Your Progress 1 .Note: i) Use tlic space given belo\\. for !.our ans\\.cr

ii) C h c c k ~ ~ o u r a ~ i s \ v c r \ v i t l i t h a t g i v c ~ i a t t h c c n d o f t h c ~ ~ ~ i i t

1) Compare and contrast a unitan. political sj.staii \vith a fcdcral onk.



i n s t i t u t i o n s a n d F o r m s o f

G o v e r n m e n t 18.3 EXAMPLES OF FEDERAL POLITICAL

ARRANGEMENTS

On the basis o f the extended meaning o f autonomy and self-rule, varieties o f

politica l arrangenlents are brought within ti le am bit o f the s ti~ dy f federalism.

Tli is include$ firstly, tl ie federations.

18.3.1 Th e Concept of Federation

I t i s a c o ~ ~ ~ p o i ~ n d e dolity consisting o f strong regional governments and a general

or central gove rnment, each possessing considerable atno illit o f autonomy in the

exercise o f competences allotted to them by the constitution. bederation i s formed

on tl ie basis o f sharing o f state's sovereignty. The examples include wel l k ti o w ~ i

federations like India. Canada, U.S.A. etc.

18.3.2 Decentralised Union

Ne xt to it is the decentralised union which, th oi~ gh rim arily a unitary state,

include historic sub-national units enjoying considerable anloilnt o f local/regional

functiona l autonomy to manage their exclusive id entity . Thus. i n tile U.K. Scotlandell joys considerable a~ no un t f ailtonom y to manage its own legal system,

education, health, local administration, banking etc. Tlie other examples o f

decentralised unions include Japan. Italy, Ukraine . Indonesia, Netherlands etc.

Unions, u nlik e the above tw o fornis o f polities, are con1poi~nde d ol it ies in wl i icl i

consti t i~ent ni ts retain their respective integrit ies not t l i r o ~ ~ g l il ie systeni o f self-

government, but through tile general government. N e w Zealarid and Leba non are

important esanlples 01' Unions.

W li e ~ i terr itor ial pol i t ical uni t with inte r~ia l el f-rule i s governed join tly by two o r

more external states, it i s termed as a 'C on do min i~~ m. ' n exaniple o f this i s the

Andorra, which ti l l tl ie otl ier day ( 1 278- 1993) functioned under tl ie jo int rule o f

France arid Spain.

18.3.4 Other Arrangements

W hile tliese forms o f politic al arrangenients are operative at tlie national level,

confederations, (eg. European Union, Co mm on W ealth o f Independent States,etc.); Leagues (fo r exilniple, tlie various region al arrange~ nents ike tlie South

As ia Associati011 for Regional Cooperation (SA ARC ), Ara b League, Association

o f Sou tl~ ast Asian Nations (ASEAN ), No rth Atlantic Treaty Organisation

(N A TO ) etc.); arid Joint Functional Autho rities l ike International Labou rOrg anis atio~ i IL O ) etc. are arrangement wo rking at tl ie international and trans-

regional levels. A ll these arrangements, work tl iroug li a joint-decision ma king

process arid are fornied tl ir oi ~g li collective desire o f individ ual countries to

address joi nt ly tl ie comm on economic and politica l interests and motives.

Check Your Progress 2

Note: i) Use the space given below for your answer.

ii) Check your answer w ith that given at tlie end o f tlie unit.



1) What is a federation? Give examples. l in i tary and Fe d e r a lSystcms: P a t t e r n s r l ~ d

Trends i n F e d e r a l S y s te n ~ s.......................................................................................................................I.......................................................................................................................

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2) What is a decentralized union? Exp lain with examples.

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3) Write a short note on otl ier federal p olitical arrangements you kno w of.

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18.4 CHANGING NATURE O F FEDERALISM

Federalism, orig ina ting from tlie L at in word foeclirs, nieaning 'compact', lias

always been an integral p art o f tlioug lits on nation-state, democracy, sovereignty,

autonomy and constitutionalism. However, there have been varied views on its

nature and type.

18.4.1 Johan nes Althusius on Federalism

The first ever systeniatic treatnient o f tlie subject was provide d by tlie Gertiian

theorist, Johannes Altliu siu s ( 1 557-1638). In l i is celebrated work, P oli tic u

Methodice Digesto, Althusius holds that every l i i ~n ia n ssociation is formed by a

"pactum expresseeni vel taeituni" that is, tlie pact or covenant is tlie fir st

funda~nen tal rinciple o f ' l iv ing together', and sut)sequent forniation o f a federal

union. Fro m this follo we d t lie eliiergence o f federal s111 as an impo rtant p olitic al

principle o f organising society and polity .

18.4.2 Am erican Federalists and the Theory o f Dual Federalism

Tlie next important stage in tl ie development o f federalism is tl ie discovery o f

'federal state' in Ame rica by the Federalists - Hamilton, Jay and Madison, whopremised American federalism on the concept of a dual federalism. The theory o f

dual federalism, according to Edwa rd Corwiti, represents tl ie syntl iesis o f four

axioms:

1 . Tlie national governlnent is one o f enume~.atedpowers only; 2. Also the

purpose wli icl i i t niay cons titutionally proniote are few; 3. W ithin tl ieir

respect ive spheres, t l ie tw o centres o f g o v e r ~ ~ ~ i i e ~ i tre "sovereign" and lielice

"equal"; 4. 'The rela;;on o f tlie tw o centres wi th each other is one o f tension

rattier than col aboratic.~."

As observed by Carl J. Friedrich in l i is book Tre~iclsof Fe(1ertrlis1ii in Theory

an d Practice, 1968, tlie federalist further argued "tlir., in a federal systeni o f



Institutions and F orms of governn1ent. each citizen belongs to t w o comm unities, that o f his state and that o fG o v e r n m e n t

the nation; that these two levels o f com mu nity should be clearly distinguished and

effectiv ely provided each with their ow n government; and that in the structuring

o f the government o f the larger commun ity, the compone nt states as states must

play a distinctive role. Contrary to the earlier notion... the federal system here is

not composed me rely o f states, as is a league, but creates a new comm unity, al l

inclusive o f the citizens o f all the states". This stress on the creation o f a larger

national/political com mu nity had over the years led to the emergence o f the 1iotio11

o f cooperative federalism.

18.4.3 Coo perative Federalism

Unlike dual federalism, wl1ich viewed two governments as separate and

coordinate entities, the cooperative federalism viewed tw o levels o f government as

mu tually co mp leme nti~ry arts o f a single federal po litica l system. 'The basic

objectives o f cooperative federalism have been define d as: (i) maintaining the

union; (ii)promoting COO welfare o f al l the citizens; and (iii) eeking join t

solution to a common problem. This system is based on the ' internal give and

take' between the federal government and the regional governments. B ut as its

working in the Australian, Canadian and American federalism shows, this notion

o f cooperative federalism caused the tre~ ne nd oi~ sentralisation o f powers and

subsequent reduction i n the autonomy and au thority o f l ie regional governments.

18.4.4 Interdependent Federalism

In recent times 'federal theorists lik e M.J.C. Vile, Da niel J. Elazar, Ronald L.

Watts have developed the notion o f 'interdependent federalism' in which tw o

governme~ltswou ld neither be ful ly independent as is the feature o f dual

federalism, nor w o i~ ld e si~bordinateo other, as is the case in the cooperative

federal sm. T~ILIS. M J.C. Vile in his book The Sfrzrcfure of America11 Federalisni.

1961 defines (interactive) federalism as "a system o f governm ent in wl1icli central

and regional authorities are l inked in a mu tually interdependent po litica l

relationship; in this system a balance is maintained such that neither level of

gove rn~n ent ecomes dominant t o the extent that it can dictate the decision o f theother. Usually, but 1101 necessarily, this system w il l be related to a constitutional

structure establishing an independent legal existence for both central and regional

governments, and providing that neither shall be legally subordinate to the other.

The functions of government will be distributed between these levels (exclusively,

compe titively or cooperatively). initia lly perhaps by a cons titi~t iona l ocument, but

thereafter b y a politica l process. inv olv ing where appropriate the jud iciar y; in this

process, the po litical interdependence o f the tw o levels o f government is o f the

first iniportance in order to prevent one level from absorbing al l effective

decision-making power".

What is stressed licre is the fact that federalism as an institutional arrangement is

founded an tl ie principles of, to use Dan iel J. Elazar's phrase, se lf rille p lus

shared ri l le, "which, iuvolves sollie kin d o f contractual l inkage o f a presi~m ably

permanent character that (I) provides for power sharing, (2) cuts around the

issue o f sovereignty, and (3) supple~nents ut does not seek to replace or dim inish

prio r organic ties where they exist." (E xp lor ing Federulisrn, 1987). Self-rule is

perm itted exclus ively in the matters of local importance, and shared rule is

exercised through interactive partnership between two levels o f government to

take decisions on matters o f conlmol1 interests. Th is takes o ut federalis111fran a

mere structural category to a process "by whic h a number o f separate political

co~ nm uni ties nter into arrangements for wo rkin g out solutions, ado pting o int

policies, and ~na ki ngoin t d ecis io~ is n joi nt problems." (Carl J. Friedrich, Trel~cls

of Fec/ertrli.sttt it1 Theory trnd Prcrcfice. (1968 ). Wh at appears fro111 tlie above is



that a federal polit y is csscntiall!. a part icipa tory polit!!. attctnpting a l\vays to scck I ' t ~ i t ~ ~ r yIII~I;c.tler;~

S)stc.tlls: I ' ~ t t c . r ~ ~ sl l ldcquil ibriuni bct\\.ccn t\vo csscntial pri~ icip lcs f 'autonom!~' a i d 'integration'. 'l'rc.l~tIs ill I;c.dt.r;tl S y n t e


Note: i) Use the space g i w i below for !,our ans\vcr.

ii) Check !.our ruis\vcr \\.it11 that gi \.cn at tl ic end o f the un it.

I) What \vcrc Jolirui~lcsAl tlii ~s ius ' \*ic\vs on fcdcralism'!

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2) What do you i~ndcrstaridb\. Dual Fcdcralism'?

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3) Esplain \\hat is Cooperati\-c Fcdcralism'?

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18.5 DISTRIBUTION O F POW ERS IN FEDERATIONS

l'hc federa l-political s!.stan is opc rati\lc in 2 5 countries nruiicl!*. Argentina.Aus tralia. Austria. Bclgium . Brazil. Canada. Comoros. Ethiopia. Gcnnan!: India.

Mala\.sia. Mcs ico. Micronesia. Nigeria. Pakistan. Russia. So i~ tl i frica. St. K ~ t t s -

Ncvis. Spain. S\vitzcrland. United States o f America. Vcnczucla a i d Yi~go slav ia.

Tl ic mruincr o f distr ibut~ono f po\\crs \ a rk s across tl icsc fcdcral systcms. Tlic

Constitution ma!. citli cr cnu~ iicratconly the po\vcrs o f fcdcral government and

Icave the rest for the states as i n tlic casc o f U.S.A. or likc the C an ad ia~ i nd

Indian Federal consti tutio~is. he. po\\crs o f both the Ic\cls o f go vc r~ i~ i ia l tlong

\\it11 their concur&nt ji~risdictio~isrui be cnumcratcd. I t is also not ~icc css ary hat

Icgislativc divisions oFpo\\crs \<ll olio\\ a similar division o f csccutivc a~~tliorit!' .

Thus. \\rhilc in the U.S .A. Canada and Australia. each unit o f gov crnm c~ithas

bccn assigned csc ci~ tiv c csp o~is ibilitics n the sane fields in \\ h id l the!, enjoy

legislative conipctcncc. the sanic is not true in the casc o f S\vitzcrlruid. A us triaand Gcrniany. In thcsc fcdcral systcms, tllc fcdcral go vc rn~ iicn tonly broadly la!rs

down the uniform fra mc \\ork legislation 'w liilc leaving this to be applied b\ - tlic

regional governniclits in ways that take account o f varying rcg io~ ial

circumstances'. Thc Indian and Malaysian Co~istitutio~lslso provide for tlic state

adn ii~iistrat ion f fcdcral la\vs. cspccially in the arcas o f shared concurrent

jurisdiction.

18.5.1 Legislative Distribution

Generally speaking. i n liiost o f the federations. liiattcrs likc f o rc ig ~ i ffairs.

defence and sccurit!.. t ransport a id c o ~ i i ~ i i ~ ~ n i c d i o ~ ~ajor tasing po\\.crs -a id



Institutions and Forms o f

Government

r e g i ~ l a t i o ~ lf inter-state trade, post and telegra pll etc. have been kept w it ll in the

legislative colllpe tcllce o f federal government; and matters relating to social affairs

like Ilealth, education, culture, social development, local self-go ver~lm ent, ocal

ad~ l l i n i s t r a t i o~ lave bee11kept within t l ie purvie w o f states' legislat ion.

However, in federations like India, Canada and Australia the respective

constitutions put the matters like c iv il and crimi na l laws, personal law,

administrat ion o f Justice. bankruptcy and inso tv ency , e ~ lv i r o ~ l~ l l e ~ l tnd forest

management, protection o f w il d life, liigl ier education, weights and measurement,

factor ies and electr ic ity, i~n~nigrationnd emigrations etc. in tlie concurrent

jur isdict ion. On the concurrent list, both levels o f governmen t are competent to

nlake laws, and in-case o f an inc o~ lsis te~ lcyetween the tw o sets o f laws. the

federal laws usually prevail. Further, the residuary powe rs on ~ lla tte rs ot

enumerated in either list may be vested either with the federal governments or

with tlie regional governments. While residuary power is vested with federal

goverllmelits in Canada, India, Belgium. it rests with the state governlllents i n the

U.S.A., ~ u st ra l i a . witzer land, Germany. Austria and Malaysia. But in Spain.

residuary power is co-shared by the federal and state governments.

18.5.2 Distribution of Finances

Mo st o f he federations provide for the collection, sh aring and revenile raisingpowers o f the tw o orclers o f government. Usually, the federal powers o f taxation

include income tax (except the agric ult i~ ral ncome in t l ie case o f India), c i~ s to ~ n

and excise duties and corporation tax. The state powers o f taxation i~ lc lu de

generally, subjects like excise on alcoliol c liquors, taxes on agricultural incom.e,

estate duty, sale tax on tlie sale and purcllase o f goods wi thin tlie te rritoria l

~uri&iiction o f a state. and land revenue. How ever in a ll the federations. there

have occ i~rred er t ical and l ior izo ~l ta l ll 1balances in terllls o f available resoilrces

to the states and its constiti~tionalesponsibilit ies to carry out the costly sociit

welfare programmes. 'To put more sharply, vertical imbalances occur wlle~lhe

c o~ is t i t u t i o~ ia l l yssigned revenues o f both t l ie levels o f goverl i lnellt do not ~i la tc l i

wi th their assigned exl)cnditure ~.esponsibiIity.Horizontal i lnba ~ices ccur "when

t l ie revenue capac it ies o f d i f ferent co ~ls t i tu e~ l tnits vary so that they are not ableto p rovide their citizens wi th services at the same lev el on the basis o f

conlpa rable tax Iqvels." (R .L. Watts, Conlparittg Federul Systenl, 1999)

Hor izontal in lbala~lcesmay also be because o f the vary ing level o f de ve lop ~l le ~l t

among t l ie federating units due to the variat ion in their endowments o f natural

resources, ad~li i~l istrat ivefficiency, and standards o f public services.

For correcting these imbalances, a federal constitution usua lly provides fo r the

fiscal transfer, from centre to states. T o b egin w ith let us note the range o f fiscal

transfers in India. These include:

1) levy o f duties b y the centre but collected and retained by tlie states;

2) taxes and duties levied and collected b y tlie centre b ut assigned. n who le tbthe states;

3) mandatory sl lar ing o f t l ie proceeds o f i l lcome tax;

4 ) perniissible part ic ipatio~in t l ie proceeds o f union excise duties;

5) stati~ tory rants- in-aid o f reveniles o f states;

6) grant for any public purposes; and

7) grant for any specific public purpose.

(B.P.R. V it li a l and M.L.Sastry, Fiscal Federalisnt in India, 2001).

Tlie above transfers are usually made on the basis o f t l ie recommendations o f t lie

Finalice Commission. Horizontal transfer to the states are computed on several



individual criteria such as population. per capita inconic. Ic \c l o f back\\ardncss.

poverty ratio and rc\cIiiIc dctic it ra tio. C'o~ iiparcd o India. tlic Australian

Constitution spcciall!. pro \ ides for t \\ o t! pcs o f arrangcnicnts to correc t tlic

horizontal and vertical imbalanccs. Tlic ! arc:

i) tas-sharing grants. calculated on tlic basis o f co nip i~ta tion f the basic

cntitlcmcnt: tlic rcvcnilc and cspcnditurc disab ility o f cacli statc: and

ii) spccitic purpose grant. an important Aus tralian innovation. ai~ ii c d t tinancing

social schcmcs like education. licaltli and infrastructure building in tlic statcs.These t\vo niodcs o f transfer. bcsidcs cor rc ct i~ igmbalanccs. arc also i~itc~idcd

to equal ize t l ~ c iscal capacities o f cacli statc. On tlic otllcr hand. tlic

Canadirui Federation lias cnibarkcd on sc\,cral nicclianisnls o f tiscal transfers.

l'licsc include:

i) Sta ti~ton . i~bsidicspaid to cacli pro\fincc as part o f the ternis o f

confcdcration:

ii) Eq i~alisa tion rants to less cndo\\cd pro\.inccs:

i i i) Stabil isatio~ipa!.mcnts on one-tim e basis:

iv) Establisllcd programme financing (i.c . national go\~crnmcnt's contribution

to tlic pro\ inccs) o f the hosp ital insurance. ~iic dic arc nd post-sccondarl\,cducation: and

v) Specitic niatcliing grants to tlic programmes cspccially devised by thep rovincia l g~ \ ~c rn ~ i i a i t s .iniilarl!,. in U.S.A. nicclia ~iisnis f fiscal tra ~is fc r

includc:

i ) Categorical grants for insuring i~~i i fornievel o f p i~b l ic crviccs

providcd across tlic countrl\.:

ii) Bloc grants. to be used by tlic statcs on discrctionarl\ basis. for tlic

com mun ity dc \'clo pm ait programmes. hcaltli. cmplo!.mcnt and trainin g

and otlicr social services: and

iii) G c~ icr al c\fcnuc sliaring as provided in tllc statute.

In Gcrnian!: rc\~c nuc ron i in co ~ lic ascs. co rpo rat io~ i axes and turno\.cr

tascs belong jo int l! to the federal go vcnim ait and the statcs. bcsidcs

special grants to \\.cak statcs to ensure mininiu m Ic\,cl o f fina ~ic ial

cqualisation arl io~ ig he statcs. Tllc otl icr fcdcrations follo\v cithcr o f t l ~ c

above nicntioncd nlctllods o f tiscal transfers.


N o t e : i) Use tlic space g iv a i bclo\v !.our ans\\.cr.

ii) Check your ans\\,cr \\;it11 tliat give11 at tlic end o f the u nit.

1 ) Esaminc Icgislativc distribution in fcdcrations.



Institut ions and Fo rms of2) How are financial powers generally distributed in a federation'?

G o v e r n m e n t

.......................................................................................................................

18.6 LET US SUM UP

In this illlit you have read about tlie i~nitary nd federal political systems. It i s

lioped that now you are in a position to understand tlie differences between the

two types of systems. You liavc also studied tlie different types 01. federal

political arrangements: viz, classical federation, decentralised union, condominiu~ii

etc. Clianging nature of federalism l ias also bee11 ouched upon. 'l'lius,' dual,

cooperative and interdependent federal sm have been explained to you.

Overall, basic featilres of illi itary and lederal systems as well as patterns and

trends in tlie two types o f political systems have been explained to you.

18.7 SOM E USEFUL BOOKS

Austin, Granvi e, Workirlg A Denlocratic Con.s/itution: The Irldian Experience,

New Dellii : OUP, 1999

, Tlw Irrtliun Conslilt~lion:Corrlerslone of a Nolion, New

DeIlii,OLI P, 2000

Burgess, Michael, anrl Alain-G. Gagnon, eds, Corrlpnrative Federerlisnl and

Fetkertrliort: C'orrrl~elirtg Trtrt/i/iorts tnld Fulirre Directioiu, New York,

Harvester. Wlieatslieaf. 1993.

Diksliit, R.D., Tire Poli~ictrlG'eogrtrl~l?~f Fetkernlisrn: An Irljtrry into Origins

trrlcl Sltrbilily, New Dellii. Macmillan, 1975.

Ducliacek, Ivo D., Cbrrllxrrtr/i\v Feclertrli.srrr: The Terriloriul Dirlter~sionof

Politics, New York, Holt, Rineliart and Winston, INC, 1970.

Elazar, Daniel J., ed, Exj~lorirlgFeckercrlism, Tucaloosa, University of Albania

Press, 1987

, Federuli.srn: An Overview, Pretoria, H S RC, 1995

, ed, Federal Sy.sten of the World: A Hcrnclbook of Federal,

Con&deruI arid Au/orlorr!y Arrtnlgernenls, 2nd edn., Harlow. Lolig~iianGroup

Limited. 1994.

, ed., Fetler.crli,srrr As Grcrrld Desigr~:Polilical Phi1osoyher.s nrld

l11e hclercrl Prirtci/~le.Lanliam, University Press o f America. 1987.

Friedrich. Carl.J., .fiendsof

Fetlertrli,sn~n Theory arltk Prcrclice, New York,Praeger, 1968



Khan, Rasheeduddin, Federul Itidiu: A Design for Cl~ ut ~g e,ew Delhi, Vikas,

1992

King, Preston, Federalisni utld Federutioti, London, Croon1 Helm. 1982.

Rath, Sharada, Federalis~ti Today: Approaches, Issues and Tre~ids,New De 1

Sterling, 1984.

Srinivasavardan, T.C.A., Federa/ Coricept: The hiclicrn Experience, New Delhi:

Allied Pub., 1992

Watts, Ronald, Co~t~/)clritigec/erul .'$s/ern.s ill the 1990s. 2nd edn., Kingston,

Ontario, Queen's University, Institute of Intergovernmetital Relations, 1999.

18.8 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES


I) See Section 18.2


1) See Subsection 18.3.1


3) See Subsections 1 8.3.2 and 18.3.4


I) See Subsection 18.4.1

2 ) See Subsectio~i 8.4.2



I ) See Subsection 18.5.1 ,


Uni tary and F ed c r a l

Systems: I B a t t c r n s and

' T rends i n F e d c r r l Systc~ns

unit 18 cooperative

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