‘Planning has superseded the federation and our country is functioning almost like a unitary system in many respects.’ In the light of the statement, examine the recent trends in Indian Federalism. (1991)
The charge is K. Santhanam‘s, in Union-State Relations in India (1960). He was a Constituent Assembly member who had chaired the Second Finance Commission, and he saw a federation designed in law being run as a hierarchy through money. Sixty-five years on, the planning machinery he blamed is gone, but the centralising pull has moved to new channels.
What Santhanam meant
- An extra-constitutional allocator. The Planning Commission (Cabinet resolution, 1950) was chaired by the Prime Minister and answered to no legislature. The National Development Council (1952) only ratified its plans.
- Money that bypassed the Constitution. Plan assistance and centrally sponsored schemes flowed as discretionary grants under Article 282. The Finance Commission was confined to non-plan revenue gaps, so the larger, conditional flow escaped the body the Constitution designed for transfers.
- Entry 20 of the Concurrent List (“economic and social planning”) let the Union set priorities in fields that belong to the states.
The states pushed back. The Gadgil formula (1969), devised by D. R. Gadgil, made part of plan assistance rule-bound. The Rajamannar Committee (1969–71), appointed by Tamil Nadu under P. V. Rajamannar, wanted the Commission replaced by a statutory body. The Anandpur Sahib Resolution (1973) would have confined the Union to four subjects. The Sarkaria Commission (1983–88), under R. S. Sarkaria, held that a strong centre need not mean weak states.
Recent trends that weaken the charge
- The end of planning. NITI Aayog (1 January 2015) allocates nothing and offers cooperative and competitive federalism instead.
- Formula over discretion. The 14th Finance Commission under Y. V. Reddy raised the states’ share to 42%. The 16th under Arvind Panagariya held it at 41% for 2026–31.
- A judicial floor. After S. R. Bommai (1994), Article 356 became justiciable and rarely used.
- Party system. The coalition years of 1989–2014, and dependence on allies again since 2024, restored the bargaining federalism that M. P. Singh describes. After 1991, states began competing for investment.
- The GST Council gives the states a collective voice. Mohit Minerals (2022) held its recommendations persuasive, not binding.
Trends that renew it
- A shrinking divisible pool. Cesses and surcharges have cut the pool from 89.1% of gross tax revenue (2014-15) to about 81%. Effective devolution is nearer 32–33%, and the 16th FC refused a cap.
- Conditional money. Centrally sponsored schemes still carry matching shares. Samagra Shiksha funds were withheld over PM SHRI.
- Surrendered tax autonomy under GST, with compensation ended.
- Governors and central agencies. The November 2025 advisory opinion ruled out timelines for assent.
- Delimitation. The 131st Amendment Bill was negatived on 17 April 2026, and the southern states demand a freeze. The fight is now over representation as well as money.
Assessment
Santhanam was right about the mechanism. Where money is tied and a central body sets priorities, the division of powers survives on paper but not in practice. Planning no longer does this, because Bommai, coalitions and formula-based devolution have closed the old routes. Fiscal design and administrative discretion now carry the pressure that planning once carried.
Conclusion
The statement no longer fits literally, because India does not plan and does not run as a unitary state. Its insight still holds, though. India is centralised by default, and it becomes federal only where courts, coalitions or constitutional formulas force it to.