FEDERALISM IN THE REGULATORY ERA

The rise of the regulatory state with its diffused apparatus has serious implications for the existing federal construct

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True, under a majoritarian-minded political government with a strong democratic mandate, centralisation is taking place at a faster pace.

A strong Centre in the Indian federal system has already become much stronger vis-à-vis the sub-national entities, i.e., the states. Along with much else, this is also because of economic liberalisation that started in the mid-eighties. The bigger and more long-lasting threat to federalism in India, in that sense, is structural. The pulls of the economy and the pushes of the market have directionally put the governance system on a path of overt and covert centralisation.

With socialism giving way to business liberalism, a parallel institutional structure of “control” has evolved: the regulators. The government has, over the last three decades, increasingly ceded operational supervision and control over business to the regulators. The new Indian economy is not a closed, control and command economy but a regulated, open market economy.

The 30-odd regulatory bodies with varying degrees of power and autonomy have replaced direct ministerial and bureaucratic control with indirect regulatory regimes. This has resulted in the rise of the regulatory state run by the bureaucrats, technocrats, and professionals, parallel to the sovereign state run by the political class.