Building a National Economy: Origins of Centralized Federalism in India

India’s post-colonial constitution introduced a new approach to federalism based on a substantial sphere of shared responsibility between Central and State governments, especially in the fields of social and economic policy, and a Central government with strong prerogatives to intervene in provincial affairs. This was qualified at the time as a diminished or “quasi” form of federalism. Existing explanations of the origins of India’s centralized federalism focus on efforts to curb further secession attempts in the aftermath of Partition or the need for a strong Center to consolidate democracy in a highly unequal society. This article draws on archival materials to demonstrate that distinctive elements of Indian federalism were shaped at their foundations by the desire to boost industrial development and lay the foundation for a national welfare state in a post-colonial future by preventing the consolidation of “race to the bottom” dynamics arising from unregulated inter-provincial economic competition.