Subject: Federal System

Introduction

India’s federal design is unique, balancing a strong Union with an inclusive representation of States. The abrogation of Article 370 and the downgrading of Jammu and Kashmir into a Union Territory in 2019 raised critical constitutional and political debates. The Supreme Court’s December 2023 ruling upheld the abrogation but directed restoration of statehood. While elections were held in October 2024, the absence of progress on restoring statehood highlights a sharp tension between constitutional intent and political practice. The issue has become a litmus test of Indian federalism, bringing into focus the balance between unity, diversity, and democratic representation.

The Demand for Restoration of Statehood to Jammu and Kashmir

1. Supreme Court Intervention: Recently, the Court sought a detailed response from the Centre on the timeline for restoring statehood to J&K.
2. Sharp Contrast: While elections were held in 2024, statehood has not been restored, despite the Court’s explicit direction.
3. Federal Implications: Critics argue that prolonged delay undermines federalism, part of the Constitution’s basic structure, and weakens democratic rights of J&K’s citizens.
4. Striking Point: For the first time, a full-fledged State was downgraded into a Union Territory, setting a precedent that challenges constitutional norms.

Constitutional Processes for the Creation of States

1. Admission: Admission of new States requires an organised political unit; e.g., J&K’s Instrument of Accession (1947).
2. Establishment: Territory can be acquired under international law, as in the case of Goa and Sikkim.
3. Formation: Article 3 empowers Parliament to reorganise existing States by altering boundaries, names, or creating new ones.

India’s Federal Design and Its Unique Character

1. Union of States: Article 1 describes India as a Union of States, signifying indivisibility while denying the right of secession.
2. Composite Culture: The dual identity of India and Bharat reflects political unity and cultural plurality.
3. Unitary Tilt: The word Union ensures a strong Centre, but representation of States through the Rajya Sabha balances federalism.
4. Basic Structure Doctrine: Federalism is recognised as part of the Basic Structure, making it inviolable.

Constitutional Imperatives for Restoring Statehood

1. Violation of Federal Features: The Union can reorganise States but cannot permanently strip a State into a Union Territory.
2. Supreme Court’s Directive: In December 2023, the Court mandated restoration of statehood along with Assembly elections.
3. Representation at the Centre: Permanent representation of States in the Rajya Sabha is essential to sustain India’s federalism.
4. Erosion of Trust: Prolonged delay risks alienating citizens and eroding India’s image as a welfare-oriented union.

The Road Ahead for Jammu and Kashmir

1. Elections Held: A 90-member Assembly election was conducted in October 2024.
2. Centre’s Silence: No concrete roadmap has been shared for restoring statehood, despite judicial directions.
3. Critics’ Argument: Restoring statehood would empower the elected government, reducing the powers of the Lieutenant Governor, which the Union may be reluctant to cede.
4. Constitutional Morality: Failure to restore statehood risks weakening the principle of cooperative federalism.

Conclusion

The demand for restoration of J&K’s statehood is not a mere political debate but a constitutional necessity. India’s federal design hinges upon the delicate balance between a strong Union and empowered States. If the Union delays restoration indefinitely, it risks setting a precedent that erodes the sanctity of federalism and weakens democratic representation. Upholding statehood is thus not only about J&K but about preserving the essence of India’s constitutional federation.

PYQ Relevance

[UPSC 2014] Though the federal principle is dominant in our Constitution and that principle is one of its basic features, but it is equally true that federalism under the Indian Constitution leans in favour of a strong Centre, a feature that militates against the concept of strong federalism. Discuss.

Linkage: The recent controversy over the restoration of statehood to Jammu & Kashmir directly exemplifies the asymmetry in India’s federal design. While federalism is a part of the Basic Structure, the downgrading of a full-fledged State into a Union Territory shows the unitary tilt of the Constitution. The Supreme Court’s directive to restore statehood reflects the tension between a strong Centre ensuring unity and the need to preserve the spirit of cooperative federalism, echoing the very debate raised in the 2014 question.

Introduction

The National Cooperative Policy, 2025 has triggered a sharp Centre–State tussle, with Kerala at the forefront of resistance. Beyond a policy dispute, it reflects deeper tensions around cooperative federalism, involving constitutional authority, political stakes, and nearly ₹3 lakh crore in deposits, making the issue both high-stakes and nationally significant.

The Current Tussle between Centre and Kerala

1. Policy provokes backlash: Kerala describes the National Cooperative Policy as “unconstitutional”, asserting that it violates the State’s exclusive authority over cooperatives.
2. Political dimension: The Left Democratic Front (LDF) government accuses the BJP of attempting to capture Kerala’s cooperative network for political consolidation.
3. Financial stakes: Kerala’s cooperatives manage deposits worth ₹2.94 lakh crore, making them critical financial entities in the State’s economy.

The Contentious Nature of the National Cooperative Policy

1. Federalism at stake: Cooperative societies are a State List subject, yet the Centre is asserting influence, reviving concerns first raised during the Multi-State Cooperative Societies (Amendment) Act, 2023.
2. Kerala’s historical legacy: Cooperative institutions date back to early 20th century Travancore, Cochin, and Malabar, and evolved through the Kerala Cooperative Societies Act, 1969, making them central to socio-economic life.
3. Grassroots importance: Primary Agricultural Cooperative Societies (PACS) serve as the credit backbone of Kerala’s rural economy.

Kerala’s Political and Institutional Response

1. Political opposition: State Cooperation Minister V.N. Vasavan termed the policy “harmful to cooperatives.”
2. Organised resistance: The Kerala Primary Agricultural Cooperative Society association passed a resolution against the policy.
3. Workers’ unions’ concerns: The Kerala Cooperative Employees Union (KCEU) alleged that the Centre seeks to hand over the cooperative sector to corporates.

Existing Challenges in the Cooperative Sector

1. Credibility crisis: Several cooperative banks face embezzlement scandals and non-refund of depositors’ money.
2. Case in point: The Karuvannur Service Cooperative Bank scam in Thrissur dented public confidence and put the State government on the defensive.
3. State reforms: In 2023, Kerala amended its Cooperative Societies Act to plug loopholes and strengthen safeguards.

Structural Reforms in Kerala’s Cooperative System

1. Bank consolidation: Merging of district cooperative banks into the Kerala State Cooperative Bank (Kerala Bank) reduced the traditional three-tier credit structure into a two-tier system.
2. Policy rationale: Streamlining was aimed at improving efficiency and financial stability in the sector.

Future Trajectory of Kerala’s Cooperatives

1. New crossroads: Accelerated urbanisation, youth aspirations, and sectoral shifts in energy, shipping, technology, and health present opportunities for cooperative diversification.
2. Future trajectory: The ability of cooperatives to adapt and modernise will shape Kerala’s economic resilience in the coming decades.

Conclusion

Kerala’s cooperative movement, historically a pillar of rural credit and grassroots empowerment, stands at a critical juncture. The National Cooperative Policy, 2025, while framed in the language of reform, has exposed fault lines in India’s federal structure and deepened Centre–State tensions. For Kerala, the challenge lies in balancing its rich cooperative legacy with the demands of modernisation and transparency. For the Union, respecting constitutional boundaries while ensuring financial discipline will be key to sustaining trust in the cooperative model.

Value Addition

Overview of the National Cooperative Policy 2025 The National Cooperative Policy, 2025—officially unveiled on July 24, 2025 —replaces the 2002 framework with a visionary 20-year roadmap (2025–2045) centered on “Sahkar se Policy Goals: Tripling cooperative sector’s GDP contribution by 2034 through expanded outreach and growth-boosting measures Establish one cooperative unit in every village, and set up 5 model cooperative villages per tehsil, with active creation of 2 lakh new multipurpose PACS by 2026 Bring 50 crore more people into the fold, increasing cooperative membership and societal participation Core Pillars of the Policy: Outlined across six strategic pillars designed to transform cooperatives: Strengthening Foundations Promoting Vibrancy Preparing Cooperatives for the Future (e.g., digitalisation) Enhancing Inclusivity & Reach Expanding into Emerging Sectors Engaging the Younger Generation Institutional and Structural Measures: Legal & governance revamp: Updated model bye‐laws, regular review mechanisms (every 10 years), and cluster-based monitoring systems for accountability and responsiveness Tribhuvan Cooperative University: A first-of-its-kind cooperative education hub aimed at professionalising the sector and reducing nepotism National Cooperative Exports Limited (NCEL): To enhance global market integration for cooperatives, especially in staples like wheat and rice Leveraging existing schemes: Integration with programs like DIDF, PMMSY, NPDD to establish infrastructure and functional PACS Sectoral Diversification & Modernisation: New sectors for cooperatives: Including green energy, insurance, tourism, taxi services (“Sahkar Taxi”), Jan Aushadhi Kendras, LPG outlets, CSCs, and more Model Cooperative Villages: Combining dairy, fisheries, floriculture, agri-services, and focused inclusion of women and tribal groups as excellence center Why It Matters: Policy Revitalisation: First major overhaul in 23 years, indicating the renewed importance given to cooperatives by the government Aligning with National Vision: Anchored in the larger goal of Viksit Bharat 2047, positioning cooperatives as engines of inclusive, rural-led development Digital and Professional Transformation: Emphasises tech adoption, capacity building, and modern governance—crucial in restoring public trust and efficiency Inclusivity at Core: Explicit focus on increasing participation of women, Dalits, Adivasis, and youth—building on the ethos of cooperative empowerment Decentralized Growth Strategy: Village and tehsil-level expansion ensures economic decentralisation and rural integration—a critical tool for grassroots development

PYQ Relevance

[UPSC 2014] “In the villages itself no form of credit organisation will be suitable except the cooperative society.” – All India Rural Credit Survey. Discuss this statement in the background of agricultural finance in India. What constraints and challenges do financial institutions supplying agricultural finance face? How can technology be used to better reach and serve rural clients?”

Linkage: The 2014 question emphasised cooperatives as the most suitable form of rural credit, highlighting their role in agricultural finance. The Kerala–Centre tussle over the 2025 policy shows how this very grassroots credit system, with PACS and cooperative banks at its core, remains vital yet contested. Thus, the article provides a contemporary case study of both the potential and challenges of cooperatives in India’s agricultural and financial landscape.

Introduction 

The Supreme Court recently questioned whether it should remain passive when Governors indefinitely withhold assent to Bills, stalling elected legislatures. This issue, highlighted by Tamil Nadu’s Bills pending for four years, raises fundamental questions about judicial review, federalism, and democratic accountability.

Why in the News

Tamil Nadu’s unprecedented case of Bills pending for years has brought the Governor’s discretionary powers under sharp scrutiny. The Supreme Court’s April 8 judgment imposing time limits on Governors is now contested by the Union as judicial overreach, sparking a crucial debate on separation of powers.

Why does the role of Governors come under scrutiny

1. Governor’s Inaction: Governors, appointed by the Union, are integral to State legislatures, yet their indefinite withholding of Bills undermines State autonomy.
2. Tamil Nadu Example: Crucial Bills remained pending for nearly four years without reasons being communicated, sparking judicial concern.
3. Democratic Will Thwarted: Prolonged silence from Governors makes elected legislatures ineffective.

How has the Supreme Court responded

1. CJI’s Question: Should the Court suspend its role as custodian of the Constitution while Governors block Bills indefinitely?
2. Judicial Review Precedent: The Court has struck down even constitutional amendments (e.g., 42nd Amendment) that sought to limit judicial review.
3. Concern of Vacuum: Justice P.S. Narasimha highlighted the risk of Bills hanging in limbo without timelines.

What is the Union Government’s stand

1. Encroachment Argument: Solicitor-General Tushar Mehta argued the Court’s April 8 order intruded into law-making, undermining Governors and the President.
2. Political Resolution: Inaction, according to the Union, should be resolved politically, not judicially.
3. Governor’s Unique Role: Unlike statutory authorities, Governors hold sui generis constitutional status, not bound by timelines.

Why is the tussle between judiciary and executive significant

1. Separation of Powers: Union argues judiciary must not micro-manage executive discretion.
2. Checks and Balances: CJI asserted that unchecked gubernatorial delay undermines democracy, and the Court cannot abdicate review.
3. Democratic Accountability: Legislators face people every five years; Governors do not. Hence judicial review is necessary.

What are the implications for federalism

1. Centre–State Tensions: Delays fuel mistrust between States and the Union.
2. Judicial Intervention: Without court oversight, States may face legislative logjams.
3. Limited Litigation: Union argues only “two or three States” have complained, but the principle has pan-India significance.

Way Forward: A structured framework for assent is necessary to prevent legislative paralysis. The Supreme Court’s suggested timelines strike a balance between constitutional discretion and democratic accountability. Moving ahead, three steps are essential:

1. Codifying Timelines: Parliament may consider amending the law or issuing guidelines to institutionalise clear deadlines.
2. Ensuring Accountability: Governors must act on the aid and advice of the Council of Ministers, barring exceptional constitutional reasons.
3. Judicial Oversight as Safeguard: Courts should step in only when gubernatorial inaction undermines constitutional morality, keeping political disputes largely within the legislative sphere.

Conclusion

Unchecked gubernatorial inaction risks turning elected assemblies powerless. While the Union calls for political remedies, the Court stresses its duty as constitutional guardian. The outcome will redefine the balance between State autonomy, judicial review, and the Governor’s role in India’s federal framework.

Value Addition

Timeline for Governor’s action on bills While the Constitution of India doesn’t explicitly state a timeline, the Supreme Court has addressed the issue of delays in Governor’s assent, particularly in the context of recent conflicts between Governors and state governments. Based on a recent Supreme Court ruling (April 2025) and subsequent discussions, here’s a breakdown of the suggested timelines for the Governor’s actions on a Bill under Article 200 of the Constitution: Granting Assent, Withholding Assent (with advice of Council of Ministers), or Reserving for President’s Consideration: The Governor must act on the bill within a maximum of one month. Withholding Assent (against advice of Council of Ministers): The Governor should return the bill to the legislature with reasons for reconsideration within three months. Reserving for President’s Consideration (against advice of Council of Ministers): The Governor must reserve the bill within three months. Reconsideration by the Legislature: If the Governor returns a non-Money Bill for reconsideration, the legislature must reconsider it, and if it’s passed again (with or without amendments), the Governor is then bound to give assent within one month.

PYQ Relevance

[UPSC 2022] Discuss the essential conditions for exercise of the legislative powers by the Governor. Discuss the legality of re-promulgation of ordinances by the Governor without placing them before the Legislature.

 

Linkage: This issue links directly with the 2022 UPSC question as both highlight the constitutional checks on the Governor’s legislative powers. The re-promulgation of ordinances without legislative approval undermines democratic accountability. Hence, examining Governor’s ordinance powers is central to debates on federalism and executive overreach.