UR Constitution is quasifederal. This was a historical necessity. When it was adopted, the princely states integrated into the Republic continued to have elements which, in the absence of a strong Union, could have disturbed our constitutional enterprise. In a country as large as India with a population of 1.4 billion, the epicentre of power in Delhi makes it difficult for states to develop at their own pace considering their unique needs and priorities. The flow of finances to states is largely controlled by the Union.
Despite the manner in which resources are to be shared between the Union and states as allocated by each Finance Commission every five years, the Union continues to garner additional resources through imposition of cess and other levies that it need not share with the states. Being the recipient of a large share of revenues, states are not given enough independent economic space to cater to their needs. The Union government, along with the Reserve Bank of India, is the arbiter of their destiny.
But a far more serious issue that confronts the federal structure of the nation today relates to the rampant misuse of the Prevention of Money Laundering Act, 2002 (PMLA). It is evident from the manner in which the investigation arm, the Directorate of Enforcement (ED), has been functioning under the present government. The situation has been exacerbated by a judgement of the Supreme Court, allowing for its rampant misuse.
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