Introduction

A state can be classified as federal or unitary based on the division of powers or absence of division of powers between the national and provincial governments. In a federal system, the constitution formally divides powers between the centre/national government and the states/provinces, whereas in a unitary system, power is concentrated in the central/national government, though it may devolve certain powers to the local governments. Federalism is an essential concept of comparative politics, and scholars have also used it to study regionalisation and regionalism in international politics and area studies. However, its usefulness has been debated. In the early twentieth century, Harold J. Laski argued that the days of federalism were over, while later, in the second half of the century, William H. Riker asserted the coming of the age of federalism.

The origin of modern federalism is credited to Johannes Althusius (1563–1638) and Montesquieu. In 1603, Althusius described the bases of this political philosophy in Politica Methodice Digesta, Atque Exemplis Sacris et Profanis Illustrata. Later, in 1748, Montesquieu, in his treatise The Spirit of Law, observed examples of federalist governments in corporate societies, in the polis uniting villages, and in cities forming confederations. In the modern era, federalism was first practiced by the Old Swiss Confederacy in the mid-14th century.

Federalism differs from both confederalism and the unitary state. In confederalism, the central government is subordinate to the regional states, and power is notably separated regionally, as seen in the Articles of Confederation of the original Thirteen Colonies or later in the Confederate States of America. In contrast, a unitary state subordinates the regional level to the central government, even if powers are devolved, thus reflecting regional integration of governing powers, as in the United Kingdom.

Today, around twenty-five states are identified as federal states, including Australia, Argentina, Austria, Belgium, Germany, Russia, Switzerland, the USA, India, Brazil, Mexico, Canada, Nigeria, Pakistan, Malaysia, Ethiopia, Venezuela, and the United Arab Emirates. Notably, about forty per cent of the world population lives under federal systems, and out of the eight largest states in the world, seven are federal, with China being an exception. This suggests that federalism is more popular among larger states than among smaller ones.

Contemporary examples of federalism, where a central/federal government coexists with regional sub-unit governments, include Argentina, Australia, Austria, Belgium, Bosnia and Herzegovina, Brazil, Canada, Ethiopia, Germany, India, Iraq, Malaysia, Mexico, Micronesia, Nepal, Nigeria, Pakistan, Russia, Somalia, South Sudan, Sudan, Switzerland, the United Arab Emirates, the United States, and Venezuela.

Federalism: Meaning and Origin

Originating from the Latin word ‘foedus’ meaning ‘treaty’ or ‘covenant’, which impacted the sovereign existence of different constituents of a union, the term federalism was nationalised in the late eighteenth century in the Greek city-states of classical Greece. Earlier states used the confederacy agreement to establish ties between the most powerful state and other smaller or localised states, thereby creating a balance of power, authority, and mutual dependence among sovereign states.

Renowned academicians like K.C. Wheare and A.V. Dicey ascribed the meaning of federalism in their works as a system in which powers are bifurcated between the central government and the regional government, each operating independently within its own sphere. In a fully developed federal system, powers are distributed among different governmental bodies, each with limited but equal powers. Within the constitutional framework, the courts have the supreme authority to uphold and interpret the values of the Constitution in a federation.

From the late 1700s to the 1860s, the power struggle between the national government and the states in the United States was significant. The first American Union, formed in 1781, was a confederation with a weak central government. However, the second American Union, established in 1789, created a stronger federal government while still preserving state sovereignty. The system gradually evolved through various constitutional amendments during the Civil War period (1861–65), which solidified the foundation of modern federalism.

The conflict between federal authority and sovereign states became evident with the creation of the National Bank. The decision of Alexander Hamilton, one of the prominent secretaries of the Congress federal government, to set up the first federal bank of the United States faced strong opposition from the Republicans. Later, in the landmark case of McCulloch vs. Maryland (1819), the establishment of the Second Bank of the United States faced resistance when the state of Maryland attempted to impose a tax on the federal bank, thereby encroaching upon federal jurisdiction.

The Supreme Court, under Chief Justice John Marshall, ruled that the authority to create the National Bank was within the powers of the national government, and that a state tax could not be enforced on the federal government. This ruling asserted the supremacy of the central government over state interference in federal activities. Further, in Gibbons vs. Ogden (1824), the Supreme Court reinforced federal authority over state laws, especially in matters of commerce, thereby emphasising the national government’s supremacy over the states. Overall, the scope of national power expanded after the Civil War, as states increasingly turned away from certain powers to protect their own interests.

Gradually, federal principles were also implemented in the Indian Constitution to maintain a balance of power, ensuring that each tier of government operates within its designated domain. Through a process of trials, errors, and amendments, India has evolved its system of federalism, strengthening intergovernmental relations over time.