India’s Constitution gives the Union strong powers, but it does not establish a unitary system. It envisages a federal structure based on division of powers, fiscal sharing, state autonomy and cooperative governance. Article 246 clearly distributes legislative powers between the Union, states and the Concurrent List. Yet, since 2014, concerns have grown that the Union government has increasingly centralised administrative powers, financial resources and policy-making, weakening the spirit of cooperative federalism.

The recently introduced Mines and Minerals (Development and Regulation) Amendment Bill, 2026, is a significant example. The proposed changes seek to substantially restrict the ability of states to impose taxes, cess or other levies on mineral rights and may bring certain mineral-bearing lands under greater Union control. The Centre argues that uniformity, investment certainty and stability in the mining sector require such measures. But the issue goes beyond tax rates. It concerns the economic and administrative rights of states over natural resources located within their territories.

Mineral-rich states bear much of the social and environmental cost of mining—land acquisition, displacement, pollution, pressure on water resources, roads, healthcare and rehabilitation. Therefore, allowing states a reasonable financial return from natural resources is consistent with the federal principle. If excessive state levies are considered harmful to investment, the answer should be better coordination, transparency and revenue-sharing mechanisms rather than eliminating state fiscal powers.

The problem is not confined to mining. The Goods and Services Tax (GST), introduced in 2017, fundamentally altered state taxation powers by subsuming several indirect taxes. States had to accept this reduction in fiscal autonomy in return for a compensation mechanism. By May 2022, the Centre had released Rs.86,912 crore as GST compensation to states, demonstrating the financial adjustment required by the new system.

Another concern is the growing dependence on cess and surcharge. These revenues are excluded from the divisible pool shared with states. The Fourteenth Finance Commission increased the states’ share of Union taxes to 42 percent for 2015–20. The Fifteenth and Sixteenth Finance Commissions retained it at 41 percent, including for 2026–31. However, this 41 percent applies only to the divisible pool, not to the Centre’s entire tax revenue. A greater reliance on cess and surcharge can therefore reduce the effective share reaching states.

Borrowing restrictions have also become a contentious issue. During Kerala’s 2024 legal challenge, the state argued that its net borrowing ceiling for 2023–24 was limited to about 3 percent of its Gross State Domestic Product, or approximately Rs.32,442 crore. Fiscal discipline is necessary, but excessive Union control over state borrowing can restrict the ability of elected state governments to respond to their own budgetary and developmental needs.

Agriculture provides another example. The three farm laws enacted in 2020 triggered a major federal debate because agriculture is closely linked to state responsibilities. After a prolonged farmers’ movement, the laws were repealed in 2021. The episode demonstrated the political and constitutional difficulties that arise when sweeping policy changes are introduced without adequate consultation with states.

Education, which is on the Concurrent List, raises similar concerns. National standards are legitimate, but increasing central influence over curricula, higher education regulation and centrally sponsored schemes can narrow the space for state-level experimentation. Proposed changes concerning the deputation of All India Service officers have also raised concerns about the balance between Union authority and state administrative autonomy.

Governor-related disputes have further strained Centre-State relations. The controversy over pending bills in Tamil Nadu and the Supreme Court’s intervention in 2025 highlighted unresolved questions about constitutional limits on gubernatorial powers.

A strong Union is necessary for national security, monetary policy, interstate trade and national infrastructure. But a strong Union is not the same as an over-centralised government. True cooperative federalism requires the Centre and states to function as constitutional partners, not as a donor and recipient.

The mining bill therefore deserves scrutiny not merely as an economic measure but through the broader principles of constitutional federalism, fiscal autonomy and democratic decentralisation. If states gradually lose their legislative, administrative and financial space, cooperative federalism could remain a constitutional phrase while governance moves steadily towards centralised federalism.