Concept:
• Federalism involves the distribution of powers between a central government and its constituent provincial units.
• The Constituent Assembly had to balance the demand for provincial autonomy with the need for a strong center to maintain national unity during the chaotic period of Partition.
Step 1: Creation of the Three Lists of Power
The Assembly established a clear division of legislative powers through three lists: the Union List (subjects like defense and foreign affairs), the State List (subjects like agriculture and health), and the Concurrent List (subjects where both could legislate, like education).
While the lists provided a framework for federalism, the Union List was significantly longer, and the 'Residuary Powers' (powers not mentioned in any list) were vested in the Central government, indicating a tilt towards a strong center.
Step 2: Fiscal Federalism and the Center's dominance
The debate on federalism was also financial. The Center was given control over the most lucrative sources of revenue, such as customs duties and income tax.
The provinces were made dependent on the Center for grants-in-aid. Some members, like K. Santhanam from Madras, argued that this would make the states "beggars at the door of the center," but the majority felt a strong financial center was necessary for national planning and security in a post-partition environment.