CHAPTER- I

Federalism in India and Canada

The chapter examines the theoretical perspectives of the Federalism. It examines the
concept, its trajectory and unfolding in a different cross country perspective. However,
the focus is mainly on Canada and India.

The ideas and institutions related to federal, political organisation of government is

generally traced back to ancient Indian, Greek and Israelite antiquities. The instances of
federal polities in modern times can be located mainly in the American 1787, Swiss1848,
Canadian1867, and Australian 1901, Indian 1950. Since then the Federal form of
government has had a phenomenal popularity worldwide both at national and
supranational levels. Typically, political federalism originates in social, cultural and
regional contexts, where the people desire unification as well as autonomy, such that the
constitution seeks to ensure self rule in the regions and shared rule in the federation.
Relation between decentralization and federalism has been described. Ingredients of
federal government and principle of division of functions and finances has been analysed
in this chapter. Principle of federal finance and operation of the federal principle has also
been taken care of. From there, the chapter moves on to the specificity of the Indian
context of federalism in comparison of Canadian perspective of federalism. This chapter
elaborates political and economic facts, geographical and demographic context,
bilingualism and multi culture in Canada. From there discussion moves towards Canadian
constitution, Canadian government, and Courts in Canada. Constitutional status of the
federal, provincial and territorial governments has been looked after. Then this chapter
moves to the role of government in federal economies.

If we take the case of federalism in India, it was conceived under crucial stress of
circumstances due to indigenous local factors and prejudices and predilections of the
founding fathers, which was a result of the influence of the modern Federal Constitutions
all over the world. India was not a federation prior to the 26th January 1950, though the

11
Government of India Act, 1935 contained a federal scheme which was not implemented.
The Government of India Act, 1935 for the first time provided for a federation in India
and made Legal use of the word ‘Federation’. The Constitution of India in Article 1 came
to provide, “India that is Bharat shall be a Union of States”.1 There is no mention of the
word, “Federation” anywhere in the text of Constitution. It has been described as ‘a
Union of States’. The Cripps Mission proposals and the Cabinet Mission Plan made use
of the word “Union” only.2 Sir B.N.Rau, the Constitutional Advisor to the Constituent
Assembly used the word ‘Federation’, but the Drafting committee substituted it by the
word “Union”. Dr. Ambedkar, the Chairman of the Drafting Committee pointed out that
the Canadian Federation is called “a Union”.3 In India neither the Federation was the
result of any agreement nor the supremacy of the union was the result of any agreement,
but the supremacy of the union was an established fact. This argument of Dr. Ambedkar
was accepted by the Union constitution Committee and the Constituent Assembly. The
federation is a union because it is indestructible.4

This chapter has gone into the deep situations prevailing in some other federations,
namely, Brazil, Germany, Nigeria, and seeks to identify the critically relevant issues for
India and Canada. These countries were selected on the basis of their being almost
similar and comparable to India in respect of features of federal structure and size in
terms of area and population or may be some other reason. Social factors are also
discussed in general. Federalism means complex institutional system for governance. The
essence of federal form of government is that the centre and the state governments should
be independent of each other in their respective constitutionally demarcated spheres of
action. Each level of the government should be provided with source of raising adequate
revenue to discharge the expenditure liabilities and functions entrusted to it.

Federalism in General Terms

It is difficult to define the term federation which means different things to different
people in different countries. But the most acceptable definition of federation may be that
it is a system of government in which there is division of powers and functions between
federal government and several regional governments, each of which in its own sphere,

12
coordinates with the others and each of which acts directly on the people through its
administrative machinery. There is no single ideal federal form. Many variations are
possible in the application of the federal idea in general or even within the more specific
category of full-fledged federations.5 Ultimately, federalism is a pragmatic, prudential
technique whose applicability may well depend upon the particular form in which it is
adopted or adapted or even upon the development of new innovations in its application.6
Federalism is a unifying force. But at the same time the constituent units joining then
federation also have a dream of better level of development and better standard of living
for their people which may not be possible with their own resources. Naturally the flow
of fiscal transfers from centre to states in federal states like India assumes an important
role, so far the solidarity and unity of federation is concerned. Federalism is considered
efficient from the political angle as well because of the facility it provides for a
heterogeneous population to come together under the banner of one nation and acquire
strength from unity while allowing the constituents to retain their identity and autonomy
over a wide area of public life. Federalism also fosters democratic values and the civic
virtues of people's participation in political processes.7 In recent years, it is the economic
benefits of federalism that have come to the front and sovereign nations are joining
together in economic union even while not surrendering their independence. The
European Union is a prime example.

The art of federalism lies in designing institutions with appropriate assignment of powers
and functions among different orders of government and rules to regulate their
relationship especially in the fiscal arena that can strike the right balance among different
objectives and resolve tensions.8 The peace treaty of Westphalia are said to have
established the modern concept of sovereign statehood.9 Since then, nations have evolved
along multiple paths while developing their organisational structures and institutions. In
today’s world, there are many nation-states that are based on single language, single
ethnicity, single religious affiliation and single socio cultural identities. There have been
other states that have been more diverse in one or more dimensions and sometimes, even
all of these dimensions. The challenge for many nation-states and it is particularly true of
the larger ones, is to manage the multiplicity of identities of individuals with the
requirements of a unified nation. Managing this duality has been one of the drivers of

13
political evolution in the last century. In the last quarter of the eighteenth century, the
thirteen British colonies having won their war of independence showed a centripetal trend
of federalism when they framed the federation of United states of America but shortly
therefore, the reaction pioneered by Jacobins and Napoleon against the unitary
continental monarchies of Europe, notorious for their oppressiveness gave rise to a
centrifugal trend of federalism10. Federalism has been popularly employed as a safe guard
against nation’s regional resentment, linguistic racial and cultural identities, threatening
their unity by organising regional groups which are given sufficient autonomy in the
federation. In the modern age, federalism entails a principle of reconciliation between the
two divergent tendencies, the widening of the range of common interests of territorial
units and the need for their local autonomy. Neither complete independence nor total
dependence is needed but an interdependence which brings out harmony. Federalism has
been a governance issue across nations of all types, particularly in the extent of the need
to have governance as close to people as possible and to enforce accountability. But, it is
in the plural group of nations, with their inherent diversity, that federalism as a concept
has had to show ingenuity and innovation in managing contradictions. In fact large plural
democracies have been successful only by having federalism sculpted into their
institutional architecture. Multiple models of federal architectures across the world, are
trying to allow for diversity to coexist in a larger unified framework; for individual sub-
national identities to work in harmony with a larger national identity.11

Decentralization and Federalism

Decentralisation is the essence of federalism, having a system of multi-level government

and multi-level planning. Decentralisation does not mean breaking the bulk, but
devolving powers, functions, authority and finances to different territorial levels of
government. To give a concrete shape to the concept of decentralisation in a federal set-
up, decentralisation has to be based on sound practices which have to be evolved, and
necessary attitudinal changes which have to be brought about. At each level in the system
of multi-level government, there should be involvement of the people, endowed with a
degree of autonomy in decision-making, relating to functions assigned to that level,

14
within the framework of the Constitution that created the federation. No system of federal
government envisages complete autonomy.12 Different territorial governments are not
independent entities but integral parts of the whole system. The determination of
relationships between different parts of the system and with the system as a whole
constitutes a major problem confronting each federation. There has to be a proper balance
between centralisation and decentralisation in each federation. Excessive centralisation in
a federal set-up may ultimately bring about disintegration and collapse of federation.
History is replete with such examples. The process of centralisation and centralised
planning in a number of socialist economies of East Europe and Soviet Union, could not
cope with the requirements of decentralised development, regional needs and aspirations,
but accentuated regional disparities, creating distortions and contradictions, leading
ultimately to the collapse of the system and disintegration of federations.13

Multistate Government and Federalism

The gist of federalism is multileveled Government. In its simple form, a federation

comprises a single central “federal” authority superimposed on a set of lower level
“states”.14 Federalism as a concept has continued evolving and adopting itself to the
circumstances of History and Geography from one country to the other country. In form
and spirit therefore, it has been Sui Generis. In a federation, there are different layers of
governments to perform definite functions assigned to them. How many territorial levels
of government should be there in a country for the purpose of administration and
planning? No cut-and-dried answer can be given to this question. It all depends upon
factors like the size of the country, its population, its geography, its history, its social and
economic characteristics and its administrative set-up. Certainly tiny states like the
Vatican City, Monaco and San Marino, cannot have more than one level of central
government. But a country of India’s size and dimensions, with large geographical
variations, varied social and cultural attainments, demands federal set-up, with large
devolution of powers and functions and finances, to lower territorial levels of
governments.15

15
Federal Government

A federal form of government has a multi order structure, with all orders of government
having some independent as well as some shared decision-making responsibilities.16
Federalism represents either a ‘‘coming together’’ or a ‘‘holding together’’ of constituent
geographic units to take advantage of the greatness and smallness of nations. In a flat
(globalized) world, it is increasingly apparent that ‘‘nation states are too small to tackle
large things in life and too large to address small things’’17 Subscribing to the ‘‘coming
together’’ view of federalism, it is pointed out and elaborated that the word ‘‘federalism’’
has its roots in the Latin Oedus, meaning ‘‘league,’’ ‘‘treaty,’’ or ‘‘compact.’’ 18 More
recently, Robert Inman (2007: 530) noted that ‘‘the word ‘federal’ has come to represent
any form of government that brings together, in an alliance, constituent governments each
of which recognizes the legitimacy of an overarching central government to make
decisions on some matters once exclusively the responsibility of individual member
states.’’19 ‘‘Coming together’’ has been the guiding framework for mature federations
such as the United States, Canada, and, more recently, the European Union. The
alternative ‘‘holding together’’ view of federalism, also called ‘‘new federalism,’’ 20

represents an attempt to decentralize responsibilities to state local orders of government

with a view to overcoming regional and local discontent with central policies. This view
is the driving force behind the current interest in principles of federalism in unitary
countries and in relatively newer federations such as Brazil and India and emerging
federations such as Iraq, Spain, and South Africa.21

A federal form of government promotes decentralized decision making and, therefore, is

conducive to greater freedom of choice, diversity of preferences in public services,
political participation, innovation, and accountability.22 It is also better adapted to handle
regional conflicts. Such a system, however, is open to a great deal of duplication and
confusion in areas of shared rule and requires special institutional arrangements to secure
national unity, ensure regional equity, and preserve an internal common market. Federal
countries broadly conform to one of two models: dual federalism or cooperative
federalism. Under dual federalism, the responsibilities of the federal and state

16
governments are separate and distinct. According to William H. Riker (1964: 11), under
such a system, (1) ‘‘two levels of government rule the same land and the people, (2) each
level has at least one area of action in which it is autonomous, and (3) there is some
guarantee . . . of the autonomy of each government in its own sphere.’’ Under
cooperative federalism, the responsibilities of various orders are mostly interlinked.
Under both models, fiscal tiers are organized so that the national and state governments
have independent authority in their areas of responsibility and act as equal partners.
National and state governments often assume competitive, no cooperative roles under
such an arrangement. Dual federalism takes either the layer cake or coordinate authority
approach. Under the layer cake model practiced in Mexico, Malaysia, and Russia, there is
a hierarchical (unitary) type of relationship among the various orders of government. The
national government is at the apex, and it has the option to deal with local governments
either through state governments or more directly. Local governments do not have any
constitutional status: they are simply extensions of state governments and derive their
authority from state governments.23 In the coordinate-authority model of dual federalism,
states enjoy significant autonomy from the federal government, and local governments
are simply handmaidens of the states and have little or no direct relationship with the
federal government. The working of the federations of Australia, Canada., India,
Pakistan, and the United States resembles the coordinate-authority model of dual
federalism.24

The cooperative federalism model has, in practice, taken three forms. In the
interdependent spheres variety as practiced in Germany and South Africa (a unitary
country with federal features), the federal government determines policy, and the state
and local governments act as implementation agents for federally determined policies.25
In view of federal domination of policy making, state or provincial governments in this
model have a voice in federal policy making through a second chamber (the upper house
of the parliament).26 In Germany and South Africa, the second-order (state) governments
are represented in the upper house of the national parliament (the Bundesrat and the
Council of the Provinces, respectively). In the other model of cooperative federalism,
various orders of government have overlapping and shared responsibilities, and all

17
constituent governments are treated as equal partners in the federation. Belgium, with its
three territorial and four linguistic jurisdictions, has a strong affinity with this approach.
Finally, in a model of cooperative federalism with independent spheres of government,
all orders of government enjoy autonomous and equal status and coordinate their policies
horizontally and vertically. Brazil is the only federation practicing this form of
federalism. The competitive federalism model is a theoretical construct advanced by the
fiscal federalism literature (Salmon, 2006; Breton, 2006; Kenyon and Kincaid, 1999) and
not yet practiced anywhere in its pure form. According to this construct, all orders of
government should have overlapping responsibilities, and they should compete both
vertically and horizontally to establish their clientele of services. Some analysts argue
that such a competitive framework would create leaner and more efficient governments
that would be more responsive and accountable to people. Countries with a federal form
of government vary considerably in terms of federal influence on sub national
governments or states in Indian context. Such influence is very strong in Australia,
Germany, India, Malaysia, Mexico, and Pakistan; moderately strong in Nigeria and the
United States; and weak in Brazil, Canada, and Switzerland. In the, countries having
weak federal influence national control over sub national expenditures is quite limited,
and sub national governments have considerable authority to determine their own tax
bases and tax rates.27

In centralized federations, conditional grants by the federal government play a large role
in influencing the priorities of the state and local governments. In Australia, a centralized
federation, the federal government is constitutionally required to follow regionally
differentiated policies. Federal countries also vary according to sub national influence on
national policies. In some countries, there is a clear separation of national and sub
national institutions (‘‘executive’’ or ‘‘interstate’’ federalism), and the two orders interact
through meetings of officials and ministers, as in Australia and Canada. In Germany and
South Africa, state or provincial governments have a direct voice in national institutions
(‘‘intrastate’’ federalism). In the United States, regional and local coalitions play an
important role in the Congress. In some federal countries, constitutional provisions
require all legislation to recognize that ultimate power rests with the people. For example,

18
all legislation in Canada must conform to the Canadian Charter of Rights and Freedoms.
In Switzerland, a confederation by law but a federal country in practice, major legislative
changes require approval by referendum. Such direct-democracy provisions indirectly
reinforce the decentralized provisions of public services. In all federal countries, local
government influences on the federal and state governments remain not- institutionalized
and weak. Federalism can be explained with two dimensions as Asymmetric federalism
and Market Preserving Federalism.

Countries with a federal form of governance do not necessarily treat second orders of
government in a uniform manner. They often offer flexibility in accommodating the
special needs or demands of constituent units or impose a federal will in certain
jurisdictions. This adaptability may take the form of treating some members as less equal
than others. For example- Chechnya in Russia and Kashmir in India enjoy lesser
autonomy than do other oblasts and states; or the federation may treat some members as
more equal than others by giving them wider powers, as is the case with Sabah and
Sarawak in Malaysia and Quebec in Canada. Some federations offer constituent units
freedom of choice to be unequal or more equal than others through opting in or out of
federal arrangements. Such options are part of the arrangements offered by Canada,
Spanish agreements, and the European Union’s treaty exceptions for the United Kingdom
and Denmark (see Watts, 1999).

Barry Weingast (2006) has advanced a theoretical concept for comparative analyses of
federal systems. Market-preserving federalism is put forth as an ideal form of federal
system. Where political authority is institutionalized in this system, sub national
governments have primary authority over public goods and services for local autonomy.
Multiple governments have clearly delineated responsibilities and all governments face
the financial consequences of their decisions as hard budget constraints. The federal
government preserves the internal common market.

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Theoretically we can divide principals of federalism in two parts described. First one is
the principle of division of functions and finances. Second is the principle of federal
finance.

Principle of Division of Functions and Finances

All forms of federations are based on compromises, and inter-governmental relations

between them are the result of give and take, because in the ultimate analysis, both the
federal government and the constituent units have to collect taxes from the same body of
tax-payees. Fiscal federalism applies cost-benefit analysis to allocate governmental
functions to different territorial levels. Accordingly, that level of government which
provides public services at the least cost may be entrusted such functions, and public
services where supply does not involve economies of scale, should be decentralised. Such
a division of functions ensures economic efficiency in the provision of public goods,
accountability of money spent and fiscal autonomy of lower level governments.
Wherever such clear-cut demarcations are not possible and wherever benefits accrue
beyond the jurisdiction of local governments, resulting in spill over of benefits and costs,
the federation has to work out a system of transfer of resources from the higher to lower
levels of government. The general experience is that when functions and resources are
divided between different layers of government, the more elastic and productive sources
of revenue with nation-wide base tend to be allocated to the national government and less
elastic with immobile and localised base to the lower layers of government. Such a
division results in vertical fiscal imbalances between expenditure needs and own-revenue
of the local governments.

Despite evolving a scheme of division of functions and finances, there are bound to be
tax and expenditure over-lapping which require coordination and harmonisation of
expenditure and taxation policies of different layers of governments. Every federation has
to face this problem and also frequent encroachments of the higher level government in
the legitimate domain of lower level governments. For example, a large number of
centrally sponsored programmes in India, numbering more than 250, particularly in such
areas which legitimately belong to the domain of local governments, do not find any

20
theoretical support but tantamount to encroachment of the Union government in the
legitimate domain of state governments and local bodies. Such conflicts are bound to
arise in every federation and have to be resolved through dialogue, mutual understanding
and interaction.

Principle of Federal Finance

In every federation, different layers of government should have considerable freedom and
initiative to raise and manage their resources, but some degree of control and regulation
by higher levels become necessary to ensure coordination between different bodies and
also to promote sound financial management. Division of functions leads to division of
resources. Local bodies are generally allocated three sources of revenue:

(i) Independent sources of revenue - tax and non-tax.

(ii) Sharing of specific taxes and other revenues raised by higher levels of
governments.
(iii) Grants-in-aid.

In the absence of independent sources of revenue, local bodies would become the
spending departments of the central and state governments. In the allocation of sources of
revenue to local bodies, it is necessary to see that the base is local and their collection
does not involve elaborate machinery. Resources allocated to different units in a
federation must be adequate to meet needs and should be capable of expansion with
growing needs. There has to be a balance between direct and indirect taxes, to promote
equity in taxation. Prof. B.P. Agarkar has laid down three essential tests of a good federal
finance set-up.

(i) Independence and responsibility,

(ii) Adequacy and elasticity, and
(iii) Administrative economy.

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But no cut-and-dried method can solve the problem of fiscal incoherence which all
federations have to face.28

Operation of the Federal Principle

The federal principle may be functional around three core dimensions: (1) the
constitution; (2) fiscal arrangements and (3) the party system. The first two dimensions
are formal aspects of the federal principle, while party systems have become informal and
integrated part of the federal principle but it is non-constitutional aspect. A written
constitution is a political and legal imperative in federal systems. Dicey has noted that
federal constitution is based “upon understandings and disagreements”.29 If the
constitution is to be considered federal, however, the two orders of government must be
independent in some spheres of governance. Indeed, Dicey wrote that in federal systems
“the ordinary powers of sovereignty are elaborately divided between the common or
national government and the separate states.30

The constitution has judicial authority and the other important aspect is constitutional
amendment. As federalism requires a written constitution, federations ought to have a
formal mechanism of constitutional amendment. Constitutional change by amendment
has a higher degree of legitimacy than either judicial interpretation or ad hoc change. 31 In
sum, if the federal principle is to be in effect, the constitution must be constructed such
that the two orders of government are sovereign in their spheres of jurisdiction. Almost in
all the federations, subjects like defence, foreign affairs, money and banking,
countrywide communications and responsibility for macro-management of the economy
are assigned to the centre, while matters of primarily regional or local concern like public
order, public health and sanitation, water supply, irrigation and canals, and industries
other than those declared by Parliament to be of strategic interest or necessary for the
centre to control in public interest are entrusted to the states. In India, anticipating a gap
between resources that states can raise on their own and their expenditure responsibilities,
the constitution provides for transfer of revenues from the centre through the mediation
of a statutory body to be set up periodically, i.e. the Finance Commission (FC). The
constitution also stipulates the creation of an independent judiciary with the Supreme

22
Court at the apex to adjudicate disputes between the centre and the states and also
envisages bodies to resolve interstate issues in the form of an interstate council.

“The problem of finance is the fundamental problem of federalism.”32. The federal

principle guaranteeing sovereignty to each order of government must have independent
sources of revenue sufficient to meet its constitutional obligations.33 Rufus Davis has
suggested that fiscal independence in a federal system would entail four dimensions “ (a)
the right to decide when to raise revenue ; (b) the right to elect the purposes for which
revenue is to be raised: (c) the right to determine the amount to be raised and; (d) the
machinery to administer these decisions,”34. In addition, it may be speculated that a
federal system will be more stable if each order of government taps separate tax sources,
instead of competing for the same resources.

To determine if the federal principle is being followed in practice, we must discover if the
two orders of government are able to collect sufficient revenue to assume their
responsibilities, or if the state government is dependent to some degree on the centre. Is
one order of government spending revenue in area of jurisdiction of the other order of
government? And if so, is that government, in effect, legislating in that area of
responsibility? If the units are dependent on the federal government for revenue and or if
the federal government is spending money in areas of state jurisdiction, the federal
system is quasi-federal. Party systems have become integral, non-constitutional
dimensions of the federal fabric, a fact well elaborated by Modern Godzins and William
Riker.35 Rufus Davis has suggested that a federal party system is one “ in which the
parties are exclusively identified with and operate at, either the federal or state level ; in
which the parties are structurally separates from each other in their composition ; and in
which the parties perform their main business – the nomination and endorsement of
parliamentary candidates. Formulation of policy, electoral management and proselytizing
completely independent of each other.”36. Davis was quick to note that no such party
system has ever existed, and he cast doubt about the analytical utility of the federal
principle in relation to the operation of political parties.37 However, the division of
sovereignty inherent in federalism can be undermined by a governing party with a non-

23
federal-structure. In a quasi-federal party system, the federal political parties will be
integrated, hierarchal organizations. If a party governing a particular state is controlled by
the party headquarters in the centre, state sovereignty will be compromised, creating the
possibility of nationalist resentment. In federal party the sovereignty of the orders of
government will be vigorously defended by independent parties.

In the modern age, federalism entails a principle of reconciliation between the two
divergent tendencies, the widening of the range of common interests of territorial units
and the need for their local autonomy. What is needed is neither complete independence
nor total dependence but an interdependence which brings harmony. The soul of
federalism is its universal constitution for contradictory interests of the centre and
territorial units. Reason may be vast geographical extent as happened in the United States
and in Australia, or it may be ethnic or other reasons as in Switzerland and India.
Theories of federalism have been formulated with diverse facets of the federal
phenomenon in mind. The political institutional approach to federalism addresses the
problem of conceptualizing this form of government and laying out various models of
federal constitutional engineering. The three broad designs in this context are (1) The
U.S. American system of Presidential Federalism that embeds federal division of powers
between two levels of government in the matrix of division of powers between the three
organs of the government (2) Canadian American model of parliamentary federalism that
continues a strong parliamentary centre with a federal component of government (3) The
Swiss consular model of federalism.

The concept of having an institution like the Finance Commission of India, for making
recommendations on inter-governmental financial relations and resource transfers, is
prevalent in some, and not all, of the federations. Some of the major federations, such as
Australia and Nigeria do have such institutional arrangements, whereas some other major
federations, such as Brazil, Canada and the United States of America, go without such an
institution. The issues on fiscal transfers in these countries are handled by the executive
and the legislature, leading to intensive politicisation of the transfer system. Some of
these arrangements have, however, developed into fairly stable system to cover transfers
even to the third tier of government, the local governments.
24
The form of federalism in Australia today can best be described as ‘opportunist
federalism’.38 This is a phrase that has been coined in America to describe a federal
system where the national government cherry picks issues of State jurisdiction in which it
intervenes for political or ideological reasons, rather than on any systematic basis or for
reasons of good government. The principle used by the European Union and most
federations is the principle of subsidiary. It provides that functions should, as far as
practicable, be exercised by the lowest level of government. The intention is to take
government as close as possible to the people so that local preferences can be satisfied by
local decisions, rather than a ‘one-size fits all’ approach.39

Federalism has often been seen as a method of constitutional government suited for a
diversity of population. By the year 1900, all the colonies had been granted considerable
independence of Britain. Each had its own constitution, parliament and public service
modelled on Britain. Each constitution40 empowered the parliament to make laws for the
peace, order and good government of the colony. Advocates of the federal system
stressed the ‘crimson thread of kinship’ linking the people of the six colonies. There was
no basic culture, racial religious or linguistic differences between them. Differences
between the colonies which became the states were, and have remained, differences of
Topography or Geography, size of economic activity and potential resources. Since the
second world War, immigration has meant that the Australian population has become
less Anglo- Celtic , but despite the adoption from Canada of many of the slogans and
practices of multiculturalism , ethnic or linguistic diversity is not state – based and has
little effect of Australian federalism. In their political institutions Australians remain
fairly and essentially British like. First eight years of Nigeria’s federation in a democratic
setting, witnessed intense frictions between the demands of states for autonomy and the
federal centre for control; the demands of the people for greater freedom and expansion
of democratic space and the pressure by the Obasanjo government for ‘guided’ or
‘controlled’ democracy. We also argued that there are basic challenges of federalism
which need urgent responses and appropriate adjustments. It is our contention that since
May 2007, there are new hopes for the expansion of the democratic space and
accommodation of the basic principles of federalism. In this regard, we argued that the
25
quality and style of leadership is very important. After all, the human values of
accommodation, tolerance, fairness, justice and equality can only be actualized by human
beings, no matter what laws are available as guidelines.

In all federations, the need for intergovernmental relations has become even more
pressing, as many issues of governance transcend a single tier of government. The
dynamics of Nigeria’s federation, intergovernmental relations have been low. The
National Economic Council has provided a forum for federal and state leaders to discuss
the framework for new intergovernmental relations in the delivery of services. There
should be greater intergovernmental relations between state and local governments for
effective service delivery. In Nigeria, the challenge is to ensure a more efficient delivery
of services for poverty alleviation.

Keeping in view of the above we can say that federation is not just a structure but a
process and, therefore, it is more important to activate the forum for interaction than
going in only for formal arrangements that divide the powers between the Union and the
states and the state and the local bodies. Federalism is poised for acquiring new
dimensions, with world economy getting globalised and integrated and the paradigm of
desirable arrangements of functions and finances at the sub national levels undergoing
changes, old ideas of sovereignty are fast facing obsolescence, as nations agree on their
own to abide by internationally accepted conventions and standards.41

Indian Perspective of Federalism

Indian federalism has been result of both centripetal and centrifugal forces. By the
reforms of 1919 the provincial executive were made responsible for the fundamental
functions of government, the enforcement of law and order, and the maintenance of an
upright administration .The 1919 Act and the devolution rules made there under gave the
provinces considerable latitude in financial matters. They now had freedom to adjust the
levies on transferred head of revenue they similarly had the right to spend whatever they
lacked on the transferred subject. Expenditure on reserved subjects alone continued to be
subject to regulations and control by the central government. The provinces were also

26
given the power to float loans both in India and abroad on the security of their revenues,
but there were no separations of cash balances of the centre and the provinces. The
provinces could withdraw from the same public account; and any amount overdraw was
to be reimbursed before the close of the financial years. So 1919 Act was a half way
house between control and autonomy.

The government of India Act, 1935 had not only embodied the basic principles of federal
finance but had also endowed the provinces with financial power and authority which
enables the constituent within a federation to proceed , further on the way of all round
development . The Act 1935 gave full control over provincial administration to elected
legislatures and popular ministers, subject however, to control and regulation in vital
matter by the British using the agency of the governor-General and Governors who were
invested with special responsibilities. The provincial governments no longer derived their
authority political and fiscal, by devolutions made by the centre but obtained it as a direct
grant from the crown. In the Central field also, the Act provided for a partial transfer of
responsibility to a ministry, but only when the federal provisions of the Act became
operative and it had retained the supervisory control of the secretary of state over India’s
administration. Regarding, the federal provisions becoming operative, the act 1935
provided that the federations comprising Governors’ provinces. The states which has
accused or would accede later to the federation and the chief commissioners’ provinces
would come into existence only when a proclamation of inauguration was issued by the
Majesty42. Negotiations initiated with the provinces to secure their assistance were
protected and had not made much progress when the war intervened in 1939 to interrupt
their continuance. The federal provisions of Act, therefore was put into cold storage. The
provinces relating to their, however came into force in 1937 the relations of provinces
with the centre were regulated thereafter in accordance with provisions. In this way,
although the act executed the facade of federations is retained in reality the essentials of a
unitary form of government. The reservation of usual powers to the government
answerable to the government –General and his overriding authority over the entire field
of India’s administration including the demarcated sphere of provincial jurisdiction did
little to change basically the centralized feature of administration. The purpose of the
provisions which served this position was to retain British Control over the Indian

27
government even after a responsible ministry had been installed at the centre, so this act
1935 was a half-way house of federations. At best it may be said, because of its
comprehensiveness the government of India Act, 1935 was admirably suited for adoption
as the interim constitution.

India in 1947, on the departure of British, the major portion of which was under British
rule, was divided into different provinces. There were also some six hundred states in the
country. The ‘provinces’ under British rule were declared to be ‘states’ in the formation
of Indian federation. The influence of centripetal and centrifugal forces in the formation
and shaping of Indian federation has naturally introduced some in the characteristics in
the Indian constitution , like emergency powers , judicial , review , etc. Now India is the
largest democratic federal polity inhabited by over a billion people spread over 28 states
and 7 centrally administered territories. A separate legislative, executive and judicial
arms of government are constituted at both Central and State levels. The upper house or
Rajyasabha in the parliament is the council of states. The seventh schedule to the
constitution specifies the legislative domains of the central and state government in terms
of union, state & concurrent lists. The constitution also requires the President of India to
appoint a Finance Commission every five years to review the finances of the centre and
the states recommended devolution of taxes and grant-in- aid for next five years.

Historical factors have played an important role in the adoption of federal constitution
with strong unitary features in India. The constitution of independent India relied heavily
on the colonial system of Great Britain. The arguments for the centralized arrangement
were drowned by the fissiparous tendency following the partition of the country. The
centralization inherent in the constitution assignments was accentuated by the adoption of
a planned development strategy. Development Planning required the planning
commission to allocate resources according to the envisaged priorities. The centralization
was on the peak when the major commercial banks were nationalized in 1969 and along
with the nationalization of financial institution; the Central Government virtually
acquired complete control over the financial system. Recent economic and political
events and globalization, however have led to a trend onwards greater decentralisation.
Although with the change in their boundaries the states in Indian federation by and large

28
became homogeneous, the process passed the way for local chauvinisms like Andhraits,
Bengali, Panjabi or Guajarati. Linguistic rigidity gave rise to conflicting claims and
territories were claimed by one group or the other on linguistic ground. 43 The idea was
stated more plainly by F.G. Carnell in his comment on the Indian federation after the
reorganization of states: “Though the states still claims for grants from the centre for
development purposes, the growth of local solidarities or a compact cultural and
linguistic basics may slowly give rise to a doctrine of state rights.”44

It will not be correct to say that India's constitution is lacking in federalist qualities.
However, in its actual operation, federalism in India has evolved in two distinctly
different phases. The first three decades of fifties, sixties, and seventies, was marked by
pronounced concentration of economic policy making powers in the centre, while the
subsequent two decades experienced a trend towards its reversal. Two pillars of fiscal
federalism — assignment of functional responsibilities along with autonomous revenue
sources to different tiers of government and the system of intergovernmental fiscal
transfer — suffered erosion during the centralising phase of fifties, sixties, and seventies.
Part of the erosion in assignment was mended in the subsequent phase but the trends are
not in one direction alone. The transfer system seems to be in for some harder knocks
with conditional transfers assuming increasing importance.

Canadian Perspective of Federalism

It may seems that there is no need to know about Canada, Resource Transfer is only
concern of this study hence it should stick to that only instead of going irrelevant. But it
is sure that to know Canada, it is must before knowing the Canadian system of Resource
Transfer. Over the last half century, this system has had a dual effect on the evolution of
the federation. On the positive side, it has served as a crucial vehicle for creating Canada-
wide social programs and thus served as a vital instrument of nation-building within
Canada. But in so doing, it has also created significant controversy in intergovernmental
relations and exacerbated tensions between Quebec and the rest of Canada. While its
value in nation-building may have outweighed its adverse impacts, the balance between
benefits and costs can be improved. It is one of the main challenges to the future of the

29
system of resource transfer. Topography, Polity, Culture, Constitution, History, all the
facts have impact on the state of fiscal federalism; it is true about all the countries, but
more relevant about Canada. Hence knowing about Canada is must45. A multinational
federation is an appropriate form of institutional arrangement to accommodate
territorially concentrated national minorities. Canada became a federation in 1867, when
the former British colony of Canada was split into two new provinces, Quebec with a
French-speaking majority and Ontario with an English-speaking majority. Two other
British colonies along the Atlantic coast, Nova Scotia and New Brunswick, were added to
establish a four-province federation46.

Modern Canada was founded in 1867, which makes it one of the oldest and most
enduring federations. Canada is a federal country with ten provinces and three special
territories. See Figure 1 for details. The names of the provinces are: Alberta, British
Columbia, Manitoba, New Brunswick, New Found land and Labrador, Nova Scotia,
Ontario, Prince Edward Islands, Quebec, and Saskatchewan. The territorial governments
are Nunavut, Yukon and the North West Territories. Alberta, because of its mineral
wealth is the richest province.47 Ontario is the second highest in terms of per capita GDP.
Canada is a fundamentally federal country marked by a vast territory, second only to
Russia in area, and by a diverse population of over 35 million descended from
immigrants drawn from many cultures around the world as well as an aboriginal
population. Canada has two official languages, English and French, and the country
consists of distinct economic regions. The federation has grown to encompass most of the
northern half of the North American continent stretching from the Atlantic Ocean to the
Pacific Ocean to the Arctic Ocean. Commencing as a relatively centralized federation,
Canada in accommodating the internal diversity of its population and regional economies
has become one of the more decentralized federations in the world, while developing at
the same time a cohesive transportation network and system of federation-wide social
programs. The government structure consists of a federal government, 10 provincial
governments, 3 territorial governments and numerous municipal (or local) governments.
All of the federal, provincial and territorial governments are organised on the basis of the
Westminster parliamentary system. There is also a newly evolving system of self-
government for many of the aboriginal communities. Canadian provincial governments

30
are even more actively involved than their counterparts in the United States. The Quebec
government alone has as many employees dealing with international relations as the 50
U.S. state governments combined, and it certainly ranks as the most internationally active
non-central government in the world.48

Political Facts

Canada became The Dominion of Canada on July 1st, 1867. Officially it became a
country in 1982. Canada is a constitutional monarchy and a federal state with a
democratic parliament. The Parliament is in Ottawa and is comprised of the House of
Commons (Lower House) and the Senate (The Upper House - whose members are
appointed). Members of Parliament are elected approximately every 4 years. Elections
may be called early or terms can be as long as 5 years. A vote of no-confidence in the
government (where the government no longer has the support of 50 percent of the House)
may also force an election. This occurred in 1979 when PM Joe Clark's government lost
the support of the House and an election was called within a year of that government
coming to power. Senators are appointed by the Prime Minister and hold their positions
until they are 75. There are currently 5 officially recognized parties in the House of
Commons:

(a) The Liberals

(b) Canadian Alliance
(c) Bloc Quebecois +
(d) Progressive Conservatives
(e) The New Democratic Party

Canada currently sits on the United Nations Security Council as a non-permanent

representative. Canada is a member of many international organizations including
NATO, OSCE, OAS and APEC.49

Economic Facts

The Canadian dollar is divided into 100 cents, like the American dollar or Indian Rupee.
In Canada $1 and $2 are represented by coins, nicknamed the "loonie" because there is a

31
loon on it and the Townie because it rhymes with loonie. Principle Natural Resources are:
Natural gas, oil, gold, coal, copper, iron ore, nickel, potash, uranium, and zinc along with
wood and water. Leading Industries are: Automobile manufacturing, pulp and paper,
iron, steel work, machinery and equipment manufacturing, mining, extraction of fossil
fuels, forestry and agriculture. Leading exports are: Automobile vehicles and parts,
machinery and equipment, high technology products, oil, natural gas, metals and forest
farm products. Imports are: Machinery and industrial equipment, (communications and
electronic equipment, vehicles and automobile parts, industrial materials (i.e. metal ores,
iron, steel, precious metals, chemicals, plastics, cotton, wool and other textiles) along
with manufactured products and food.50

Geographical and Demographic Context

Canada is a large country, with an area of approximately ten million square kilometres,
which fronts on three oceans-Atlantic, Pacific and Arctic. Canada is the second-largest
country, by area, in the world. It is normally regarded as comprising five regions:

(a) The Atlantic region (Newfoundland, Prince Edward Island, Nova Scotia, and New
Brunswick)
(b) The central region (Québec and Ontario)
(c) The prairies (Manitoba, Saskatchewan, Alberta)
(d) The Pacific coastal region (BC)
(e) The sparsely inhabited north

Canada's land mass is 9970610 square km (The world's second largest country).Ottawa is
the Capital of Canada (located in Ontario) Canada has 10 provinces and 3 territories. 51
There are more than 100 national parks and historic sites in Canada. Mountain Ranges
include: Torngats, Appalachians, Laurentians, Rocky, Costal, Mackenzie, Mt. St. Elias
and the Pelly Mountains. At 6050 metres above sea level, Mount Logan in the Yukon is
Canada's tallest peak. Great Bear Lake is the largest lake in Canada with an area of 31,
326 sq.km. The longest river is the Mackenzie River flowing 4241 km through the
NWT52. Canada has six time zones. In NFLD 53 the time zone is 3 hours and 30 minutes

32
past Greenwich Mean Time (GMT). The farthest west is the Pacific at 8 hours behind
GMT. Canada's capital, Ottawa, has the coldest average temperature of any capital city in
the world.

Canada has two official languages, English and French, and the country consists of
distinct economic regions. Canada became a federation in 1867 when the former British
colony of Canada was split into two new provinces, Quebec with a French-speaking
majority and Ontario with an English-speaking majority. Two other British colonies
along the Atlantic coast, Nova Scotia and New Brunswick, were added to establish a
four-province federation. In the 133 years since that time, the federation has grown to
encompass most of the northern half of the North American continent stretching from the
Atlantic Ocean to the Pacific Ocean to the Arctic Ocean and consisting of ten provinces
and three territories. Commencing as a relatively centralized federation, Canada in
accommodating the internal diversity of its population and regional economies has
become one of the more decentralized federations in the world, while developing at the
same time a cohesive transportation network and system of federation-wide social
programs. The population of Canada as October 2002 was 35 000 000 (30 million).54
The largest city in Canada is Toronto followed by Montreal, Vancouver, Ottawa-Hull,
and Edmonton 76.6 per cent of Canadians live in cities and towns while 23.4 per cent live
in rural areas. 31 per cent of the population live in the largest cities of Toronto, Montreal
and Vancouver the life expectancy of a Canadian woman is 80 years and a Canadian man
is 73 years. The size of the average family is 3.1 people (including 1.3 children).
Multiculturalism (as opposed to the melting pot ideology55) was officially recognized in
1988 with the Multiculturalism Act. Majority of Canadians are Christians. Canadians are
Roman Catholic, other religions in Canada include: Protestantism, Judaism, Islam,
Hinduism, Sikhism and Buddhism.56

All Canadian have free access to health care with the exception of dental services. Most
people over 65 receive their prescriptions for free. Canada has an extensive social safety
network with old age pensions, family allowance, unemployment insurance and welfare.
Popular sports in Canada include Ice Hockey, swimming, cross-country and alpine
skiing, baseball, tennis, basketball, soccer and golf. Many would suggest that the most

33
preferred spectator sports are Ice hockey and Canadian Football. The largest ethnic
groups in Canada are: British, French, German, Italian, Ukrainian, Dutch, Polish,
Chinese, South Asian, Jewish, West Indian, Portuguese and Scandinavian. It is hard to
imagine Canada being governed in any other way than as a federation. The basic units of
Canadian federalism are its ten provinces and three territories. The two largest provinces,
Ontario and Québec, contain more than half of Canada’s population between them. The
four small Atlantic Provinces (and the three territories) together contain fewer people
than each of the four largest provinces. The three territories are vast in extent but tiny in
population57. Canada has a population of more than 35 million which, while relatively
small given the large area of the country, has been growing quite strongly- in part
because of immigration from other countries. Most of the population inhabit a narrow
strip relatively close to the US border. A high proportion of the total population lives near
the American border and that country –which is also a federations-has had a strong and
growing influence on Canada, both culturally and as a trading partner. Historically, there
has been a strong linkage with Great Britain and Canada remains a member of the British
Commonwealth. Approximately one quarter of the total population of Canada lives in
the Province of Quebec, which is predominantly French speaking with a relatively strong
resistance to central government domination, and this has done much to explain the
decentralized nature of the Canadian federalism. The English/French make-up of Canada
on the one hand makes nation-building objectives difficult to achieve but, on the other
hand, leads to the use of federal provincial transfer programs as a means of doing so.
However, programs with detailed federally – imposed conditions attached to them as a
criterion for eligibility have become increasingly difficult to implement. The evolution of
the Canadian transfer System has occurred over a lengthy period, going back to the
serious economic depression of the 1930’s and the subsequent world war and, to some
extent, even earlier.

A Brief History and Cultural Characteristics

The Geography, culture and ethnic composition of Canada, necessities a flexible

approach on the part of authorities to keep the federal spirit high. The socio-cultural
composition poses a challenge to the question of unity. Plurality of culture does not pose

34
a danger to the Canadians unity; what is most serious is the development of separatist’s
feelings among the French speaking majority of Quebec province. The British North
America which came into being in 1867 was primarily a result of contract between the
two races and cultures- the English speaking and the French speaking. In the twentieth
century millions of people came from other places, mainly from Europe to settle in
Canada. Economist of nations during and after the Second World War Canada sided with
democratic forces.58

Although Canadian federation was not strong and the demand for separatism gained
momentum in the sixties when Liberal Party was in power. The reason might be that the
bargaining power of Quebec finance minister Jacques Parizeau who is regarded as the
brain of the Party Quebecois has been propounding a theory of economic association
between the sovereign Quebec and rest of Canada59. The separatists have seized the
opportunity by putting it firmly that it was a question of cultural survival for the French
Canadians and the move towards political self-determination was absolutely irresistible
60
Claude Morin proclaimed : “ Its cultural and sociological- a civilization thing. Our
feelings aren’t worked out, but they’re always there, the idea of why’s can’t have a
country? “61Knowing the strategy that the number of Quebecers jumps dramatically if
economic association is linked with independence, the separatists planned to popularize
the economic association between the two separating cultural groups.

On the economic side it is a fact that Ontario has markets in western Canada and in
Quebec. Ontario and Quebec are economically interdependent and they need each other
more than any two provinces between themselves. Finance Minister Jacques Parizeau
emphasized on this point that much dependent on what stand Ontario had to take without
being pressurized by the federal government. He differentiated the emotional political
fight with the socio-economic realities of Canada. Banking on his economic association
plea Jacques Parizeau hoped for a rational approach in Ontario as the province poised
against loss in the eventuality of the break-up of the Canadian market would have to pipe
down emotions at some point in future. Jacques Parizeau had not thought of economy
association with the western Canada; he had only been talking about Ontario for years.
The approach of the separatists on this point raises many questions and one of them is

35
that Canada may be further divided in many parts if economic association among them all
can compensate the disadvantage of political separation. This issue has also raised new
questions on the relationship of various parts of Canada and U.S. Market. Quebec enjoys
protectionism in Canadian confederation. Labour, wages and such other problems will
crop up in free market.62

Donald Creighton, an eminent historian of the English Canada, raised some important
questions on the unity of the Canadian confederation and relations between the English
speaking provinces of Canada on the one hand, and French speaking Quebec on the other.
In his view the party Quebecois is morally a revolutionary body which has been
campaigning for the destruction of the basis political character of confederation. The
Party Quebecois has rejected the bicultural and bilingual character of the confederation
and has been moving towards one language in Quebec. They have been repudiated the
official Language Act and have also defined Section 133 of the British North America
Act which gives both English and French equal official standing in the legislature and
courts of Quebec is a serious point. Professor Donald Creighton has pleaded for a new
courageous approach to stop the process of blackmailing by the French Canadians. On
the economic association between the English speaking and the French speaking
Canadians he is of the view that the English speaking should not show the slightest
inclination on such a move which proposes to divide their country and threaten its
survival. The notion that the English Canada and Quebec need the political level by
making it clear that there would be economic stagnation if separatists pursue their goal to
independence. Quebec is more dependent on the English speaking Canada, particularly
on Ontario. Natural gas and oil are supplied from the western Canada.63

Bilingualism

Unanimous approval was given by the parliament in mid-1969 to the official languages
act which stipulates that “The English and French languages are official languages in
Canada” and that they “possess and enjoy equality of status and equal rights and
privileges as to use in all the institutions of parliament and government of Canada.”
Bilingualism was basically a political approach to satisfy the minority group in each

36
province and to strengthen the federal unity in Canada. From 1970 bilingualism
development programme was taken up with all sincerity, and the federal government
gave financial assistance to provincial government and municipalities for the
development of the two languages n public and private sectors. The Department of the
secretary of state works in collaboration with other agencies to promote bilingualism. 64

Multiculturalism

The persistence of the Canadian state is somewhat surprising, not to say impressive,
given its high level of ethnic linguistic, cultural and religious diversity. It has been the
locus of numerous and vibrant debates about the rights of aboriginal peoples and about
the accommodation of immigrants and ethnic minorities. It has been ( and is still) faced
with deep nationalist divisions which give rise to many constitutional battles over the
status of the French-speaking national minority concentrated in the province of Québec,
and has survived two referendums on the independence of this internal national group—
the first was held in 1980 when approximately 40% of the Québécois supported
secession, the second was held in 1995 when Québec almost gave its government a
mandate to negotiate the terms of separation with Canada by voting for 49.42% in favour
of secession. Although Québec’s nationalist affirmation has almost torn the country
apart, it has not been accompanied by a wave of ethnic violence and has been handled
relatively peacefully. What has enabled this persistence of the Canadian federation as
well as the peaceful cohabitation of antagonistic nationalist groups? The answer lies in
the multinational character of the Canadian federation which has been able to
accommodate its ‘deep diversity’65 (i.e. its multinational diversity) by allowing
Québécois to exercise some degree of autonomy. To explain the dynamics of
multinational federalism in Canada, it is necessary to draw a picture of ethno cultural
diversity in Canada in which it is possible to distinguish between different sources of
diversity. This will help to highlight the specific situation and claim of Québécois as a
national minority by contrasting it with other sources of ethno cultural diversity. 66

To assess the extent to which Canada can be said to be a multinational federation, it will
appear that although many aspects of the political structure and of the political processes

37
in Canada allow viewing it as a multinational federation, there are currently many
features of the Canadian political system which do not embody the idea of multinational
federalism. Further there are some obstacles to the adoption a multinational form of
federalism but none of them is insurmountable. To ensure the cultural freedom of the
Canadians a new policy of multiculturalism was introduced in October 1971. As a result
of the recommendations of the royal commission, on bilingualism and biculturalism, the
prime minister announced the federal government’s new policy which recognized the
cultural and ethnic pluralism in Canada. The prime minister said that a vigorous policy of
multiculturalism would help to create confidence among individual. In 1973, a 102
member’s Canadian consultative council on multiplication was established to provide
consultation to the minister of states on matters relating to the implementation of
programmers of multicultural policy.67

Ethno Cultural Diversity in Canada

Ethno cultural diversity in Canada is not a single phenomenon; it follows different

patterns and has multiple sources. These three kinds of ethno cultural minorities are -

(a) Ethnic and immigrant groups

(b) Aboriginal peoples and
(c) A national minority, that is, the Québécois who form a French-speaking society of
approximately 7.5 million people.

Canada has been a land of immigration since its very beginning. Whereas until the
second half of the 20th century immigrants and ethnic groups were mainly Christians of
European descent (Scottish, Irish, German), immigrant groups have become more and
more diversified in their provenance and religious allegiance ever since. This greater
diversification combined with the liberal commitment to the equal treatment of every
citizens regardless of their ethnicity, race, and religion have pushed Canadians to adopt a
multiculturalists policy which emphasizes anti-discrimination measures, the promotion of
cultural diversity in school curricula, the funding of ethnic organizations, grants some
exemptions from public holidays, dress codes (Allowing Sikhs, Muslims or Jews to wear

38
religious symbols in public institutions), etc. This set of measures aims at making
members of ethnic and immigrant groups full and equal participants in Canadian society
without requiring them to abandon important aspects of their cultural identity; its
objective is the fair integration of members of immigrant communities to the larger
society.68 Charles Taylor called it, the kind of diversity involved with ethnic and
immigrant groups “first-level diversity”69. What is at stake here is the accommodation of
cultural, ethnic and religious pluralism within a single political community. The rights
and policies associated with this kind of diversity aim at promoting the integration of
members of traditionally marginalized and vulnerable ethno cultural minorities to a
community of equal citizens in a way that is sensible to the value that members of these
minorities accord to their distinct identities.

However, as Taylor puts it, the kind of diversity involved with the two other types of
ethno cultural groups (aboriginals and Québécois) plays at another level; it is a second-
level diversity, or “deep diversity”.70 What is at stake at this level is not the integration of
members of ethno cultural groups to a single political community, but the
accommodation of certain groups whose members conceive of themselves as forming a
distinct community and share a desire to control their destiny together and act
collectively as a political actor, as a people, free from external rule. These groups
understand themselves as nations within a multinational state, which is, as peoples
entitled to self-determination.71 Accommodating these groups does not aim at offering
them fair terms of integration to a larger society, but rather requires allowing them to
enjoy a certain degree of self-government. Although the claims of the indigenous peoples
of Canada and those of the Québécois are located at the level of deep diversity, since both
want to be recognized as distinct society, or as nations, and want to exercise a significant
degree of territorial autonomy and self-government, they do represent two different
sources of diversity in Canada. Whereas Québécois form a single French speaking and
populous national minority concentrated in a given territory (Québec is the second most
populous province after Ontario), there are over 600 aboriginal bands in Canada and they
differ significantly amongst themselves; some are very small and isolated, while others
are located in urban areas and are intermingled with non-aboriginals, etc. In addition,

39
aboriginal peoples stand in a very distinct relation with the Canadian state, even when
compared to the Québécois. Whereas French-Canadians were the founding people of the
1867 Canadian confederation and have since then actively taken part in the decision
making process at both the federal and provincial level, indigenous peoples have been,
until the mid-1970s, largely excluded from exercising power and subjected to
paternalistic administrations. Because of their different dispersion on the territory and
historical relationship with the Canadian state and larger society, the claims for self-
government of Québécois and indigenous peoples cannot be met by the same institutional
arrangements. Reason is that, Québécois form a majority within a federal subunit, their
nationalist aspirations can be answered by a genuinely multinational federalism. This is
not the case of most groups of indigenous peoples, moreover some commentators point
out that many aboriginals want to achieve autonomy by negotiating a special political
status that would be external to the current federation and based on treaties anterior to the
1867 Confederation. Nationalism is thus closely related to the idea of self-determination;
it is the assertion of a group’s willingness to be the master of its own destiny, not a
conservative commitment to maintain a certain traditional culture.72 It treats them like
members of a pan-Canadian multicultural society, rather than as members of one of the
founding nation of Canada as a multi-national country.73 The same thing could be said
about the Canadian policy of Bilingualism, which affirms the bilingual character of
Canada as a single nation (it defines English and French as its two official languages and
forces federal institutions to provide services in both languages); its goal is to promote
Franco phones’ participation within a coast to coast pan-Canadian political community
rather than enabling an internal nation to enjoy territorial autonomy. States that are
characterized by what Taylor has coined ‘deep diversity’ must therefore take different
measures to accommodate national minorities than those they usually take to
accommodate ethnic and immigrant groups.74 Since national minorities conceive of
themselves as distinct political communities, they usually seek to be recognized as
nations by the state and they also seek to exercise some degree of self-government by
achieving territorial autonomy.

40
The Canadian Constitution

While the British North America Act, now known as the Constitution Act, 18667,
established two orders of government, each with a considerable array of jurisdictions, a
number of violations of the federal principle were enshrined in the Act. For example , the
provinces were given a significant set of powers in Section 92 of the BNA Act, including
“ local works and understandings” (Section 92.10), but the federal government could
assume control of these works by declaring them to be in “ the general advantage of
Canada or for the advantage of two or more provinces”(Section 92.10.C) This was known
as the declaratory power of the federal government and it was employed 472 times by
the federal government , mostly in the early years of the confederation. The most
egregious violation of the federal principle was the power enabling the central
government to disallow provincial legislation. In addition, the Lieutenant –Governor of a
province could reserve provincial legislation for consideration by the federal government.
These powers were also used extensively, at least 107 disallowances and 57 reservations
between 1867 and 1939. In both instances, disallowance and reservation, the sovereignty
of the provinces to legislative in their spheres of jurisdiction was compromised. The key
characteristics of federalism were thus rendered inoperative, at least until the 1940’s
when these practices were abandoned.75

The division of powers in the Canadian constitution was also quasi-federal. The “ Peace ,
Order , and a Good government “ (POGG) clause in the preamble to Section 91
contained the potential for the federal government to completely overwhelm all the items
reserved for provincial jurisdiction in Section 92 , including substantial heads of power
such as “ all matters of merely local or primitive nature “ and “property and civil
rights” Indeed the judicial committee of the privy Council (JCPC) concluded in the 1896
Local Prohibition case [i]f it were once conceded that the parliament of Canada has the
authority to make laws applicable to the whole of the Dominion in relation to matters
which in province are substantially that these matters also concern the peace, order, and
good government of the dominion, there is hardly a subject enumerated in Section 92
upon which it might not legislate , to the exclusion of the provincial legislatures. Lord

41
Watson thus ruled to limit the federal government’s ability to encroach upon jurisdiction
through the POGG clause. Lord Haldane later interpreted this clause as an emergency
provision to be used only as a measure of last resort. In short, the JCPC inserted the
federal principle in the constitution and gave the provinces of a degree of sovereignty in
their fields of jurisdiction. By the 1940’s most of the quasi-federal powers in the
constitution has atrophied the Canadian constitution is thus ambiguous. As whereas
concluded it is quasi-federal provinces has fallen into disuse, the fiscal systems remains
quasi-federal.

The Canadian Government

The Canadian constitution is not fully written in the sense the American constitution is.
Even the powers of the Prime Minister and the Cabinet are based on conventions deriving
strength from the British Convections.76 The Governor General of Canada has to act on
the advice of the P.M. and cabinet. The Governor – General has to act on his own in
every extraordinary situation, when none of the parties is in a comfortable position in the
house. The prime minister has to choose his cabinet members from each province. The
organisation and working of political parties are important matters in a parliamentary
democracy, because the stability of the government at the centre and in provinces
depends upon the integrity and the unity of the ruling political party. The liberal party
which claims to be more reformists in social, economic and political matters has been
winning the elections in the last decade. The progressive conservations are the main
opposition in the house while the new Democratic Party and social credit party of Canada
have also a few representatives in the House of Commons. The liberal party has been
taken initiative during its regime to encourage multiculturalism and maintain the identity
of various cultural groups in Canada. The liberal leadership has also made renewed
efforts from 1969 onward to foster bilingualism in the Canadian social and political life.
The position of the liberal party is relatively strong at the centre, but the fact cannot be
overlooked that its strength depends upon the support it receives from Quebec. If the
regional party (Party Quebecois) gets upper hand in parliamentary election in Quebec just
as it got in the provincial election, the liberal party will lose its character of central force
unifying the nation.77

42
After the Second World War the liberals had been most of the time in power at the
federal centre. The solid contingent of liberal M.P.s from Quebec had long been the
mainstay of the liberal party at the centre. When Liberals ruled with slim majority they
were vulnerable to pressure The Canadians members of Parliaments and the governments
of Quebec was in a better position to bargain with a week federal centre. Separate and
exclusive French –Canadian interests prospered because of the weakness of the centre
.The composition of the central government as well as the parliament is so designed that
the French Canadians are sometimes in a commanding position to pressurize the federal
centre . Two main results followed from this political situation: First the French
Canadian promoted the use of French language and the status of the French Canadians
throughout the Canada; Secondly to glorify the demand of autonomy for Quebec. The
regional representation in the parliament and the Central government cannot be
overlooked. Ontario and Quebec constitute more than half of the members of the lower
house (commons) and little less than half of the strengthen of upper house(Senate) – 48
out of 102 members. The house of common has 264 members out of which 74 come from
Quebec and 88 from Ontario. This clearly means that half of the parliament from Ontario.
This clearly means that half of the parliament has representation from the two provinces
Ontario and Quebec which was formerly known as the province of Canada. The senate is
not as powerful as the American senate and there is no equality of representation from the
ten provinces. The members of the senate are not elected by the provinces but they are
appointed by the central cabinet. Therefore, the ruling party in the House of Commons is
at an advantageous position as the new vacancies in the senate are filled on the
recommendations of the prime minister. The representatives of the opposition parties get
little chance of entering the senate.

The 264 members House of Commons functions mostly on the British pattern and
provides political stability in the confederation. Four political parties have generally been
represented in the House of the Commons the liberal party, the progressive conservative
party , the new democratic party, and le Rallimement des creditistes. During the regime
of the liberal party at the centre the separatist demand of French speaking Canada gained
momentum. At successive elections the bargaining position of the silent revolutionaries
supporting separate status for Quebec increased. The senate, or upper regional basis by

43
the governor-general on the recommendation of the prime minister, could not serve as a
check on the power like the American senate, and as such as a check on the increasing
regionalism in Quebec. The Senate does not enjoy powers like the American Senate, and
such there are lesser chances of political initiative in the Canadian senate. The Canadian
constitution prepared in the 19th century relied much upon the House of Commons as a
stabilising factor in the confederation. It was expected that the parliamentary system
would be able to meet the diverse pulls in the confederation. Political structure at the
centre and provinces was built on the basis that parliamentary elections would provide
the necessary training in political management and national unity.

After Second World War a new situation was created on account of economic
development, and increasing aspirations of people of various groups. The parliamentary
systems are increasingly required to cope with new dimensions in development and
provide safeguards for minorities. The provinces are claiming more and more autonomy
to provide services to local population. More and more centralising forces are coming up
to cope with modern developments tasks. But the success on local as well as national
projects depends upon the cooperation of the provincial units and local governments.
Planning in the urban area, development of new sources of energy and new devices to
meet the energy crisis, pollution, development of ocean science, and social welfare
schemes are some of the matters which concern most Canadians; these issues may pose
some new challenge to the centre-state relations. Apart from the constitutional division of
power between the centre and the provinces there are other matters of concern for all
Canadians , and the primary responsibility for the implementation of new programmes
lies with the provincial and local governments. A wide range of social services are
provided by the federal, provincial and local governments and by voluntary agencies in
Canada. The department of national health and welfare has the major federal role in
welfare schemes. A number of social security programmes are administered through the
department of national health and welfare. Provincial governments are responsible for
matters such as education working the provinces look after local affairs and they are
elected by the people. Thus the responsibility of the government is hared through a well –
knit process of decentralization in which there is participation of the people at various
levels of government working.

44
The ten provinces of Canada provide a variety in natural resources, economic production,
geography and climate. Brunswick and Prince Edward Island constitute 5.5 per cent of
the total area of Canada. These provinces are not advanced in industry but provide some
of the natural resources. The central provinces comprising of Quebec and Ontario are
industrially the most advanced provinces and they have a complex of modern industries,
abundant water resources and nuclear power installations. Quebec is second only to
Ontario in industrial development. Quebec is famous for its mining industry; and copper,
iron and asbestos are found in huge quantities. Ontario is equally significant for mining.
There is also intensive farming in Ontario. Among the three Prairie Provinces, Alberta
has enough of energy resources. Alberta has recently attained a strategic importance in
Canada as it produces about 70 per cent of Canada’s oil and 81 percent of gas, and has
nearly 42 percent of the country’s total coal production. Modernisation and economic
development of Alberta are realized through wealth and also famous for paper industry,
which suggests that economic development is interdependent and central Assistance is
given to provinces to meet the specific and general demands.78

The Courts

One institution that does have considerable power to check the power of the federal,
provincial, and territorial governments is the courts. They conduct judicial review on two
bases
1) The division of powers (as it is specified in the Constitution) and
2) Since 1982 on the basis of an entrenched Charter of Rights.
In both of these cases the courts have the power to rule legislation and to declare any
statute null and void if it is found to violate the terms of the Constitution.

The Federal, Provincial and Territorial Legislatures

The fusion of the legislative and executive branches of government within the federal and
provincial legislatures with executives chosen from within and responsible to the
legislatures, combined with strong political conventions of party discipline, have
effectively transferred legislative power in practice to the executive branches. The Senate

45
of Canada is the Upper House and its members are appointed by the prime minister and
hold office until retirement at 75. Although the Constitution gives the Senate, extensive
legislative powers these are rarely fully exercised because the chamber lacks democratic
legitimacy. As a result there are few checks on the power of the executive when it is
supported by a majority in the House of Commons. The House of Commons (the Lower
House) of Canada is elected by a first past the post electoral system and the number and
distribution of seats is based on population (giving provinces with a larger population
more seats). In the 41st election conservative party has won the election and Stephen
Harper has been elected as 22nd Prime Minister of Canada.

The Canadian prime minister must choose the executive from the members elected to the
House of Commons or from members in the Senate79 and as a matter of convention the
executive reflects regional, linguistic and other important interests. In order to stay in
government the executive must win votes in the Lower House on issues that are
considered central to their governing platform. This is usually assured by the electoral
system which gives the governing party a majority of seats and the use of party disciple
to ensure that members of parliament from the government’s party vote in support of the
executive’s legislation.80 This ensures a very stable executive and very stable government
(as long as one party holds the majority of seats) that faces few challenges from the
legislature or the Upper house. Provincial and territorial legislatures are unicameral.
These legislatures are elected by the same method as the federal House of Commons and
the relationship between the executive and the legislature is the same as it is in the federal
House of Commons.81

Constitutional Status of the Federal and Provincial Governments

The federal government and the 10 provincial governments are recognised and their
existence is guaranteed in the Constitution (Canada Act 1867, s.1-5). The federal and
provincial governments are independent of each other; there is nota hierarchical
relationship between the two orders of government. The provincial legislatures and the
federal parliament are each considered sovereign within their own constitutionally

46
defined areas of jurisdiction. The federal government has legislative and regulatory
powers in areas that include: regulation of trade and commerce, national defence, foreign
affairs, criminal law, unemployment insurance, and direct and indirect taxation. The
provinces have legislative and regulatory powers in important, and costly, areas that
include: education, health, social assistance, civil law (and the administration of justice),
municipal affairs, licensing, and management of public lands and non-renewable natural
resources and forestry resources, property law, civil law, direct taxation, “property and
civil rights within a province” and other matters of a “local nature.”

Local and Territorial Governments

Canada’s three territories remain under the constitutional authority of the federal
government and their legal structures are specified in several federal statutes.82 The
territorial legislatures derive their legislative powers from the federal government. In the
statutes that created the territories, the federal government delegated extensive powers to
the territorial legislatures that roughly correspond to the list of provincial powers. Local
governments (city governments, town governments, village governments, township
governments, etc) are the creation of the provincial and territorial governments and are
subject to regulation by the provincial and territorial governments that create them.83 It is
a federal state, with a Constitution that defines the respective responsibilities of the
central government and provinces. The most distinctive element of Canadian federalism
is its relatively decentralized nature in comparison with other federations. Thus, it has
strong provincial governments which, together with the local governments under their
jurisdiction, have total revenues and also total expenditures which slightly greater than
those of the federal government. There are ten provinces plus two northern territories and
about 5,000 municipalities84.

Conclusions can be drawn at large from the above. Canada started as a Quasi Federal
state but now it is a Genuine Federation. Canada began as a highly centralized Federation
but now it is a highly decentralized Federation. Canada began with a system of watertight
compartment but now Powers and Responsibilities of each Order of Government are

47
collide, entangle, and competitive. Initially the federal Government had a paternalistic,
oversight role at the beginning, now provinces are autonomous and two orders of
government are equally sovereign in their spheres of jurisdiction. Canada had in 1867 and
still has a federal system dominated by the executive at both levels but Quebec’s status in
the federation remains unresolved.85 Necessity of the new programs and endless
intergovernmental negotiations are responsible for a new approach on federalism; it is
often called executive federalism.86 The role of the executive has increased in planning
and development. In Canada the central government has not been able to establish direct
links with local bodies on new development programs. Local authorities take guidance
from the provincial government on the formulation of new plans; in many cases it is a
regional approach on development of local areas. The central government has to be
diplomatic in dealing with provincial and local bodies to handle serious problems of local
jurisdiction.87 Flexibility in the political process would help solve intergovernmental
relations.88

Federalism: A Comparison between India and Canada

The constitutional similarities between India and Canada are well known. Both of the
countries have a colonial past; both are parliamentary and federal democracies; and both
have institutionalized judicial review of constitutional matters. The Social and cultural
context for the operation of the constitutional framework in both of the countries is also
somewhat similar. While the Indian society may be more complex than the Canadian
society, both the societies have marked cleavages that strain the process of political
governance in the two countries.

Canada in 1867 and India in 1950 adopted a form of government broadly similar in
principle to the Westminster model prevalent in England, but with the modification that
they added onto a parliamentary framework a federal component. This combination of
parliamentary and federal principles of government was necessitated by social and
regional diversities characterising these two countries. However it was a combination in
which the parliamentary principle was predominant over the federal component. Canada
also found the Indian experience with Union State planning of some interest and

48
relevance. India is a leading federal system in the commonwealth and the third world
generally that has experimented with democratic planning for economic development-a
technique that originated with the socialist experiment in the U.S.S.R89. If economic
situation does not significantly improve to ensure reasonable measure of equity and
justice, there may really be a demand for a renewed role of the state in the economy. The
Indian experience may be relevant to Canada which has often found its public economic
policies riddled with federal provincial confrontations and wasteful use of natural
resources. The government in Canada have been alive to this problem. For Example, the
Trudeau government in the early 1970s entrusted the following three bodies with the
responsibility of planning- The Privy Council office, the treasury board and the
Department of Finance. But a senior Canadian academician pointed out “instead of
coherence and efficiency we got confrontation bureaucratic infighting and a draining of
morale”90 Taking of this experience, Thor burn advocates, “a process of institutional
innovation in which a federal provincial economic development commission would be
created”91 Post war Canada also setup a highly developed welfare state providing social
and economic securities to Canadians which to some observers still constitute one of the
important bases of Canadian identity. India could, by no stretch of imagination, be said to
have developed a welfare state, yet chapter IV of the constitution on Directive Principles
of State policy contains the promise of a welfare state, subject to the availability of the
necessary resources with the state. Nonetheless, with limited resources, India was
probably the first among the developing countries to have gone ahead to establish a
reasonable degree of social assistance to the needy sections of the population.92

In Canada, in seventies new departments have come up at the centre such as the
department of urban affairs, Department of Environment which have increased the scope
of activities of the national government. Promotion and co-ordination of urban policies
and programs fostered intergovernmental relationships.93 The federal government has the
responsibility to initiate new policy and programs and to co-ordinate efforts relating to
environmental protection. Provincial and local governments are finally responsible to
carry out the new programs but directions in consolidated form come from the national
government.94 Modern economic activities of the state and developmental policies have
increased the scope of national government in assistance programs. Federalism is more or
49
less regarded as a technique to maintain national unity while providing the scope for
regional powers and local institutions as to grow according to local traditions and
environment. Regional sentiments and cultural diversity have an impact on the working
of the federal polity95.

The social structure affects the federal system and likewise the style of federal working
has imprint on the social and economic life of the people and even on the style of foreign
policy and diplomacy. Diverse pulls are noticed with a federation and a search for proper
balance between localism and nationalism is possible provided there is a spirit of
accommodation. Through federal device it is possible to get the co-operation of people at
the local level of administration; the national government gets support on issue of
national importance96. Localism and regionalism may have their place in federation like
Canada but a balance between the regional forces and national unity is possible by
adjustment. The federal techniques of evolving national common understanding by
giving opportunity to local and provincial elements to play their role within the larger
frameworks of significant importance in the present day state politics, some feeling of
equality among the provinces, or federal units which may not be strictly at part on
account of socio-economic and historical factors, is important for the development of
federalism. If federalism is used as a mechanism for domination by a particular province
or racial group it will not be able to protect certain basis values such as justice and
equality.

A competitive approach by political parties and provincial and local organizations may be
useful to provide wider participation of people in federation. Instead of domination by
one party at the centre emergence of two national parties will have a far reaching impact
on the political structure and federal spirit. Clarity in direction and accountability in the
political process would increase with the two competitive national political parties.97
Federal –provincial relations have acquired importance in the Canadian political system;
in the absence of effective opposition parties at the centre the opposition is provided by
the provinces. Flexibility in the working of the parliamentary system would reduce the
problem of accountability. The Canadian brand of federalism is suitable for
decentralization; participation of people at the provincial and local levels would be

50
desirable to increase the credibility of the political process. Necessity of the new
programs and endless intergovernmental negotiations are responsible for a new approach
on federalism; it is often called executive federalism.98

Role of Government in Federal Economies99

In a federation that is economy which establish the type of a federation or operation of

the federal principles. In federal economies, role of the government is very important
which can be evaluated by examining the instruments which are being used by the
government. The instruments that governments use to undertake their economic activities
include -

Expenditures on goods and services - Governments may purchase labour, capital,

goods, and services from the private sector in order to provide goods and services to their
constituents. Such major expenditure categories as defence spending, transportation,
schools, and hospitals are included in their menu of goods and services expenditures. In
some cases, the public sector actually produces the goods or services. In others, it merely
finances their provision by private producers or the non profit sector.

Welfare payments - Government spending also includes transfer payments. These can
be provided to households in the economy, for example, in the form of welfare payments,
payments for disability, and payments to the elderly people. These transfers might be
administered through the tax system or through an agency responsible for delivering them
to their intended recipients.

Subsidies to firms- A particular form of transfer are a subsidy to firms in the private
sector, whose purpose is typically to assist the firm’s participation in the private sector in
ways that facilitate government objectives.

Vertical transfers - In a federation, transfers can also be from one level of government
to another. Most commonly, intergovernmental transfers go from higher-level to lower-
level governments, but in some cases they go the other way.

51
Taxation-Governments can, and do, use a wide assortment of taxes to raise revenues,
such as individual and corporate income taxes, general sales taxes, payroll taxes, excise
taxes, import and export duties, and property and wealth taxes, to name the main ones.
Different levels of government may have access to different taxes and may share some
tax bases.

User fees- Revenues may be raised from charges that are related to services provided.
Examples include water, garbage, and sewage charges, road tolls; licenses of various
sorts imposed on individuals and businesses; user fees for parks and recreational facilities
(entertainment tax); fines; and charges for luxury ,health and education services
(education cess).

Borrowing-In additions to raising revenues from taxation and charges, governments

typically borrow money, especially but not exclusively for capital projects. Because the
borrowed funds must be paid back in the future, they can also be viewed as postponed
taxes. Lower levels of government may be restricted in what they are able to borrow.

Money creation- Governments, through their central banks, may also be able to obtain
some revenues through the creation of money. To the extent that the creation of money
induces inflation (i.e., the money supply grows more rapidly than that needed to meet the
growth in the volume of transactions in the economy), it is viewed by economists as
being analogous to a tax, in this case a tax on holding money. Control of the money
supply, however, is typically not seen primarily as a source of revenues but as a means of
controlling the movement of aggregate economic activity by affecting interest and
exchange rates.

Regulation- Regulation is a non-budgetary way of influencing the allocation of

resources. It can take many different forms, including labour market regulation (hours of
work, union formation, discrimination laws, occupational licensing, rules for layoffs,
worker safety, etc.), capital market regulation (asset or liability rules for institutions,

52
bankruptcy laws, insider trading rules, accounting requirements, etc.), and the regulation
of goods and services markets (product liability, advertising rules, price and profit
regulation for large firms, competition laws, communications regulations, environmental
laws, regulation of natural resources such as fishing and forestry, etc.). In a federation,
one level of government may have some regulatory control over another.100

Now it is proper time to move towards our second chapter titled “Fiscal Federalism-
Theory and Approaches”.

NOTES

1
Retrieved from www.lawyersclubindia.com › Experts › Constitutional Law

2
Retrieved from parliamentofindia.nic.in/ls/debates/facts.htm
3
Retrieved from www.ambedkar.org
4
Retrieved from parliamentofindia.nic.in/ls/debates/vol7p1b.htm
5
Abstract from http://www.mp.gov.in/finance/ulb4e.pdf
6
J.Isawa Elaigwu, The current state of federations, some basic challenges, available on
http://www.igsronline.org/pdf/elaigwu.pdf
7
Robert P. Inman and Daniel L. Rubinfeld, Texas Law Review,May 1997, Volume 75,
Number 6, available at http://scholarship.law.berkeley.edu/facpubs
8
Amresh Baghchi, Fifty years of Fiscal Federalism in India, Kale Memorial lecture
delivered at Gokhale Institute of Politics & Economics, Pune on 08 December,2001, p.2
9
Christer Jonsson, Sven Tagil, Gunnar Tornqvist, Organizing European Space,
Michigan:SAGE publication,2000

53
10
Retrieved from www.cultorweb.com/

Prime Minister’s speech on the inauguration of 4th International Conference on

11

Federalism, 05 Nov. 2007, New Delhi

12
Jonathan Roddent, Comarative Federalism and Decentralization on Meaning and
Measurement ,in Comparative Politics, Published by: Ph.D. Program in Political Science
of the City University of New York: Vol. 36, No. 4 (Jul., 2004), pp. 481-500
13
Cheryl Saunders ,Options for Decentralizing Power: Federalism to Decentralization,
Melbourne : Melbourne Law School, available at www.constitutionmaking.org/files
14
Michael keen, IMF Staff Papers, Washington D.C.: IMF Publication, A quarterly
Journal of IMF, 1998,Vol 45
15
Retrieved from www.mp.gov.in/finance/ulb4e.pdf
16
Federal countries (twenty-three in 2008) include Argentina, Australia, Austria,
Belgium, Bosnia-Herzegovina, Brazil, Canada, Comoros, Ethiopia, Germany, India,
Malaysia, Mexico, Micronesia, Nepal, Nigeria, Pakistan, Russia, St. Kitts and Nevis,
Switzerland, United Arab Emirates, United States of America, and Venezuela. Nepal
became a federal republic on May 29, 2008. In addition five more countries – Democratic
Republic of Congo, Iraq, South Africa, Spain, and Sudan – have recently adopted
constitutional provisions with federal features
17
Brian Galle and Kirk J. Stark Bell, Beyond Bailouts: Federal Tools for Preventing
State Budget Crises,Bloomigton: Indiana University,2012,Vol 87,pp 13-14

18 Daniel J Elazer, Althusius and Federalism as Grand Design, Jerusalem: Centre for
public affair,1992, available on Journals.cambridge.org

19
Robin Boadway, Anwar Shah, Fiscal FederalismPrinciples and Practice of Multiorder
Governance, Melbourne:Cambridge University Press, 2009 available at
www.cambridge.org/aus/catalogue

20
John Kincaid, Anwar Shah, The Practice of Fiscal Federalism: Comparative
Perspectives, Canada:Mcgill Queens University Press,2007
21
Ibid
22
Not all federal countries are decentralized and not all unitary countries are centralized.
For example, Canada is highly decentralized, but Australia and Germany are centralized
federations, as is indicated by the share of sub national expenditures in consolidated

54
public expenditures. Nordic unitary countries are more decentralized than are Australia
and Germany.

23
Robin Boadway, Anwar Shah, Fiscal Federalism: Principles and Practice of
Multiorder Governance, Canada:Mcgill Queens University Press

Anwar Shah, “The Practice of Fiscal Federalism: Comparative Perspectives”, Canada:

24

Mc Queen University, 2007, p 26

25
Ibid, p. 27-28
26
Philip j. Weiser, Cooperative Federalism, and the Enforcement of the Telecom act,
Federal Common Law, School of Law, University of Colorado,
http://www.focusoncommerce.net

Anwar Shah, “The Practice of Fiscal Federalism: Comparative Perspectives”, Canada:

27

Mc Queen University, 2007

28
R. Dehem, J. N. Wolfe, The Principles of Federal Finance and the Canadian Case,
The Canadian Journal of Economics and Political Science , Canada: Wiley-Blackwell,
Vol. 21, No. 1 (Feb., 1955), p. 64

29
A.V.Dicey, Introduction to the Study of the Law of the Constitution, London: Elibron
Classics, Tenth Edition, 1914, p.146
30
A.V.Dicey, Introduction to the Study of the Law of the Constitution, Elibron Classics,
Tenth Edition, 1914, p.143
31
W.S.Livingstone, Federalism and Constitutional Change, London:Oxford University
Press, 1956, p. 13-14
32
Anthony Birch, Federalism Finance and Social Legislation in Canada, Canada:
Clarendon Press, 1955
33
Wheare, Federal Government, available at www.irs.gov/publications/p17/ch12.html
34
Rufus Davis, The Federal Principle Reconsidered- American Federalism in
perspective”, Australian Journal of Politics and History, ed., Aaron Wildavsky, p. 17
35
Modern Godzins, The American System: A New View of Government in the United
States; Transaction Publishers, 1982, William Ricker, Federalism: Origin, Operation,
Significance, Boston: Little Brown Publishing House, 196
36
Rufus Davis, The Federal Principle Reconsidered, Malden U.S.A.:Australian Journal
of Politics and History, p. 24
55
37
Ibid, p. 29
38
T Conlan, From Cooperative to Opportunistic Federalism, Public Administration
Review, 2006, p.663
39
A Gunlicks, German Federalism Reform: Part One , German Law Journal,2001, 111
40
J McMillan, G Evans and H Storey, Australia’s Constitution –Time for change?,
Sydney: Allen &Unwin, 1985, p 24
41
Bagchi Ameresh, Rethinking Federalism - Overview of current debate with some
reflections in Indian Context , Economic and Political Weekly, August 19, 2000
42
Rangarajan, C. and D. K. Srivastava , Fiscal Deficits and Government Debt in India:
Implications for Growth and Stabilizatio, Economic and Political Weekly, 2005, July
43
Loksabha Debates, Government of India, Vol 4 part 2 1956 col.6243
44
F.G.Carnell, Political Implications of federalism in new states, in U.K. Hicks et.al
available at books. Google.co
45
Bird, R. and A. Tassonyi, Constraining Sub national Fiscal Behaviour in Canada:
Different Approaches, Similar Results?, in J. Rodden, G. Eskeland and J. Litvack
(Eds.),Decentralization and Hard Budget Constraints, MIT Press, 2003
46
Boadway, R. and P. Hobson , Intergovernmental Fiscal Relations in Canada, Canadian
Tax Paper no. 96, Toronto: Canadian Tax Foundation, 1993
47
Retrieved from http://en.wikipedia.org/wiki/Canada
48
Emery. H. , Controlling the Creatures: An Historical Perspective on Financing Cities,
in P. Boothe (Ed.), Paying for Cities: The Search for Sustainable Municipal Revenues,
University of Alberta: The Institute for Public Economics, 2003, p.1-18.
49
North Atlantic Treaty Organization, Organization for Security and Cooperation in
Europe, Organization of American States, Asia Pacific Economic Cooperation.
50
Boadway, Robbin and Frank Flatters, Equalization in a Federal State: An Economic
Analysis, Economic Council of Canada, Ottawa: Canadian Government Publishing
House, 1982
51
Retrieved from http://www.kidport.com/reflib/worldgeography/canada/canada.htm
52
North West Territories

56
53
New Foundland
54
October 2012, Consensus Reportof Canada
55
H.G. Thorburn, Planning and the Economy: Building Federal-Provincial consensus,
Toronto :Tames Lorimar and Company, published in association with Canadian Institute
for Economic Policy, 1984
56
Retrieved from http://www.kidport.com/reflib/worldgeography/canada/canada.htm
57
Graham, K. and S. Phillips, Who Does What in Ontario: The Process of Provincial-
Municipal Disentanglement, Canadian Public Administration, Canada: Mcgill Queens
University Press,1998

Breton, Albert, and Anthony Scott, “The Economic Constitution of Federal State”
58

Toronto: Toranto University Press, 1978

59
Charles Taylor, The Dialogical Self, (304-314), in The Interpretive Turn: Philosophy,
Science, Culture, Edited by David R. Hiley, James F. Bohman, and Richard Shusterman.
New York : Cornell University Press, 1991, p 311
60
See interview given by the Quebec Minister of Inter government affairs, Claude Morin
to Peter C .Newman , MacLean ,June 27 , 1977,p. 10. Available at www.google.com
61
See Ibid
62
Anthony Birch, Federalism Finance and Social Legislation in Canada, Oxford:
Clarendon University Press, 1955
63
Wolfgang Koerner, The Foundations of Canadian Federalism, Political and Social
Affairs Division,Parliamentary Information & Research Service, Parliament of
Canada,December 1988, available at http://publications.gc.ca

64
Retreived from http://publications.gc.ca
65
Charles Taylor, The Dialogical Self, (304-314), in The Interpretive Turn: Philosophy,
Science, Culture, Edited by David R. Hiley, James F. Bohman, and Richard Shusterman.
New York : Cornell University Press, 1991, p 311

66
McAllister M. L., Governing Ourselves- The Politics of Canadian Communities,
Vancouver: UBC Press, 2004

57
67
Siegel, D., Municipal Reform in Ontario: Revolutionary Evolution, in J. Garcea and E.
Lesage (Eds.), Municipal Reform in Canada: Reconfiguration, Re-empowerment, and
Rebalancing, Oxford: Oxford University Press, 2005,pp.127-148
68
For a deeper analysis of the justifications of such multiculturalists’ policies and of the
rights they entail, see Will Kymlicka’s work, 1995; 2007.
69
Taylor, N.1,P.75
70
Ibid, 75-76.
71
James Tully, Multinational Democracies, London:Cambridge Press, 2001
72
This point is emphasized by Margaret Moore, The National Self Determination and
Secession, 2001, available at www.oxfordscholarship.com
73
McRobberts, Streets of Glory: Church and Community in a Black Urban
Neighbourhood, Chicago:University of Chicago Press, 2003, Daniel Weinstock, The
Moral Psychology of Federalism, 2007, 20-21
74
For the distinction between the claims of immigrant groups and national minorities, see
Will Kymlicka, 1995
75
Adam Dodek, The Canadian Constitution, available at www.dundurn.com
76
Kenneth McRobbert , Undergraduate Journal Of Political Science, Toranta: University
Of Toronto, 2003
77
Breton, Albert, and Anthony Scott, The Economic Constitution of Federal
States,Toronto: Toranto University Press,1978
78
Woolstencroft, Education Policies: Challenges and Controversies, in E. Fowler and
D,2001, available at www.cpsa-acsp.ca/papers-2007/MacLellan.pdf
79
Although members from the Senate can be appointed to the executive, but this is very
rare.
80
Sancton, A., Merger Mania: The Assault on Local Government, Canada:McGill-
Queen’s University Press,2000
81
Treff, K. and D. Perry, Finances of the Nation, Toronto: Canadian Tax Foundation,
2001

58
82
The Yukon Act, Northwest Territories Act, Nunavut Act, Government Organisation
Act, and the Federal Interpretation Act are those specified acts. Available at laws-
lois.justice.gc.ca/eng/acts
83
Sancton, A., Reducing Costs by Consolidating Municipalities: New Brunswick, Nova
Scotia and Ontario’, Canadian Public Administration 39-3: 267-289, 1996
84
Sancton, A., Amalgamations, Service Realignment, and Property Taxes: Did the Harris
Government have a Plan for Ontario’s Municipalities?, Ontario: Canadian Journal of
Regional Science, 19 90; J. Tremblay , Public Policy Review 23-1: 135-156, 2000
85
Papers of Intensive course on ‘Democratic Federalism’ ,Forum of federations, Canada,
2010, available at www.forumfed.org
86
Phillips Resnick, University of Columbia Press,1994, p. 71, available at
www.columbia.edu.. See also Kymlicka, Multioculturasme, 2001, p. 97-101
87
Kymlicka, 2001, p. 95
88
Tindal, R. and S. Tindal, Local Government in Canada, Sixth edition, Scotland:
Thompson Nelson publication,2004
89
Lazar, H., F. St-Hilaire et J.F Tremblay , Federal Health Care Funding: Toward a New
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90
H.G.Thorburn, Planning and the Economy: Building Federal-Provincial consensus,
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91
Ibid p. xv
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Slack, E. and R. Bird , Cities in Canadian Federalism , Toronto: Institute on
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93
Kymlicka, N 1., p.94
94
Siegel (Eds.), Urban Policy Issues, London: Oxford University Press, 276-294
95
Treff, K. and D. Perry , Finances of the Nation, Toronto: Canadian Tax Foundation,
2005
96
Kletzer, Kenneth, and Nirvikar Singh, The Political Economy Of Indian Fiscal
Federalism, In Public Finance Policy Issue For India, ed. Sudipto Mundle, New Delhi:
Oxford University Press, 1997 ,pp. 259-298.

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97
Supreme Court of Canada, Reference re Secession of Quebec, Para. 66. Available at
www.law.ualberta.ca/centres/ccs/rulings/
98
Resnick, N.1. , p. 71. See also Kymlicka, N.1. ,97-101.
99
Robin Broadway, Recent Development in the Economics of Federalism in Harvey
Lazar, ed., Towards a New Mission Statement for Canadian Fiscal Federalism, Kingston :
Institute of Intergovernmental Relations, 2000
100
Robin Boadway and Anwar Shah, Fiscal Federalism: Principles and Practices of
Multi order Governance, Oxford: Cambridge University Press

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