India is too big, too populated, too diverse and too corrupt to be managed by a single central government. The individual states don’t have enough freedom to frame rules and regulations that suits their state.
In federal system, the central government role is mainly confined to nation security and defense and individual states have more power to make their own rules. Also individual states have more control over tax collection and spending. For example, if we had federal system, then each state could decide their own tax rates and incentive schemes. A particular state may decide to completely abolish sales tax or have much lower income tax. This way states can complete with each other to lure more investment and to work hard to show good results. This may also lead to less corruption at central level. If India adopted federal system then there will be good cross learning between different approaches of state governments.
For India to have rapid progress and to become a developed country we should adopt federal system of governance.
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Federalism in India
The federal system is called the divide the government between national and state government. There are so many countries having federal system like Canada, Mexico, United States (US), and Australia. In Indian central government 25 states and 7 territories. Indian parliament of 2 houses Rajya Sabha (elected by state legislatures) and Lok Sabha (elected by people).