The Constitution of India provides for a polity with clearly defined spheres of authority between the Union and the States to be exercised in the fields assigned to them. There is an independent judiciary to determine issues between the Union and the States or among States to be exercised in fields assigned to them respectively. The Indian Constitution is basically federal in nature though the word "Federation" is nowhere used. The Constitution provides for a unifying central entity holding together a number of constituent units with all their diversity enjoying autonomy in their given sphere. It is a political system with extra authority and responsibilities to the Centre in selected matters and many ways.

2. Co-ordination, which is the mainstay of all federations, becomes more tenuous in a situation like that of India. With 28 States and 7 Union Territories and large areas of common interest and shared action among these constituent units and between them and the Union, co-ordination in policy formulation and policy implementation is a complicated challenge. As such a sustained consultation under the auspices of a formal forum is indispensable under the system.

 3. The results of the fourth general elections were a landmark in the sense that they qualitatively changed the political map of the country. Regional outfits of national parties and regional and State political parties emerged strong and occupied seats of power. One predominant theme in these changes was that while the Centre must retain its over-riding unifying authority it should not be done at the cost of the constitutional rights of the States and their rights against the Centre. These aggressive assertions made it imperative that the functional arrangement be clearly spelt out and an ongoing system of consultations among the States and between the States and the Union institutionalized.