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Synopsis Recent transformations in the party system coupled with the advent of economic liberalization have posed new challenges to India’s federal structure. Tracing the historical roots of India’s federalism, this book analyzes the changes brought about by the shift from one-party dominance to coalition politics and multi-party governance. Coupled with these changes, the author maintains that the process of economic liberalization has permanently altered the federal calculus in India. The book argues that these developments have transformed federal relations in India from intergovernmental competition between the central government and the states to interjurisdictional cooperation between the states. As a result, the states no longer need to rely exclusively on the central government for their economic and industrial development. Using recent and hard-to-get data, Lawrence Saez, examines the impact of foreign direct investment and portfolio equity investment on federal relations and the challenges they have created for the central government. He provides a unique comparison with China and shows that India has experienced considerable difficulties in implementing first generation economic reforms. On the other hand, the book maintains that India may have the upper hand in the implementation of second generation reforms, particularly privatization. Perhaps the first effort to analyze the impact of economic liberalization on India’s federal system, this book will be of considerable interest to students and scholars of politics, economics, public policy and development studies.