Thursday, August 14, 2014

Federalism – the experience of Brazil

Brazil follows a more decentralised federalism and gives special importance to the municipalities. Port Alegre city's pioneering and successful  'participatory budgeting' is a role model for the world. India could learn from the positive and negative aspects of the Brazilian system.

Federalism – the experience of Brazil

Brazil is one of the largest federal states in the world and one of the oldest, dating from 1889. The country started off with  a unitary central authority as a colony and later as a monarchy when it became independent from Portugal in 1824. It was turned into a federation as it became a republic in 1889 . Since then, it has oscillated between centralizing military dictators and authoritarian regimes and decentralizing liberal governments. When democracy was restored in 1985 after two decades of the last military dictatorship, Brazil became a federal republic under the constitution of 1988, the seventh since independence.

Empowerment of municipalities

The Brazilian federalism is unique since it has recognized and included municipalities as integral entities of the federal structure. The municipalities are invested with some of the traditional powers usually granted to states in federalism. The Brazilian municipalities enjoy independent and coequal status unlike in other federal countries where the states control the local bodies.

Brazil is a federation of 26 states and the 5564 municipalities plus the federal district of Brasilia. The states have their own constitution while the Municipalities have 'organic laws' .

The municipalities, whose populations range from a few thousand to many millions, have considerable autonomous powers and resources.The World Bank in its 1990 report ' The new fiscal federalism in Brazil" has commented that the municipalities have more money than they need while the federal government's revenues fall short of its spending needs. The municipalities are empowered to take decisions in many important areas, such as territorial management, land development, environment, local taxation and industrialization.

How federalism works

Brazil is an example of a more 'robust federalism' in comparison to other federal countries of the world in the extent of decentralization. Few federal countries give such a large share of the total tax revenue to the states and municipalities. The state governors have lot of power and clout  vis-a vis the federal government in certain tax and expenditure functions. After having suffered from the centralized military dictatorship in the past, those who drafted the 1988 constitution seems to have opted for decentralization which creates more powerful local leaders to balance any strong and ambitious president. Governors and mayors of wealthy states and cities compete with the federal president for power and resources. In fact, one of the federal presidents Itamar Franco, who was President of Brazil in 1992-95 later became the governor of the state of Minas Gerais in 1999-2003 and kept challenging his successor in Brasilia.

It should also be noted that another larger objective of such greater decentralization is to bring the government closer to the people. This has served well the young democracy of Brazil.

The Brazilian structure is also described as Cooperative Federalism since the management of the distribution of powers and responsibilities of the federal system is based on the assumption of cooperation between the three federal entities. 

The bicameral national legislature also reflects the federal spirit of the constitution. Each state, big or small, is represented equally by  3 senators elected directly from the states. The number of seats in the Chamber of Deputies is distributed according to the population in each state. In order to balance the larger and smaller states there is a stipulation that the states should have a minimum of 8 Deputies and maximum of 70.

Brazil could afford to be decentralized so much since its population of 200 million speak just one language and follow one religion and the country does not face any centrifugal forces.


Although the Brazilian federal system has served the country well so far, it is still a work in progress and is far from mature since it is just thirty years old. There are many challenges and flaws some of which are highlighted below. 

The excessive emphasis on decentralization in the model of cooperative federalism without defined distribution of responsibilities is a source of tensions. When states or municipalities do not carry out their responsibilities, there is no adequate mechanism for the federal authorities to remedy the situation. 

The structure of the revenue-sharing system is unbalanced and is being challenged frequently and in any case it has not helped adequately to deal with regional and income disparities.

Because of the large clout given to states and municipalities, the political parties have got fragmented and the national parties have become like a federation of state parties and the Congress 'an assembly of states'. The federal legislators give more importance to local interests than national concerns, hobbling and complicating the federal government's functioning and priorities. 

Relevance of Brazilian experience for India

India cannot afford to be as decentralized as Brazil's federation given the  vast Indian diversity of languages, religions, ethnic groups and more importantly separatist history and tendencies. Prime Minister Modi, who advocates a 'cooperative federalism' can learn from the downside of Brazil's excessive decentralization. 

India could study the empowerment of Brazilian municipalities and especially the "participatory budgeting" system successfully pioneered by the Municipality of Port Alegre, which had captured the imagination of Aam Admi party's Arvind Kejriwal. About 50, 000 citizens out of the total population of 1.5 million inhabitants of the city participate in the budget allocation of the 200 million dollar annual fund for construction and services. 

The Indian Ministry of External affairs could learn from the Brazilian foreign ministry's interaction with regional authorities. They have six offices in the major cities and regions of Brazil as two way communication points with state and municipal authorities as well as with civil society. These are headed mostly by ambassador-level officers. The foreign ministry takes the views of the local leaders on board on issues of regional integration such as Mercosur and external trade. MEA has recently opened offices in some cities of India but these are headed by junior level officers and are not able to serve a larger bridging role like the Brazilian diplomats do. 

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