The Centre has to play an important role in resolving conflicts between the regions and managing the economy in a broad economic sense, Chelliah has stated in a book "Federal India: Emerging Economic Issues" published by the Indian Tax Institute.

"Central government must have the powers to control the economy in the broad macro economic sense, there could be decentralisation of economic powers," the economist has stressed.

According to him, since there is now a multi-party system both at the state level and at the central level, there is naturally scope and desire for introducing more of decentralisation.

While following the decentralisation process, however, Chelliah has pointed out, "We have to remember that in a federation also even in a large country which is not a federation technically, there areconflicting interests between the regions." These cannot be left to be decided by the constituent units by themselves because they may not come to an agreement, he has outlined.

Citing an example, the economist has put the point in perspective. "A representative of a regional government may not care much for the common market because by itself that government may not be affected too much by the country losing the status of a common market, but for the country as a whole maintaining the unity of the internal market is a matter of extreme importance." Logically, there are areas which have to come under the control of the central government, which cannot be considered to be an undue interference in the powers of the state government, Chelliah has said.

"Even though we are for decentralisation, the central government will have to have a surplus of resources to transfer in some effective way sufficient resources to the backward areas in the interest of equalisation." It leads to the question of sharing thetotal resources, which is a tricky problem, feels Chelliah.