While natural resources are spatially located, their development is of a wider national interest. Gains from their development accrue to a large common market though the process affects local lives and environments. The distribution of powers and functions across levels of government and the way they play out determine the effectiveness with which various policy goals are met. The need to examine these becomes important given the increased demands from resource-bearing states for a more "fair" distribution of resource rents in buoyant commodity markets, and from local people in resource regions for greater recognition of their rights and compensation for the effects of resource development. This paper examines the federal structure in India in the context of minerals, and suggests ways in which this can be strengthened through expanding the space and institutional capacity for local governance and by improving compensation and the sharing of resource revenues.
