The package of economic reforms initiated by the new PV Narashima Rao government, is likely to generate a strong tendency towards dispersal of power. However, whether this tendency will grow and mature, will depend upon what supportive reforms, both political and economic, are taken by the Indian State. There is need for a sort of dual federalism as well as for freeing the market from the innate centralising impulses of monopoly capital. Deregulation, decentralisation and demonopolisation should grow together within a single framework of sustainable development and accountable government.