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In many ways, identity politics is both a consequence and a reaction to specific approach and model of modernization. The origin of Shiromani Akali Dal as a movement for reforms in religious institutions of gurdwaras, becoming a political party representing a community and then the leadership using religion for acquisition and use of power for caste, class and even family confirms the observation. A national identity is made out of the various cultural and ethnic identities that make up the state totality. Somehow, many states, particularly the post-colonial ones, remain prisoner to post-colonial understanding of state-building, considering ethno-cultural groups' demands and aspirations, particularly of those having a sense of homeland in the territory of their concentration, as threat to unity and integrity. Federalism must be dynamic and responsive to both external and domestic pressures. Federalism, as the dynamic element sets the tone for a continuing reassessment of centre-state relationships.