This study examines the decentralisation process by which local governance becomes instrumental in structuring effective state building mechanisms. A decentralised government offers incentives to forge a harmonious relationship between the state and society. Local self-government provides equal central and regional incentives and functions on the principle of “self-rule-shared-rule”. The federalisation ofterritorial boundaries which gives equal representation to every stakeholder mitigates crises and leads to successful nation building. While on the one hand, ethno-national centric demands have been well assimilated into the broader Indian union similar ethno-nationalist demands in Iraq have broken territorial integrity. The two cases have contrasting as well as similar conditions where one has been successful in managing the territorial viability of an ethno-linguistic state, while the other has failed to forge a national identity.
