In which respect have the Centre-State relations been specifically termed as “municipal relations” ?

The correct answer is Option 4: Centre’s control of the State in the planning process.

This terminology gained prominence during the era of the erstwhile Planning Commission. While the Indian Constitution establishes a federal structure, the centralized planning process historically bypassed constitutional federalism, leading experts to describe Centre-State relations as "municipal relations."

• Erosion of Autonomy: Through the Planning Commission (an extra-constitutional body), the Centre dictated developmental priorities and resource allocation. States were often reduced to mere implementing agencies for central schemes, similar to how a municipality functions under a State government.
• Financial Dependency: Discretionary grants under the planning process forced States to follow Union directives to secure funding, undermining their legislative and administrative independence.
• Distinction: While legislative and administrative controls are constitutionally defined, the planning process exerted a unique, extra-constitutional dominance that fundamentally altered the federal balance, justifying the "municipal" comparison.