Indian Federalism: A Background Paper: M. P. Jain

Indian Federalism : A Background Paper
M. P. Jain*
ΐ
THE SUBJECT OF federal-state relationship is of abiding interest
in any federal country. It is, therefore, appropriate that discussion in depth
is held on this subject at this seminar on Indian Constitutional Law which
is being organised after 25 years of the independence of India, and 23
years after the inauguration of the Indian Constitution. Much has happened
in the area of Indian federalism during this period. An attempt is made
in this paper to highlight the main trends which seem to have emerged so far
in this area.
TI
Federalism constitutes a complex governmental mechanism for the
governance of a country. It binds into one political union several auto
nomous, distinct, separate and disparate entities or administrative units. It
seeks to draw a balance between the forces working in favour of concen
tration of power at a central point and the forces which favour a
dispersal of the power in a number of units. Federalism thus seeks to
reconcile unity with multiplicity, centralisation with decentralisation and
nationalism with localism. The originality of the federal system which
lies in that power is, at one and the same time, concentrated as well as
divided. There is centralisation of administration and legislation in certain
areas along with decentralisation in other areas.1 A federal constitution
* Professor of Law, Delhi University andProfessor-in-Charge, Evening Law Centre

No. 1, Mandir Marg, New Delhi.
1. Reference may be made to the following articles on federalism by the author of
this Paper : M.P. Jain, "Federal Grants-in-aid in the U.S.A.," 1956 Vyavahar
Nirnaya, 245; "Taxing Powers in Canda," 1955 Vyavahar Nirnaya, 252;
"Federalism in India," 6 J.I.L.I. 355 (1964); "Central-State Fiscal Relation
ship in India (1950-1967) : A study of an Aspect of Indian Federalism", 16 Jabr-
buch Des of fanlichen Rechts Der Cegenwari, 465 (1968); "Some Aspects of Indian
Federalism," Jf. Pthe Max-Planek Institute 301 (1968). Some contemporary
literature on the subject to which reference can be made is : Alice Jacob,
206 Constitutional Developments Since Independence
establishes a dual polity, comprising two levels of government—a central

government having jurisdiction over the entire country in some areas, and
state governments, each of which exercises jurisdiction within defined
regional boundaries. A citizen in a federal country is subject to the decrees
of two governments.2 The totality of governmental powers and functions
are divided between the Centre and the states. Each level of government
thus functions within its assigned field. The several governments do not,
however, function in watertight compartments. They come in contact
with each other at several points, and thus a host of inter-governmental
relations arise in a federal country. The pattern of these relations is not
static; it is dynamic and is constantly finding a new balance in response to
the centripetal and centrifugal forces operating in the country, and, that is
why the subject of inter-governmental relations is of much significance to
a student of any federal constitution. The same is true of the Constitution
of India which establishes a dual polity comprising a Central Government
and several state governments.
HI
The framers of the Tndian Constitution learnt a great deal from the
experiences—the problems faced and the solutions attempted—of the federa
tions of the U.S.A., Canada and Australia, and their approach to the
structuring of Indian federalism was conditioned in good measure
by that knowledge. It will, therefore, be worthwhile to attempt a rapid
survey of some of the main trends in Ihe three English-speaking federations
not only as a background to Indian federalism but also as a help to
attempting and thinking of solutions to some of the problems at present
facing the country.
The American Constitution drafted in 1787 is the oldest of the contem

porary federal constitutions. The motive forces which promoted federalism
amongst the several colonies were defence and the felt-need to keep down
economic barriers among them. The U.S. Constitution follows a simple
method for dividing power between the Centre and the states. There is only
one list enumerating the powers of the Central Government and the rest of
the powers are left to the states. From an agricultural community of the 18th
century, the U.S.A. has emerged into an industrial giant of the 20th century.
In the meantime, the political philosophy has changed from laissez-faire
to that of social welfare state. The country has met several serious chal-
"Centre State Governmental Relations in the Indian Federal System," X J.I.L.I.

583 (1968); S.N. Jain, "Freedom of Trade and Commerce and Restraints on the
State Power to Tax Sale in the Course of Inter-State Trade and Commerce,"
X J.IL.l. 547(1968).
2. No reference is being made in this paper to local governments in the states.
Indian Federalism : A Background Paper 207
lenges of wars, depression and economic growth. This has been made
possible because the Centre, a very small affair to begin with, has grown
into a colossus and dwarfed the states in the process. This transformation
has taken place not so much through formal amendments of the Constitu
tion because of the rigidity of the amending process, but through the
process of judicial interpretation. The judiciary has helped the Centre,
first, by protecting it against the hostile state action, and then by conceding
a greater latitude to it by broadly interpreting its enumerated powers in
response to the demands of the times. The Centre now has control over
the economic life of the country through its commerce power which has
helped the process of industrialisation of the U.S.A.3 The Centre has full
control over foreign affairs and can implement a treaty, ratified by the
Senate, irrespective of the fact whether its subject-matter falls within its
enumerated powers or not. 4 Defence and war power,5 taxing power,
spending power, all have been given an expansive interpretation. The
mechanism of central grants to the states based on the Centre's spending
power have helped the states in providing better services to the people
than what they could have done through their own resource alone. On the
other hand, this has enabled the Centre to influence an area of govern
mental operations much larger than what its own enumerated powers would
have envisaged. A kind of centre-state partnership to promote people's
welfare has thus come into existence which has transformed the entire concept
and character of federalism. From a competitive relationship between the
Centre and states, the movement has been towards co-operative federalism.0
The states though by no means unimportant in the country's constitutional
and administrative processes, have, however, come to occupy a position
somewhat of junior partners to the Central Government whose primacy is
now an established fact.
In Canada, the growth of federalism has been greatly influenced by the

existence of bi-racialism and bi-linguism arising out of the English and the
French languages and cultures. The English-speaking majority wants a
strong Centre, but the French-speaking minority, concentrated mainly in
the province of Quebec, urges for a weak Centre and strong provinces so
3. Dowlingand Gunther, Constitutional Law, Cases & Materials 215-332 (7th ed.
1965).
4. Missouri v. Holland, 252 U.S. 416 (1920); United States V. Curtiss-Wright Export
Corp., 299 U.S. 304; Dowling, supra 386-8.
5. Steuart & Bro inc. v. Bowles, 322 U.S. 398 (1944); Woods v. Miller Co., 333
U.S. 138(1948).
6. Corwin, "National-State Co-operation—Its Present Possibilities'', 46 Yale L.J.
599 (1936-37) L.A. Warsoff, "Federalism, Re-examined", 18 N.Y.U.L.Q.R, 533,
(1940-41) Edward McWhinney, Comparative Federalism (1962); M.P. Jain,
"Federalism in India," 6 J.I.L.I., 355 (1964).
that it may preserve its language and culture at the provincial level.7 It is
ever suspicious of the English majority at ihe Centre. The scheme of distribu
tion of powers between theCentreand the provinces has given rise to prolific
case law. Drafted at a time when the U.S. A was faced with a civil war, the
framers of the Canadian Constitution (The^British North America Act,
1867) wanted to give primacy to the Centre so that it may deal with all
matters of national importance leaving to the provinces merely matters of
local interest. But the judicial interpretation has not followed this historical
approach. The Privy Council, influenced by the aspirations of the French-
Canadians, by its process of interpretation, shifted the balance in favour of
the provinces. The result is that in peace time, the Centre's power becomes
restricted to the enumerated 29 heads in section 91, and the provincial
power on 'property and civil rights' gets a very broad interpretation so
much so that the provinces have extensive powers in such fields as business,
labour, social services, roads, conservation and development.8 Tn times of
emergency, however, the Centre's general power becomes omnipotent and
enables it to face the war-emergency effectively. During peace time, on the
other hand, the Centre finds itself handicapped in several ways : it cannot
implement through legislation a treaty with a foreign country if its subject-
matter falls outside the enumerated heads;9 its limited capacity to deal
with socio-economic problems of an industrial society was demonstrably
brought home during the depression of the 1930 when a good deal of
Bennet's New Deal legislation was judicially declared to be uncon
stitutional.10 The development of Canadian federalism has been in striking
contrast with that of American federalism. In the latter case, the Centre,
' designed to be of limited powers, has turned out to be very strong, while
in the former case, a Centre purposely designed to be strong, has turned
out to have only restricted capacity to deal with the problems of a fast
developing economy. On the other hand, some of the provinces with
inadequate development find it difficult to discharge their functions adequa
tely with their own limited resources. This imbalance has been rectified
through various expedients, viz, delegation of legislative power by Parlia-
7. Bora Laskin, Canadian Constitutional Law 1-23 (3rd ed. 1969).

8. Dehcm & Wolfe, "The Principles of Federal Finance and the Canadian Case",
21 Can. Jl. of Eco. & Pol. Sc. 64; Scott, French Canada and Canadian Feder
alism in Evolving Candían Federalism 54-91 (1958).
9. The Labour Conventions case, 1937 A . C 326; Laskin, Some International Legal
Aspects of Federalism : The Experience of Canada in Currie (ed.) Federalism
and the New Nations of Africa 389-414 (1964).
10. The Weekly Rest case, Attorney-General for Canada v. Attorney-General for
Ontario, 1937 A.C. 326; Smiley, "The Two Themes of Canadian Federalism," 31
Can. Jl. of Eco. Pol. Sc. 80.
ment or a provincial legislature to a subordinate agency of the other,11
referential legislation,12 limited growth of co-operative federalism and
central grants-in-aid to the provinces. These techniques have inducted some
flexibility into an otherwise rigid constitutional mechanism amendment of
which is extremely difficult owing to the opposition to any shift of balance
of power in favour of the Centre by the French-speaking Quebec.13
The developments in Australia have been parallel to those in the U.S.A.
The Centre there has specified powers but, on the whole, the judiciary
has given them an expansive interpretation. Under its defence power,
it assumes a very dominating position during the war;14 it has full control
over external affairs and can implement any treaty; its power over
commerce and arbitration of industrial disputes enables it to deal with the
problems of economic and industrial growth. But, even with all this,
there exists a feeling in some quarters in Australia that in the peace time,
the Centre lacks adequate power to deal with the socio-economic problems
of a modern industrial community.15 Efforts to amend the Constitution
have been made from time to time to correct the lacunae but these have
not succeeded because of an extremely rigid process of constitutional
amendment.18 Australia has made notable contribution to the concept of
co-operative federalism by evolving the concept of fiscal need grants to the
deficit states through the agency of the Commonwealth Grants Commis
sion, and also by creating a Loan Council for co-ordinating borrowing by
the various governments. Perhaps, of all the three federations, Australia
has gone the farthest on the road of a co-operative approach to federalism.
A review and study of the salient trends in the three federal systems
have many lessons for an Indian. Firstly, they provide the necessary pers
pective to the federal structure envisaged in theConsitution, for the framers
of the Indian Consitution were, no doubt, influenced by these developments
and they had drawn a number of lessons therefrom. Secondly, they
provide the necessary perspective and frame of reference to evaluate the
post-constitutional developments in India. Thirdly, they give us new ideas
and techniques to help us in solving our modern problems.
11. P.E.I. Potato Marketing Board v. Willis, (1952) 2 S.C.R. 392; for a comment
on this case see 30 Can. B.R. 1050 (1952); John D. Coughlin v. The Ontario
Highway Transport Board, [1968] S.C.R. 569. Also see the references cited in
Bora Laskin, supra note 7 at 65-66.
12. Lord's Day Alliance of Canada v. A.G.B.C, [1959] S.C.R. 497.
13. Alexander, "A Constitutional Strait Jacket for Canada," 43 Can. B.R. 262
306(1965).
14. Marcus Clarke v. The Commonwealth, 87 C.L.R. 177 (1952-53).
15. Else-Mitchell (ed.), Essays on the Australian Constitution (2nd ed. 1961).
16. Evatt, Post-War Reconstruction and the Constitution in Post-War Reconstruc-
tion in Australia, 238-262; Report of the Joint Parliamentary Committee of Both
Houses of Parliament on the Australian Constitution (1959),
210 Constitutional Dzvelopments Since Independence
The lessons which can be drawn from a survey of the three foreign
constitutions are as follows. Firstly, in each federation, need has been felt
for a strong Centre so that the variegated problems facing a country in
modern times, problems of defence, socio-economic problems of an indu
strial society, eic, may be properly and effectively tackled. Each of the
three federal countries, in varying degrees, has exhibited this tendency,17
and, therefore, inter alia, it provides a justification to make the Centre
strong in India. Secondly, the constitutional frameworks of the three
federal systems have proved to be extremely rigid. Formal amendments
therein have been an exception rather than the rule. This has thrown a
heavy burden on the courts to introduce some measure of flexibility through
their interpretative process, as well as it has necessitated invention of
new and varied expedients to enable the federal structure to meet the
contemporary needs. Thirdly, courts play an important role as the balance-
wheel of a federal system as they seek to effect necessary adjustments in
the federal system in response to the changing needs, though it may be
correct to say that their role is becoming somewhat less important now
than what it used to be earlier. Lastly, the accent in each country
presently is on co-operative federalism. This is a phenomenon of the day
which helps a federal system, with its divided jurisdiction, to solve many
problems of a modern welfare industrial society. Finance plays a signifi
cant role in the evolution of this concept.
The founding fathers accordingly, designed the federal system in India

on three pillars—a strong Centre, flexible federation and co-operative
federalism—the concepts which have emerged, in varying degrees, in the
three English-speaking federations.
IV
Apart from the experiences of other countries suggesting a strong

centre, there were some very good indigenous reasons in India itself for
having a strong centre.18 The past history of India conclusively establishes
that whenever the central power had become weak, the country quickly
disintegrated. Memories of partition on the eve of independence were very
green in the minds of the people and this suggested to the framers of the
Constitution the need for taking adequate precautions to ensure unity and
prevent any fissiparous tendencies. The problem of defence also loomed
large on the horizon due to the not so friendly attitude of the neighbouring
countries. Above all, India's socio-economic progress had been retarded for
17. For details in a short c-mpass see Sawer, Modern Federalism 64-154, 179-187
(1969).
18. M.P. Jain, Indian Constitutional Law 329-333 (1972). Granville Austin, The Indian
Constitution: Cornerstone of a Nation 186-194 (1966),
centuries. The framers of the Constitution foresaw that the country would
have to force the pace of economic development so as to compress into
decades the progress of the centuries, and this could only be done effectively
by mobilising national resources and using them properly under central
leadership. A unitary constitution could not have been adopted because
of the vastness of the country and the variety of its people and local pro
blems and, therefore, the second best course to adopt was to have a federal
structure with a strong Centre. The founding fathers thus had a pragmatic
approach, keeping in view the unity and welfare of the country as the
objectives to be promoted. The accent on the Centre was facilitated by two
existing factors—historical background of the country and the existence of
one unified all-India political party. For long, before independence, British
India had been governed more or less as a unitary entity, and, although in
1937, federalism was sought to be introduced under the Government of
India Act, 1935, it never took off the ground and worked in pratice, as
under the impact of the second world war, India was administered under
the emergency powers more as a unitary, rather than a federal country.
As regards (be political party, because of the national struggle for

independence against the British, the Indian National Congress had built
up a broad mass organisation, spreading throughout the country, and all
the governments at the time of the Constitution-making owed allegiance
to this party; it was the predominant party in the Constituent Assembly
and this facilitated the process of strengthening the Centre.
The Centre's strength lies in its large legislative and financial powers,
and in its control over state legislation and administration in certain
situations. The flexibility of the Indian federalism lies in the expedients
designed to mitigate the proverbial rigidity of a federal system by increasing
the Centre's powers temporarily if a situation so demands. As noted
above, in other federations, the Centre has, at times, felt handicapped to
take effective action to meet the socio-economic needs and this is sought
to be avoided in India by having built-in mechanism to enable the Centre
to get more powers without resorting to a formal amendment of the
Constitution. Even the rrethod of amending the Constitution (as regards
the federal portion) is rather flexible. This can be amended by each House
of Parliament passing a Bill by a special majority, its being ratified by one-
half of the state legislatures and then receiving the President's assent.
Though, at times, it may prove difficult to obtain the needed state concur
rence, or the special majority in Parliament for a particular amendment,
yet, on the whole, this procedure is not as intractable as the amending
procedures in Australia and the U.S.A.
The concept of co-operative federalism has been worked out in India

in a number of ways as discussed later. There jsalso the judiciary with

powers to interpret the Constitution and thus to draw the necessary
balance in accordance with the needs of the times. In fashioning the
Indian federal system, the founding fathers have not only adopted some of
the expedients prevalent in other federations but also showed originality
and ingenuity in devising some new techniques of their own which amount
: to a distinct Indian contribution to the theory and practice of modern
' federalism. It would, however, be wrong to get the impression that the
states are completely subservient to the Centre. They have their own
powers; they do not exist merely at the sufferance of the Centre but
claim their status, rights and powers from the Constitution itself,
and many conventions have been evolved making them more auto
nomous in practice than what they would look to be in theory. The states
have significant legislative powers given to them by the Constitution.
Then, recently, some political forces have been released, and this has,
to some extent, cabined the central initiative because the Centre finds it
more expedient to carry the states along with it rather than always threaten
to use its reserve powers. It might, therefore, be misleading if one were
to take his ideas about the Indian federalism merely from the constitutional
text. For drawing a balanced picture, one has to search for practices and
operating forces underneath the surface of the formal constitutional
provisions.
Since its inception, the Indian federalism has been called upon to meet
many challenges, stresses and strains. The rejoicing of Independence was
marred by a colossal migration of population between India and Pakistan
creating heavy burden on the concerned governments to rehabilitate
millions of unfortunate people. Then, in a bid to improve and ameliorate
the material well-being of the people, and to create a social order based
on social justice, India has embarked on an ambitious and stupendous
programme of socio-economic reconstruction through planning. The Indian
five-year plans are comprehensive and cover practically every aspect of
national life, such as, industrialisation, agriculture, land reforms, population
control, village panchayats, natural resources, social services such as educa
tion, health, housing, etc. The implementation and fulfilment of these
'. programmes necessitate a complete mobilisation, utilisation and exploita
tion of the country's material and human resources. The country has been
continuously faced with economic difficulties arising out of scarcity
conditions because of drought or floods, shortage of food, inflation, etc.
There have been difficulties on the borders and the country has thrice faced
external aggression resulting in a long spell of emergency. Stresses and
strains have arisen within the body politic itself because of the language
problem manifesting itself in various forms such as re-organisation of the
states on a linguistic basis, inter-state border disputes, etc. Above all,
India has witnessed the significant political phenomenon of one political

party—the Indian National Congress—completely dominating the scene at
the Centre and the states for a long time. This also had an abiding impact
on the develoment of inter-governmental relations in India. One party rule
throughout the country facilitated the working of the Indian federalism in
its formative stages. It kept tensions between the various governments in a
low key, and promoted inter-governmental co-operation. As all govern
ments in the country owed allegiance to the same party, many problems
amongst them could be resolved informally at party forums. Even with all
this, inter-governmental tensions were not entirely unknown. But then, in
1967, as a result of the general elections, the political situation in the
country underwent a sea change. The dominance of the Congress
Party was broken, and quite a few states came under the sway of other
parties—which range from extreme left to extreme right. With this arose
an era of confrontation between the Centre and several state governments.
A good deal of what had come to be accepted in the area of federalism
during the last 17 years came to be questioned and challenged. In 1971,
the political situation underwent a change again. The Congress was again
returned to power with a large majority and, thus, the inter-governmental
relationships have become less bitter.
Some of the problems raised during the period 1967-71 have not been
solved so far. The questions of central-state relationship and inter-state
relationship continue to figure in discussions from time to time and there is
no knowing as to when the political situation of the period 1967-71 may be
repeated in future with all its tensions in the central-state relationship.
An attempt is made in this paper to spotlight some of the crucial problems
of the Indian federalism.
V
A problem which has constantly bedevilled the growth of the
federal system in India since its inception is the question of re
organisation of the states. The Constitution had adopted a three-fold
classification of states. There were Part A states, Part B states and Part
C states. Part A states were the erstwhile Governors' provinces of the
British India, Part B states were constituted out of the erstwhile princely
states, and part C states were a heterogeneous lot—some were the old
princely states and some were the old Chief Commissioners' provinces in
the pre-Constitution era.
The question of reorganisation of states had been engaging the attention
of the political leaders for quite some time prior to independence. As early
as 1920, the Congress Party had come to accept the idea that the provinces
should be reorganised on linguistic basis. It had been felt that the then
Ί\4 Constitutional Developments Since Independence
existing provinces were not based on any rational basis, were mostly
accidents of history, and created administrative difficulties because of their
multi-lingual character and so the provinces should be reorganised in
such a way that each province had one major linguistic group. However,
when independence came, this process was not undertaken because the
leaders were assailed by doubts regarding the wisdom of linguistic reorgani
sation of the country. They were afraid that linguistic chauvinism might
generate parochial tendencies leading to weakening the unity of India. A
committee consisting of Nehru, Patel and Sitaramayya and later the
Dar Commission examined this question but advised caution. So
the provinces were left as they were and constituted into Part A states.
But this did not solve the problem. Public opinion in some regions started
asserting itself in favour of linguistic reorganisation and the first fruit of
this agitation was the formation of the Andhra State in 1953 by separating
Telugu-speaking areas from the then Madras State. Even this could not
contain public demand, and the Government of India was thus led to appoint
the States Reorganisation Commission to consider the problem of, and make
recommendations for, the linguistic reorganisation of the country. As a
result of the Commission's report, most of the states were constituted on
a linguistic basis in 1956.19 Even the commission's recommendations had
to be changed under public pressure. For example, it had proposed that
Telangana might be kept as a separate state,20 but the Telugu-speaking
people wanted one state for all Telugu-speaking people and so Andhra
Pradesh was born. The Commission had also recommended a separate
Vidarbha State, but the Government of India merged this area in Mahara
shtra.21
The States Reorganisation Act, 1956, did away with the distinction
between Part A and Part B states. Part C states ceased to exist as such;
some were merged with the states and others designated as Union
territories. Even this process did not finally solve the question of re
organisation of states and several changes have occurred since then. Thus,
in 1962, the Bombay State was divided into States of Maharashtra and
Gujarat. The State of Nagaland was created in 1962. In 1966, the Punjab
was divided into States of Punjab and Haryana. Recently, States of
Himachal Pradesh, Meghalaya, Manipur and Tripura have been created. But
even with this, the process of reorganisation cannot be said to have been
completed. There was a demand for breaking up of Andhra Pradesh
into Andhra and Telangana. There are other demands and counter-
demands for creation of new states. One such case is Vidarbha in
19. The Report of the Stales Reorganisation Commission (1955).

20. See the Report, id. at 107.
21. Id. at 125.
Maharashtra. There are muted voices also for the division of Uttar Pradesh.
The Central Government does not appear to have evolved any consistent
policy in regard to reorganisation of states. It appears to start with an
instinctive resistance to any such demand after public agitation for that.
The demands for new states are based on many factors—emotional,
desire for political power, economic backwardness, etc. People in a back
ward region feel that the pace of their economic progress would be quick
ened if their region is given the status of a separate state. At times, people
are led to demand new states because they feel that their individual
identity, language and culture could be better preserved by having a state
of their own as has happened in the case of Nagaland, Meghalaya and the
Punjab. In this respect, federalism may be compared with the fundamental
rights. Just as fundamental rights safeguard individual freedom against
government encroachment, so a state in a federal structure seems to the
concerned group as the best method of preserving its own individual
identity.
In theory, there appears to be no objection in having a few more sates.

The view that creation of new states jeopardises the unity or integiity of
the country or weakens the country does not seem to be correct. A state
may be regarded as an administrative unit in the scheme of federalism and
the main considerations for demarcating new states may be homogeneity,
economic viability, opportunity to make quick economic progress, and a
better and more efficient administration, it may be worthwhile for the
Seminar to devote its attention to the question of reorganisation of
the country.
VI
The pivotal point in a federation is the allocation of law-making powers

between the Centre and the constituent units. The Indian scheme of
distribution of powers is more elaborate as compared to the schemes in
the U.S.A., Canada and Australia. List I contains 97 entries with respect
to which the Centre has exclusive right to make laws;22 List II enumerates
66 entries for exclusive legislation by the states, and List III contains 47
entries for concurrent law-making by both the Centre and the states.
Matters in List I are such as need a uniform law for the whole country;
those in List II admit of local variations, while in List III fall such matters
22. The Centre has been given extensive powers of legislation over such matters as
defence, foreign affairs, many forms of communications, currency, taxation,
foreign and interstate trade and commerce, incorporation of trading companies,
banking and insurance, industries, mines, some educational institutions,
some aspects of education and health.
2Í6 Constitutional Developments Since Independence
in which, if lccal treatment is found wanting, uniformity may have to be

secured on a national basis.23
As a matter of abundant caution, List I contains 7 entries relating to
defence and 12 entries relating to foreign affairs. In other countries, only
one entry is found about each of these matters but in India it has been
ensured beyond doubt that the Centre has complete jurisdiction over all
aspects of these matters. The Centre's power over foreign affairs has been
further strengthened by article 253 which lays down that it can make any
law to implement any treaty, agreement or convention with any other
country, or any decision made at an international conference, association
or body. This has been done to avoid any difficulty of the type as has
arisen for the Central Government in Canada in this area. In the economic
area, Centre's primacy has been ensured. Thus, in such fields as companies,
banking, insurance, there are uniform central laws. It has complete control
over foreign trade which is exercised through the Imports and Exports
(Control) Act, 1947. It can take under its control any industry as entry 52 is
very flexible. It has exercised this power by bringing under its regulation a
number of industries through the Industires (Development and Regulation
Act, 1951. Also, tea, coffee and other such products have been brought
under central regulation. Similarly, the Centre can regulate mines and
minerals to any extent it wants under entries 53 and 54 in List I, and it
has exercised this power by enacting the Mines and Minerals (Development
and Regulation) Act, 1957, under which the authority to grant mining
leases rests with the states subject to an appeal to the Centre, and also
the rates of royalties for minerals payable to the states are to be fixed by
the Centre. Under the Oilfields (Regulation and Development) Act,
1948, the Centre has taken under its control the regulation of oilfields and
development of mineral oil resources. The granting of mining leases in
respect of any mineral oil is to be regulated under the rules made by the
Centre. In exercise of its power in the Concurrent List, the Centre has
enacted the Essential Commodities Act, 1955, to regulate trade and com
merce in many essential commodities. Thus, the Centre has enacted a
mass of economic legislation.
The states' legislative powers, on the other hand, though not so broad
as those of the Centre are, nevertheless, significant and touch the people
perhaps more intimately. They have to maintain law and order. Agricul
ture and irrigation on which the prosperity of the country so much
depends, fall within their domain. They can regulate industry and mines
after what has been left over by the Centre. Education is their preserve
23. The Concurrent List contains, inter alia, general laws, public welfare, labour
matters, trade monopolies, regulation of essential commodities, economic and
social planning.
and the Centre's powers in the area are limited. Health falls in their
jurisdiction as well as roads, waterways, trade and commerce. They can
legislate in the concurrent field to the extent left unoccupied by the
Centre, and even when the Centre has made a law on any matter, a state
law can be kept alive, although inconsistent with the central law, by the
expedient of presidential assent.
Usually, the distribution of powers in a federation between the Centre

and the states is rigid, as the balance drawn between them cannot be
disturbed unilaterally by any one of them. The process of constitutional
amendment is also rigid and is not -capable of being effectuated easily.
Gradual adjustments in the balance,of powers is effected by the process
of judicial interpretation, but there are times when it fails to rise to the
occasion and make the needed adjustments to meet the situations at hand.
To some extent, rigidity of the federal systems has been mitigated by
techniques of co-operative federalism, but these techniques are of limited.
efficacy and are resorted to because better and more effective methods are
not available.· There have been times in the federations of the U.S.A.,
Canada and Australia, when lack of necessary powers in the Centre has
been keenly felt as pressing problems have demanded solutions. India in
this respect Breaks new ground as the Constitution contains a few unique
provisions, not to be found in other constitutions, for making temporary
adjustments in the scheme of central-state distribution of powers which
introduce an element of flexibility in an inherently rigid federal structure.
Firstly, the long Concurrent List on the model of Australia, reduces to
some extent the barriers which otherwise would arise if the two levels of
government were to have only exclusive powers. A further mcastucof
flexibility in this area has been introduced by providing for a method of
keeping a state law alive in the face of a central law. Secondly, two or
more states can delegate power to Parliament to legislate on a specified
state matter. 24 This provision has been borrowed from Australia, but the
24. See article 252, The Constitution of India. A number of states have, delegated
to the Centre power to enact law to regulate prize competitions—a state
subject. A uniform all-India law was thought to be desirable for this purpose
because usually these competitions were run by out-of-state journals which
a state law could not effectively regulate. The expedient of stale delegating
powers to the Centre has also been used for enabling the Centre to enact a
comprehensive law levying estate duty on agricultural as well as non-
agricultural property. Jurisdiction in this respect is fragmented under the
Constitution. While agricultural property falls within the state sphere, the
non-agricultural property is under the central ambit. It was felt that it
would be inequitable to tax only non-agricultural property and not the
other. There were problems of aggregation of the assessee's entire property
for tax purposes and so a central law was thought to be a desideratum.
There is now a proposal to urge Parliament to enact a comprehensive Act to
¿18 Constitutional Developments Since Independence
interesting fact remains that while it has not been used at all in Australia,
it has been used in India quite a few times. Thirdly, under an emergency,
the Centre gets powers to legislate in the state sphere. Fourthly, by a
resolution passed by the Council of States supported by two-thirds of the
members present and voting, the Centre can legislate on a stale matter
for a year, and each time the Council passes the resolution, the power
can be extended further for a year. This unparalleled provision has been
used a few times but not too often. The theory underlying the provision
is that the Council of States represents the states as such, as it ¡selected by
the state legislatures on the basis of proportional representation. The
House thus reflects the political forces in the country, and if too many
states are opposed then it may be difficult to mobilise necessary support
in the House for passing the resolution for making a temporary adjust
ment. 25 But then, it is also a fact that the House is divided on party lines
and voting has never taken place there on state basis, and, therefore, if the
ruling party can muster the needed strength in the House, it can
have the resolution carried through. The procedure is of strictly temporary
efficacy as the resolution's effect is limited to one year. If past experience
is any guide, this method will be resorted to only when national interest
demonstrably so demands and to tide over a situation of a temporary
nature. Lastly, certain entries in the Union List have been so worded as
to make the ambit of the central power flexible, enabling Parliament to
legislate to the extent necessary in a given situation leaving the rest of the
area to the states. For example, entry 52 in List I runs as "Industries the
control of which by the Union is declared by Parliament by law to be
expedient in the public interest." Thus, the Centre can declare any
industry as a centrally controlled industry.28
Then, even in the field open to the states, the Centre can control, to
some extent, state legislation in certain areas. Thus, under article 31 (3),
a state law compulsorily acquiring or requisitioning property needs the
President's assent to be valid. This provision enables the Centre to keep
under control state power to acquire property and ensure payment of
check river water pollution from domestic and industrial wastes. As legislation
on this subject is relatable to entry 17 read with entry 6 in List II, the state
legislatures will have to pass necessary resolutions to empower Parliament to
undertake the necessary legislation. Gujarat, Haryana, Jammu and Kashmir,
Kerala and Mysore Legislatures have already passed the necessary resolutions.
Resolutions have also been passed recently by several state legislatures to
enable Parliament to impose a ceiling on urban property.
25. According to Sawer, the Council of States "Provides a fairly substantial
regional counter weight to the representation in proportion to population of
the House of the People," and he considers this as a factor in favour of India's
Constitution being considered as federal, supra note 17 at 46.
26. Other such enlries in List I are 7, 23, 27, 53, 54, 56, 62, 63, 67, etc.
compensation for the same. Again, certain types of land legislation have
been freed from the restrictions of fundamental rights, but a state law can
claim this immunity only if the President assents to it.27 This ensures that
only a justifiable use is made of the legislative power by the states. By
the Constitution (Twenty-Fifth) Amendment Act, 1971, article 3 IC gives
overriding effect to article 39(b) and (c) over articles 14,19 or 31, but a
state law can claim this effect only if assented to by the President. Central
assent is also needed when a state law endangers the constitutional position
of the High Court or imposes a tax in respect of water or electricity stored,
generated, consumed or sold by an inter-state river authority constituted
by Parliament,28 or imposes reasonable restrictions on freedom of trade,
commerce and intercourse within the states.29 These are specific situations
where central assent to state legislation is necessary for its validity. But,
then, a general provision authorises the state Governor to reserve a Bill
passed by the state legislature for presidential consideration and assent.30
No norms have been laid down in the Constitution as to when the
Governor can exercise this power, or when the President can refuse to
give his assent to a state Bill, and on its face, it appears to be a blanket
power. The Governor is a nominee of the Centre. It has not been made
clear whether the Governor is to act in this matter«n the advice of the
state ministers or on his own responsibility. Obviously, it is difficult to
think that the state ministers will give him such an advice, and, therefore,
he will act either on his own initiative or on the 'dictat' of the Centre. The
most debatable case so far in this area has been the Kerala Education Bill
case.31 In 1957, the Kerala Legislature passed a Bill to provide for the
better organisation and development of educational institutions in the
state. The measure raised a storm of protest, and the Governor reserved
the Bill for presidential assent. The Centre, in order to keep the matter
above partisan politics, sought the advice of the Supreme Court which
reported that a few provisions of the Bill infringed the fundamental right
guaranteed by article 30(1). The Bill was returned to the state for
necessary modifications in the light of the Supreme Court's opinion.
No doubt, the constitutional provisions requiring Central assent to

state legislation do detract, to some extent, from the autonomy of the
states. There are also inherent in these provisions seeds of centre-state
conflict, for, with various political parties in power at the Centre and
states, differences of policies and approach amongst the various govern
ments may naturally arise. It, therefore, becomes incumbent on the
27. First proviso to article 31 A, The Constitution of India.
28. Proviso to articles 200 and 288 (2).
29. Article 304 (b).
30. Article 200, 201.
31. In re the Kerala Education Bill, 1957, A.I.R. 1958 S.C. 956.
Centre to exercise its veto power over a state legislation only in very rare
-cases, as for example, when there is inconsistency between a state law and
a central law, or a state law violates the Constitution or the established
national policies like the industrial policy, etc. A strong opposition group
in Parliament can keep the Central Government under check in exercising
its powers. Much depends on the political reality of the situation. So
far, however, the Centre has been circumspect in exercising its controlling
powers over state legislation. On an average, the Centre assents to nearly
100 state Bills every year under various heads. A fascinating question
awaiting investigation is the way the Centre has hitherto used its power of
controlling state legislation through the mechanism of Presidential assent
under various constitutional provision. What norms, if any, have been
established for the purpose ? How, and on what criteria has the Centre
exercised its powers ?32 These questions obviously have an intimate
relevance with the legislative relationship between the Centre and the
states. Experiences of Canada may also be helpful in this regard as there
also the Central Government enjoys the power to disallow provincial
legislation.
Though India has three elaborate lists enumerating over 200

entries, still questions continually arise whether a particular piece of
legislation falls within the central competence or the state competence, but
even then there have not been many controversies in this area worthy of
notice.
The broad interpretative norms as laid down in some of the cases under
the Government of India Act, 1935, are still followed by and large by the
courts because the structure of distribution of powers under the Constitu
tion remains basically the same as under the Act of 1935. Speaking
generally, the approach of the courts has been to uphold the impugned
legislation. Not many laws have so far been declared to be unconstitu
tional on the ground of the legislature concerned going out of its legislative
field. Challenges to ths central laws have been much fewer than those to
the slate legislation and, on the whole, the courts have been liberal towards
the Centre's powers. Three types of controversies may be identified in the
area of distribution of legislative powers. Firstly, there arise the questions
of interpreting entries to spell out their proper ambit in order to determine
whether apiece of legislation falls within a particular entry or not. The
32. See in this connection the results of an investigation made by the Indian Law
Institute as given by S.N. Jain in Freedom of Trade and Commerce, supra
note 1 at 558-561. The study reveals that it is only in a very few cases that
presidental assent has been refused which indicates that "so far the process of
presidential assent has not acted as a substantial threat to the autonomy of the
States", id. at 561.
general norm, however, is to interpret an entry broadly, bringing within its

scope all incidental and ancillary matters because the legislative entries set
up a 'machinery of government' and are 'heads of legislation'.33 Secondly,
various entries in different lists may appear to overlap and there arises the
question of determining interrelationship among them. The judicial
approach in such cases has been to establish harmony among the various
seemingly conflicting entries, by restricting the ambit of broader entry in
favour of the narrower entry so that the latter is not eaten away by the
former. This interpretative norm has helped the states, as the Centre's
powers are more generally worded.34 But there is at least one instance
where this norm has been invoked by the courts to curtail the states'
pDwer viz., in the G.ijiral University35 case discussed below. Thirdly, a
law may appear to relate to an entry in one list and also to an entry in
another list and this raises the question whether the law has been
validly enacted by the enacting legislature. In such a situation, the courts
apply the principle of pith an i substance; they determine the true nature
and character of the law in question so as to decide under what entry it
falls. The doctrine of pith and substance gives quite a good deal of
manoeuvrability to (hz courts, and out of a number of choices available,
the courts usually adopt the one which would favour the constitutional
validity of the impugned law.36
While it docs not appear to be necessary for thi purposes of this paper
to review the case-law in the area of distribution of powers, reference
must, however, be made here to two cases for their special signifi
cance in the Indian federalism, viz. Gujarat University v. Sri Krishna37 and
Dhillon's case.3* As is well known, in the Gujarat case, the Supreme Court
was called upon to delineate the respective spheres of respansibility of the
Centre and the states in the area of university education. This brought
into question the area of interrelationship among several entries, viz.
entries 63, 61, 65, 66 in List I; entry 11 in List II; and entry 25 in List III.
The main question raised in the case was whether the State of Gujarat was
competent to legislate prescribing Gujarati and Hindi as the exclusive
media of instruction at the universities in place of English. The court
interpreted the word 'education' in entry 11, List II, somewhat narrowly so
33. Calcutta Gas Co. v. State of West Bengal, A.I.R. 1962 S.C. 1044.
34. In re the C.P. and Berar Act, No. XIV of 1938, A.I.R. 1939 F.C. 1; State of
Bombay v. Balsara, A.I.R. 1951 S.C. 318; Tikaramji v. State of U.P., A.I.R. 1956
S.C. 676.
35. Gujarat University v. Sri Krishna, A.I.R. 1963 S.C. 703.
36. Atiabari Tea Co. v. State of Assam, A I.R. 1961 S.C. 232; O.N. Mohindroo v.
Bar Council, A.I.R. 196? § C· 888.
37. Supra note 35.
38. A.I.R. 1972 S.C. 1061,
as to carve out of it the matters falling in List I and List TIL The Centre's
power under entry 66 was given primacy over the state's power under
entry 11, on the ground that while the former was specific, the latter was
general and in the interest of harmonious interpretation of the Constitution
the general power should give way to the specific one. It was thus held
that the power to legislate in respect of medium of instruction in the
universities should fall to the Centre as it has a direct bearing on the
'co-ordination and maintenance of standards.' Even if the Centre does
not exercise this power, the states do not become authorised to legislate in
respect of that matter. The validity of a slate law on university education,
held the court, would, therefore, depend on whether it prejudicially affects
'co-ordination'and'determination'of standards. Thus, the validity of a
state law fixing a regional language or Hindi as an exclusive medium of
instruction and examination in the universities, superseding English to that
extent, would depend on the question whether it would necessarily result in
the lowering of standards. This means that the court would veto a state
legislation prescribing a regional language as an exclusive medium if it
holds the view that adequate text books do not exist in the language con
cerned, that competent teachers are not available and that the students do
not have adequate capacity to imbibe education in the concerned language.
The above view has been diluted to some extent by the Supreme Court in
Chitralekha v. State of Mysore.™ In this case was involved a state law
prescribing a higher percentage of marks for extra-curricular activities for
admission to medical and engineering colleges. Holding the law to be
valid, the majority held that the crux of the Gujarat case was that if a
state law under entry 11, List ΙΓ, made the exercise of legislative power of
the Parliament under entry 66, List I, impossible or difficult, the state law
might be bad. The majority view in the Chitralekha case did seek to give
a greater freedom to the states in the matter of university education than
what the court had envisaged in the Gujarat case. In the Gujarat case
it was held that a state law which had the effect of lowering standards in
university education, would be bad. Nowhere did the court say in that
case that only such a state law would be bad which sought to destroy the
Centre's power under entry 66.40 This gloss was put on the Gujarat case by
Justice Subba Rao only to dilute somewhat the effect of the case on the
state's power in respect of university education. The importance of the
39. A.I.R. 1964 S.C. 1823.

40. Nayak in "Education : The Central-State Legislative Relationship,'' 14 J.I.L.I.
562 (1972) suggests at 566 that the Chitralekha case has reiterated the Gujarat
view. As said above, in ray view, the Chitralekha case dilutes the Gujarat case
to some extent. Another case on the medium of instruction at university level
is D.A.V. College, Jullundur v. State of Punjab, A.I.R. 1971 S.C. 1737. This
case has not been noted here as it raised questions mainly under fundamental
rights in articles 29 and 30 and not under the distribution of legislative powers.
Gujarat case lies in giving an expansive interpretation to the Union entry

and in seeking to contain the linguistic chauvinism of the states.14
Union of India v. H.S. Dhillon^ is a pronouncement of major signifi
cance insofar as it seeks to give an expansive interpretation to the Centre's
residuary powers. Here was involved a central law, the Wealth Tax Act,
imposing wealth tax on agricultural and non-agricultural property. The
Act was upheld by the Supreme Court under the Centre's residuary powers.
The subject-matter of the legislation was held not to fall under entry 49,
List I I ; it did not wholly fall under entry 86 of the Union List as well.
The court's majority view was that the subject-matter of the impugned law
did not fall und^r any entry and so the Centre could justifiably legislate
under its residuary powers ; or that even if a part of the Act fell within
entry 86, the residuary clause could stil! be invoked to justify the rest of
the legislation. The main point, as is well known, arose because entry
86 in List I excep'.ed 'agricultural land' from its purview. Did this mean
that it was also excepted from the purview of the Centre's residuary
powers? In earlier cases,43 the residuary power had been invoked when
the subject-matter of legislation did not fall within any of the lists. In
Dhillon's case, the question posed was whether residuary power could be
invoked to make law on a topic partly included in an entry and partly
excluded from the scope of an entry. The principle formulated then was
that the test to determine the scope of residuary powers was to examine
whether the subject-matter of legislation fell under List II or III or not.
N o question need be asked whether it fell in List I or not. If the subject-
matter did not fall under List II or List III, then Parliament would have
the requisite power. To reach this result article 248 was invoked accord
ing to which Parliament has exclusive power to make any law with respect
to any matter not enumerated in the Concurrent List or State List. The
minority, on the other hand, took a restrictive view of the residuary power.
It ruled that once a topic or field of legislation is enumerated in any
entry in any List, then the residuary power cannot be invoked. There
is no doubt that the majority view denotes a liberal approach as regards
the Centre's power and is in consonance with the judicial attitude
of interpreting the legislative powers liberally. The Centre can now use
its residuary powers broadly. The minority view, on the other hand, has
41. M.P. Jain, ''Constitutional Aspects of the Language Problem in India," 1967/68
Year Book of the South Asia Institute, Heidelberg University, 116-139.
42. Supra note 38. For a comment on the case see, Alice Jacob, "Residuary
Power and Wealth Tax on Agricultural Property : A Note on Union of India
v. H.S. Dhiilon," 14 J.l.L.l. 80 (1972).
43. Jaora Sugar Mills v. State of M.P., A.I.R. 1966 S.C. 416 ; Had Krishna v.
Union of India, A.I.R. 1966 S.C. 619; Second G.T.D. Mangafore v. D.ff,
Nazareth, (1970) J S.C.C. 749,
the serious flaw that it could give rise to a vacuum in the Constitution as
there could be matters on which neither the Centre nor the states could
legislate. Imposition of wealth tax on agricultural property would have
been one such matter if the minority view were to be accepted.
On the whole, it may be asserted that the scheme of allocation of

powers as interpreted by the judiciary has well stood the test of time and
has fulfilled so far, and is capable of fulfilling in the future, the contem
porary needs of the country. After the majority ruling in the Dhillon
case, any danger that any vacuum may arise in the area of legislationjias
receded. Adjustments in the central-state legislative sphere is a constant
problem in a federal system. In the U.S.A., the needed adjustments have
been achieved through the judicial process. In Australia and Canada,
the necessary adjustments, to some extent, have been effected both by
judicial process and constitutional amendment, but still the position is not
regarded as satisfactory as the Centre feels hamstrung in economic sphere.
in Tndia such difficulty may not arise. The courts have played a creative
role in the area as is evidenced by the cases mentioned here, although the
elaborate nature of the entries in the lists do not provide much leeway
for the judicial interpretative process. By and large, the courts decide in
favour of the existing legislation and principles of interpretation are
flexible enough to enable them to reach such a result. Whenever, however,
there has been a serious conflict on a crucial matter between the Centre
and the states, the courts have by and large sought to support the Centre's
power. 41
So far only a few formal amendments have been made in the scheme
of legislative relations. The Third Amendment of the Constitution made
in 1955 rediafted entry 33 in List III so as to enable the Centre to enact a
law to regulate trade and commerce in certain essential commodities in
short supply in the country like food, sugar, cotton, etc. The Sixth
Amendment made in 1956 added entry 92A to List I so as to enable the
Centre to tax inter-state sales which were earlier going practically tax-free
to the detriment of the inter-state trade and commerce. These amendments
have given additional powers to the Centre to meet new challenges which
could not otherwise be met effectively. Many more proposals have been
mooted from time to time to effect some modifications in the scheme of
centre-state legislative powers. As for example, in the wake of the
Supreme Court's decision in the Gujarat University case, the Government
of India appointed a Parliamentary Committee, known as the Sapru
Committee, to examine the Constitution regarding the responsibility of
the Centre in the field of higher education with a view to finding out the
44. See State of West Bengal v. Union of India, A.T.R. 1963 S.C. 1241.
extent to which the Centre could assume greater responsibility in this field
and to suggesting appropriate steps for the purpose. The committee
suggested in its report in 1964, that 'education' be transferred from the
State List to the Concurrent List, retaining entry 66 in List I as it was.
Nothing concrete came out of this exercise as the states opposed the move.
They were not prepared to accept any diminution of their powers in respect
of education. Recently a non-official Constitution Amendment Bill seeking
to make education a central subject, was debated in the Lok Sabha, but
there was stiff opposition to such a proposal. The general consensus was
that it would be difficult for the Centre to develop education in every
nook and corner of the country and that the state governments were
capable of handling the subject and, therefore, the present arrangement
should continue. There is extreme reluctance on the part of the states
against their power on 'education' being curtailed in any manner whatso
ever. The Bill was ultimately withdrawn.45 It, of course, stands to reason
whether such a change is desirable and whether or not the Centre can
fulfil its policy goals with such powers as it already has at its disposal. In
the view of the author, the Centre can achieve much more in the sphere of
university education under its present powers, than it has sought to do so
far. There does not appear to be any immediate prospect of any change
in the status quo in the area of 'education' and so the Centre should try
to achieve whatever it can under its existing powers and there is no doubt
that it can achieve a lot if it is so minded.46 Another proposal under
consideration of the Central Government at present is to amend the
Constitution to take away river waters from the jurisdiction of state
governments and declare water to be a 'national asset'. This is necessary
to develop wate,r resources on a national scale as at present such schemes
are held up indefinitely by interstate disputes.47 Parliament at present
has power under entry 56 in List I to regulate and develop inter
state rivers and river valleys to the extent Parliament desires. It is not
clear what more power the Centre wants to cope with the problem
and whether the states have agreed to the proposed constitutional
amendment.
On the other hand, from time to time, voices have been raised against
'too-much' of centralisation, particularly in the economic area. Palkhivala
has deplored the expansive use made by the Centre of entry 52
in List I in "gradually transforming industries into a Union subject without
45. Lok Sabha Debates, 6-4-1973.
46. Reference may be made in this connection to the author's article, "Central-
State Jurisdiction in Higher Education in India," 2 Jl. of Univ. Education ¡81-
189 (1964).
47. Statement of K.L. Rao, Minister for Irrigation and Power, The Times of India,
26-1-1973.
amending the Constitution". According to him, in the case of industries

with a capital of Rs. 25 lakhs and over, the Centre now has control over
as much as 93 per cent of them in terms of the value of their output. He
would like the Centre to confine itself to industries "vital to national
development" or "where a state would not allow industries to start or
develop". 43 Some states have demanded transfer of some powers from
the Centte to the states, as they feel that the Centre has too jnany
powers while the states have too few powers and that this imbalance
needs to be rectified. So far, these ideas have remained vague and
nebulous, and no concrete and specific suggestions have been form
ulated as to what specific powers should be given to the states. The only
attempt made so far in this direction is the appointment of the Centre-
State Relations Inquiry Committee, popularly known as the Rajamannar
Committee, by the Government of Tamil Nadu. In its report released in
1971, the committee has made certain recommendations to transfer
certain maUers from the Union List to the State List, e.g., entries 48, 53,
54, and 55. It has also suggested transfer of certain concurrent matters
to the State List, e.g., entries 5, 8, 17, 19, 22, 23, 24, 25, 28, 30, 31, 32, 33,
34, 35, 36, 37, 38, 39, 40, 42, and 45. It has furher suggested the transfer
of the Centre's residuary power of legislation to the states on the ground
that "in all the Federations the residuary powers vest in the constituent
units". 49 The proposals made by the committee are drastic and suffer
from an overstatement of the states' case. They have not evoked much
of public enthusiasm as is clear from the fact that they have neither been
endorsed in full by any state nor by any all-India political party.
VII
The ordering of the centre-state financial relationship in a federal polity
constitutes a complicated exercise, for, the crux of the matter is not only
just to allocate resources amongst the two levels of governments so that
each of them may somehow find some funds to carry on its functions, but
there also arises the additional problem of balancing the financial resources
of each government with its allotted responsibilities and functions. An
imbalance in the function-resource equation at any level will necessarily
lead tobad government and create tensions in the fede al system. A
viable scheme of centre-state financial relationship is the sine qua non for
the p oper functioning of a fede.al polity as a whole, and it is one of the
most difficult objectives to achieve because of economic disparities of the
states and several other factors.
The framers of the Indian Constitution drew an elaborate scheme of
centre-state financial relationship. In doing so while they sought to adopt
48. The Times of India, 5-4-1973.
49. The Report of the Centre-State Relations Inquiry Committee 25-56 (1971).
some of the techniques developed in other federations, they also tried to

avoid some of the difficulties and pitfalls which have arisen there. The
Indian Constitution demarcates the taxing powers of the Centre and
the states; taxes of a local nature have been given to the states while taxes
with a tax-base extending over more than one state, or which should be
levied on a uniform basis throughout the country and not varying from
state to state, or which can be collected more conveniently by the Centre
rather than the states, have gone to the Centre. A beneficial result of this
seheme has been to eliminate all problems of multiple and overlapping
taxation which have arisen in an actue form, because of concurrent taxing
powers, in the other federations creating manifold complications both for
the tax-payer as well as the tax collector.50 The wisdom of the technique
adopted in India can be underlined by reference to the centralisation of
income tax and estate duty in Canada and Australia during the second
world war with a view to exploiting these tax areas to their optimum
capacity.51
However, the technique of separation of centre-state tax resources has

also created the problem of imbalance between resources and functions at
the state level. Most of the expansive functions have been allotted to the
states, such as agriculture, education, roads, irrigation, etc. The taxes
allotted to the states, on the other hand, are not very expansive and are
hardly sufficient by themselves to enable the states to meet their growing
needs. The founding fathers themselves realised this and sought to augment
resources of the states by providing for transfer of funds to the states from
the Centre through the techniques of tax-sharing and grants. Tax-sharing
envisages that the Centre shares some of its taxes with the states. All the
taxes leviable by the states are used by the states themselves, but all taxes
leviable by the Centre are not meant for its exclusive use. Income-tax on non-
agricultural income is compulsorily shareble by the Centre with the states,
while excises are voluntarily shareable. Some of the taxes levied by the
Centre are used entirely by the states. Thus, the tax resources of the states
have been appreciably augmented and those of the Centre correspondingly
curtailed. The revenue transferred from the Centre to the states by way
of tax-sharing is unconditional and the states can use tbe money in any
way they like. Over and above this, the Centre is also required to make
50. Guaranty Trust Co. v. Virginia, 305 U.S. 19 (1928); International Harvester Co. v.
Evatt, 329 U.S. 416 (1947) For Canada, see Anderson, ''Succession Duties—
Double Taxation", 15 Can. B.R. 620 (1937). For Australia, Broken Hill South
Ltd. v. The Commissioner of Taxation, 56 C.L.R. 337 (1936-37).
51. South Australia v. The Commonwealth, 65 C.L.R. 373 (1942); State of Victoria
v. The Commonwealth, 99 C.L.R. 575 (1957),
grants to these states which need financial help. Thus, under article 275
Parliament has been authorised to provide by law as grants-in aid to the
revenues of such states as it decides to be in need of assistance.
These grants are characterised as fiscal need grants. These are not to be
given to each and every state but only to such states as are in need of
assistance. The amount of money payable to the states as fiscal need grants
is also unconditional and the states can use this money as they like. There
appears to be little doubt that the inspiration for this provision has come
from Australia where such grants are given by the Central Government
to some state governments every year. An autonomous finance commission
is appointed every five years to make recommendations regarding the
quantum of tax-sharing and fiscal-need grants.
The Finance Commission can be regarded as the balance wheel of the

Indian federal financial relationship. The basis of transfer of funds from
the Centre to the states has not been fixed by the Constitution. This has
been left flexible to be adjusted from time to time by the Finance Commis
sion. Since the Constitution came into force in 1950, five such commis
sions have made recommendations on these points and the Sixth
Commission is at present engaged in the exercise. With each commission,
progressively the amount of central funds transferred to the states has
been increasing.
A few examples may be cited here of this process. On the eve of the
appointment of the first commission, 50 percent of the central income-tax
was transferred to the states. In a bid to increase the resources of the
states, the first commission increased the states' share in central income-
tax to 55 per cent; the second commission increased the same to 60 per
cent; third commission raised this to 66.6 p;r cent and the fourth commis
sion enhanced it to 75 per cent. The fifth commission kept it at that
figure, for, it thought that the Central Government, being responsible for
the levy and collection of the income-tax, should have a significant interest
in it.
The Union excises which under the Constitution are only optionally
shareable are now shared between the Centre and the states. The process
was intitiated on a modest scale by the first commission, but thereafter,
with each commission the process of sharing the excise revenue between
the Centre and the states has been carried further continually. The fourth
commission made the entire excise revenue of the Centre sharable with the
states up to an extent of 20 per cent. The fifth commission maintained
that ratio but increased the revenue flowing to the states from the Centre
by merging the special excise duties in the divisible pool. These special
duties had hitherto been used exclusively for central purposes. Sharing of
central excise duties with the states has been quite helpful in augmenting
their financial resources, for the excise duties constitute an expanding
source of revenue in an economy which is fast becoming industrialised.
In the area of fiscal-need grants as well, the revenue flowing to the
states have increased tremendously over the years. The first commission
had recommended these grants for seven states amounting to Rs. 50.5
million a year. The second commission recommended these grants to 11
states and increased these to Rs. 395 million a year. The fifth commission
suggested fiscal-need grants to Andhra Pradesh, Assam, Jammu and
Kashmir, Kerala, Mysore, Nagaland, Orissa, Rajasthan, Tamil Nadu and
West Bengal to the tune of Rs. 637.85 crores over a five-year period.
In fixing the states' share in the divisible pool of the central funds,
each commission has sought to reduce regional disparities to some extent,
so that the resources of the poor states are strengthened. For example,
in fixing the states' share in the divisible pool of income-tax revenue,
greater weightage is given to the population factor and much less weight-
age is given to the collection factor. The first commission suggested
distribution of 80 per cent on the basis of population and 20 per cent on the
basis of collection. The third and fourth commissions had also adopted the
same principle, but the second commission while holding the view that the
principle of collection was not an equitable basis for distribution and should
be completely abandoned in favour of the principle of population, nevertheless
gave to collection 10 per cent weightage as against 90 per cent to popula
tion. This formula was approved by the fifth commission as well. The
Union excise duties among the states are divided 80 per cent on the basis
of population and 20 per cent on various criteria indicating social and
economic backwardness. In givingfiscal-needgrants under article 275,
broad fiscal-needs of the states are taken into account, but as the author
of this paper has argued elsewhere, the meachanism for granting fiscal-
need grants is somewhat inadequate and leaves much to be desired.52
Besides, the fiscal-need grants, the Constitution also makes provision
for 'specific purpose grants' which are given outside the recommendations
of the Finance Commission, at the discretion of the Centre, for such
activities as the Centre may want to promote to achieve the desired
national goals. These grants have increased manifold under the impact
of planning and have dwarfed the fiscal-need grants. Plan grants are
made on the advice of the Planning Commission. A number of grants
under article 282 are given for several state activities outside the plan
programmes.
52. M.P. Jain, "Anomalies in the Scheme of Fiscal-Need Grants in India,'' in The
Union and the States 265-280 (ed. Jain, Kashyap and Srinivasan 1972).
Although the Constitution devises an elaborate and flexible scheme of

centre-state financial relationship, yet the fact remains that there exist
several problems in its actual working. A major problem, however, is
that the states are never satisfied with howsoever much may be given to
them by the Centre. Demands are raised from time to time for greater
financial allocations by the Centre to the states. As for example, before the
Sixth Finance Commission, the Mahara'shtra Government had argued that
the share of the states' income-tax proceeds be raised from 75 per cent to
90 per cent. 53
Such a demand arises because of two main reasons. First, there is

imbalance between the functions and resources at the state level. The
imbalance has arisen mainly because of planning Their tax resources are
somewhat inelastic while the expenditure on the nation-building activities
incurred by them is very large. In spite of huge central aid being given
every year by way of grants and loans, they do not find themselves in a
position of being able to meet their commitments. To some extent, such
a situation arises because the states are not utilising fully the taxing powers
available to them. In the wake of the 1967 general elections, some of
the states even reduced the existing taxes such as land revenue, taxes on
profession, etc. The states are always reluctant to tax the agricultural
sector. Income-tax on agricultural income is not yet tapped fully by the
states. The Centre has made some attempts, within the restraints of its
constitutional powers, to bring in the agricultural wealth for purposes of
wealth tax,54 and also to bring in agricultural income for computing
income tax on non-agricultural income.55
Further, there exist wide disparities in various social services in the

states and adequate steps have not been taken to equate them. According
to the statistical dala given in the report of the fifth commission, per
capita expenditure on education varied from as low as Rs. 4.98 in Bihar
to as high as Rs. 46.08 in Nagaland. The second next was Kerala with
Rs. 21.11. Similarly, on public health while the per capita expenditure
in Bihar was Rs. 0.23, the highest was in Nagaland at Rs. 4.41, and next
in Rajasthan at Rs. 4.29. Such examples can be multiplied. But, ironically
enough, Bihar which is perhaps one of the most backward states in India
from the point of view social services receives no fiscal-need grant. Uttar
53. The Times of India, 2-2-1973.

54. Dhillons case, supra note 38.
55. On 24 February, 1972, the Government of India appointed a committee under
K.N. Raj as chairman to examine the question of taxation of agricultural
wealth and incomes from all aspects. The committee has suggested methods
by which these direct taxes can be used more effectively. See, the Report of the
Committee on Taxation of Agricultural Wealth and Income (1972).
Indian federalism : A Background Paper 231
Pradesh which is only marginally better also receives no fiscal need grant.se
The ideas of fiscal-need grant and Finance Commission have been
borrowed by India from Australia. In Australia, the task of the Common
wealth Grants Commission has been to equate the social services in the
deficit states to a national average of social services. In India, the
Finance Commission does not perform a similar task. It takes into
consideration the present high level of expenditure in some states on some
social services, but does not seek to equate with them other states with
low expenditure on these social services.57
The compulsions of planning have cast a shadow on the smooth

operation of the centre-state fiscal relationship as envisaged in the
Constitution. There has come to be an overlap of functions between
the Planning Commission and the Finance Commission. The truth is
that at present larger funds pass to the states under the Planning
Commission than under the Finance Commission, and the Finance
Commission has thus been overshadowed, to some extent, by the
Planning Commission.58 The states are not very satisfied with the
arrangement that the plan grants be recommended by the Planning
Commission. Their argument is that the Planning Commission is a body
established by the Central Government through an executive order, and,
therefore, the principles governing the allocation of plan grants should be
enunciated by a different body created by law of Parliament, and the
Finance Commission has been suggested in this connection. The
Administrative Reforms Commission in its report on Centre-State
Relationships has endorsed this suggestion.59 The ARC has recommended
that in future the Finance Commission might be asked to make recommen
dations on the principles which should govern the distribution of plan
grants to the states, but the application of these principles from year to
year might be left to the Planning Commission and the Central Govern
ment. In order that the Finance Commission's recommendations might
be effectively coordinated with the plans, the ARC has also suggested that
a member of the Planning Commission may be appointed to the Finance
Commission.60 An argument has been raised over time whether article
282 was designed to be merely a residuary article or was it meant to be
56. Other States receiving no fiscal-need grants are : Gujarat, Haryana, Madhya
Pradesh, Mysore, the Punjab and Maharashtra.
57. The Report of the Finance Commission (Fifth) 1969, 58.
58. For detailed comments see M.P. Jain, "Central-State Fiscal Relationship in
India", supra note 1.
59. The Report of the Administrative Reforms Commission on Centre-State Reía ion-
ships (hereinafter referred to as the ARC Report).
60. Id. at 16.
2^2 Constitutional Developments Since Independence
used for transfer of such larger funds as is being done at present for
planning purposes. It has thus been argued that funds for planning
purposes should also be given to the states under article 275 through the
Finance Commission and not throughthe Planning Commission. The biggest
snag in this arrangement is that the Finance Commission meets only once in
five years and, therefore, the achievements of plan targets by the states
can only be assessed by the commission once in five years. This will leave
the states free to spend the money as they like and en such schemes as
they like. The whole of the planning process may thus go awry.81
Demands have been made by some states for a re-allocation of taxing

powers between the Centre and the states so as to enhance the states'
taxing powers.62 But, any re-allocation of taxing powers between the
Centre and the states neither appears to be practical nor is it going to
solve all the difficulties of the states. It is not easy to determine what
central taxes can be transferred to the states. As things are, except customs
and corporation tax, which are exclusively central, all other central taxes
are either shared with, or fully utilised by the states. It is unthinkable
that customs or corporation tax can be transferred to the states and the
transfer of any other tax would not increase the taxing capacity of the
states. Further, care has to be taken to see that the frustrating problems
of multiple and over-lapping taxation as have arisen in other federations
do not arise in India. Nor can it be that the central assistance can be
dispensed with \n the near future, because there are the poor states with
low taxing capacity which can never hope to do without central aid what
ever taxing power may be given to them. If that is so, it stands to reason
whether any purpose would be served by resorting to a solution which
reduces the Centre's capacity to help the states without considerably
increasing their own capacity to help themselves. The interests of trade
and commerce have also to be taken into consideration. Tt is already a
fact of life that in a bid to coordinate the incidence of centrally levied
excise duties and the state levied sales taxes, and for convenience of collec
tion, a scheme has already been initiated in India under which the states
have surrendered sales taxes on factory-made textiles, sugar, tobacco and
61. See theRajamannar Committee Report which suggests that grants by the Centre
to the states should be made only on the recommendation of an independent
and impartial body like the Finance Commission or some such similar statutory
body . the Report, supra note 49 at 94.
62. Some of the suggestions made by theRajamannar Committee are : (1) corporation
tax should be divisible among the states like income tax; (2) customs and export
duties should be compulsorily divisible among the states; (3) tax on the capital
value of assets (entry 86, List I) should be made divisible; (4) excise duties
leviable by the Centre should be compulsorily sharable between the Centre and
the states.
silk fabrics, and to compensate the states for the loss sustained by them,
the Centre levies an additional excise duty on these commodities over
and above what it levies normally. The whole of the revenue collected
out of the additional duty accrues for the benefit of the states. The
states were guaranteed the revenue which was accruing to them at the date
the scheme was enforced from their sales taxes- on these commodities.
The surplus, if any, also accrues to them. The arrangement was arrived
at with the consensus of the states achieved through the National Develop
ment Council in 1956. The scheme has been continued since then.
Though some states want to have the freedom to levy their own sales taxes
on these commodities, yet the scheme continues to exist. Various chambers
of commerce and other trade organisations favour these arrangements as
they have resulted in considerable administrative convenience and have
brought relief to the commercial community. 63 This also serves as a
warning against too much decentralisation of taxing powers and is an
argument against transferring any taxing power from the Centre to the
states.
It may not be out of place to state here that adjustment of central-state

financial relationship in a federal country is a continuous process and that
other federations have also to devise constantly new norms in this area.
Tranfer of funds from the Centre to the regions is a universal phenomenon.
It is so in the federations of the U.S.A., Canada and Australia.
The soultion of the existing difficulties appears to be in a more effective

husbanding of the available resources and their wise use by the stales, by
improving the methodology of the Finance Commission and coordinating
the tasks of the Finance Commission and the Planning Commission to the
extent possible.
VIII
In the modern administrative age of government enterprise and initia
tive on a large scale, the need for an effective administration in India
cannot be overemphasized. The pattern of administrative relationship
between the Centre and the states, therefore, assumes a significance of its
own in this country, especially in the context of five-year plans and the
63. The Federation of Indian Chambers of Commerce and Industry has in a study
"Sales Tax—A Plea for Simplification", pleaded for amalgamation of sales tax
with excise duties or introduction of a single-point levy at the first stage.
According to the Federation, the working of sales tax laws and procedures has
all along been vexatious. The Federation believes that amalgamation will be
beneficial not only to trade and commerce but also to the states as well as
administrative expenses will be much less and there will be little scope for
evasion.
endeavour to promote socio-economic welfare of the people which need

sustained and colossal administrative effort, as plan programmes have to
be executed within the target dates.
The Constitution lays down a flexible and permissive and not a rigid
scheme of allocation of responsibilities for administration between the
Centre and the states. The scheme is suchas to permit all kinds of co
operative arrangements between the two levels of government as may be
thought desirable to cope with the situations at hand. The Centre has
been given power to administer any matter falling within its exclusive
legislative domain,64 but it is not bound to administer all these matters
itself and can, if it so desires, entrust the responsibility of administering
any of these matters to the states or their instrumentalities by legislation.65
The states have been empowered to administer all matters within their
exclusive legislative domain,66 but they may leave any of their functions
to the Centre for administration by agreement with it.67 The administra
tion of the matters in the Concurrent List rests with the states in the first
instance,"8 but Parliament may, by passing a law, enable the Centre to
assume responsibility for administration of any of these functions.60 In the
concurrent area, therefore, there are several alternatives available to the
Centre. So long as Parliament makes no law, the executive power
rests with the states. When Parliament makes a law, it can do either of
the three things with respect to the executive power—(a) it can leave
it to the states; or (b) the Centre may take over the whole of the adminis
tration in that subject by making a specific provision in the law to
that effect; or (c) it may create a concurrent area of administration in
which both the Centre and the states may operate. A survey of the central
legislation will reveal all these patterns in operation. Under the Electricity
(Supply) Act, 1956, enacted by Parliament under entry 38> List III, admi
nistrative powers have been left with the states; under the Industial
Disputes Act, 1947, enacted by Parliament under entry 22, List HI,
administrative powers rest both with the Centre and the states; under the
Essential Commodities Act, enacted by Parliament in pursuance of entry
33 List Til, the whole of the administrative power is vested in the Centre,
but provision is made in the Act for the Centre to delegate administrative
powers to the states from time to time as may be thought necessary and
desirable.
64. Article 73, The Constitution of India.

65. Article 154 (b).
66. Article 162.
67. Article 258 A.
68. Proviso to article 162.
69. Ibid.
The Constitution makes a few more provisions to regulate the centre-

state administrative relationship. Any government, whether central or
state, may carry on any commercial or industrial activity, or may acquire
property and enter into contracts for the purpose, but if an activity falls
outside its legislative domain then it would be subject to the laws made
by the other government having power to do so.70 It is the only case of
its kind where the central executive power may be subjected to the state
legislative power. Then, the states have been obligated to so exercise their
executive powers as to ensure compliance with the laws made by the
Centre, and not to impede or hinder the exercise of the Centre's executive
power, and this includes giving of necessary directions by the Centre to
the states. 71 The Centre also has power to give directions to the states for
constructing and maintaining means of communication of national or
military importance; for protection of the railways, the costs of which are
to be defrayed by the Centre.72 A special obligation has been placed on
the Centre for the welfare of the minorities and, therefore, it can direct
the states to draw up and execute schemes for the welfare of the scheduled
tribes, or to provide facilities for instruction in the mother tongue at the
primary stage to the children of the linguistic minorities.73
During an emergency arising out of internal aggression, the Centre

gets overriding powers over the states and can give directions to them
regarding the way they should exercise their executive functions and
power.74 The Centre can also give directions to the states during a
financial emergency.75 Tf a state government fails to follow a central direc
tive, the Centre can treat this as the breakdown of the constitutional
machinery in the state and thus take over its administration.70 Provisions
have also been made for the inter-delegation of administrative power
between the central and state governments. This has been done to mitigate
rigidity which might otherwise arise from the centre-state distribution of
administrative power. The President, with theconsent of state governments,
may entrust to them any function to which the central executive power
extends.77 A state government may also entrust to the Central Govern-
70. Article 298.

71. Articles 256 and 257 (1).
72. Article 257 (2).
73. Articles 339 (2) and 305A.
74. Article 353 (a).
75. Article 360 (3).
76. Article 365 read with article 356.
77. Article 288 (1). Many functions conferred on the Centre by Parliamentary
legislation have thus been entrusted to the states under this constitutional provi
sion, e.g., functions entrused to the Centre under rule 3 of the Registartion of
Foreigners Rules, 1939, or by section 7 of the Explosive Substances Act, 1908.
See Jayantilal Amrailal v. F.N. Rana, A.I.R. 1964 S.C. 648.
ment, with its consent, any of its executive functions.78

Some of the constitutional provisions in India regulating centre-state
administrative relationship are unique in the sense that no such parallel
provisions exist in other federations. These provisions are designed
to meet the special needs of the country and to avoid the difficulties Which
have arisen in other federations by a rigid demarcation of functions.
Underneath the constitutional provisions, a variegated pattern of

practices concerning administrative functions has arisen in India. The
Centre administers directly through its own instrumentalities only a few
matters in the Union List, e.g., defence, foreign affairs, railways, posts,
telegraphs and telephones, collection of taxes, regulation of foreign trade
and foreign exchange or industries declared to be of national importance,
etc. For administration of quite a few of the subjects in the exclusive
Union List, the Centre depends on the states or their officers, e.g., till
recently, passports were issued by the states, but this task has now been
centralised; policing of some of the international borders was left to the
state border police, but progressively this has been brought under the
central control. The Central Sales Tax Act provides a conspicuous example
of state administration in an exclusively central sphere; interstate sales
tax though levied by the Centre is collected and assessed by the states.
Functions are entrusted to the states either by the central legislation itself,
or through a presidential order under article 258, or through both the
techniques. In the concurrent area, even when the Centre seeks to legislate
on a matter, administration is mostly left with the states. Thus, under
the Essential Commodities Act, in actual practice, the Centre acts through
its own officers in respect only of textiles, sugar, iron and steel, and leaves
the rest of the commodities to the states for regulation subject to its direc
tions and ultimate control. Power to give directions to the states has also
been vested in the Centre under many statues, e.g., section 23 of the
Supply and Prices of Goods Act, 1950, the Plantation Act, 1951. An inter
esting administrative pattern has been created under the Mining Concession
Rules, 1949, promulgated by the Centre under the Mines and Minerals
Act. The initial power to grant a mining licence rests with the states, but
appeal can be taken to the Centre against an order of a state government.
The state power is thus ultimately subject to the central power. In some
cases, powers are left with the states, but they have to exercise the same
subject to the concurrence or directions of the Central Government. Some
central statutes confer power on the Central Government but authorise it
78. Article 258A. See N.B. Singh v. Duryodhan, A.I.A. 1959 Ori. 58, for details
of the complicated arrangements existing between the Government of India and
the Government of Orissa in respect of the Hirakud Dam, a state enterprise, the
execution of which had been entrusted by the state to the Centre.
to delegate its powers directly on the state officials and authorities. All
the exclusive functions belonging to the states are, however, administered
by them exclusively and delegation by them of any such function to the
Centre is very rare. A mosaic of central-state administrative relationship
thus exists in the country with most of the administration at the grass
roots being vested in the states. The law-enforcement machinery, like the
police, practically belongs wholly to the states. Therefore, when a central
law makes an activity penal, the efficacy of the law depends, by and large,
on the zeal with which the states seek to enforce the law. Tt is not
uncommon to see many central laws remaining merely on paper because
of their indifferent enforcement by the states. A large segment
of five-year plans falls to the states for implementation because many
natioii-building activities fall within their legislative purview. The imple
mentation of many all-India policies falls on the states and thus their
effeciiveness and success depends on the states' enterprise and initiative.
This great dependence of the Centre on the states for purposes of adminis
tration has been characterised as a weakness of the Tndian federalism by
many foreign and Indian scholars who have lamented that administratively
India is rather weak as has been demonstrably evidenced time and again
by the shortfall in the plan targets all around which, to a large extent,
may be ascribed to the inertia of the states. The Centre's power to make
the states move and stimulate action by them is rather limited; it can hold
conferences, try to persuade them, give them financial inducements through
grants-in-aid, but, on the whole, performance has lagged behind. Even
when the Centre has power to issue directives to the states, that power is
not exercised frequently and, in the nature of things, cannot be so exercised.
Even though the Constitution squarely rests the responsibility to protect
the means of communication on the states, the destruction of railway
property in one state after another on the least justifiable excuse occurs
frequently. As early as November, 1967, the Central Government addressed
a general letter to all the state governments drawing their attention
to their obligations under articles 256 and 257 and cautioning them that
such a failure on their part was against the Constitution which clearly
placed on them the responsibility to ensure proper functioning of the
central agencies and protection of central property in the states. The
communication stated that the Central Government hoped that occasions
would not arise necessitating resort by it to powers under articles 256 and
257. The Centre advised the states to seek central assistance if they ever
felt that they on their own could not prevent interference in the working
of Union agencies and services in their respective jurisdictions.
The pattern of administrative relationship woven around the grants-in-

aid remains by and large vague as not much published information is
available on this point and it thus needs to be studied in depth and exhau
stively. What arrangements of supervision, control and auditing of accounts
are made, what sanctions are exercised in case money is used for purposes
other than those which are sought to be aided, or when a shortfall of
targets occur, are there adequate conditions imposed to see that the purpose
for which a grant is being made to the states is implemented fully? Informa
tion about all these questions is lacking. The whole system of grants-
in-aid at present appears to be in a flux and no viable and stable system
has yet emerged. On the whole, it appears that over the time, the tendency
has been to make grants for planning under article 282 free from as many
restrictions as possible and to give greater freedom to the states to spend
the money according to their needs. What the effect of this trend would be
on planning processes, is a question which needs to be studied.
In spite of the detailed constitutional provisions regulating central-state

administrative relationship, there is not smooth sailing always, and stresses
and strains arise between the Centre and the states from time to time. If
one national party holds dominance throughout the country, some cohesion
between the Centre and the states may be achieved and the states per
suaded to discharge their tasks through the party mechanism and forums.
But that mechanism may cease to be available, and embarrassment
may be caused to the Centre when a state government of a different
political complexion in spite of its constitutional obligation, does not extend
its full co-operation to the Centre in implementing the Centre's laws. A
case in point is the controversy which arose between New Delhi and Kerala
in 1968 on the question of implementation of the central anti-strike law.
In anticipation of the strike by the employees of the Central Government,
the Central Government promulgated the Essential Services Maintenance
Ordinance in 1968, declared the strike illegal and sent directives to the
states as to how to deal with the threatened strike. The Kerala Government
publicly declared that it would not implement the central directive but
follow its own policy in the matter. The Centre then drew the attention
of the state government to the obligation imposed on it by article 256,
and then the state government informed the Centre that it would take all
actions necessary and found suitable, keeping in viaw the provision of
article 255. Later, the state government unilaterally withdrew all criminal
cases against those central government employees who were arrested on
charges of violence, etc. during the strike period under the central law
banning the strike. Though this caused embarrassment to the Centre, yet it
could do nothing as the law enforcement machinery belonged to the states.
The Kerala Government thus showed resistance to enforcing the central
law and directives issued thereunder.79 The Central Government could
79 The Central Government did not feel happy at the way the Kerala Government
have taken action against the state government under article 365 but such
a drastic action may not always be politically feasible. Another controversy
of this period between Kerala and Delhi may also be noted. In anticipation
of the Central Government employees' strike, the Centre deployed the
Central Reserve Police in Kerala to protect Central Government offices and
installations. The State objected to this on the ground that the Centre
had not consulted it before doing so.80 The Centre, however, took the
position that it was not obligatory on it to consult the state government
to deploy the Central Reserve Police to protect its own institutions in the
state. 81 A similar controversy arose between the Centre and the State of
West Bengal. The Central Reserve Police has been created by an Act of
Parliament under entry 2, List I. Though 'public order' is a state matter
under entry I in List II, yet 'armed forces of the Union' has been speci
fically excluded from the scope of the entry. The Centre has also an
obligation under article 355. The Centre can, therefore, plausibly argue
that if a state fails to protect its property, it could not stand by helplessly
and let its property be destroyed. The Centre must take action to deal
with the eventuality.
Although, the phase of tension bstween.the Centre and the states has
now passed over for the present, there is no knowing as to when such a
state of affairs may re-emerge in the country. What happened in Kerala
is only a symptom of a much more serious constitutional crisis that could
arise if a state decided to ignore the central laws and failed to implement
them.
In view of tb.5 possibility of stresses and strains arising in the scheme

of things, there appears to be a need to give serious thought to the problem
of restructuring the centre-state administrative relationship. No amend
ment of the Constitutional provisions appears to be necessary for the
purpose as these provisions are quite flexible. What may, therefore, be
necessary to do is to change the prevailing practices somewhat. Several
lines of adjustment may be adopted in this respect. First, the Centre may
federalise some of its more important functions as has been done, for
example, in case of administration of the Company Law, so that it depends
less on the states and more on its own instrumentalities to enforce its
had functioned in this matter. The Central Government categorically asserted

that no state government had the right to place its own interpretation or have
its own policy on how a central law should be enforced and that the Central
Government had the right and authority to frame a broad policy directive for
the implementation of its laws. The Times of India, 28-9-1968.
80. See the statemeut of E.M.S. Namboodiripad, Kerala Chief Minister, The
Times of India, 22-9-1968.
81. See the statement of P, Govinda Menon, The Times of India, 22-9-1968,
more important laws. That the administration of its laws will improve
is borne out by the example of the company law. Before 1956, its
administration was in the hands of the states and so it was administered
in a perfunctory and ineffective manner. Now that it is done through a
central agency, administration of the law has certainly become more
effective. Secondly, the technique and mechanism of grants-in-aid may be
strengthened and the central supervision over, and guidance to, state
functioning in the aided areas may be made more effective. In the U.S.A.,
Canada and Australia, grants-in-aid have been used extensively to stimulate
state action and initiative towards achievement of many nationally preferred
goals. State performance has been improved tremendously through intro
duction of central supervision over aided state activities and a very
elaborate mechanism of administrative co-operation has been developed
through the grants. It is doubtful whether the full potentialities of the
grants-in-aid system as a catalyst for more effective administration in a
federation is as yet realised, and has been exploited, in Tndia. Thirdly, the
administrative machinery of the states themselves needs to be streng
thened. In the U.S.A., a good deal of thought is being given to the
question of finding ways and means for improving the state adminis
trative machinery. The problem in India is no less crucial because
the effectiveness of many programmes of national well-being depends
on their proper implementation by the states, and the states will continu
ously have to play a meaningful role even in the future, howsoever much
the Centre may federalise its own functions. Fourthly, the Centre should
think of some machinery for prosecuting cases in courts which arise because
of infringement of the central laws. As it is, a state can make a central law
completely ineffective either by not arresting those who infringe the law, or
by releasing the offenders and withdrawing cases against them as was
done by the Kerala Government.
It may be worthwhile to note that the Indian Constitution contains

more elaborate provisions regarding central-state administrative relation
ship than arc to be found in any other federal constitution. In other
federations, however, the basic pattern of administration is that federal
legislation is implemented by the federal executive. It may be useful to
study the administrative patterns evolved in other federations and adopt
such of those in India as may appear to be suited to our needs and
exigencies.82 Never was there a greater need than today for a study in
depth of the centre-state administrative relationship, as much of the
82. In the U.S.A. there are many federal agencies to ensure the observance of federal
laws throughout the country. There are federal courts and federal attorneys in
every state to prosecute and punish people violating the federal laws. The F.B.I.,
for instance, has the power to intervene and investigate any interstate offence
involving criminal action.
viability of the Indian democracy and federalism, and much of the well-
being of the people depend on a satisfactory discharge of administrative
responsibility by the two levels of government. The responsibility of the
states has to be matched with theirfinancialand administrative capacity. If
there is a lack of balance between these, administration is bound to remain
a bottleneck aud many of our goals and targets will founder on this rock.
States have to play a meaningful role as administrative entities as they are
nearer to the people and the crucial question to consider is what steps should
the Centre take so that the administrative apparatus of the states may be
geared to cope with the tasks that lie ahead.8S
IX
Some reference may be made here to articles 355 and 356. The Indian
Constitution envisages an emergency arising out of the failure of the
constitutional machinery in a state. Under the U.S. Constitution, the
Centre guarantees to every state a republican form of government, protec
tion against invasion, and on application of the state legislature or the
executive (when legislature cannot be convened), protection against
domestic violence.84 Some time back, under this provision, the Central
Government sent its forces into Detroit in the State of Michigan, on a
request of the Governor, to contain the racial violence. A similar provision
is to be found in Australia.85 Parallel to these provisions there is article
355 in the Indian Constitution which makes it obligatory on the Union to
protect every state against external aggression or internal disturbance
and to ensure that the government of each state is carried on in "accordance
with the provisions of the Constitution." The first limb of this provision,
that of protecting the states, does not stipulate that a state should request
the Centre before it could send its forces into a state to counter the
breakdown of law and order as is to b; found in the parallel provisions in
the United States and Australia. It would, therefore, mean that while the
Centre may be under an obligation to send its forces when so requested by
a state, it is not bound to wait tiil that request is received ; if the situation
warrants, the Centre can act suo moiu. Though ordinarily the Centre
should not act without a state request, and it may be a good policy not to
get involved in local matters, yet there appears to be no doubt that the
83. The Rajamannar Committee has, on the other hand, gone to the other extreme
insofar as it has suggested repeal of articles 256, 257 and 365. TheReport, supra
note 49 at 20-23. It has not, however, stated as to what mechanism should be
adopted to ensure compliance with central laws. The only result of repealing
these constitutional provisions will be to make the Centre move in the direction
of federalising most of its administrative functions.
84. Article IV, section 4 of The Constitution of the United States.
85. Section 119 of the Commonwealth of Australia Constitution Act, 1900.
Centre can act unilaterally if it feels that such a step is necessary in the
interest of maintenance of law and order in a state. This is further re
inforced by article 352 which empowers the Centre to declare emergency
when there is internal breakdown of law and order in any part of the
country. This provision envisages the taking of all steps thought to be
necessary by the Centre for maintaining law and order in any part of the
country.
To enable the Centre to discharge its obligation under article 355 to
see that the governments of the states are carried on in accordance with
the provisions of the Constitution, and this, be it noted, being a unique
feature of the Indian Constitution, the Centre is authorised under article
356 to take over the administration of a state if it is satisfied that it cannot
be carried on according to the Constitution. This can be done under a
presidential proclamation which can be issued either on the report of the
Governor concerned or through information received otherwise. The
proclamation is subject to parliamentary control. When the Centre takes
over the state administration, the Governor of the state acts as a delegate
of the Centre ; the Council of Ministers does not remain in office ; and
state legislature may either be suspended or dissolved, and the legislative
power for the state vests in Parliament. But, as Parliament may not
possibly find the necessary time for this purpose, the expedient adopted is
to enact a law delegating law-making power for the state concerned on
the President, i.e., the central executive with which is associated a
committee of members of Parliament. The Acts, known as the President's
Acts, are laid before Parliament which can direct any modifications
therein.
Article 356 has had to be invoked and governance of several states

assumed by the Centre a number of times. Primarily, this has been done
when a Council of Ministers commanding majority support in the state
legislature could not possibly be had in office. The politics of defection
since 1967 has necessitated the invocation of article 356 many a time. In
such cases, the Centre has intervened temporarily, fresh elections held as
soon as possible, and responsible Council of Ministers installed in office.
Assumption of state government by the Centre has at times raised acute
controversies as happened in Kerala in 1959, in Haryana in 1967 and more
recently in Orissa. Questions have been raised as to what is the implication
of the words "in accordance with the provisions of the Constitution" in
articles 355 and 356? Do these words mean only the letter of the
Constitution, or do they also include the democratic spirit, conventions
and fundamental assumptions on which the Constitution is based ? The
Centre appears to take the view that it will be justified in intervening in a
state in case of political breakdown, gross mismanagement of affairs or
abuse of its powers by a state government. The action in Kerala and

Haryana can be justified on this basis. As is well known, the action in
Haryana was taken when the Governor reported that the state administra
tion had been totally paralysed by the frequent defections and rapidly
changing loyalties of the members of the legislature.86
The Centre's action can be justified theoretically by saying that tem
porarily a bigger democracy takes over a smaller democracy. But this
places at once, in the hands of the Centre, a great power vis-a-vis the
states, as well as a great responsibility. The way the power is used by
the Centre is bound to have an abiding effect on the growth of the Indian
federalism, which envisages co-existence of governments of different
political complexion. The restraints on the use of this power are its own
sense of prudence and judgment of the Central Government and the
political realities of the situation. The action of the Centre is invariably
criticised by interested political parties as mala fide or as an unwarranted
exercise of its power. When the country is politically fragmented with
various political parties holding power, there is a danger that confronta
tion of political parties may lead to a confrontation of the Centre and the
states which may, ultimately, result in resumption of some state govern
ments by the Centre. The Centre will need all prudence, caution and
tact in judging when it should intervene. Greater opposition in Parliament
also induces the necessity of caution. The Centre has a grave responsibility
and it needs to act with circumspection and only when it is politically feasi
ble, possible and justifiable, otherwise it may be accused of subverting the
federal fabric of the Constitution which permits various political parties to
be in power in various states and the Centre. It is, therefore, desirable
that some norms be evolved regarding the use of article 356 so that inter
governmental tensions and accusations of bad faith against the Centre
may be avoided. So far, the only norm which the Centre appears to have
followed in this connection is to accept the Governor's recommendation
in each case. It is only when the Governor recommends President's rule
in a state that the Centre intervenes. Although the Centre can act on its
own, so far it has not done so in any case. This is a healthy practice to
follow, but has not insulated the Centre from criticism;
The Rajamannar Committee has advocated the repeal of articles 356 and
357. In the alternative, it has suggested that the President should not
86. The Governor made his report on November 1968, in which he'stated that constant
defection of legislators had brought democracy into ridicule in the State and
made a mockery of the Constitution. The Rao Ministry which commanded a
majority in the House was consequently dismissed from office and the Legislature
was dissolved. The action of the Centre was challenged unsuccessfully in the
$igh Court : Rao Birinder Singh v. Union of India, A.I.R. 1968 Punj. 441.
proclaim Presidential rule in a state without the Governor's report and
the word 'otherwise' in article 356 may be dropped. In practice, so far
this has been the case and article 356 has not been invoked except when
recommended by the Governor. However, the committee has also
suggested that the Governor's report should be referred to state legislature
for expressing its views thereon before the Centre acts on it.97
Three issues of significance may be considered at this stage arising out
of the above. The first came into lime-light in the new political situation
as it developed after the 1967 elections. The Governor has to act, in
certain situations, as the balance wheel of the centre-state relationship. So
long as there was one-party rule at the Centre as well as in the states, the
office of the Governor was more or less dormant, but with the political
fragmentation in the states, the Governor's office assumed some importance
as the Governor has to take decisions on such matters, as the appointment
of the chief minister in the state, prorogation or dissolution of the legislature,
his report to the President under article 356, etc. A Governor has a dual
capacity. He is the head of the state as well as a representative of the
Centre. Ordinarily, he acts on the advice of his Council of Ministers, yet
there are areas where he may have to act on his own judgment as well.
The question of his reserving state Bills for the central assent is one such
area, for obviously no state ministry is going to advise him to do so.
Another such area is his making a report to the Centre on the question
whether or not the state government is being carried on in accordance
with the Constitution. As such a report may be against the state ministry
in office, it will mainly be a question for his own judgment whether the
political situation in the state warrants such a report from him or not.
After the fourth general elections, some state Governors were called upon
to decide between the claims and counter claims of political parties about
their majority in the legislature and their right to form the government.
The Governor has to perform such a task himself, according to his own
views. Acute controversies have arisen concerning the exercise by the
Governors of their several powers in their discretion. The Centre has
often been accused of using the Governor's office asan instrument to control
state governments or to interfere in their working. Many a time,
acrimonious debates have been held on the floor of Parliament on the
exercise of powers by the Governors. By and large,· the Centre has left
the Governors free to exercise their powers. Yet, at times, Governors
ido hold consultations with the central ministers. It remains shrouded in
doubt whether the Centre can or does direct a Governor to act in a
particular manner. The position of a Governor is rather delicate when
he heads a state with a government of a political, complexion different
87. The Report, supra note 49 at 139.

from that of the Central Government, for there appear to be great

difficulties in the way of a Governor ignoring a central directive if the
Centre decides to issue one. It is also true that in identical situations
state Governors have not taken identical decisions. This is bound to
happen if all state Governors are left free to exercise their discretionary
powers according to their own wisdom and assessment of the political
situation. A danger in this situation is that varied practices will emerge
and no uniform conventions will be set up. It is, therefore, necessary
that somi guidelines are evolved for the purpose of guiding the
Governors in the exercise of their discretionary powers.88 These circums
tances also raise problems with regard to the appointment of Governors.
The Constitution gives a carte blanche to the Centre in the matter of
appointing a Governor but, over the time, a practice has developed to
consult the state chief minister before making an appointment. So far,
with one-party dominance, this consultation was more of a formality
and no difficulties ever arose in this regard, but in the changed situation
during 1967-71, difficulties did arise on this issue. Some state governments
claimed that they should have a final say in the matter of appointment of
the Governor. The Central Government refused to concede this point.
The Centre would naturally like to have a person as Governor in whose
judgment and independence it may have confidence ; at the same time,
the state government would like to have a person as Governor who would
not be too much biased in favour of the Centre. Therefore, it appears to
be proper that a person enjoyingthe confidence of both, the Centre and the
state government concerned, should be appointed the Governor of the
state. The Centre should not impose a person on a state against its
wishes, otherwise relations between the Governor and the state government
will become bitter. At the same time, no state government can claim
that only its nominee, and no one else, should be appointed as the
Governor. After all, the Governor has certain functions to discharge
independently of the government in office in the state and the Centre has
been charged by the Constitution with the ultimate responsibility to see
that the states function according to the Constitution. According to the
ARC, the person selected as Governor should be able to discharge the
two-fold function of "sustaining harmonious relationship between the
State and the Centre, while, at the same time, playing the role of a
friend and guide to his Council of Ministers." Accordingly, it has
recommended that the convention of consulting the chief minister before
88 Reference may be made on this question to the ARC Report, supra note 59 at
20-31; the Report of the Committee of Governors on the Role of Governors (1971);
the Rajamannar Committee Report, supra note 49 at 119-131.
246 Constitutional Developments Since independence
appointing a Governor should be continued as it is a 'healthy' one.89

Another question relates to discussions on the floor of Parliament
regarding state matters and vice versa. There are certain occasions
when Parliament has to discuss state matters, .e.g, imposition
df the Centre's rule in a state as the Centre's action needs parlia
mentary ratification. But discussions are commonly raised in Parlia
ment from day to day on matters falling in the state sphere which
would appear to be against the federal nature of the Constitution. The
usual method to raise such a discussion is through an adjournment
motion on a matter of public importance, and although many such
motions are declared inadmissible, yet a miniature discussion does take
place because the mover of the motion will argue as to why his motion
should be admitted and the government will oppose the same. Some
time back a very interesting discussion took place in the Lok Sabha on a
state matter. The Governor of a state prorogued the state legislature on
the advice of the chief minister whose majority was in doubt because some
of his supporters had crossed the floor. The opposition parties in the
Lok Sabha brought an adjournment motion charging the Central Govern
ment that it had directed the Governor to prorogue the house and thus
deny a chance to the opposition in the state from forming the government.
The Central Government agreeing to have the matter discussed repudiated
any suggestion of having directed the Governor one way or the other. The
home minister maintained that as the constitutional head of the state, the
Governor had acted on the advice of the chief minister and the Centre had
not issued any directive to the Governor. One may look forward to such
discussions in Parliament in the future as well. More recently, the matters
pertaining to the Government of Haryana have often figured in Parliament.
The question does arise as to how far matters falling in the state sphere
should be discussed in Parliament.
Lastly, a question of great significance is whether the Centre has any

responsibility to take action when charges of corruption are made against
a state chief minister or state goverment as a whole. Can such an obliga
tion be spelled out of article 355? So long as the same political party is in
power at the Centre and in the states, the position may not be difficult. The
Centre appointed a commission of inquiry to go into the charges against
the Chief Minister of the Punjab, and because of an adverse report by the
commission, the chief minister had to resign. In Orissa, the chief minister
89. The ARC Report, supra note 59 at 24-25. The Rajamannar Committee has made an
interesting suggestion that the Governor should be appointed by the President in
consultation with a high power body composed of eminent jurists, lawyers and
administrators.
resigned when a committee of the central cabinet held, on a report from

the Central Bureau of Investigation, that he had been guilty of administrative
impropriety. In both these cases, the chief ministers belonged to the
Congress Party to which the Centre also owed allegiance. In such cases,
the line of division between the party and the government was somewhat
blurred. The question may raise a difficult aspect in a fragmented political
context. While previously the motivations behind the action by the Centre
might have been interpreted as an attempt to clear the image of the party,
today such an action may be interpreted as]an attemptto tarnish the image of
the party in office in the state concerned when the Central and the concerned
state governments belong to different political complexion. Recently, when
certain charges were submitted to the President against the DMK ministry
in Tamil Nadu, the state chief minister questioned the right of the Central
Government to take cognisance of the complaint.90 The difficulty in the
situation is obvious. If the matter is left to the state government itself,
then justice may be seen to have been done as the very government against
which charges have been made is asked to look into them. If the Centre
intervenes, then it may be accused of interfering in state matters on politi
cal grounds and its bonafidesmay be questioned. If no action is taken,
then people may lose faith in the democratic system of government. It,
therfore, appears to be necessary to evolve certain norms to deal with such
a situation as and when it arises. The Central responsibility in the matter
can, however, be spelled out of articles 355 and 356 mentioned above. It
will be necessary to evolve certain norms for this purpose so that political
considerations are kept aside and the centre-state relationship in the sensitive
area is placed on an objective, non-party and non-political basis, so that
democracy and federalism can flourish in the country. The matter indeed
is full of difficulties.
For quite a while in America, after the Federal Constitution was
inaugurated in 1787, the dominant operative concept was that of competi
tive federalism, envisaging a kind of competition between the Centre and
the states. The same tendency manifested itself in other federations as
well, like Canada and Australia.91 Under the impact of the depression,
90. In a statement on the floor of the state legislature on December 15, 1972,
Karunamidhi, the Chief Minister, stated that in his letter to the prime
minister, he had pointed out that under the Constitution, the Centre had no
right to interfere in the powers conferred on the state under the State List.
According to him, the question was whether the Centre could set up a com
mission of inquiry against a state government under the existing provisions of
the Constitution. The law minister stated that the state cabinet was respon
sible only to the state assembly which was supreme insofar as the affairs of
the state were concerned : The Times of India, 16-12-1972.
91. Corwin, The Constitution of the U.S.A., Senate Document 14 (1953), Schwartz,
American Constitutional Law 163 (1955); Sawer, Modern Federalism, supra note
17 at 64-105, 117, 154.
wars and international emergencies, in each federation, to a more or less

degree, the concept of co-operative federalism has come into being. The
purpose of the newly emerging concept is the promotion of co-operation
and minimisation of friction amongst the various constituent governments
of the federal union so that all of them may pool their resources with a
view to achieving certain desired national goals. It is realised that the
various governments in a federation are interdependent and that they
should act, not at cross purposes, but in co-operation for the promotion
and maximisation of the common good. Various instruments and
processes have come into existence in each federation because of this
contemporary trend.
The framers of the Indian Constitution were aware of this emerging

trend in comparative federalism. They realised that governments in a
federal structure are not arranged hierarchically or vertically but horizont
ally; that there is no line of command, and decisions amongst them can be
promoted not by dictation but by discussion, persuasion, agreement and
compromise. The states in India have a large field of administration and
decision-making and it becomes essential, therefore, to create agencies to
co-ordinate intergovernmental action in those fields at least where the
repercussions of a state action would not be confined merely to its own
boundaries, but would be felt outside the state as well or where the
national interests demand a uniform approach, .e.g, education which,
though partly a state subject and partly a central subject demands a great
deal of co-ordinated action and a uniform policy in many matters at least
at the level of university education. Further, when several governments
operate within the same territory, with a division of powers of legislation of
taxation and administration, certain disputes and differences of opinion
are bound to arise. Perhaps in some situations the interests of one
government may look to be inconsistent with the other, and it becomes
necessary to find out ways and means to keep down such intergovern
mental differences and to evolve a mechanism for resolution and reconcilia
tion of differences as and when they arise.
Wilh this end in view, the Constitution itself envisages a number of

agencies of intergovernmental co-ordination and co-operation and lays
down certain norms to promote good relationship amongst various govern
ments to minimise tensions and friction among them. Without going
into too many details at this stage, reference may be made in this connec
tion to articles 262, 263, 280 and 307. In the same category may also be
included the doctrine of immunity from mutual taxation of central and
state property. Article 307 envisages creation by Parliament of a suitable
body for promoting, and resolving intergovernmental disputes concerning
f r ee flow of trade and commerce in the country. A body established by
Parliament under article 307 is the interstate transport commission under

the Motor Vehicles Act, 1939, for developing, co-ordinating and regulating
the ope-ation of transport vehicles in an interstate area or route. Article
262 provides for creation by Parliament of a suitable machinery for adjudi
cation of interstate disputes with respect to the use, distribution or control
of waters of interstate rivers and river valleys. Accordingly, Parliament
has enacted the River Boards Act, 1956, empowering the Cenire to establish
river boards fcr regulation and development of interstate livers and river
valleys, and ihe Inter-State Water Disputes Act, 1956, which provides for
setting up of tribunals for adjudicating disputes among the states concerning
waters of interstate rivers and river valleys. Article 280 provides for the
appointment cf a finance commission, to which reference has already been
made. Article 263 envisages creation of an Inter-state Council and a reference
to this provision will be made below. A review of the working of these
various bodies, however, reveals that they have not effectively served the
needs for which they have been established. Except for the Finance
Commission set up under article 280, no other body envisaged by the
Constitution has had much impact on the centre-state or interstate relatio
nship. For example, a number of interstate water disputes have remained
unresolved for a long time and many urgent development projects have
remained su,sp;nded for years putting the country to a great loss.
Besides the agencies envisaged by the Constitution, a number of other

bodies have been established through parliamentary legislation to promote
intergovernmental cooperation, e.g., under the States Reorganisation
Act, 1956, five zonal councils have been established to promote co-operation
and communication between the various states organised on linguistic
basis. From the reports appearing now and then, thes; councils appear
to have made some contribution towards promoting interstate relationship.
A zonal council is an advisory body and can discuss any matter in which
some states, or the Centre and a state in the zme, may b^ interested. In
particular, it can discuss matters of common interest in the area of economic
and social planning, concerning border disputes, linguistic minorities,
interstate transport, or any matter arising out of the states' reorganisation.
The council may advise the Centre and the states regarding the action to
be taken in any such matter. A body of great importance in the area of
university education is the University Grants Commission. According to
the scheme of distribution of powers, education is a state subject, but
co-crdinaiion and maintenance of standards in university education is a
central responsibility and it is to fulfil this function that the University
Grants Commission has been established. The commission has been given
broad powers over the universities in the country and the main sanction
behind it is its power to give grants to the universities, e.g., the commis
sion can inspect a university for ascertaining its financial needs or teaching
standards, can recommend to the university action to be taken, and withhold

grants if the university fails to comply with its recommendations. The com
mission is an autonomous body and, to some extent, mitigates the difficulties
which may otherwise have arisen in the field of university education
because of divided jurisdiction between the Centre and the states. The
commission ensures that each university maintains at least a minimum stan
dard. The North-Eastern Council Act, 1971, provides for the setting up of
a council for North-Eastern areas of India which comprise the States of
Assam, Manipur, Meghalaya, Nagaland, Tripura and the Union territories
of Arunachal Pradesh and Mizoram. The Council is to consist of Gover
nors of the states, administrators of the Union territories, chief ministers,
and a Union minister nominated by the President. The Council is an
advisory body and can discuss any matter in which some of the states, or
the Centre and one or more states may be interested. The Council can
advise the states and the Centre as to the action to be taken.
A number of bodies of intergovernmental co-ordination and co-opera
tion have come into existence outside the Constitution and the statutes, the
two most outstanding examples of such bodies being the Planning
Commission and the National Development Council. In the same category
may be placed the conferences of central and state ministers held from
time to time to exchange views and chalk out common programmes,
policies and approaches to national problems.
One of the ways to promote co-operation among the various gover

nments in a federation may be to do away with areas of tension among
them and to resolve disputes which may arise between them. Legal contro
versies between two governments can be resolved by the Supreme Court
either in its original jurisdiction, as was done in West Bengal v. Union of
India,92 or on its advisory jurisdiction of which the Kerala93 and the Sea
Customs9* cases are examples. When cases arise on the initiative of private
parties, governments may intervene to protect their interest and put forth
their views on matters in dispute. The bodies above-mentioned like the
tiver boards, interstate river tribunals, etc., also help in the resolution of
disputes of a specific nature.
A constitutional provision much talked about during 1967-71, after

the fourth general elections, is article 263 which provides for the appoint
ment of an Inter-state Council. The idea underlying this mechanism is to
smoothen intergovernmental relationship. It may be appointed by the
President and may be charged with the duty of (i) inquiring into and
92. A.I.R. 1963 S.C. 1241.
93. A.I.R. 1958 S.C. 956.
94. In re Sea Customs Act, S. 20 (2), A.I.R. 1963 S.C. 1760.
Indian Federalism : A Background Paper, 251
advising upon disputes arising between states, (ii) investigating and

discussing subjects in which some states, or the Centre and one or more
states, may be interested, and (iii) making recommendations upon any
subject, particularly, for better coordination of policy and action thereon.
The provision is general and any number of such bodies for various
purposes may be established. Such a body is designed to be advisory
with no authority to give binding decisions. Several such bodies, viz., the
Central Council of Health and the Central Council of Local Self-Govern
ment, Regional Councils on Sales Tax have already been established. The
Health Council consists of central and state health ministers; and the
Council of Local Self-Government is composed of the central minister of
health and the state ministers for local self-government. A Regional
Council for Sales tax has been appointed in each of the four zones—
Northern, Eastern, Western and Southern. A council consists of the
secretaries in charge of sales tax in each state in the Zone or the Union
territories; commissioners of sales tax; deputy secretary to the Government
of india, Ministry of Finance, deputy secretary to the Home Ministry in
charge of Union territories and the under secretary to the Government of
India incharge of sales tax. The council considers matters relating to the
levy of sales tax in any state and its decisions are of recommendatory nature.
Since 1967, voices have been raised Very frequently for the establish
ment of an Inter-state Council on a broader basis, viz., to discuss
federal problems and find solutions for them. The Central Government
has remained cool to the idea, presumably because it has its own misgivings
that once such a body is established it would seek to undermine the respo
nsibility of the Central Government vis-a-vis the states. The central cabinet
has to take a number of decisions in this sphere, e.g., regarding the
appointment of state Governors and their functioning, application of
article 356 and of such other provisions to the states. Controversies around
these questions have arisen from time to time, sometimes in a virulent
form. These matters lie within the decision-making sphere of the Centre,
but if the states seek to take them to the proposed Inter-state Council and
thus make it a forum where they themselves are represented, then as the
Central Government apprehends, its position would be undermined.
Nevertheless, the mechanism envisaged in article 263 can certainly be used
for a much wider purpose than it has been used so far. The ARC
did recommend the setting up of such a council for a period of two
years on an 'experimental' basis to discharge the functions envisaged
by article 263. 85 One specific function envisaged for the council by the
commission was the formulation of guidelines for the Governors.96
95. The ARC Report, supra cote 9 at 32-35.

96. Id. at 25.
The commission did not work out the details of types of functions which
the council can discharge. It only made a general statement that "the
establishment of an Inter-State Council would be conducive to better under
standing." If the council acts in a constructive manner to discuss centre-
state relationship, then it can serve a useful purpose, but it should not be
used as a forum to dilute the constitutional responsibilities of the Centre.
This obviously is the objective of the Rajamannar Committee which has
recommended the setting up of a council consisting of chief ministers or
their nominees with the prime minister as the chairman. The committee
has practically overstated its case. It suggests that every Bill of national
importance or which is likely to affect the interests of one or more states
should, before its introduction in Parliament, be placed before the council,
and its comments and recommendations thereon should be placed before
Parliament at the time of the introduction of the Bill. Thecommittee further
suggests that it should be definitely provided that before the Union
Government takes any decision of national importance or any decision
which would affect one or more states, the Inter-state Council shculd be
consulted.97 The committee is ready to make an exception in regard to
subjects like defence and foreign relations. "But even in such matters the
decision of the Central Government should be placed before the Inter-State
Council subsequently without any avoidable delay." 98 The Rajamannar
Committee further suggests that if the council is to be really effective, its
recommendations should be made ordinarily binding on both the Centre
and the states. If for any reason, any recommendation of the Inter-state
Council is rejected by the Central Government, such recommendation
together with the reasons for its rejection should be laid before Parliament
and the state legislature.98 Obviously, it is an extremely high-pitched
demand and is designed to subject the policies of the Centre to the veto of
the states and subvert the functioning of the government and its respon
sibilities to Parliament. Conceiving of a body to promote intergovernmental
co-operation is one thing, but setting up a body to completely control the
working of the Central Government is another matter. No such body as
envisaged by the Rajamannar Committee functions anywhere in any federal
country as yet.
An unsatisfactory trend of the evolution of the Indian federalism so

far is the lack of channelisation of centre-state relations into legal norms.
Tco many decisions have been made, and are still being made on ad hoc
political grounds. This process has been working satisfactorily so far
because of one-party dominance. It is easier for governments of the same
97. The Report, supra note 49 at 24.

98. Ibid.
99. Ibid.
political party to decide matters on a political basis. But this procedure

has a drawback. It does not lead to the creation of a corpus of principles
which can be applied in similar situations in future when governments
belonging to different political parties are in office Our federal system is
not yet attuned to functioning with governments of different hues in office.
The experienes of a short spell during 1967-71 are significant. There,
therefore, appears to be a very good case for the appointment of a non-
political body under article 263 to keep intergovermental relationship
under constant review and observation, study problems in that area on an
objective and dispassionate basis and project solutions for major issues. Being
a non-political, advisory body, its recommendations may be received
with a greater acceptability and it may also go a long way in suggesting
means and ways for making the federal system more viable. A model to
be followed for the purpose is furnished by the Advisory Commission on
Inter-governmental Relations in the U.S.A. set up in 1959 with the main
idea of increasing the effectiveness of the federal system. The commission,
as its name indicates, functions in an advisory capacity. It has the follow
ing purposes and duties : to bring together representatives of central, state
and local governments to consider common problems; to provide a forum
for discussing the administration and coordination of federal grant
programmes requiring inter-governmental cooperation; to give critical
attention to controls involved in the administration of federal grant
programmes; to make available technical assistance to the executive and
legislative branches of the ftdtral government in the review of the proposed
legislation to determine its overall effect on the federal system ; to encour
age discussion and study of emerging public problems likely to require
intergovernmental cooperation; to recommend wiihin the framework
of the Constitution, the most desirable allocation of governmental
functions, responsibilities and revenues among several levels of
government; to recommend methods of co-ordinating and simplifying tax
laws and administrative practices to achieve a more orderly and less
competitive fiscal relationship between the governments.100 A similar body
may be useful in India to suggest and study various alternative solutions
to the issues causing tension and fraction in intergovernmental relationship
in India. If, in the future, different political parties come in power at the
Centre and the states, chances of a sharper clash of views will arise which
can make intergovernmental relationship very acrimonious at times. No
one can deny that a number of tension-areas do exist not only between
one government and another, but at times between one region and another
within the same state. The serious nature of the problem may be under
lined by reference to the resolution passed by the general body of the
}Q3. Wj-jght, Public Administration R?vi?w 19? (}956),

Congress Party in 1966 recommending that a machinery be evolved for

resolving such disputes. It, therefore, becomes necessary to investigate
more fully into the efficacy of the present-day institutional set-up in India
seeking to promote intergovernmental co-operation for resolution of
disputes among the various governments and come out with suggestions as
to how co-operation may be better promoted and tensions reduced between
them. One of the lines of investigation in this connection is the question
of the reorganisation of states itself. In this connection, the experiences
of other federal systems may be useful. What methods have these countries
adopted for this purpose and do these have any relevance in the
Indian context? India can successfully face its manifold problems if all the
governments pull their weight together. The governments in a federation
are not independent of each other but interdependent, and they have to
act not at cross-purposes but in unison for the maximization of the
common good. Federalism is not a static but a dynamic concept. It is
always in the process of evolution and constant adjustments. Studies
have been undertaken in other federations to review the developments
therein from time to time and to suggest necessary adjustments for making
the system more workable in the light of the contemporary demands being
made on it.101 The Indian Constitution will soon be completing twenty-
five years. It, therefore, appears to be an opportune moment to undertake
a study of the Indian federalism in depth to take stock of the developments
hitherto, to evaluate the trends, frictions and difficulties in the area of
intergovernmental co-operation and for sorting out these differences with a
view to making the Indian federalism a more robust and viable system so
that India may successfully meet the great challenges of development and
defence.
101. The Report of the Commission on Inter-governmental Relations in the U.S.A.

(1955); the Report of the Royal Commission on the British North America Act
(1939); the Report of the Royal Commission on the Australian Constitution (1929);
The Report of the Joint Parliamentary Committee of Both Houses of Parliament
ρη the Australian Constitution (1959),

Indian Federalism: A Background Paper: M. P. Jain

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Indian Federalism: A Background Paper: M. P. Jain

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Indian Federalism : A Background Paper

* Professor of Law, Delhi University andProfessor-in-Charge, Evening Law Centre

establishes a dual polity, comprising two levels of government—a central

The American Constitution drafted in 1787 is the oldest of the contem­

"Centre State Governmental Relations in the Indian Federal System," X J.I.L.I.

In Canada, the growth of federalism has been greatly influenced by the

7. Bora Laskin, Canadian Constitutional Law 1-23 (3rd ed. 1969).

The founding fathers accordingly, designed the federal system in India

Apart from the experiences of other countries suggesting a strong

As regards (be political party, because of the national struggle for

The concept of co-operative federalism has been worked out in India

in a number of ways as discussed later. There jsalso the judiciary with

India has witnessed the significant political phenomenon of one political

19. The Report of the Stales Reorganisation Commission (1955).

In theory, there appears to be no objection in having a few more sates.

The pivotal point in a federation is the allocation of law-making powers

in which, if lccal treatment is found wanting, uniformity may have to be

Usually, the distribution of powers in a federation between the Centre

No doubt, the constitutional provisions requiring Central assent to

Though India has three elaborate lists enumerating over 200

general norm, however, is to interpret an entry broadly, bringing within its

39. A.I.R. 1964 S.C. 1823.

Gujarat case lies in giving an expansive interpretation to the Union entry

On the whole, it may be asserted that the scheme of allocation of

amending the Constitution". According to him, in the case of industries

some of the techniques developed in other federations, they also tried to

However, the technique of separation of centre-state tax resources has

The Finance Commission can be regarded as the balance wheel of the

Although the Constitution devises an elaborate and flexible scheme of

Such a demand arises because of two main reasons. First, there is

Further, there exist wide disparities in various social services in the

53. The Times of India, 2-2-1973.

The compulsions of planning have cast a shadow on the smooth

Demands have been made by some states for a re-allocation of taxing

It may not be out of place to state here that adjustment of central-state

The soultion of the existing difficulties appears to be in a more effective

endeavour to promote socio-economic welfare of the people which need

64. Article 73, The Constitution of India.

The Constitution makes a few more provisions to regulate the centre-

During an emergency arising out of internal aggression, the Centre

70. Article 298.

ment, with its consent, any of its executive functions.78

Underneath the constitutional provisions, a variegated pattern of

The pattern of administrative relationship woven around the grants-in-

In spite of the detailed constitutional provisions regulating central-state

In view of tb.5 possibility of stresses and strains arising in the scheme

had functioned in this matter. The Central Government categorically asserted

It may be worthwhile to note that the Indian Constitution contains

Article 356 has had to be invoked and governance of several states

abuse of its powers by a state government. The action in Kerala and

87. The Report, supra note 49 at 139.

from that of the Central Government, for there appear to be great

appointing a Governor should be continued as it is a 'healthy' one.89

Lastly, a question of great significance is whether the Centre has any

resigned when a committee of the central cabinet held, on a report from

wars and international emergencies, in each federation, to a more or less

The framers of the Indian Constitution were aware of this emerging

Wilh this end in view, the Constitution itself envisages a number of

Parliament under article 307 is the interstate transport commission under

Besides the agencies envisaged by the Constitution, a number of other

standards, can recommend to the university action to be taken, and withhold

One of the ways to promote co-operation among the various gover­

The American Constitution drafted in 1787 is the oldest of the contem

One of the ways to promote co-operation among the various gover