Federalism in India

Centre - State Relations – Legislative, Administrative and Financial Relations.

Federalism:

1. Federalism refers to, a political system that constitutionally distribution of powers

between a national government and several regional governments.
2. Democratic federalism is the best instrument to ensure ‘Unity in diversity’.
3. Maximum harmony and coordination between them is essential for the effective
operation of the federal system.

Centre - State relations

The constitution of India, being federal in structure, divides all powers [legislative, executive and
financial] between the centre and states.

Centre-State

Legislative Relations Administrative Relations Financial Relations

Art 245 to 255 Art 256 to 263 Art 268 to 293
Part XI Part XI Part XII

Legislative relations

1. Territorial Extent of central and State legislation:

a. Parliament can make laws for any part or whole part of the country
b. State can make laws for the whole or part of the state.
c. Parliament alone can make extra territorial legislation.
2. Distribution of legislative subjects:
a. Union list [100] - Parliament has exclusive power
b. State list [61] - State can make laws
c. Concurrent list [52] - Parliament and State can make laws
3. Parliamentary legislation in the state list:
Under 5 instances:
a. When Rajya Sabha passes a resolution (Article 249).
b. During National emergency (Article 250).
c. When 2 or more states makes request by passing resolution (Article 252).
d. To implement the international agreement, the centre can make laws (Article 253)..
e. During the president rule, centre can make laws in state list (Article 356)..
4. Central Control Over State
a. Certain bills can be reserved by governor for the consideration of president.
 b. Certain bills can only be introduced in the state legislature after the consideration
of president (bills imposing restrictions on freedom of trade and commerce)
c. The president can direct the states to reserve the money bill or financial bills during
financial emergency.

Administration relations-

1. Distribution of executive power:

 Centre and State respectively in Union and state list.
2. Centre’s Directions to States
 Maintenance of communication / railways / mother language in primary stage.
3. All India Services
 Some officers may go into deputation from the states.
4. Obligation of States and the Centre
5. Cooperation Between the Centre and States
6. Public Service Commissions
7. Integrated Judicial System
8. Relations During Emergencies

Financial relations-

Allocation of Taxing powers

 Parliament - Union list - 15 numbers

 State legislature - State list - 20 numbers
 Concurrent - 3 numbers.
 Residuary power of taxation - parliament.

Grant in Aids to the States

 Statutory grants – Article 275

 Discretionary grants: Article 280.

Finance Commission.

 Article – 280
 For Distribution of net proceeds of taxes to be shared between the centre and state.

Distribution of Tax Revenues

Distribution of Non-tax Revenues

Protection of the States’ Interest

Borrowing by the Centre and the States

Inter-Governmental Tax Immunities

Effects of Emergencies
So for the better future of our countries, there must be a co-operative federalism. The division of
powers and clear cut clarity makes the federalism - a cooperative federalism.

“The rule of federal supremacy is a technique to avoid absurdity, resolve conflict and ensure
harmony between the functioning of Union and state laws.
Tension areas / Barriers to Central - State relations:

1. Mode of appointment, dismissal of governor;

2. Discriminatory and partisan role of governors;
3. Imposition of President’s Rule for partisan interests;
4. Deployment of Central forces in the states to maintain law and order;
5. Reservation of state bills for the consideration of the President;
6. Discrimination in financial allocations to the states;
7. Role of Planning Commission in approving state projects;
8. Management of All-India Services;
9. Use of electronic media for political purposes;
10. Appointment of enquiry commissions against the Chief Ministers;
11. Sharing of finances between centre and states;
12. Encroachment by the Centre on the State List. Eg. Transferred Education in
concurrent list.

Centre-State Relation in Public Service Commissions

1. Chairman and members of a state public service commission, though

appointed by the governor of the state, can be removed only by the
President.

2. Parliament can establish a Joint State Public Service Commission (JSPSC)

for two or more states on the request of the state legislatures concerned. The
chairman and members of the JSPSC are appointed by the President.

3. The Union Public Service Commission (UPSC) can serve the needs of a state
on the request of the state Governor and with the approval of the President.

4. The UPSC assists the states (when requested by two or more states) in
framing and operating schemes of joint recruitment for any services for
which candidates possessing special qualifications are required.

Centre-State Relation in Integrated Judicial System

1. Judges of a state high court are appointed by the President in

consultation with the Chief Justice of India and the Governor of the state.

2. They can also be transferred and removed by the president.

3. The Parliament can establish a common high court for two or more states.
Mutual delegation of functions between the Centre and the States

1. Take place either under an agreement or by legislation. While the Centre can
use both the methods, a state can use only the first method.

2. President may, with the consent of the state government, entrust to that
State Government any of the executive functions of the Centre.

3. Governor of a state may, with the consent of the Central government, entrust to
the Central Government any of the executive functions of the state.

4. A law made by the Parliament on a subject of the Union List can confer powers
and impose duties on a state, or authorize the conferring of powers and
imposition of duties by the Centre upon a state (irrespective of the consent
of the state concerned).

Cooperation between the Centre and States

1. The Parliament can provide for the adjudication of any dispute or complaint
with respect to the use, distribution and control of waters of any inter-state
river and river valley.(Article 262)

2. The President can establish Inter-State Council (Article 263)

3. Full faith and credit is to be given to public acts, records and judicial
proceedings of the Centre and every state.

4. The Parliament can appoint an appropriate authority to carry out the

constitutional provisions relating to the interstate freedom of trade,
commerce and intercourse. But, no such authority has been appointed
so far.

Effects of Emergencies on Centre-State relations:

National Emergency

1. President can modify the constitutional distribution of revenues between

the Centre and the states.

2. President can either reduce or cancel the transfer of finances (both tax
sharing and grants-in-aid) from the Centre to the states.

3. Such modification continues till the end of the financial year in which the
emergency ceases to operate.

President’s Rule

1. President can assume to himself the functions of the state government and
powers vested in the Governor or any other executive authority in the state.
Financial Emergency

1. Centre can give directions to the states:

2. To observe the specified canons of financial propriety;
3. To reduce the salaries and allowances of all class of persons serving in the
state (including the high court judges);
4. To reserve all money bills and other financial bills for the consideration of
the President.

Various Reform Commissions:

Administrative Reforms Commission (1966):

Formed in 1966 by Central government, to examine the Centre–State relations.

Composition

1. 6 Member Committee
2. Headed by Morarji Desai (followed by K Hanumanthayya)

Recommendations are:

1. Establishment of an Inter-State Council.

2. Appointment of persons having long experience in public life and administration and non-
partisan attitude as governors.
3. Delegation of powers to the maximum extent to the states.
4. Transferring of more financial resources to the states to reduce their dependency upon the
Centre.
5. Deployment of Central armed forces in the states either on their request or otherwise.

No action was taken by the Central government on the recommendations of the ARC.

Rajamannar committee (1969-1971):

Formed in 1969 by Tamilnadu government, to examine the entire question of Centre–State

relations.

Composition

1. 3 Member Committee
2. Headed by P V Rajamannar

Purpose-
1. To examine the entire question of Centre–state relations and to suggest amendments to
the Constitution so as to secure utmost autonomy to the states
Reason identified for the prevailing unitary trends in the country:
1. Certain Constitutional provisions confer special powers on the Centre;
2. One-party rule;
3. inadequacy of state’s fiscal resources and consequent dependence on
the Centre for financial assistance;
4. Central planning & the role of the Planning Commission.

Recommendations are:

1. Setting up of Inter-State Council;

2. Permanent Finance Commission;
3. Replacing the Planning Commission with a statutory body;
4. Articles 356,357 and 365 should be omitted;
5. Provision that state ministry holds office during the pleasure of the governor
should be omitted;
6. Certain subjects of Union List and Concurrent List should be transferred
to the State List;
7. Residuary powers should be allocated to the states;
8. Abolition of All-India services.

Recommendations were not accepted by the Centre.

Sarkaria commission(1983-1987):

It was setup to examine the centre - state relationship on various portfolios and Suggest changes.

Composition

1. 3 Member Committee
2. Headed by Justice Ranjit Singh Sarkaria - Retired Judge of the Supreme Court of India.
3. Other members - Sivaraman, S. R. Sen.

Purpose-

 To examine and review the working of existing arrangements between the Centre and
states in all spheres and recommend appropriate changes and measures.
 It observed that over-centralisation leads to blood pressure at the centre and anemia at
the pheriphery.
Recommendations:

Commission has made 247 recommendations. But 180 implemented so far.

Main recommendations are as follows-

Inter-state council-

 A permanent Inter-state council should be setup under Article 263.

President Rule-

 President rule (Article 356) should be used as a last resort, when all alternatives fail.

Governor-

1. Politically active persons should not be appointed as governor.

2. Only eminent persons must be appointed as governors.
3. Governor must be appointed after consultation with the Chief Minister.
4. Governor should be from outside the State and a detached figure.
5. Governor’s term of five years should not be disturbed except for some extremely
compelling reasons.

All-India Services

1. Should be further strengthened and some more such services should be created.

Appoint of Chief ministers-

a. Discretionary powers of governor to be Limited.

b. A pre-poll Alliance to be regarded as one political party.

Concurrent list

a. Centre should consult states before making a law on a subject in concurrent list.

Article 355 & 356

a. These should be amended and that sought to localize the emergency provisions under Article
355 & 356

Language-

1. Take Steps to uniformly implement the three language formula in its true spirit.

Conclusion - There should be a Continuing and aiding role for the Inter –State Council in matter of
concurrent jurisdiction.

Other recommendations of Sarkaria:

1. When the president withholds his assent to the state bills, the reasons should be
communicated to the state government.
2. Zonal councils should be reactivated to promote the spirit of federalism.
3. Residuary powers (except those related to taxation) should be placed in the
Concurrent List.
4. National Development Council (NDC) should be reconstituted as the
National Economic and Development Council (NEDC).
5. Centre should have powers to deploy its armed forces, even without the consent
of states. However, it is desirable that the states should be consulted.
6. Net proceeds of corporation tax may be made permissibly shareable with the states.
 7. No commission of enquiry should be set up against a state minister unless a demand is
made by the Parliament.
8. No autonomy for radio and television but decentralisation in their operations.
9. No change in the role of Rajya Sabha and Centre’s power to reorganize the states.
10. Commissioner for linguistic minorities should be activated.

Punchhi Commission (2007):

 Constituted by Government of India in 2007 as a commission on centre- state relations.

 To look into the issues of Centre-State relations keeping in view the sea-changes that
have taken place in the polity and economy of India since the Sarkaria Commission

Composition of commission:

 Headed by Madan Mohan Punchhi – Former CJI as chairperson

 5 members.

Governor-

1. Person should be eminent in some walk of life

2. He should be from outside the State and a detached figure.
3. He should not be connected with politics in recent past
4. Governor must be given fixed tenure of 5 years
5. Impeachment should be made applicable for governor as well.
6. Convention of Governors acting as Chancellors of Universities and holding other
statutory positions should be done away with.

All-India services

1. New all-India services in sectors like health, education, engineering and judiciary
should be created.

Residuary Powers

1. Residuary powers (except taxation in Union List) should be placed in the concurrent list.

President Assent

1. Period of 6 month should be made for president to decide on state bills.

Other recommendations of Punchhi:

1. Governor should insist on Chief Minister proving his majority on the floor of
the house for which he should prescribe a time-limit
2. Bommai case(994) guidelines should be kept in mind while deciding
cases related to President’s rule
3. Union should be extremely restrained in asserting Parliamentary
supremacy in matters assigned to the states
 4. Inter-state council should be made more use of to further centre-state
relations.
5. Devolution of powers to local bodies to act as institutions of self-government
should be constitutionally defined through appropriate amendments.
6. Steps should be taken for the setting up of an Inter-State Trade and Commerce
Commission under Article 307 read with Entry 42 of List-I.

Venkatachaliah Commission(2000):

1. National Commission to review the working of the Constitution (NCRWC)

2. Also known as Justice Manepalli Narayana Rao Venkatachaliah Commission
3. Set up by resolution of NDA Government of India led by Atal Bihari Vajpayee on 22
February 2000
4. For suggesting possible amendments to the Constitution of India.

Second Administrative Reforms Commission(2nd ARC):

1. Setup in August 2005 and submitted its work in May 2009.
2. Under Department of Administrative Reforms and Public Grievances, Ministry of
Personnel.
3. Chairman: Veerappa Moily, later on V.Ramachandran
4. To prepare a detailed blueprint for revamping the public administration
system.
5. Commission considered the following:
1. Organizational structure of the Government of India
2. Ethics in governance
3. Refurbishing of Personnel Administration
4. Steps to ensure effective administration at the State level
5. Steps to ensure effective District Administration
6. Local Self-Government/Panchayati Raj Institutions
7. Social Capital, Trust and Participative public service delivery
8. Strengthening of Financial Management Systems
9. Citizen-centric administration
10. Promoting e-governance
11. Issues of Federal Polity
12. Crisis Management
13. Public Order
Inter-State Council:

Article 263 - empowers the President to establish an Interstate Council at any time to
effect coordination between the states and between Centre and states.

It was set up in 1990 by Janata Dal goverment. [v.p. Singh govt on recommendation of Sarkaria
Commision]

Composition:

1. Prime minister - Chairman

2. Chief Ministers of all states
3. Chief Ministers of union territories having legislative assembly.
4. Administrators of union territories not having legislative assemblies.
5. Governor of States under president's rule.
6. Six cabinet ministers including home ministers nominated by Prime Minister.

Duties

1. Enquiring into and advising upon disputes which may arise between states
2. Investigating and discussing Subjects in which States & Centre have common interest.
3. Making recommendations for better co-ordination of policy and action.

Following councils established under Article 263:

1. Central Council of Health.
2. Central Council of Local Government and Urban Development.
3. Four Regional Councils for Sales Tax for the Northern, Eastern, Western and
Southern Zones.
Need of Inter-State Council:
1. A mechanism "to support Centre-State and Inter-State coordination and
cooperation in India"
2. Strengthens the spirit of cooperative federalism
3. Acts as a forum for discussions among various governments
4. Helps to bridge the trust deficit between the centre and the states.
5. It is the only multilateral centre-state forum that operates directly within the
framework of the Constitution (Article 263 (b) and (c)) where topics like the GST
and contemporary issues like disaster management, terrorism and internal
security can be taken up.

Zonal Council:

 Statutory body established under States reorganization act of 1956.

Zones [originally – 5, later – 6]

1. Northern Council
2. Central Council
3. Eastern Council
 4. Western Council
5. Southern Council
6. North Eastern Council – added in 1971

Composition

1. Home minister of Central government

2. Chief minister of all the states in the zone
3. Two other ministers from each State in the zone.
4. Administrator of each union territory

Aim & Objective:

1. Promoting cooperation and coordination between States, union territories and Centre.
2. Achieving emotional integration of the Country
3. Cooperation with each other for the better execution of major developmental projects.
4. Help in arresting the growth of acute state-consciousness, regionalism,
linguism and particularistic trends.
5. Enable to cooperate with each other in social and economic matters and
exchange ideas and experience in order to evolve uniform policies.
6. To secure some kind of political equilibrium between different regions of the
country.

National Integration Council:

 It was first constituted to combat the crisis of communalism, Casteism, Regionalism and
linguism in 1961.

Features

1. It is an Extra- Constitutional body.

2. Chaired by Prime minister of India.
3. Composition - Council includes the following
a. Cabinet ministers
b. Chief Ministers of states.
c. Political leaders
d. Chairman of UGC
e. Commissioner for a scheduled Castes and Scheduled Tribes.
f. Representatives of business, Industry and trade unions

Meetings-

1. Total meeting - 16.

2. First in 1962 & last in 2013, which passed resolution on maintaining Communal harmony and
ending discrimination on SC & ST.
Cooperative federalism. How it functions:
1. It is a model of intergovernmental relations that recognizes the cooperation of
the national and state governments in the formulation and implementation of
national policies.
2. It is obliged by sharing powers between Centre and state by the Schedule VII of
the constitution itself.
3. 7th Schedule
a. Provides the division of powers as central, state and concurrent lists
giving some residual powers to the Centre.
b. Article 249(5) authorises the Indian parliament to amend those
subjects of the state list with a 2/3rd majority.
4. All India Services
a. Article 312 provides for an All India Service that works on integration
under cooperative federalism in India.
b. Article 263 - inter-state council to consider common interest
factors between the states and the Centre.
c. Article 261 - full faith and credit to all records, public acts and judicial
proceedings of the Union and states throughout the Indian territory.
5. Zonal Councils:
a. 5 councils - Central, north, south, east and west under the State
Reorganization Act of 1956
b. Northeast zonal council under a distinct act.
6. NITI Aayog
a. Replaced the Planning Commission
b. It advises the Centre and states to look after the discussion and
coordination between these 2 powers.
7. GST
a. 101st Constitutional Amendment Act passed unified taxation called GST.
b. “one nation, one tax” goal.
Challenges to Cooperative Federalism:
1. Trust deficit
2. Shrinkage of divisible pools
a. Especially for southern states (tax revenues) as per the 15th FC
recommendations.
3. Reduced allocation of funds for various social welfare schemes
4. Inter-State water disputes
Measures to Strengthening Federalism
1. Strengthening of Inter-State Council
2. More autonomy to states – through budgetary support and least interference in
the state subjects.
3. Democratic Decentralization of administration and strengthening governments at
all levels in true spirit
Non-constitutional bodies promote Cooperative Federalism:
Niti Ayog
1. Bringing States together as ‘Team India’ to work towards the national
development agenda.
2. Meetings between the Prime Minister/Cabinet Ministers and all Chief Ministers
3. Forming subgroups of Chief Ministers to discuss subjects of national importance.
4. Sharing of best practices
5. Policy support and capacity development of State/UT functionaries
6. Launching of the Aspirational Districts Programme for development of backward
districts
7. Theme-based extensive engagements in various sectors
8. Framing model laws for land leasing and agriculture marketing reforms
9. Area-specific interventions for the North-Eastern and Himalayan States and
island development.

Some imposition impacts the Unity of our Nation:

According to Article 1, India, that is Bharat, is a Union of States. The Federal
feature of India is built on Unity in Diversity.
In recent times, the imposition comes in the form of
1. Language
2. GST
3. National Education Policy
4. NEET
5. Appointment of Vice Chancellors
6. Centralization of Power
7. Dividing of States
8. One Nation one ration
Impacts:
1. Eruption of Protests
2. Increase in Alienation of land
3. Loss of autonomy to a state
4. Increases the centralization of all powers
5. Makes the state as subordinate to the union
6. Questions the concept of Federalism
7. Increases the ‘exclusion’ rather ‘inclusion’
8. Promotes ‘son of the soil’ feeling
9. Impacts the bedrock of the constitution
10. Demotes the sense of unity
11. Paves the way for regionalism
12. Promotes the tendency of demanding of separate statehood
Rise & growth of State Autonomy in India with special reference to Tamil Nadu:
1. The state autonomy in India demanded by the Regional Political Parties that
the existing constitutional federal scheme neither respected the feelings of
the states nor appreciated the needs and problems of states.
2. Hence, the maximum autonomy of the states is demanded for the growth and
development of states.
3. Growth of State Autonomy:
a. In 1960s, regional party in tamilnadu campaigned for a separate
independent sovereign state of Tamilnadu.
b. Later the demand was extended to propose a separate Dravidnad with
Tamilnadu, Andhra, Kerala and Karnataka
c. It was seen as a severe threat to the nation’s integrity by the Center.
d. With the increasing separatist tendencies in the country during the 1960s,
the union government initiated the 16th Constitutional Amendment for
curbing separatist tendencies
e. The Bill, known as the Anti-secession Bill to prevent separatist and
secessionist tendencies and preserve India’s sovereignty and territorial
integrity
f. In 1969, Rajamannar Committee appointed by TN govt made some
recommendations such as
i. Removing Article 356,
ii. Dissolution the Planning Commission
iii. Making Finance Commission a permanent body,
iv. Transferring some subjects to the State list from the Union and
Concurrent list, and
4. Recent Trend: Now state autonomy moves towards the following aspects
1. Financial autonomy
2. Moving of Education, Forest, etc to State List
3. Promotion of cooperative federalism
4. Smoothening of relation between the Governor and the state
5. Fulfilling the needs of the state’s demand like taxation, etc.

Conflict of issues with respect to state autonomy:

1. Powers of taxation
2. Power of Parliament to make laws in State list
3. Absence of Fiscal federalism
4. Unequal representation of different states
5. Centralised amendment powers
6. India is an indestructible union of destructible states
7. Role of governor
8. Integrated services
9. Language conflicts
Though the Centre and the states are supreme in their respective fields, the maximum
harmony and coordination between them is essential for the effective operation
of the federal system.

Head of a state should be a facilitator not a law creator. Substantiate.

1. Governor is the head of a state.
2. Constitution says that Governor has to act on the aid and advice of the
Council of Ministers headed by Chief Minister.
3. But, in recent times, there are many issues rising between the State Government
and Governor.
4. Issues in recent times:
1. Delay in sending bills to the President of India
2. Not taking action over a bill in time bound manner
3. Acts on their own discretion rather than on the advice of the Council of
Ministers of a state
4. Interference in the day – to -day administration of the Government
5. Acting as the trouble maker of the union government to the State
Government.
6. Inviting a political party to form a government which has no majority in the
assembly
5. Hence, for smooth functioning of a state, he/she has to be facilitator rather
than trouble maker or law maker.