Presentation on Distribution of

Powers between Centre, States

and Local Governments
Government of India
Ministry of Home affairs
Structure of the Indian Constitution
• India is a Union of States.
• There are
– 28 States; and
– 7 Union Territories.
• Neither ‘federal’ in the classical sense.
• Nor ‘Unitary’ in character.
• Some call it ‘quasi federal’
Structure of the Indian Constitution
• Constitution of India follows a sui generis system
of two-tier polity - the predominant strength of
the Union is blended with the essence of
cooperative federalism.
• Several features have been designed to
institutionalize the concept of cooperation.
• The wide range of Concurrent jurisdiction and
intertwining of certain items in the State List with
several entries in the Union List are examples.
Structure of the Indian Constitution
• Parliamentary / Cabinet form of Government at
both levels i.e.-
– Union; and
– State
• President is de jure head of Union Government
who acts on aid and advice of Council of
Ministers, which comprise de facto executive.
• Governor is de jure head of State Government
who acts on aid and advice of Council of
Ministers, which comprise de facto executive.
Structure of the Indian Constitution
• Parliament for the Union consists of the
President and two Houses known
respectively as the Council of the States
and the House of the People.
• The Legislature of a State consists of the
Governor and two Houses in case of the
States of Bihar, Maharashtra, Karnataka
and Uttar Pradesh and one House in case
of all other States.
Structure of the Indian Constitution
• The executive power of the Union extends to the
matters with respect to which Parliament has power to
make laws
• Executive power of the Union does not, ordinarily,
extend in any State to matters with respect to which
the Legislature of the State has also power to make
laws.
• In other words, normally, the executive powers of the
Union and the States are co-extensive with their
legislative powers. However, with respect to matters
in the Concurrent List, the executive power remains
with the States unless the Constitution or Parliament
by law expressly provided otherwise.
 Legislative Relations between the
Union and the States
Extent of Laws made by Parliament and
by the Legislatures of State
• Parliament may make laws for the whole
or any part of the territory of India.
• Legislature of a State may make laws for
the whole or any part of the State.
 Division of Legislative Jurisdiction
• There are three lists in the Seventh Schedule:
– List – I (Union List)

– List – II (State List)

– List – III (Concurrent List)

• Parliament has exclusive power to make laws

with respect to any matter contained in List-I
(Union List). [Article 246(1)]
 Division of Legislative Jurisdiction
• Parliament as also Legislature of any State have
power to make laws with respect to any matter
contained in List-III (Concurrent List).
• Legislature of any State has exclusive power to
make laws with respect to any matter contained
in List-II (State List).
• Parliament can make laws with respect to any
matter contained in the State List for any part of
the territory of India not included in a State.
[Article 246(4)]
 Division of Legislative Jurisdiction
Union List
• The Union List includes matters, such as,
Defence, Foreign Affairs, Foreign
Jurisdictions, Citizenship, Railways, Posts
& Telegraphs, Telephones, Wireless,
Broadcasting and other like forms of
communication, Airways, Banking,
Coinage, Currency, Union Duties and
Taxes, etc.
 Division of Legislative Jurisdiction
State List
• The State List includes items, such as, Public
Order, Police, Public Health, Local Government,
Agriculture, Land, Rights in or over Land, land
Tenures, Land Improvement, Alienation of
Agricultural Land, Colonisation, Fisheries,
Markets and Fairs, Money Lending and Money
Lenders, Relief of Agricultural Indebtedness, etc.
and certain duties and taxes.
 Division of Legislative Jurisdiction
Concurrent list
• The Concurrent List includes items of concurrent
legislative jurisdiction of the Union and the
States, such as, Criminal Law, Criminal
Procedure, Administration of Justice,
Constitution and Organisation of all Courts,
except the Supreme Court and the High Courts,
Marriage and Divorce, Adoption, Wills, Forests,
Economic and Social Planning, Population
control and Family Planning, Social Insurance,
Welfare of Labour, etc.
 Division of Legislative Jurisdiction

Residuary Powers of Legislation

• Parliament has exclusive power to make
any law with respect to any matter not
enumerated in the Concurrent List or State
List.
• Such power includes the power of making
any law imposing a tax not mentioned in
either of the above Lists.
 Division of Legislative Jurisdiction
Power of Parliament to legislate on a matter contained in
the State List
• Parliament can make laws with respect to any matter
enumerated in the State List if it becomes necessary or
expedient in national interest.
• The Council of States must pass a resolution supported
by not less than two-thirds of the members present and
voting.
• The resolution remains in force for specified period but
not exceeding one year. It may be extended for a further
period of one year if and so often the Council of States
so resolves.
• Such a law remains in force for a period of six months
after the resolution ceases to be in force.
 Division of Legislative Jurisdiction
Parliament may legislate on State subject while
Proclamation of Emergency is in operation
• While a proclamation of emergency is in
operation, Parliament has power to make laws
for the whole or any part of India with respect to
any matter contained in the State List.
• Such a law would cease to have effect after six
months from the date proclamation of
emergency ceases to operate.
 Division of Legislative Jurisdiction
Inconsistency between laws made
between the Parliament and laws made by
the States
• When Parliament exercises
abovementioned overriding power to make
any law in the national interest or while
emergency is in operation, its law prevails
over the law made by the Legislature of a
State, whether passed before or after.
 Division of Legislative Jurisdiction
Parliament may legislate on a State subject if two or
more States consent
• If Legislatures of two or more States resolve and request
Parliament to make law on a subject on which
Parliament has no power, Parliament may pass an Act
for regulating that matter and any Act so passed applies
to requesting States and to any other State which may
adopt it subsequently.
• Any Act passed in the above manner by Parliament may
be amended or appealed by Parliament in like manner,
but, it cannot be amended or repealed by an Act of
Legislature of the State to which it applies.
 Division of Legislative Jurisdiction
Inconsistency between laws made by the Parliament and laws made by Legislatures
of the States
• In the event of an inconsistency between a law made by the
Legislature of a State and by Parliament, the law made by
Parliament shall prevail. [Article 254 (1)]
• Where a law of a State on any matter in the Concurrent List
contains any provision repugnant to the provisions of an earlier law
made by Parliament or an existing law with respect to that matter,
then, the law so made by the Legislature of such State shall, if it has
been reserved for the consideration of the President and has
received his assent, prevail in that State. [Article 254 (2)]
• Provided that nothing shall prevent Parliament from making at any
time any law with respect to the same matter including a law adding
to, amending, varying or repealing the law so made by the
Legislature of the State.
 Administrative Relations
between Centre and States
Obligation of the States and the Union

• Normally, the executive powers of the Union and the

States are co-extensive with their legislative powers.
However, with respect to matters in the Concurrent List,
the executive power remains with the States unless the
Constitution or Parliament by law expressly provided
otherwise.
• Every State, in exercise of its executive power, has to
ensure compliance with the laws made by Parliament
and any existing laws applicable in the State.
• Union Government can give directions to a State for this
purpose.
 Administrative Relations
between Centre and States
Control of the Union over States

• No State can exercise its executive power so as

to impede or prejudice the executive power of
the Union.
• Union can give directions to a State to ensure
the above.
• Union can give directions to a State as to the
construction and maintenance of means of
communication of national or military
importance.
 Administrative Relations
between Centre and States
In short
• Administration of several matters in the
concurrent sphere and enforcement of Union
laws relating to them is secured through the
machinery of States.
• Three modes for enforcement of Union laws in
concurrent field;
– Administration entrusted entirely to States
– Administration entrusted partly to States
– Whole responsibility reserved by Union
Financial Relations between the Union
and the States

• Financial arrangements have two main

aspects:
– Distribution of taxation heads (Articles 246,
248 and 265, read with the Legislative Lists I
and II); and
– Distribution of revenues and sharing of
resources between the Union and the States
(Chapters I and II of Part XII of the
Constitution).
Financial Relations between the Union
and the States

Distribution of taxation powers

• Separate heads of taxation for the Union and the
States are provided in Lists I and II.
• No tax can be levied unless it is related to a
specific head of taxation in List I or List II.
• There is no head of taxation in the Concurrent
List (Union and the States have no concurrent
power of taxation).
Financial Relations between the Union
and the States

Distribution of taxation powers

• Residuary power of taxation vests in the
Union.
• There are thirteen taxation heads
comprised in Entries 82 to 92B in the
Union List; and
• Nineteen taxation items comprised in
Entries 45 to 63 of the State List.
Financial Relations between the Union
and the States

Broad Principle of Allocation of Heads

• Taxes which are location-specific and relate to
subjects of local consumption have been
assigned to the States.
• Those taxes which are of inter-State significance
and where the tax-payer can gain or evade tax
by shifting his habitat, or where the place of
residence is not a correct guide to the true
incidence of tax, have been vested in the Union.
Financial Relations between the Union
and the States

Distribution of Revenues
• The taxation powers allocated to the Union
and the States are mutually exclusive.
• But the scheme of accrual of revenues
envisages total assignment to the States
of the net proceeds of specified taxes and
of some others, sharing by them.
Financial Relations between the Union
and the States
Distribution of Revenues
• This scheme of distribution contemplates:
– Certain stamp duties and duties of excise in the
Union List are to be levied by the Union but
collected by the States and the proceeds assigned
to the States in which collected. (Article 268).
– Taxes mentioned in Article 269(1) shall be levied
and collected by the Union but assigned to the
States, within which they are levied, as laid down in
Article 269(2).
– Taxes levied and collected by the Union but shared
with the States, viz., tax on on-agricultural income.
(Article 270).
Financial Relations between the Union
and the States

Distribution of Revenues
– Taxes which are levied and collected by the
Union but may be shared with the States, if
Parliament by law so provides, viz., Union
Excise Duties. (Article 272).
– Taxes in the Union List levied, collected and
retained by the Union subject to the
exceptions mentioned above.
– Taxes in the State List, levied, collected and
retained by the States.
Financial Relations between the Union
and the States

Grants
• Union may pay such sums as Parliament may by
law provide each year as grants-in-aid of the
revenues of such States as Parliament may
determine to be in need of assistance.
• Union Government is required to give grants-in-
aid to the States for the welfare of the Schedule
Tribes and for raising the level of administration
in the Scheduled Areas and separately for
Assam. (Article 275).
Financial Relations between the Union
and the States

Finance Commission
• Determination of shares of the States in the
aforesaid taxes and duties and their inter se
allocation as also of grants-in-aid of revenues, is
done on the recommendations of the Finance
Commission, constituted every after five years.
• Every recommendation made by the Finance
Commission together with an explanatory
memorandum as to the action taken thereon has
to be laid before each House of Parliament.
 Judiciary
• Judiciary comprises of Supreme Court at the
Apex level and High Courts in the States as well
as Subordinate Courts at the District and below
level.
• There is hierarchy in respect of jurisdiction with
the Supreme Court and High Courts who also
enjoy exclusive powers to enforce fundamental
rights and adjudicate on any manner relating to
interpretation of law and Constitutional
provisions.
 Judiciary
• Supreme Court does not have any
administrative or supervisory control over
High Courts.
• All the District Courts and other Courts in
the State are under the administrative
control of the High Court of that State.
 Judiciary
• The appointment of Judges in the
Supreme Court as well as High Courts is
made by the President of India in
consultation with the Chief Justice of India.
• In case of appointment of Judges in the
High Court, the Chief Justice of that High
Court as well as Governor and Chief
Minister of the State/province are also
consulted.
 Judiciary
• The Judges of Supreme Court and High Court
enjoy full security of tenure and are absolutely
free from any control of Executive or Legislature.
• They can be removed by President only on
grounds of proved misbehavior or incapacity if
the Parliament through Motion as prescribed in
the Constitution makes such recommendation to
the President.
• The retirement age for the Judges of the
Supreme Court and High Courts is 65 and 62
years, respectively.
 Judiciary
The Union Judiciary

• Supreme Court consists of a Chief Justice of India and not more

than 25 other judges. [Art. 124]
• Supreme Court, and no other Court, has original jurisdiction in any
dispute
– between the Government of India and one or more States; or
– between the Govt. of India and any State or States on one side
and one or more other States on the other; or
– between two or more states, if and in so far as the dispute
involves any question (whether of law or fact), on which the
existence or extent of legal right depends. [Art. 131]
• The Supreme Court acts as an Appellate Court in appeals from High
Court. [Article 132]
 Judiciary
High Courts in the States
• There is a High Court for each State.
[Article 214]
• High Court is a court of record and has all
the powers of such a court including the
power to punish for contempt of itself.
[Article 215]
 Judiciary
Subordinate Courts
• Appointments of persons to be, and the posting
and promotion of, district judges in any State are
made by the Governor of the State in
consultation with the High Court exercising
jurisdiction in relation to such State. [Article 233]
• The control over district courts and courts
subordinate thereto including the posting and
promotion of, and the grant of leave to, persons
belonging to the judicial service of a State and
holding any post inferior to the post of district
judge is vested in the High Court. [Article 235]
Local Government
 Salient features of the 73rd Constitution
Amendment Act, 1993
• Constitutional status for Gram Sabha (assembly of the
community),
• Three tier Panchayat system at the village, intermediate and
district levels except in State with populations of less than 20
lakhs, where intermediate Panchayats may not be constituted,

• Reservation of seats and leadership positions for SCs/STs

and women,
• Regular elections every 5 years,
• Establishment of independent State Election Commission,
• State Finance Commissions to be set up once in 5 years,
• Powers to be so devolved upon Panchayats as to enable
them to functions as institutions of self government (Article
243 G read with Schedule XI).
 Article 243 G reads as under,
Powers, authority and responsibilities of Panchayats.-
Subject to the provisions of this Constitution, the Legislature
of a State may, by law, endow the Panchayats with such
powers and authority as may be necessary to enable
them to function as institutions of self-government
and such law may contain provisions for the devolution of
powers and responsibilities upon Panchayats at the
appropriate level, subject to such conditions as may be
specified therein, with respect to- 
(a) the preparation of plans for economic development and
social justice; 
(b) the implementation of schemes for economic development and
social justice as may be entrusted to them including those in
relation to the matters listed in the Eleventh Schedule.
 Eleventh Schedule lists 29 matters as
below
Agriculture, incl. Land
Landimprovement,
improvement, Minor irrigation,
Agriculture, incl. Minor irrigation, Animal husbandry,
extension land
landreforms,
reforms,consolidation
consolidation water management Animal husbandry,
extension water management dairying and poultry
soil conservation. watershed devpment dairying and poultry
soil conservation. watershed devpment

Social
Socialforestry
forestry Minor
Minorforest
forest Maintenance
Maintenanceof
of
Fisheries 
Fisheries  Fuel
Fueland
andfodder
fodder
farm forestry
farm forestry produce
produce community assets
community assets

Poverty
Poverty Public
Publicdistribution
distribution
Rural housing Drinking water
Rural housing Drinking water alleviation
alleviationprogramme
programme system
system

Education, Cultural
Education, Technical training Adult and non-formal Cultural
including primary
including primary
Technical training
vocational education
Adult and non-formal
education
Libraries
Libraries activities
and secondary schools vocational education education activities
and secondary schools

Social
SocialWelfare,
Welfare
Welfareof
ofthe
theweaker
weakersections,
sections, Welfare, Women
Womenandand
Welfare
Welfare lf handicappedand
lf handicapped and
in Child development
in particular of SCs andSTs
particular of SCs and STs mentally
mentallyretarded
retarded
Child development

Health and sanitation Roads, culverts,bridges, Non-

Health and sanitation Roads, culverts,bridges, Non-
hospitals. Primary health centres Family
Familywelfare
welfare ferries, waterways conventional
hospitals. Primary health centres ferries, waterways conventional
dispensaries other means of communication energy
dispensaries other means of communication energy
Rural electrification,
Markets Khadi, Rural electrification,
Markets Khadi,village
villageand
and Small
Smallscale
scaleindustries,
industries, distribution of
distribution of
Fairs
Fairs cottage
cottage industries food processingindustries
industries food processing industries electricity
electricity
 The Panchayats (Extension to Scheduled
Areas) Act, 1996
• Panchayati Raj extended to Tribal areas with
• State legislation enjoined to give primacy to
communities to manage their affairs in
accordance with traditions and customs.
• Gram Sabhas given extensive powers to
– safeguard and preserve traditions, customs, cultural identity,
community resources and customary mode of dispute resolution.
– to approve the plans, programmes and projects for social and
economic development,
– Identify beneficiaries under poverty alleviation and other programmes,
– certify utilization of funds by the Gram Panchayat,
– Protect common property resources, including minor forest produce,
– Be consulted prior to land acquisition.
 Central
Central and
and State
State Finance
Finance Commissions
Commissions
State Finance Commission to be appointed every 5
years:
• review the financial position of the Panchayats,
• recommend principles to govern distribution of State
taxes, duties, etc between State and Panchayats,
• Allocation between the Panchayats of their
respective shares of such taxes etc.,  
• determination of taxes, duties, etc. which may be
assigned to, or appropriated by, the Panchayats;  
• Recommend grants-in-aid to Panchayats from State
Consolidated Fund; 
• Recommend measures needed to improve the
financial position of the Panchayats;
Background: Article 280 (2) (bb) of
the Constitution
• The Central Finance Commission shall
recommend:

– The measures needed to augment the

Consolidated fund of a State

to supplement the resources of Panchayats

in the State,

on the basis of the recommendations made

by the Finance Commission of the State
 Recommendation of Twelfth Finance
Commission (TFC)

• Rs.200 million payable during 2005-10 to

State, to be transferred to Panchayats.

• Allocation amongst various Panchayati Raj

Institutions and also autonomous councils in
excluded areas to be made by States.
 Mode of release of funds

• Two equal instalments in July and January

every year.

• States to mandatorily transfer the grants

released by the Centre to the PRIs within 15
days of the same being credited to the
States’ account.
 Special monitoring of releases and
utilisation of grants
• Central Review Committee headed by
Secretary, Ministry of Finance,
Department of Expenditure.

• Separate Committee to monitor the

release of grants to PRIs, headed by
Secretary Ministry of Panchayati Raj,
Urban Local Bodies
 Constitution (74th Amendment) Act
• Passed by the Parliament in 1992. Came into
force on 1st June, 1993.
• Aims at Constitutional guarantee to safeguard
the interest of Urban Local Bodies to enable
them to function as effective, democratic and
self-governing institutions at grassroots level.
• Envisages that the Governments of States and
Union Territories would take action to pass new
Legislation or amend existing Laws within a
period of one year, from the date of
commencement of the Act.
 Constitution (74th Amendment) Act
• The Act provides for basic framework for Urban
Local Bodies in India.
• The main provisions cover the following:-
– Type and Composition of Municipalities
– Ward Committees
– Reservation of seats for SC/ST and Women
– Term, Powers and Responsibilities
– Financial Powers
– State Finance Commission
– District and Metropolitan Planning Committees
– List of functions in 12th schedule
Thank you!