Centre-State Relations – Indian Polity Notes

The constituent assembly in their wisdom have chosen the federal polity for India that too of Westminster style democracy. It provides, two level of governments, at centre and at states, both deriving their original power from the constitution.

The constitution also provides for separation of power using three lists given in the Schedule-VII. Further it also provides for principles governing centre – state relationship.

The centre – state relations can be broadly classified into three types: Legislative, Administrative and Financial.

Centre State Legislative Relations

Article 245 to 255 deals with the legislative relations between the Centre and the States.

1. Territorial Extent:

• The constitution authorises the union parliament to make law for whole or any part of the territory of India. 
• Legislative powers of states are limited only to jurisdiction of state.
• Further, the constitution also provides the parliament power to make extra territorial legislations [laws which are applicable to Indian subjects not necessarily living in India. Like Indian Embassies, Indian Mission to Antarctica etc.]

However the parliamentary laws aren’t applicable under following circumstances:

• Constitution provides the President duty to make regulations for peace and good government in 4 UTs- Andaman and Nicobar, Lakshadweep, Dadra Nagar Haveli & Daman and Diu, Ladakh. Acts of parliament are applicable only after the Presidential regulations.
• The governor is empowered to amend or stop application of act of parliament with respect to Scheduled Areas.

2. Distribution of Legislative Subjects:

• Union Parliament has exclusive power to legislate on matters given in Union List.
• Union and States share powers to legislate on matters given in Concurrent List.
• The state legislature have exclusive power to legislate on matters given in the state list.

3. Parliamentary Legislation in the State Field.

• Under article 249, even in normal circumstances (other than emergency) union can legislate on state subjects. Given that the Rajya Sabha passes a resolution with special majority that too in national interest.
• Acts passed using this article are temporary in nature.

• Article 248 gives the residuary powers to legislate to the union parliament. This is indicative feature of Indian federation’s centralizing tendency.
• Article 250 empowers the parliament to make laws on state subjects when national emergency is in force. Such laws are of temporary nature, becomes inoperative after 6 months of exploration of emergency.
• Article 252: Two or more states can request union parliament to legislate an act for them. Such act passed by parliament is applicable only to requesting states. 
  • Further requesting states lose the power to amend, repeal that law to the union parliament.
• Article 253 provides the parliament with power to enact laws to give effect to international agreements. 
  • When the Government signs an international agreement. There is need to pass a law to enforce such agreement or treaty. The constitution gives this power only to the union parliament.

4. Centre’s control over state legislation:

• Under Article 200, the Governor can reserve any bill for the Presidential consideration. The President enjoys absolute veto over such bills provided under article 201.
• Bills on certain matters given in state list can only be introduced with previous sanction of the President.
• During the financial emergency under article 360, certain bills needs to be reserved for the Presidential consideration.

Centre State Administrative Relations

Articles 256 to 263 deals with administrative relations between the centre and the States.

Concerns of the states:[MAINS]

• Power to issue directions & power to punish in case of non-compliance.
• Role of governor, All India Services, Paramilitary forces.

Power to issue directions

Article 256: Subordination of the executive power of the state to the legislative power of the union parliament.

Article 257: Subordination of the executive power of the state to the executive power of the union.

Union can issue directions for(under Article 256)

• Construction and maintenance of means of communication declared to be national and military importance.
• For railway protection.

Article 258: Mutual delegation of functions.

• Union can delegate the executive functions to the state governments with or without their consent. Without consent means the law itself will mention that.

Article 258A: the states can delegate the executive powers to the union but only with the consent of the union.

Power to Punish

Article 365: Effect of failure to comply with the directions. 

It is lawful for the President to declare that the situation has arises where the government of the state cannot be run according to the constitution.

Consequence

Article 355: It is duty of the union to ensure that government of every state is run in accordance with the constitution.

Article 356: Imposition of the President’s Rule.

Role of Governor

The constitution under article 153 provides for the governor for each state and under Article 154 makes him/her executive head of the state.

Role of Governor in Centre State Relations

• Parliamentary System requires two heads- real and nominal. President and Governor are nominal heads.
• Governor has dual responsibilities:
  • As a head of executive of state.
  • As a lynchpin in India’s cooperative federalism.
    • The Governor is communication link between the union and the state. Brings national perspective at the state level and informs the union with ground level developments. E.g. Article 355.

Why controversy?

Misuse of the institution of the governor by the party in power at Union.

What allows the union to misuse the institution?

• Discretionary Powers. (In case of the governor, discretionary power implies to be used without aid and advice of state council of ministers).
• System of appointment
• System of removal

All India Services

• They act more like agents of the union, as union has all disciplinary powers.
• The chief minister can only suspend. The union still can reinstate the officer suspended by the CM.
• Under union parliament, on passing of resolution by the Rajya Sabha under article 312 is authorised to create new All India Service.

Armed forces and paramilitary forces

• Entry 2A of Union List: Deployment of any Armed Forces of union in any state, in aid of civil power.
• States concern is w.r.t. suo moto deployment by union without state’s consent.
  • Naga People’s Case: the Supreme Court held the suo moto deployment of the forces is constitutional.

Centre State Financial Relations

Articles 268 to 293 deals with financial relations between the centre and the states.

Theme in the financial relations: Cooperative Federalism

• Interdependence.
• Centre acts as a big brother.

Scheme: Is such which results into horizontal and vertical imbalance. Imbalance denotes the gap in income and expenditure.

How imbalance comes: Union has more resources. The taxes which yields better revenue are given to Union(e.g. Income Tax Corporate Tax etc.)

Why such division

• Regional imbalance.
• India is a welfare state and goals of planning. In centralized planning, centre allocates the funds.

Distribution of the Financial Powers

Both governments get revenue, they can borrow from market. The state governments also receives grant-in-aid(in aid of revenue from the Centre).

Distribution of Taxes

Finance Commission constituted by the President once in every five years under article 280, gives recommendations for sharable pool of taxes under article 270, 271.

Concerns of the States

1. Article 268: If state had been levying duties the rates would have been more than present rates are.
2. Article 270: States had been demanding at least 50% share from shareable tax pool but the present share is 41% (as per 15^th Finance Commission report for 2021-26).
3. Article 271: Union follows the practice of increasing surcharge rather than the tax rates. Hence, the state governments also demand the share from surcharge, which is denied by the Centre.
4. GST: In present structure, GST harmonizes the tax. It provides the bandwidth within which states can choose their rates. 
   1. It further reduces scope of autonomy of Panchayats and Municipalities as Octrai, Entertainment Tax etc. are subsumed under GST.
   2. Being destination based tax, it is disadvantageous for producing states. 

Issues relating to borrowing

• States cannot borrow from outside.
• There are certain limitations on borrowing within domestic market.

Statutory Grants(Article 275)

• They are given to states needing central assistance.
• They are given for purposes mentioned in the Union List.
• These are mandatory grants. 
• Purpose: to meet cost of schemes of development for welfare of STs in states and improve administration in the scheduled areas.
• Mandatory grants for Assam for improving administration in tribal areas and for development of autonomous areas.

Discretionary Grants (Article 282)

The union of state may make any grants for any purpose, notwithstanding, that the purpose is such with which the parliament and the state legislature can make law.

E.g. for rural development which is state subject.

Important Commission Recommendations

Administrative Reforms Commission (ARC)

It made following recommendations:

• Establishment of inter state council under article 263.
• Appointment of persons having long experience in public life and non partisan attitude as governors.
• Delegation of powers to the maximum to the states.
• Transferring of more financial resources to the states.
• Deployment of central armed forces in the state on their requests.

Sarkaria Commission 1983

It made 247 recommendations out of which 180 have been implemented. The key recommendations were:

1. Establishment of permanent Inter State Council under article 263.
2. President’s Rule(article 356) should be used sparingly as last resort.
3. Expect for residuary power of taxation, all residuary powers should be placed in Concurrent List.
4. Zonal councils constituted afresh and reactivated.
5. Centre should consult states before making law on state subjects.
6. Governor cannot dismiss state government as long as they enjoy majority in the assembly.

Punchhi Commission 2007

Key recommendations were:

1. While selecting the Governors, the central government should adopt the strict guidelines given by the Sarkaria Commission.
   1. Eminent person.
   2. Person outside the state.
   3. Detached figure not intimately connected with state politics.
   4. Not active in politics in the recent past.
2. Governor’s should be given fixed tenure of 5 years and their removal shall not be at will of the centre.
3. Governor should take action on bills sent for his consent within 6 months.
4. Procedure laid down for presidential impeachment can be made applicable for governor also.
5. Convention of Governors acting as chancellors universities should be done away with.
6. Article 352, 356 should be used as last resort.
7. Amendments to be made in article 263 to make inter state council effective and credible.

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