Go Paper III main page.
India is a union of states. The constitution of India has divided the legislative, executive and financial powers between the centre and the states, which gives the constitution a federal character whereas judiciary is integrated in a hierarchical structure.
- The distribution of powers is an essential feature of federalism. A federal constitution establishes the dual polity with the Union at the centre and the States at the periphery, each endowed with the sovereign powers to be exercised in the field assigned to them respectively by the constitution.
- The state is not subordinate to the centre in its own field; the authority of one is to co-ordinate with the otherIn the Indian federal set-up. The constitution divides powers between centre and states as:
- Legislative (Articles 245-255)
- Administrative (Articles 256-263)
- Financial (Article 264-281)
National unity operates through a delicate balance of power across three distinct
pillars.
A. Legislative
Relations (Articles 245–255)
The Constitution divides the power
to make laws into three lists under the Seventh Schedule:
o Union List (100 subjects): Exclusive to Parliament (Defense,
Banking, Atomic Energy).
o State List (61 subjects): Exclusive to States under normal
conditions (Police, Agriculture, Public Health).
o Concurrent List (52 subjects): Both can legislate. If a conflict
arises, Central Law prevails
(Art. 254).
·
Residuary
Powers (Art. 248):
Vested in the Parliament
(unlike the US/Australia where they stay with States).
· Territorial Jurisdiction: Parliament can make laws for the whole or any part of India (and extra-territorial laws). State Legislatures make laws only for their respective states.
·
Parliamentary
Legislation in State Field:
Parliament can legislate on State subjects under five extraordinary
circumstances:
1.
Rajya
Sabha passes a resolution (Art. 249).
2.
During
a National Emergency (Art. 250).
3.
States
make a joint request (Art. 252).
4.
To
implement International Agreements (Art. 253).
5. During President’s Rule (Art. 356)
- Sarkaria Commission’s Opinion on Legislative Relations
- Regarding residuary powers: Powers related to taxation should remain with Parliament, while the other residuary powers should be placed in Concurrent List.
- Regarding Union List: Commission feels that the proposed redistribution on powers would require drastic changes in the basic scheme and framework of the Constitution so dedicatedly designed to protect the independence and ensure the unity and integrity of the country.
- Regarding Concurrent List: Commission observes that the demand for abolition of the Concurrent List would involve a drastic change in the fundamental scheme and framework of the Constitution.
B. Administrative
Relations (Articles 256–263)
This defines how the executive
branch of the Centre interacts with the States.
·
Directions
to States: The Centre
can issue directives to States to ensure compliance with central laws (Art.
256) or to protect railways and communication (Art. 257). Non-compliance can
trigger Article 365,
leading to President's Rule.
- All-India
Services: AIS officers are recruited by
the Centre but serve the States, creating a unique "bridge" in
administration.
This is a unique feature of Indian federalism.
- The Governor's Role:
Often a point of contention; the Governor acts as the constitutional head
of the State but is appointed by the President.
·
Inter-State
Council (Art. 263):
Established by the President to investigate and discuss subjects of common
interest (Sarkaria Commission recommendation).
·
Grants-in-Aid: The Centre provides financial
assistance to states to bridge the gap between their resources and
responsibilities.
During the time of Emergency, Indian constitutional works like a unitary Government. In normal times, there are constitutional provisions, which ensure the control of the Union over the states.
Sarkaria Commission’s Opinion on Administrative Relations
- In a two-tier system of government, where the administration of Union Law is largely secured through the machinery of the State, differences are bound to arise in regard to manner of implementation of Union laws. Article 256 and 257 are essential to ensure harmonious exercise of executive power by the Union and the States.
- Before issuing directions to a State under Articles 256 and 257, the Union should explore the possibilities of settling points of conflict by all other available means. a direction under these provisions and application of the sanction under Article 365 in the event of its non-compliance is a measure of last resort.
- Federalism is more a functional arrangement for co-operative action, than a static institutional concept. Article 258 provides a tool, by the liberal use of which, co-operative federalism can be substantially realized in the working of the system. The commission recommends a more extensive and generous use of this Article.
C. Financial Relations (Articles 268–293)
This is the most dynamic area,
governed by Fiscal Federalism.
- Taxing Powers: The 101st Amendment (GST) significantly altered this. Most indirect taxes are now subsumed under GST, which is governed by the GST Council (a joint forum).
·
Finance
Commission (Art. 280):
A quasi-judicial body appointed by the President every 5 years to recommend the
distribution of tax proceeds.
· The 16th Finance Commission (2026-2031) is currently the active framework for vertical and horizontal devolution.
·
Grants-in-aid
(Art. 275 & 282):
o Statutory Grants (Art. 275): Given on the recommendation of the
Finance Commission.
o Discretionary Grants (Art. 282): Given by the Centre/States for any
public purpose.
- Niti Ayog also plays a vital role in financial relations b/w centre & states. It decides outlays of the plans for the country which in turn decides amount of money to be given to various states
- Finance Commission (Article 280) recommends to the President on the distribution of net proceeds of taxes between the centre and states.
- Borrowing by the Centre and the States
- The centre can grant loans to states and also give guarantee in respect of loans raised by them (Article 293).
- The Central government can borrow either within India or outside upon the security of the Consolidated Fund of India or can give guarantees, but both within the limits fixed give the Parliament.
- Similarly, a state government can borrow within India (and not abroad) upon the security of the Consolidated Fund of the State or can give guarantees, but both within the limits fixed by the legislature of that state.
- The Central government can make loans to any state or give guarantees in respect of loans raised by any state. Any sums required for the purpose of making such loans are to be charged on the Consolidated Fund of India.
- A state cannot raise any loan without the consent of the Centre, if there is still outsanding any part of a loan made to the state by the Centre or in respect of which a guarantee has been given by the Centre.
Recent Conflict Zones (2025-2026)
- Delimitation 2026:
Southern states have expressed deep concern that a 2026 reallocation of
Lok Sabha seats based on population will "punish" them for
successful population control, giving more political power to Northern
states.
- Central Agencies:
Friction has increased over the jurisdiction of the CBI and ED
within states, with some states withdrawing "general consent"
for central investigations.
- 130th Constitutional Amendment Bill (2025): A landmark bill introduced to automatically disqualify Ministers (including CMs and the PM) if they are detained for more than 30 days, sparking intense debate over state sovereignty and the potential misuse of investigative agenci
- Goods and Services tax
- GST (101st amendment of the constitution) aims to make India a common market with common tax rates and procedures and remove the economic barriers thus paving the way for an integrated economy at the national level. By subsuming most of the Central and State taxes into a single tax and by allowing a set-off of prior-stage taxes for the transactions across the entire value chain, it would mitigate the ill effects of cascading, improve competitiveness and improve liquidity of the businesses. GST is a destination based tax. It follows a multi-stage collection mechanism. In this, tax is collected at every stage and the credit of tax paid at the previous stage is available as a set off at the next stage of transaction. This shifts the tax incidence near to the consumer and benefits the industry through better cash flows and better working capital management.
- The important changes made to the Constitution are:
- Article 246 (A) This is a new article inserted in the constitution. It says that (1) Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, has power to make laws with respect to goods and services tax imposed by the Union or by such State. (2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.
- Article 269A: Goods and services tax on supplies in the course of inter-State trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council.
- —For the purposes of this clause, supply of goods, or of services, or both in the course of import into the territory of India shall be deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce.
- Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.
- Article 279-A: This article provides for constitution of a GST council by president within sixty days from this act coming into force. The GST council will constitute the following members:
- Union Finance Minister as chairman of the council
- Union Minister of State in charge of Revenue or Finance
- One nominated member from each state who is in charge of finance or taxation.
Administrative Relations between Center & States
- Union-state administrative relations in India are organized so as to enable the union government to exercise considerable direction & control over administrative machinery of the state
- Union government has been armed with the powers of giving directions to state & has been given certain other powers to promote interstate coordination + settle interstate river water disputes
- For above purpose, President may appoint interstate councils (Advisory in nature) to effect coordination b/w the states
Financial Relations between Center & States
Financially strong centre, so much that states are almost completely dependent upon the union for financial assistance. While proceeds of all the taxes within the state list are entirely retained by the state, proceeds of some of the taxes in union list are allotted wholly or partially to the states.
- Taxes levied & collected by union but assigned to states:
- Taxes levied & collected by the union but distributed b/w union & states → Income tax (Not including corporate tax)
Grant in aids & Loans
- Parliament make grants to give financial assistance to states to help overcome budgetary deficits
- Union can make grants for any public purpose for various national development schemes
- Union provides many other grants to states from time to time which mean states depend greatly on Union to get loans. A state government can only borrow within India & can not raise a new loan without the consent of Union government, if there is an outstanding on previous loans
- Constitution provides for appointment of finance commission by President every 5 years to advise him regarding distribution of resources b/w union & states & other revenue matters
Cooperative Federalism
- In exigencies of war, national interest takes precedence over fine points of centre – state divisions of powers
- Substitution of primary police state by welfare state, where varied social services or technological advancement requires huge outlays & state government could not meet them on their own resources
Supreme Court Doctrines in context of legislative relations b/w Centre & States
Doctrine of Pith & Substance
- Within their respected areas of authority, Union & state legislatures are supreme & are not supposed to encroach upon others sphere
- If a new law passed by one encroaches upon the subject, held & assigned by the other, court will apply Doctrine of Pith & Substance
- If it is found that law in substance is within the subjects assigned to that legislature & intention of law is genuine, the law shall be valid, even though there is some overlapping.
- Hence, there can not be watertight division of powers b/w centre & the state, because if it is, it would made several laws invalid on simple grounds of overlapping
Doctrine of Colorable legislation
- In federal government, transgression of its limit of powers by a legislature may be overt or covert. When the legislation is indirect & covert, it is known as colorable legislation
- In this, although the subject on which legislature make laws falls within its legislative competence in exterior appearance but its real motive is to transgress the powers of other legislature covertly
- In this, case applying the Doctrine of colorable legislation, court can invalidate the entire law which means, what legislature can not do directly, it can not do the same indirectly also
Interstate councils
- President is empowered to constitute an interstate council, if at any time it appears to him that public interest would be served thereby
- Establishment → May 1990, on recommendations of Sarkaria commission
- Meet 3 time a year with proceedings under camera
Largely based on GOI act of 1935; ISC has 3 specific duties viz.
- To enquire into & advice upon disputes arose b/w states
- To investigate & discuss subjects on which states or union + states have common interest
- To make recommendations on these subjects for better coordination of policy & action
source
No comments:
Post a Comment