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CENTRE-STATE RELATION & FEDERALISM BY ATRISHEKHAR - Coggle Diagram
CENTRE-STATE RELATION & FEDERALISM BY ATRISHEKHAR
Legislative Relation
provisions
Part - XI
Chapter - 1
Articles 245-255
Territorial extent of Central and state legislation
Distribution of legislative subjects
Centre’s control over state legislation
Parliamentary legislation in the state field
Extraordinary
Situation
Rajya Sabha passes a Resolution
Majority required
Must be supported by 2/3rd of the members
present and voting.
Duration
Duration of remaining in force – 1 year
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Renewal
Can be renewed ‘any’ number of times.
Renewal should not exceed 1 year.
National Emergency
Parliament can legislate on a matter enumerated in the state list.
Laws made by Parliament remain in force ‘6 months’ after
expiry of emergency.
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State make a Request
When the legislatures of 2 or more states pass resolutions request the Parliament to enact laws on a matter in the State List, then the Parliament can make laws for regulating that matter.
A law so enacted applies only to those states which
have passed the resolutions.
However, any other state may adopt it afterward by passing a resolution to that effect in its legislature.
Such a law can be amended or repealed only by the
Parliament and not by the legislatures of the concerned states.
Abdication or surrender - The state legislature
ceases to have the power to make a law with respect to that matter
Some examples of laws passed under the above
provision are :
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To implement International Agreements
The Parliament can make laws on any matter in the ‘State List’ for implementing international treaties agreements, or conventions.
This provision enables the Central government to fulfill its international obligations and commitments.
Some examples of laws enacted under the above provision are:
United Nations (Privileges and Immunities) Act, 1947;
Geneva Convention Act, 1960;
Anti-Hijacking Act, 1982
Legislations relating to environment and TRIPS.
President Rule
Parliament becomes empowered to enact a law on the state matter during the time of operation of the President’s rule
The law made during this time would continue even after the expiration of the president’s rule.
But, such a law can be repealed or altered or re-enacted by the state legislature
ARTICLE-200 =The governor can reserve certain types of bills
passed by the state legislature for the consideration of the President. The president enjoys an absolute veto over them.
Bills on certain matters enumerated in the State
List can be introduced in the state legislature only with the
previous sanction of the president
for example bill imposing restriction on freedom of trade and commerce.
The Centre can direct the states to reserve
‘money bills’ and other ‘financial bills’ passed bythe state legislature for the President’s
consideration during a financial emergency.
7th Schedule of the
Constitution
Three-Fold
Classification
Union List
Union alone can make laws
100 subjects:
Matter of National
Importance
Example-Defence, banking, foreign affairs, currency, atomic energy etc.
Concurrent List
Union+State can make laws
52 subjects:
Has subjects of common interest
Examplepopulation control,
Education, forest, trade
State List
State alone can make laws
61 subjects :
Matters of regional and local importance
Example-public order, police, public health and
Residuary powers (Article 248) - Parliament has exclusive power to make any law
The 42nd Amendment Act of 1976 transferred 5 subjects to ‘Concurrent List’ from ‘State List’ that are as follows
Education
Forests
Weights and Measures
Protection of Wild animals and birds
Administration of Justice; Constitution and organization of all courts except the Supreme Court and the high courts.
101st Amendment Act of 2016 has made a special provision with respect to goods and services tax.
o Accordingly, the Parliament and the state legislature have the power to make laws with respect to goods and services tax imposed by the Union or by the State.
o Parliament has exclusive power to make laws related to ‘inter-state’ trade or commerce.
Parliament
Can make laws
Whole’ or ‘any part of the territory’.
Territory of India includes
‘States’ + ‘Union territories’ + any other
area included in the territory of India
Power of Extra Territorial
legislation lies with Parliament
Applicable to Indian citizen and their
property in any part of the world
State Legislature
Can make laws
Power to make laws for
whole or part of the state.
Exception
The laws made by a state legislature are
not applicable outside the state, except when there is a sufficient nexus between the state and the object.
Administrative Relation
PROVISIONS
Part - XI
Chapter - 2
Articles 256-263
Distribution of Executive Powers
The executive power of the Centre extends to
the whole of India w.r.t. to the following:
Rights, authority and jurisdiction
conferred on it by any treaty or agreement
The subjects enumerated in the
‘Union List’
The executive power of a state extends to
the subjects enumerated in the ‘state list’.
A law on a concurrent subject, though enacted by the Parliament, is to be executed by the states
Exception-when a ‘Constitutional provision’ or a ‘parliamentary law’ specifically confers it on the
Centre
Obligation of States and the Centre
State must ensure compliance with the laws
made by the Parliament and any existing law which applies in the state
State must not to impede or prejudice the
exercise of executive power of the Centre in the state.
Article 365- If any state has failed to comply with (or to give effect to) any directions given by the Centre, in such a situation, the President’s rule can be imposed in the state under Article 356
Special provision with respect to goods and services tax
Article 246-A:
The intra-state trade now comes under the jurisdiction of both ‘centre’ and ‘state’; while
inter-state trade and commerce is “exclusively” under central government jurisdiction.
Both Union and States in India now have
“concurrent powers” to make law with respect to goods & services.
Article 269-A
In case of the inter-state trade, the tax will be levied and collected by the Government of India and shared between the Union and States as per recommendation of the GST Council.
Article 279-A
There will be a
GST council constituted by President, headed by finance minister as its chairman and one nominated member from each state who is in charge of finance or taxation.
Centre’s directions to the States
The Centre is empowered to give directions to the states in the following matters:
o Construction and maintenance of means of communication which is of national importance.
o Protection of the railways in the state
o Execution and preparing the specified schemes for the welfare of the Scheduled Tribes in the state.
o Instruction in the mother tongue at the primary stage of education to children belonging to linguistic minority groups
Article 365 applicable for the breach of
above provisions
Mutual delegation of Functions
Since the distribution of legislative powers
between the ‘Centre’ and the ‘states’ is rigid,therefore,
Centre cannot delegate its legislative powers to the states and a single state cannot request the Parliament to make a law on a state subject.
The same
applies to executive powers too
.
The Constitution provides for inter - government delegation of ‘executive’ functions in order to mitigate rigidity and avoid a situation of deadlock.
Mutual delegation of functions between the
Centre and the state can take place
By Centre- By law passed by Parliament or
by agreement between Center and State
By State- Only by agreement between
Center and State
How the deadlock can be resolved?
President may, with the consent of the
state government, entrust to that government any of the executive functions of the Centre
Provisions also exist for giving executive
functions of the centre to the state without the consent of the state.
But this delegation needs to be done by the
Parliament (and not the President).
law made by Parliament can confer powers
as well as impose duties on the state (i.e without the consent of the states).
Governor of a state may, with the consent
of the Central government, entrust to that government any of the executive functions of the state
Cooperation between the Centre and
States
Provision 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 can be provided by Parliament.
Establishment of Inter-State Council to investigate and discuss subject of common interest between the Centre and the state by the President
Public acts, records and judicial
proceedings of the Centre and every state must be given full faith and credit throughout the territory of India
An appropriate authority to carry out the purposes of the constitutional provisions relating to the interstate freedom of trade, commerce and intercourse can be appointed by the Parliament.
All-India Services
• Public Services of center is called as- Central Services
• Public Services of State is called as- State
• All-India Services
o The members of these services occupy top services
o They are recruited and trained by the Centre
o They are IAS, IPS and IFS (Indian Forest Services)
Article 312 – It authorises the Parliament to
create new All-India Service on the basis of a Rajya Sabha resolution to that effect.
it seems that All India Services violate the principle
of federalism by restricting the autonomy of the states, then why they are in place ?
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• The ultimate control lies with- Central government
• The Immediate control vests with - State Governments positions (or key posts) under both the Centre and the states and serve them by turns.
Public Service Commissions
Only the President can remove the
‘Chairman’ and members of a ‘state public service commission’, though they are appointed by the Governor of the state.
Joint State Public Service Commission
(JSPSC) for 2 or more states can be established by the Parliament on the request of the state legislatures concerned.
The chairman and members of the JSPSC are appointed by the President
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’.
The UPSC assists the states (when requested by 2 or more states) in framingand operating schemes of joint recruitment for any services for which candidates possessing special qualifications are required to be appointed.
Relations during Emergencies
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Financial Relation
PROVISION
Chapter 1 & 2
Articles 268-293
Part - XII
Allocation of taxing powers
Parliament has the exclusive power to levy taxes on subjects enumerated in the Union list
State legislature has the exclusive power to levy taxes on subjects enumerated in the state list
Both union and state can levy taxes on matters enumerated in the concurrent list
Residuary power of taxation is vested in the Parliament
Restriction placed by constitution on taxation power of the state
A state legislature can impose taxes on profession, trades, callings and employments. But, the total amount payable by any person should not exceed Rs 2500 per annum
A state can impose taxes on sale or purchase of goods (other than newspaper). But, this power of state to impose sales tax is subjected to four restrictions:
No tax sale or purchase outside the states
No tax ON import or export
No tax - inter-state trade and commerce
sale or purchase of goods declared by the Parliament to be of special importance in inter-state trade and commerce
State cannot impose tax on sale of electricity in the following circumstances- or
consumed by the centre or sold to the centre,
consumed in the construction, maintenance or operation of any railway by the centre
sold to the railway company for the same purpose
A state can impose tax on sale of water or electricity sold to an authority established by Parliament for regulating or developing Inter-state River.
However, such imposition can be undertaken through a law which has received the assent of the President
Distribution of tax revenues
Taxes are imposed by the centre but are collected and appropriated by the state (Article 268).
Ex: Stamps duty, excise duty
Taxes are levied and collected by the centre but assigned to the states (article 269).
Ex: Taxes on the sale or purchase of goods (other than newspapers) in the course of inter-state trade.
Taxes are levied and collected by the centre but distributed between the centre and the states (Article 270).
The matter of distribution of these taxes is prescribed by the President based on the recommendation of the Finance Commission
This category includes all taxes except those mentioned above, surcharges and cess.
Parliament at any point can levy the surcharges on taxes and duties referred to in Article 269 and article 270.
Such proceeds from surcharges go exclusively to the centre
Taxes levied and collected and retained by the states:
Ex: Taxes on agriculture income, excise duties on alcohol, taxes on professions, ceilings etc
Distribution of Non-tax revenues:
The centre: The receipts from the following form the major sources of non-tax revenues of the centre:; ; ;
i) posts and telegraphs
ii) railways;
iii) banking
iv) broadcasting;
v) coinage and currency
vii) escheat and lapse
vi) central public sector enterprise; and
The states: The receipts from the following form the major sources of non-tax revenues of the states: ;
i) irrigation;
ii) forests;
iii) fisheries
iv) state public sector enterprise and
v) escheat and lapse
Escheat and lapse are two legal terms that refer to situations where property or assets are transferred to the state
GRANTS
Grants-in-Aid to the states:
There are two types of grants-in-aid:
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Other grants:
Constitution provided for a temporary grant for specific purpose.
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These grants were to be given for a period of 10 years from the commencement of the constitution based on the recommendation of the Finance Commission
FINANCE COMMISSION
Article 280 provides for this quasi-judicial body
It is constituted by the President every five years or even earlier
It is required to make recommendations to the President on the following matters:
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Some bills can be introduced in the Parliament only on the recommendation of the President so as to protect the financial interests of the states:
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Borrowing by the centre and the states
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Inter-governmental tax immunities
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During emergencies: financial relations between centre and the states
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There is no division of judicial power as the Constitution has established an integrated judicial system to enforce both the ‘central laws’ as well as ‘state laws.
Challenges at present in Centre-State relations
Federalism
SUPREME COURT ON FEDERALISM
The Supreme Court has included ‘Federalism’ in the basic structure of India. Though it also stated that India is not absolute federalism.
India is stated to be a quasi-federal country and classified as “a unitary state with subsidiary federal principles rather than a federal state with subsidiary unitary principles.”
Horeover, the Indian Constitution does not mention the word “Federation”, rather Article 1 of the Constitution states India to be a “Union of States”
India has a quasi-federal structure which means it has taken ‘partly federal’ & ‘partly unitary’ features.
There is no mention of the ‘federal’ or ‘federation’ term in the Indian constitution.
But in practice, India is a federal structured country with a strong centre (similar to the Canada) which is stated as a Union of States (Cooperative Country) –according to Article 1 of the Constitution.
Quasi Federalism
Partly Federal
Supremacy of the constitution.
Written constitution
Rigid constitution
7th schedule – Division of legislative powers b/w centre and states.
Independent Judiciary.
Bicameralism
Partly Unitary
Single Citizenship.
Single Constitution.
Emergency provisions (which make the system unitary).
Parliament has the power to change the names / boundaries of the state.
Integrated Judiciary system.
Appointment of Governors by Centre.
Dependence of states on centre for economic assistance and grants.
All Indian Services
Federal Theorist KC Wheare: He has argued that the nature of Indian Constitution is quasi-federal in
nature.
Sat Pal vs. State of Punjab and Ors (1969): The Supreme Court held that the Constitution of India is more
Quasi-federal than federal or unitary
is a system of government in which the
power is divided between ‘central authority’ and various constituent units of the country
Steps towards promoting Co-operative Federalism
• New institutions have been created for promoting cooperation between center and states as well as also interstate cooperation. They are
o Empowered Committee of Finance Ministers which has been set up in 2000 - Instrumental in
o GST council: It has been set up under Article 279 A of the Constitution.
o Governing Council of Chief Ministers (NITI Aayog)
• Enhanced untied fiscal transfers to the statesbringing about the major reform in the fiscal setup i.e., VAT & GST
• Several rights-based legislation that provide for joint responsibility. For example, NREGA, RT E Act, etc.
Competitive federalism
It views Central and State governments as competing with each other to put together a package of
services and a fiscal environment that attracts maximum resources. It's also more of a mercantilist or economic concept based on the market analogy rather than merely just a political concept.
Benefits of competitive federalism
o It promotes innovation
o Better services for the people
o It places emphasis on continuous reforms
o It also has the effect of disciplining the states fiscally
o It is best suited to deal with the pressures of globalization
Political federalism
The Inter-State Council has met only once in the last seven years, while the National Development Council has not met at all.
The constitutional office of the governor has come under scrutiny several times for encroaching on the powers of state executive and legislature.
Many important and politically sensitive decisions are taken without reference to, and consultation with, the concerned states. For instance,
Article 370 was removed without consulting the state legislature.
Parliament legislated on “agriculture”, entry no. 14 in the state list, to enact the three contentious farm laws, overstepping its jurisdiction and imposing a law on the states.
The BSF’s jurisdiction was extended in Assam, West Bengal and Punjab without any consultation with the concerned states.
The New Education Policy has been flagged as encroaching on the federal nature of the polity.
Students in Tamil Nadu have committed suicide over the discriminatory nature of the NEET examination. Other centralised examinations are also indifferent to languages spoken in different parts of India and education boards of different states.
Recently, the rejection of the Republic Day tableaux of Kerala, Tamil Nadu and West Bengal by the Centre prompted protests by the respective states.
Economic federalism:
Revenue sharing concern: When it comes to sharing revenue, the states are upset with the Center.
In an effort to provide economic relief and fulfil the GST shortfall, the Centre announced in 2020 two alternatives for borrowing to be returned through an extension of the compensation cess beyond June 2022.
Some states agreed to look at the ideas, but others didn’t want to “borrow from the market at a higher interest rate.
Vertical and horizontal revenue imbalances: Two main challenges in the fiscal transfer system pertain to tackling the vertical ( transfer of Union taxes to states) and horizontal (distribution between countries) imbalances.
So far, the share of the states emanating from the combined revenues has remained more or less stable, thus taking care of the vertical balance. .
As far as horizontal balance is concerned, some Finance Commissions have addressed the issue of equalization
GST concern: The GST has already taken away much of the autonomy available to states and has made the country’s indirect tax regime unitary in nature.
The tenure of the 15th Finance Commission was mired in controversy, and many states expressed apprehensions about devolution.
NITI Aayog witnessed a boycott: The recent meeting of the Governing Council of NITI Aayog witnessed a boycott and mounting criticism from some states
Environmental federalism
The State Action Plans on Climate Change (SAPCCs) have suffered from a lack of specificity in design and inadequate financial support from the Centre, and rank low among governance priorities in state capitals.
The Centre controls the major part of national revenue (in 2018-19 it raised 62.7% of the aggregate resources of the Centre and states) and plays a large normative role in defining state priorities, only the states can assess and respond to the political and physical implications of climate impacts and local energy transitions.
Punchhi Commission on Centre-State relations 2007
Governor:
Appointment: The appointment of the Governor must be done by a panel which among others also has the State Chief Minister.
Removal of Governor: The doctrine of pleasure should end and should be deleted from the constitution. Governors should not be removed at the whim of the central government.
Instead, a resolution by the state legislature should be there to remove Governor.
There should be provisions for the impeachment of the Governor by the state legislature along the same lines as that of the President by Parliament.
On Inter-State Council (ISC):
ISC needs to be “substantially strengthened. The council must meet at least thrice a year on an agenda evolved after proper consultation with states.
On economic federalism
Handling the issues listed in the Finance Commission’s terms of reference should be done between the Center and the States. The States should be involved in the Finance Commissions’ work to come up with the final terms of the contract.
The commission was worried about the growing amount of money that was being made through cesses and surcharges. It was suggested that the Central Government look at all of the current cesses and surcharges to lower the amount they add to the total amount of taxes collected.
The Finance Commission and the Planning Commission (now NITI Aayog) should work much closer together.
On environmental federalism:
The Punchhi Commission was formed before major climate initiatives like the Paris Agreement (COP 21), the Sustainable Development Goals (SDGs), etc. However, the committee has a dedicated volume on environmental, resource, and infrastructural issues related to federalism. For example:
On water sharing: The National Water Resources Council needs to play a greater role in integrating policy and programmes on a continuous basis.
On forest: A National Policy on ‘Compensation’ should be put together through consultation and consensus.
On mineral: To determine royalty rates an independent statutory body comprising experts and representatives from Central, State, and industries and utilities need to be set up. The Central Government, if it differs from the recommendations or modifies them, would need to lay its reasons for the same, before Parliament.
Sarkaria Commission, 1983
The institution of All-India Services should be strengthened, and more such services should be created.
The Union should occupy only that much field of a concurrent subject on which uniformity of policy is needed and leave the rest for state action.
National Commission to Review the Workings of the Constitution (NCRWC), 2000
In accordance with Article 307, the Inter-State Trade and Commerce Commission should be established as a legislative body.
Emergency and disaster management should be covered in the Concurrent List of the Seventh Schedule.
