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Parliament and State Legislatures
- Parliamentary System
- Federal System
- Centre–State Relations
- Inter-State Relations
- Emergency Provisions
The Constitution of India provides for a parliamentary form of government, both at the Centre and in the states. Articles 74 and 75 deal with the parliamentary system at the Centre and Articles 163 and 164 in the states.
Modern democratic governments are classified into parliamentary and presidential on the basis of nature of relations between the executive and the legislative organs of the government. The parliamentary system of government is the one in which the executive is responsible to the legislature for its policies and acts.
The presidential system of government, on the other hand, is one in which the executive is not responsible to the legislature for its policies and acts, and is constitutionally independent of the legislature in respect of its term of office.
The parliamentary government is also known as cabinet government or responsible government or Westminster model of government and is prevalent in Britain, Japan, Canada, India among others. The presidential government, on the other hand, is also known as non-responsible or non-parliamentary or fixed executive system of government and is prevalent in USA, Brazil, Russia, Sri Lanka among others.
In the past, the British constitutional and political experts described the Prime Minister as ‘primus inter pares’ (first among equals) in relation to the cabinet. In the recent period, the Prime Minister’s power, influence and position have increased significantly vis-a-vis the cabinet. He has come to play a ‘dominant’ role in the British politico-administrative system. Hence, the later political analysts, like Cross-man, Mackintosh and others have described the British system of government as ‘prime ministerial government’. The same description holds good in the Indian context too.
FEATURES OF PARLIAMENTARY GOVERNMENT
The features or principles of parliamentary government in India are:
1. Nominal and Real Executives
The President is the nominal executive (de jure executive or titular executive) while the Prime Minister is the real executive (de facto executive). Thus, the President is head of the State, while the Prime Minister is head of the government. Article 74 provides for a council of ministers headed by the Prime Minister to aid and advise the President in the exercise of his functions. The advice so tendered is binding on the President.
2. Majority Party Rule
The political party which secures majority seats in the Lok Sabha forms the government. The leader of that party is appointed as the Prime Minister by the President; other ministers are appointed by the President on the advice of the prime minister. However, when no single party gets the majority, a coalition of parties may be invited by the President to form the government.
3. Collective Responsibility
This is the bedrock principle of parliamentary government. The ministers are collectively responsible to the Parliament in general and to the Lok Sabha in particular (Article 75). They act as a team, and swim and sink together. The principle of collective responsibility implies that the Lok Sabha can remove the ministry (i.e., council of ministers headed by the prime minister) from office by passing a vote of no confidence.
4. Political Homogeneity
Usually members of the council of ministers belong to the same political party, and hence they share the same political ideology. In case of coalition government, the minister are bound by consensus.
5. Double Membership
The ministers are members of both the legislature and the executive. This means that a person cannot be a minister without being a member of the Parliament. The Constitution stipulates that a minister who is not a member of the Parliament for a period of six consecutive months ceases to be a minister.
6. Leadership of the Prime Minister
The Prime Minister plays the leadership role in this system of government. He is the leader of council of ministers, leader of the Parliament and leader of the party in power. In these capacities, he plays a significant and highly crucial role in the functioning of the government.
7. Dissolution of the Lower House
The lower house of the Parliament (Lok Sabha) can be dissolved by the President on recommendation of the Prime Minister. In other words, the prime minister can advise the President to dissolve the Lok Sabha before the expiry of its term and hold fresh elections. This means that the executive enjoys the right to get the legislature dissolved in a parliamentary system.
The ministers operate on the principle of secrecy of procedure and cannot divulge information about their proceedings, policies and decisions. They take the oath of secrecy before entering their office. The oath of secrecy to the ministers is administered by the President.
FEATURES OF PRESIDENTIAL GOVERNMENT
Unlike the Indian Constitution, the American Constitution provides for the presidential form of government. The features of the American presidential system of government are as follows:
(a) The American President is both the head of the State and the head of government. As the head of State, he occupies a ceremonial position. As the head of government, he leads the executive organ of government.
(b) The President is elected by an electoral college for a fixed tenure of four years. He cannot be removed by the Congress except by impeachment for a grave unconstitutional act.
(c) The President governs with the help of a cabinet or a smaller body called ‘Kitchen Cabinet’. It is only an advisory body and consists of non-elected departmental secretaries. They are selected and appointed by him, are responsible only to him, and can be removed by him any time.
(d) The President and his secretaries are not responsible to the Congress for their acts. They neither possess membership in the Congress nor attend its sessions.
(e) The President cannot dissolve the House of Representatives—the lower house of the Congress.
(f) The doctrine of separation of powers is the basis of the American presidential system. The legislative, executive and judicial powers of the government are separated and vested in the three independent organs of the government.
MERITS OF THE PARLIAMENTARY SYSTEM
The parliamentary system of government has the following merits:
1. Harmony Between Legislature and Executive
The greatest advantage of the parliamentary system is that it ensures harmonious relationship and cooperation between the legislative and executive organs of the government. The executive is a part of the legislature and both are interdependent at work. As a result, there is less scope for disputes and conflicts between the two organs.
2. Responsible Government
The ministers are responsible to the Parliament for all their acts of omission and commission. The Parliament exercises control over the ministers through various devices like question hour, discussions, adjournment motion, no confidence motion, etc.
3. Prevents Despotism
Under this system, the executive authority is vested in a group of individuals (council of ministers) and not in a single person. This dispersal of authority checks the dictatorial tendencies of the executive. Moreover, the executive is responsible to the Parliament and can be removed by a no-confidence motion.
4. Ready Alternative Government
In case the ruling party loses its majority, the Head of the State can invite the opposition party to form the government. This means an alternative government can be formed without fresh elections. Hence, Dr Jennings says, ‘the leader of the opposition is the alternative prime minister’.
5. Wide Representation
In a parliamentary system, the executive consists of a group of individuals (i.e., ministers who are representatives of the people). Hence, it is possible to provide representation to all sections and regions in the government. The prime minister while selecting his ministers can take this factor into consideration.
DEMERITS OF THE PARLIAMENTARY SYSTEM
In spite of the above merits, the parliamentary system suffers from the following demerits:
1. Unstable Government
The parliamentary system does not provide a stable government. There is no guarantee that a government can survive its tenure. The ministers depend on the mercy of the majority legislators for their continuity and survival in office. A no-confidence motion or political defection or evils of multiparty coalition can make the government unstable. The Government headed by Morarji Desai, Charan Singh, V P Singh, Chandra Sekhar, Deva Gowda and I K Gujral are some such examples.
2. No Continuity of Policies
The parliamentary system is not conductive for the formulation and implementation of long-term policies. This is due to the uncertainty of the tenure of the government. A change in the ruling party is usually followed by changes in the policies of the government. For example, the Janata Government headed by Morarji Desai in 1977 reversed a large number of policies of the previous Congress Government. The same was repeated by the Congress government after it came back to power in 1980.
3. Dictatorship of the Cabinet
When the ruling party enjoys absolute majority in the Parliament, the cabinet becomes autocratic and exercises nearly unlimited powers. H J Laski says that the parliamentary system gives the executive an opportunity for tyranny. Ramsay Muir, the former British Prime Minister, also complained of the ‘dictatorship of the cabinet’ . This phenomena was witnessed during the era of Indira Gandhi and Rajiv Gandhi.
4. Against Separation of Powers
In the parliamentary system, the legislature and the executive are together and inseparable. The cabinet acts as the leader of legislature as well as the executive. As Bagehot point out, ‘the cabinet is a hyphen that joins the buckle that binds the executive and legislative departments together.’ Hence, the whole system of government goes against the letter and spirit of the theory of separation of powers. In fact, there is a fusion of powers.
5. Government by Amateurs
The parliamentary system is not conductive to administrative efficiency as the ministers are not experts in their fields. The Prime Minister has a limited choice in the selection of ministers; his choice is restricted to the members of Parliament alone and does not extend to external talent. Moreover, the ministers devote most of their time to parliamentary work, cabinet meetings and party activities.
Now, let us compare the parliamentary and presidential systems in terms of their features, merits and demerits.
REASONS FOR ADOPTING PARLIAMENTARY SYSTEM
A plea was made in favour of US presidential system of government in the Constituent Assembly. But, the founding fathers preferred the British parliamentary system due to the following reasons:
1. Familiarity with the System
The Constitution-makers were somewhat familiar with the parliamentary system as it had been in operation in India during the British rule. K M Munshi argued that, ‘For the last thirty or forty years, some kind of responsibility has been introduced in the governance of this country. Our constitutional traditions have become Parliamentary. After this experience, why should we go back and buy a novel experience.’
2. Preference to More Responsibility
Dr B R Ambedkar pointed out in the Constituent Assembly that ‘a democratic executive must satisfy two conditions: stability and responsibility. Unfortunately, it has not been possible so far to devise a system which can ensure both in equal degree. The American system gives more stability but less responsibility. The British system, on the other hand, gives more responsibility but less stability. The Draft Constitution in recommending the parliamentary system of Executive has preferred more responsibility to more stability.’
3. Need to Avoid Legislative-Executive Conflicts
The framers of the Constitution wanted to avoid the conflicts between the legislature and the executive which are bound to occur in the presidential system prevalent in USA. They thought that an infant democracy could not afford to take the risk of a perpetual cleavage, feud or conflict or threatened conflict between these two organs of the government. They wanted a form of government that would be conductive to the manifold development of the country.
4. Nature of Indian Society
India is one of the most heterogeneous States and most complex plural societies in the world. Hence, the Constitution-makers adopted the parliamentary system as it offers greater scope for giving representation to various section, interests and regions in the government.
This promotes a national spirit among the people and builds a united India.
Whether the parliamentary system should be continued or should be replaced by the presidential system has been a point of discussion and debate in our country since the 1970s. This matter was considered in detail by the Swaran Singh Committee appointed by the Congress government in 1975. The committee opined that the parliamentary system has been doing well and hence, there is no need to replace it by the presidential system.
DISTINCTION BETWEEN INDIAN AND BRITISH MODELS
The parliamentary system of government in India is largely based on the British parliamentary system. However, it never became a replica of the British system and differs in the following respects:
1. India has a republican system in place of British monarchical system. In other words, the Head of the State in India (that is, President) is elected, while the Head of the State in Britain (that is, King or Queen) enjoys a hereditary position.
2. The British system is based on the doctrine of the sovereignty of Parliament, while the Parliament is not supreme in India and enjoys limited and restricted powers due to a written Constitution, federal system, judicial review and fundamental rights.
3. In Britain, the prime minister should be a member of the Lower House (House of Commons) of the Parliament. In India, the prime minister may be a member of any of the two Houses of Parliament.
4. Usually, the members of Parliament alone are appointed as ministers in Britain. In India, a person who is not a member of Parliament can also be appointed as minister, but for a maximum period of six months.
5. Britain has the system of legal responsibility of the minister while India has no such system. Unlike in Britain, the ministers in India are not required to countersign the official acts of the Head of the State.
6. ‘Shadow cabinet’ is an unique institution of the British cabinet system. It is formed by the opposition party to balance the ruling cabinet and to prepare its members for future ministerial office. There is no such institution in India.
Political scientists have classified governments into unitary and federal on the basis of the nature of relations between the national government and the regional governments. By definition, a unitary government is one in which all the powers are vested in the national government and the regional governments, if at all exist, derive their authority from the national government.
A federal government, on the other hand, is one in which powers are divided between the national government and the regional governments by the Constitution itself and both operate in their respective jurisdictions independently.
Britain, France, Japan, China, Italy, Belgium, Norway, Sweden, Spain and so on have the unitary model of government while the US, Switzerland, Australia, Canada, Russia, Brazil, Argentina and so on have the federal model of government. In a federal model, the national government is known as the Federal government or the Central government or the Union government and the regional government is known as the state government or the provincial government.
The specific features of the federal and unitary governments are mentioned below in a comparative manner:
The term ‘federation’ is drived from a Latin word foedus which means ‘treaty’ or ‘agreement’. Thus, a federation is a new state (political system) which is formed through a treaty or an agreement between the various units. The units of a federation are known by various names like states (as in US) or cantons (as in Switzerland) or provinces (as in Canada) or republics (as in Russia). A federation can be formed in two ways, that is, by way of integration or by way of disintegration. In the first case, a number of militarily weak or economically backward states (independent) come together to form a big and a strong union, as for example, the US. In the second case, a big unitary state is converted into a federation by granting autonomy to the provinces to promote regional interest (for example, Canada). The US is the first and the oldest federation in the world. It was formed in 1787 following the American Revolution (1775–83). It comprises 50 states (originally 13 states) and is taken as the model of federation. The Canadian Federation, comprising 10 provinces (originally 4 provinces) is also quite old—formed in 1867.
The Constitution of India provides for a federal system of government in the country. However, the term ‘federation’ has no where been used in the Constitution. Instead, Article 1 of the Constitution describes India as a ‘Union of States’. According to Dr B R Ambedkar, the phrase ‘Union of States’ has been preferred to ‘Federation of States’ to indicate two things: (i) the Indian federation is not the result of an agreement among the states like the American federation; and (ii) the states have no right to secede from the federation. The federation is union because it is indestructible.
The Indian federal system is based on the ‘Canadian model’ and not on the ‘American model’. The ‘Canadian model’ differs fundamentally from the ‘American model’ in so far as it establishes a very strong centre. The Indian federation resembles the Candian federation (i) in its formation (i.e., by way of disintegration); (ii) in its preference to the term ‘Union’ (the Canadian federation is also called a ‘Union’); and (iii) in its centralising tendency (i.e., vesting more powers in the centre vis-a-vis the states).
FEDERAL FEATURES OF THE CONSTITUTION
The federal features of the Constitution of India are explained below:
1. Dual Polity
The Constitution establishes a dual polity consisting the Union at the Centre and the states at the periphery. Each is endowed with sovereign powers to be exercised in the field assigned to them respectively by the Constitution. The Union government deals with the matters of national importance like defence, foreign affairs, currency, communication and so on. The state governments, on the other hand, look after the matters of regional and local importance like public order, agriculture, health, local government and so on.
2. Written Constitution
The Constitution is not only a written document but also the lengthiest Constitution of the world. Originally, it contained a Preamble, 395 Articles (divided into 22 Parts) and 8 Schedules. At present (2013), it consists of a Preamble, about 465 Articles (divided into 25 Parts) and 12 Schedules. It specifies the structure, organisation, powers and functions of both the Central and state governments and prescribes the limits within which they must operate. Thus, it avoids the misunderstandings and disagreements between the two.
3. Division of Powers
The Constitution divided the powers between the Centre and the states in terms of the Union List, State List and Concurrent List in the Seventh Schedule. The Union List consists of 100 subjects (originally 97), the State List 61 subjects (originally 66) and the Concurrent List 52 subjects (originally 47). Both the Centre and the states can make laws on the subjects of the concurrent list, but in case of a conflict, the Central law prevails. The residuary subjects (i.e, which are not mentioned in any of the three lists) are given to the Centre.
4. Supremacy of the Constitution
The Constitution is the supreme (or the highest) law of the land. The laws enacted by the Centre and the states must confirm to its provisions. Otherwise, they can be declared invalid by the Supreme Court or the high courts through their power of judicial review. Thus, the organs of the government (legislative, executive and judicial) at both the levels must operate within the jurisdiction prescribed by the Constitution.
5. Rigid Constitution
The division of powers established by the Constitution as well as the supremacy of the Constitution can be maintained only if the method of its amendment is rigid. Hence, the Constitution is rigid to the extent that those provisions which are concerned with the federal structure (i.e., Centre–state relations and judicial organisation) can be amended only by the joint action of the Central and state governments. Such provisions require for their amendment a special majority of the Parliament and also an approval of half of the state legislatures.
6. Independent Judiciary
The Constitution establishes an independent judiciary headed by the Supreme Court for two purposes: one, to protect the supremacy of the Constitution by exercising the power of judicial review; and two, to settle the disputes between the Centre and the states or between the states. The Constitution contains various measures like security of tenure to judges, fixed service conditions and so on to make the judiciary independent of the government.
The Constitution provides for a bicameral legislature consisting of an Upper House (Rajya Sabha) and a Lower House (Lok Sabha). The Rajya Sabha represents the states of Indian Federation, while the Lok Sabha represents the people of India as a whole. The Rajya Sabha (even though a less powerful chamber) is required to maintain the federal equilibrium by protecting the interests of the states against the undue interference of the Centre.
UNITARY FEATURES OF THE CONSTITUTION
Besides the above federal features, the Indian Constitution also possesses the following unitary or non-federal features:
1. Strong Centre The division of powers is in favour of the Centre and highly inequitable from the federal angle. Firstly, the Union List contains more subjects than the State List. Secondly, the more important subjects have been included in the Union List. Thirdly, the Centre has overriding authority over the Concurrent List. Finally, the residuary powers have also been left with the Centre, while in the US, they are vested in the states. Thus, the Constitution has made the Centre very strong.
2. States Not Indestructible Unlike in other federations, the states in India have no right to territorial integrity. The Parliament can by unilateral action change the area, boundaries or name of any state. Moreover, it requires only a simple majority and not a special majority. Hence, the Indian Federation is “an indestructible Union of destructible states”. The American Federation, on the other hand, is described as “an indestructible Union of indestructible states”.
3. Single Constitution Usually, in a federation, the states have the right to frame their own Constitution separate from that of the Centre. In India, on the contrary, no such power is given to the states. The Constitution of India embodies not only the Constitution of the Centre but also those of the states. Both the Centre and the states must operate within this single-frame. The only exception in this regard is the case of Jammu and Kashmir which has its own (state) Constitution.
4. Flexibility of the Constitution The process of constitutional amendment is less rigid than what is found in other federations. The bulk of the Constitution can be amended by the unilateral action of the Parliament, either by simple majority or by special majority. Further, the power to initiate an amendment to the Constitution lies only with the Centre. In US, the states can also propose an amendment to the Constitution.
5. No Equality of State Representation The states are given representation in the Rajya Sabha on the basis of population. Hence, the membership varies from 1 to 31. In US, on the other hand, the principle of equality of representation of states in the Upper House is fully recognised. Thus, the American Senate has 100 members, two from each state. This principle is regarded as a safeguard for smaller states.
6. Emergency Provisions The Constitution stipulates three types of emergencies—national, state and financial. During an emergency, the Central government becomes all powerful and the states go into the total control of the Centre. It converts the federal structure into a unitary one without a formal amendment of the Constitution. This kind of transformation is not found in any other federation.
7. Single Citizenship In spite of a dual polity, the Constitution of India, like that of Canada, adopted the system of single citizenship. There is only Indian Citizenship and no separate state citizenship. All citizens irrespective of the state in which they are born or reside enjoy the same rights all over the country. The other federal states like US, Switzerland and Australia have dual citizenship, that is, national citizenship as well as state citizenship.
8. Integrated Judiciary The Indian Constitution has established an integrated judicial system with the Supreme Court at the top and the state high courts below it. This single system of courts enforces both the Central laws as well as the state laws. In US, on the other hand, there is a double system of courts whereby the federal laws are enforced by the federal judiciary and the state laws by the state judiciary.
9. All-India Services In US, the Federal government and the state governments have their separate public services. In India also, the Centre and the states have their separate public services. But, in addition, there are all-India services (IAS, IPS, and IFS) which are common to both the Centre and the states. The members of these services are recruited and trained by the Centre which also possess ultimate control over them. Thus, these services violate the principle of federalism under the Constitution.
10. Integrated Audit Machinery The Comptroller and Auditor-General of India audits the accounts of not only the Central government but also those of the states. But, his appointment and removal is done by the president without consulting the states. Hence, this office restricts the financial autonomy of the states. The American Comptroller-General, on the contrary, has no role with respect to the accounts of the states.
11. Parliament’s Authority Over State List Even in the limited sphere of authority allotted to them, the states do not have exclusive control. The Parliament is empowered to legislate on any subject of the State List if Rajya Sabha passes a resolution to that effect in the national interest. This means that the legislative competence of the Parliament can be extended without amending the Constitution. Notably, this can be done when there is no emergency of any kind.
12. Appointment of Governor The governor, who is the head of the state, is appointed by the President. He holds office during the pleasure of the President. He also acts as an agent of the Centre. Through him, the Centre exercises control over the states. The American Constitution, on the contrary, provided for an elected head in the states. In this respect, India adopted the Canadian system.
13. Integrated Election Machinery The Election Commission conducts elections not only to the Central legislature but also to the state legislatures. But, this body is constituted by the President and the states have no say in this matter. The position is same with regard to the removal of its members as well. On the other hand, US has separate machineries for the conduct of elections at the federal and state levels.
14. Veto Over State Bills The governor is empowered to reserve certain types of bills passed by the state legislature for the consideration of the President. The President can withhold his assent to such bills not only in the first instance but also in the second instance. Thus, the President enjoys absolute veto (and not suspensive veto) over state bills. But in US and Australia, the states are autonomous within their fields and there is no provision for any such reservation.
CRITICAL EVALUATION OF THE FEDERAL SYSTEM
From the above, it is clear that the Constitution of India has deviated from the traditional federal systems like US, Switzerland and Australia and incorporated a large number of unitary or non-federal features, tilting the balance of power in favour of the Centre. This has promoted the Constitutional experts to challenge the federal character of the Indian Constitution. Thus, KC Wheare described the Constitution of India as “quasi-federal”. He remarked that “Indian Union is a unitary state with subsidiary federal features rather than a federal state with subsidiary unitary features.”
According to K Santhanam, the two factors have been responsible for increasing the unitary bias (tendency of centralisation) of the Constitution. These are: (i) the dominance of the Centre in the financial sphere and the dependence of the states upon the Central grants; and (ii) the emergence of a powerful planning commission which controls the developmental process in the states. He observed: “India has practically functioned as a unitary state though the Union and the states have tried to function formally and legally as a federation.”
However, there are other political scientists who do not agree with the above descriptions. Thus, Paul Appleby characterises the Indian system as “extremely federal”. Morris Jones termed it as a “bargaining federalism”. Ivor Jennings has described it as a “federation with a strong centralising tendency”. He observed that “the Indian Constitution is mainly federal with unique safeguards for enforcing national unity and growth”. Alexandrowicz stated that “India is a case sui generis (i.e., unique in character). Granville Austin called the Indian federalism as a “cooperative federalism”. He said that though the Constitution of India has created a strong Central government, it has not made the state governments weak and has not reduced them to the level of administrative agencies for the execution of policies of the Central government. He described the Indian federation as “a new kind of federation to meet India’s peculiar needs”.
On the nature of Indian Constitution, Dr B R Ambedkar made the following observation in the Constituent Assembly: “The Constitution is a Federal Constitution in as much as it establishes a dual polity. The Union is not a league of states, united in a loose relationship, nor are the states the agencies of the Union, deriving powers from it. Both the Union and the states are created by the Constitution, both derive their respective authority from the Constitution.” He further observed: “Yet the Constitution avoids the tight mould of federalism and could be both unitary as well as federal according to the requirements of time and circumstances”. While replying to the criticism of over-centralisation in the Constitution, he stated: “A serious complaint is made on the ground that there is too much centralisation and the states have been reduced to municipalities. It is clear that this view is not only an exaggeration but is also founded on a misunderstanding of what exactly the Constitution contrives to do. As to the relations between the Centre and the states, it is necessary to bear in mind the fundamental principle on which it rests. The basic principle of federalism is that the legislative and executive authority is partitioned between the Centre and the states not by any law to be made by the Centre but by the Constitution itself. This is what the Constitution does. The states are in no way dependent upon the Centre for their legislative or executive authority. The states and the Centre are co-equal in this matter. It is difficult to see how such a Constitution can be called centralism. It is, therefore, wrong to say that the states have been placed under the Centre. The Centre cannot by its own will alter the boundary of this partition. Nor can the judiciary”.
In Bommai case (1994), the Supreme Court laid down that the Constitution is federal and characterised federalism as its ‘basic feature’. It observed: “The fact that under the scheme of our Constitution, greater power is conferred upon the Centre vis-a-vis the states does not mean that the states are mere appendages of the Centre. The states have an independent constitutional existence. They are not satellites or agents of the Centre. Within the sphere allotted to them, the states are supreme. The fact that during emergency and in certain other eventualities their powers are overridden or invaded by the Centre is not destructive of the essential federal feature of the Constitution. They are exceptions and the exceptions are not a rule. Let it be said that the federalism in the Indian Constitution is not a matter of administrative convenience, but one of principle—the outcome of our own process and a recognition of the ground realities”.
In fact, the federalism in India represents a compromise between the following two conflicting considerations :
(i) normal division of powers under which states enjoy autonomy within their own spheres; and
(ii) need for national integrity and a strong Union government under exceptional circumstances.
The following trends in the working of Indian political system reflects its federal spirit:
(i) Territorial disputes between states, for example, between Maharashtra and Karnataka over Belgaum;
(ii) Disputes between states over sharing of river water, for example, between Karnataka and Tamil Nadu over Cauvery Water;
(iii) The emergence of regional parties and their coming to power in states like Andhra Pradesh, Tamil Nadu, etc.;
(iv) The creation of new states to fulfil the regional aspirations, for example, Mizoram or recently Jharkhand;
(v) Demand of the states for more financial grants from the Centre to meet their developmental needs;
(vi) Assertion of autonomy by the states and their resistance to the interference from the Centre;
(vii) Supreme Court’s imposition of several procedural limitations on the use of Article 356 (President’s Rule in the States) by the Centre.
The Constitution of India, being federal in structure, divides all powers (legislative, executive and financial) between the Centre and the states. However, 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.
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. Hence, the Constitution contains elaborate provisions to regulate the various dimensions of the relations between the Centre and the states.
The Centre-state relations can be studied under three heads:
• Legislative relations.
• Administrative relations.
• Financial relations.
Articles 245 to 255 in Part XI of the Constitution deal with the legislative relations between the Centre and the states. Besides these, there are some other articles dealing with the same subject.
Like any other Federal Constitution, the Indian Constitution also divides the legislative powers between the Centre and the states with respect to both the territory and the subjects of legislation. Further, the Constitution provides for the parliamentary legislation in the state field under five extraordinary situations as well as the centre’s control over state legislation in certain cases. Thus, there are four aspects in the Centre–states legislative relations, viz.,
• Territorial extent of Central and state legislation;
• Distribution of legislative subjects;
• Parliamentary legislation in the state field; and
• Centre’s control over state legislation.
1. Territorial Extent of Central and State Legislation
The Constitution defines the territorial limits of the legislative powers vested in the Centre and the states in the following way:
(i) The Parliament can make laws for the whole or any part of the territory of India. The territory of India includes the states, the union territories, and any other area for the time being included in the territory of India.
(ii) A state legislature can make laws for the whole or any part of the state. 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.
(iii) The Parliament alone can make ‘extra-territorial legislation’. Thus, the laws of the Parliament are also applicable to the Indian citizens and their property in any part of the world.
However, the Constitution places certain restrictions on the plenary territorial jurisdiction of the Parliament. In other words, the laws of Parliament are not applicable in the following areas:
(i) The President can make regulations for the peace, progress and good government of the four Union Territories—the Anda-man and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu. A regulation so made has the same force and effect as an act of Parliament. It may also repeal or amend any act of Parliament in relation to these union territories.
(ii) The governor is empowered to direct that an act of Parliament does not apply to a scheduled area in the state or apply with specified modifications and exceptions.
(iii) The Governor of Assam may likewise direct that an act of Parliament does not apply to a tribal area (autonomours district) in the state or apply with specified modifications and exceptions. The President enjoys the same power with respect to tribal areas (autonomous districts) in Meghalaya, Tripura and Mizoram.
2. Distribution of Legislative Subjects
The Constitution provides for a three-fold distribution of legislative subjects between the Centre and the states, viz., List-I (the Union List), List-II (the State List) and List-III (the Concurrent List) in the Seventh Schedule:
(i) The Parliament has exclusive powers to make laws with respect to any of the matters enumerated in the Union List. This list has at present 100 subjects (originally 97 subjects) like defense, banking, foreign affairs, currency, atomic energy, insurance, communication, inter-state trade and commerce, census, audit and so on.
(ii) The state legislature has “in normal circumstances” exclusive powers to make laws with respect to any of the matters enumerated in the State List. This has at present 61 subjects (originally 66 subjects) like public order, police, public health and sanitation, agriculture, prisons, local government, fisheries, markets, theaters, gambling and so on.
(iii) Both, the Parliament and state legislature can make laws with respect to any of the matters enumerated in the Concurrent List. This list has at present 52 subjects (originally 47 subjects) like criminal law and procedure, civil procedure, marriage and divorce, population control and family planning, electricity, labour wel-fare, economic and social planning, drugs, newspapers, books and printing press, and others. The 42nd Amendment Act of 1976 transferred five subjects to Concurrent List from State List, that is, (a) education, (b) forests, (c) weights and measures, (d) protection of wild animals and birds, and (e) administration of justice; constitution and organisation of all courts except the Supreme Court and the high courts.
The power to make laws with respect to residuary subjects (i.e., the matters which are not enumerated in any of the three lists) is vested in the Parliament. This residuary power of legisla-tion includes the power to levy residuary taxes.
From the above scheme, it is clear that the matters of national importance and the matters which requires uniformity of legislation nationwide are included in the Union List. The matters of regional and local importance and the matters which permits diversity of interest are specified in the State List. The matters on which uniformity of legislation throughout the country is desirable but not essential are enumerated in the concurrent list. Thus, it permits diversity along with uniformity.
In US, only the powers of the Federal Government are enumerated in the Constitution and the residuary powers are left to the states. The Australian Constitution followed the American pattern of single enumeration of powers. In Canada, on the other hand, there is a double enumeration—Federal and Provincial, and the residuary powers are vested in the Centre.
The Government of India (GoI) Act of 1935 provided for a three-fold emumenration, viz., federal, provincial and concurrent. The present Constitution follows the scheme of this act but with one difference, that is, under this act, the residuary powers were given neither to the federal legislature nor to the provincial legislature but to the governor-general of India. In this respect, India follows the Canadian precedent.
The Constitution expressly secure the predominance of the Union List over the State List and the Concurrent List and that of the Concurrent List over the State List. Thus, in case of overlapping between the Union List and the State List, the former should prevail. In case of overlapping between the Union List and the Concurrent List, it is again the former which should prevail. Where there is a conflict between the Concurrent List and the State List, it is the former that should prevail.
In case of a conflict between the Central law and the state law on a subject enumerated in the Concurrent List, the Central law prevails over the state law. But, there is an exception. If the state law has been reserved for the consideration of the president and has received his assent, then the state law prevails in that state. But, it would still be competent for the Parliament to override such a law by subsequently making a law on the same matter.
3. Parliamentary Legislation in the State Field
The above scheme of distribution of legislative powers between the Centre and the states is to be maintained in normal times. But, in abnormal times, the scheme of distribution is either modified or suspended. In other words, the Constitution empowers the Parliament to make laws on any matter enumerated in the State List under the following five extraordinary circumstances:
When Rajya Sabha Passes a Resolution If the Rajya Sabha declares that it is necessary in the national interest that Parliament should make laws on a matter in the State List, then the Parliament becomes competent to make laws on that matter. Such a resolution must be supported by two-thirds of the members present and voting. The resolution remains in force for one year; it can be renewed any number of times but not exceeding one year at a time. The laws cease to have effect on the expiration of six months after the resolution has ceased to be in force. This provision does not restrict the power of a state legislature to make laws on the same matter. But, in case of inconsistency between a state law and a parliamentary law, the latter is to prevail.
During a National Emergency The Parliament acquires the power to legislate with respect to matters in the State List, while a proclamation of national emergency is in operation. The laws become inoperative on the expiration of six months after the emergency has ceased to operate. Here also, the power of a state legislature to make laws on the same matter is not restricted. But, in case of repugnancy between a state law and a parliamentary law, the latter is to prevail.
When States Make a Request When the legislatures of two or more states pass resolutions requesting 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 afterwards 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.
The effect of passing a resolution under the above provision is that the Parliament becomes entitled to legislate with respect to a matter for which it has no power to make a law. On the other hand, the state legislature ceases to have the power to make a law with respect to that matter. The resolution operates as abdication or surrender of the power of the state legislature with respect to that matter and it is placed entirely in the hands of Parliament which alone can then legislate with respect to it.
Some examples of laws passed under the above provision are Prize Competition Act, 1955; Wild Life (Protection) Act, 1972; Water (Prevention and Control of Pollution) Act, 1974; Urban Land (Ceiling and Regulation) Act, 1976; and Transplantation of Human Organs Act, 1994.
To Implement International Agreements The Parliament can make laws on any matter in the State List for implementing the international treaties, agreements or conventions. This provision enables the Central government to fulfil 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 and legislations relating to environment and TRIPS.
During President’s Rule When the President’s rule is imposed in a state, the Parliament becomes empowered to make laws with respect to any matter in the State List in relation to that state. A law made so by the Parliament continues to be operative even after the president’s rule. This means that the period for which such a law remains in force is not co-terminus with the duration of the President’s rule. But, such a law can be repealed or altered or re-enacted by the state legislature.
4. Centre’s Control Over State Legislation
Besides the Parliament’s power to legislate directly on the state subjects under the exceptional situations, the Constitution empowers the Centre to exercise control over the state’s legislative matters in the following ways:
(i) The governor can reserve certain types of bills passed by the state legislature for the consideration of the President. The president enjoys absolute veto over them.
(ii) 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, the bills imposing restrictions on the freedom of trade and commerce).
(iii) The President can direct the states to reserve money bills and other financial bills passed by the state legislature for his consideration during a financial emergency.
From the above, it is clear that the Constitution has assigned a position of superiority to the Centre in the legislative sphere. In this context, the Sarkaria Commission on Centre–State Relations (1983–87) observed: “The rule of federal supremacy is a technique to avoid absurdity, resolve conflict and ensure harmony between the Union and state laws. If this principle of union supremacy is excluded, it is not difficult to imagine its deleterious results. There will be every possibility of our two-tier political system being stultified by interference, strife, legal chaos and confusion caused by a host of conflicting laws, much to the bewilderment of the common citizen.
Integrated legislative policy and uniformity on basic issues of common Union–state concern will be stymied. The federal principle of unity in diversity will be very much a casualty. This rule of federal supremacy, therefore, is indispensable for the successful functioning of the federal system”.
Articles 256 to 263 in Part XI of the Constitution deal with the administrative relations between the Centre and the states. In addition, there are various other articles pertaining to the same matter.
Distribution of Executive Powers
The executive power has been divided between the Centre and the states on the lines of the distribution of legislative powers, except in few cases. Thus, the executive power of the Centre extends to the whole of India: (i) to the matters on which the Parliament has exclusive power of legislation (i.e., the subjects enumerated in the Union List); and (ii) to the exercise of rights, authority and jurisdiction conferred on it by any treaty or agreement. Similarly, the executive power of a state extends to its territory in respect of matters on which the state legislature has exclusive power of legislation (i.e., the subjects enumerated in the State List). In respect of matters on which both the Parliament and the state legislatures have power of legislation (i.e., the subjects enumerated in the Concurrent List), the executive power rests with the states except when a Constitutional provision or a parliamentary law specifically confers it on the Centre. Therefore, a law on a concurrent subject, though enacted by the Parliament, is to be executed by the states except when the Constitution or the Parliament has directed otherwise. 5
Obligation of States and the Centre
The Constitution has placed two restrictions on the executive power of the states in order to give ample scope to the Centre for exercising its executive power in an unrestricted manner. Thus, the executive power of every state is to be exercised in such a way (a) as to ensure compliance with the laws made by the Parliament and any existing law which apply in the state; and (b) as not to impede or prejudice the exercise of executive power of the Centre in the state. While the former lays down a general obligation upon the state, the latter imposes a specific obligation on the state not to hamper the executive power of the Centre. In both the cases, the executive power of the Centre extends to giving of such directions to the state as are necessary for the purpose. The sanction behind these directions of the Centre is coercive in nature. Thus, Article 365 says that where any state has failed to comply with (or to give effect to) any directions given by the Centre, it will be lawful for the President to hold that a situation has arisen in which the government of the state cannot be carried on in accordance with the provisions of the Constitution. It means that, in such a situation, the President’s rule can be imposed in the state under Article 356.
Centre’s Directions to the State
In addition to the above two cases, the Centre is empowered to give directions to the states with regard to the exercise of their executive power in the following matters:
(i) the construction and maintenance of means of communication (declared to be of national or military importance) by the state;
(ii) the measures to be taken for the protection of the railways within the state;
(iii) the provision of adequate facilities for instruction in the mother-tongue at the primary stage of education to children belonging to linguistic minority groups in the state; and
(iv) the drawing up and execution of the specified schemes for the welfare of the Scheduled Tribes in the state.
The coercive sanction behind the Central directions under Article 365 (mentioned above) is also applicable in these cases.
Mutual Delegation of Functions
The distribution of legislative powers between the Centre and the states is rigid. Consequently, the 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 distribution of executive power in general follows the distribution of legislative powers. But, such a rigid division in the executive sphere may lead to occasional conflicts between the two. Hence, the Constitution pr-ovides for inter-government delegation of executive functions in order to mitigate rigidity and avoid a situation of deadlock.
Accordingly, the President may, with the consent of the state government, entrust to that government any of the executive functions of the Centre. Conversely, the governor of a state may, with the consent of the Central government, entrust to that government any of the executive functions of the state. 6 This mutual delegation of administrative functions may be conditional or unconditional.
The Constitution also makes a provision for the entrustment of the executive functions of the Centre to a state without the consent of that state. But, in this case, the delegation is by the Parliament and not by the president. Thus, a law made by the Parliament on a subject of the Union List can confer powers and impose duties on a state, or authorise the conferring of powers and imposition of duties by the Centre upon a state (irrespective of the consent of the state concerned). Notably, the same thing cannot be done by the state legislature.
From the above, it is clear that the mutual delegation of functions between the Centre and the state can take place either under an agreement or by a legislation. While the Centre can use both the methods, a state can use only the first method.
Cooperation Between the Centre and States
The Constitution contains the following provisions to secure cooperation and coordination between the Centre and the states:
(i) 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.
(ii) The President can establish (under Article 263) an Inter-State Council to investigate and discuss subject of common interest between the Centre and the states. Such a council was set up in 1990. 7
(iii) Full faith and credit is to be given throughout the territory of India to public acts, records and judicial proceedings of the Centre and every state.
(iv) The Parliament can appoint an appropriate authority to carry out the purposes of the constitutional provisions relating to the interstate freedom of trade, commerce and intercourse. But, no such authority has been appointed so far.
Like in any other federation, the Centre and the states also have their separate public services called as the Central Services and the State Services respectively. In addition, there are all-India services— IAS, IPS and IFS. The members of these services occupy top positions (or key posts) under both the Centre and the states and serve them by turns. But, they are recruited and trained by the Centre.
These services are controlled jointly by the Centre and the states. The ultimate control lies with the Central government while the immediate control vests with the state governments.
In 1947, Indian Civil Service (ICS) was replaced by IAS and the Indian Police (IP) was replaced by IPS and were recognised by the Constitution as All-India Services. In 1966, the Indian Forest Service (IFS) was created as the third All-India Service. Article 312 of the Constitution authorises the Parliament to create new All-India Services on the basis of a Rajya Sabha resolution to that effect. Each of these three all-India services, irrespective of their division among different states, form a single service with common rights and status and uniform scales of pay throughout the country.
Though the all-India services violate the principle of federalism under the Constitution by restricting the autonomy and patronage of the states, they are supported on the ground that (i) they help in maintaining high standard of administration in the Centre as well as in the states; (ii) they help to ensure uniformity of the administrative system throughout the country; and (iii) they facilitate liaison, cooperation, coordination and joint action on the issues of common interest between the Centre and the states.
While justifying the institution of all-India services in the Constituent Assembly, Dr B R Ambedkar observed that: “The dual polity which is inherent in a federal system is followed in all federations by a dual service. In all federations, there is a Federal Civil Service and a State Civil Service. The Indian federation, though a dual polity, will have a dual service, but with one exception. It is recognised that in every country there are certain posts in its administrative set up which might be called strategic from the point of view of maintaining the standard of administration. There can be no doubt that the standard of administration depends upon the calibre of the civil servants who are appointed to the strategic posts. The Constitution provides that without depriving the states of their rights to form their own civil services, there shall be an all-India service, recruited on an all-India basis with common qualifications, with uniform scale of pay and members of which alone could be appointed to those strategic posts throughout the Union”.
Public Service Commissions
In the field of public service commissions, the Centre–state relations are as follows:
(i) The Chairman and members of a state public service commission, though appointed by the governor of the state, can be removed only by the President.
(ii) The 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.
(iii) 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.
(iv) 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.
Integrated Judicial System
Though India has a dual polity, there is no dual system of administration of justice. The Constitution, on the other hand, established an integrated judicial system with the Supreme Court at the top and the state high courts below it. This single system of courts enforces both the Central laws as well as the state laws. This is done to eliminate diversities in the remedial procedure.
The 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. They can also be transferred and removed by the president. The Parliament can establish a common high court for two or more states. For example, Maharashtra and Goa or Punjab and Haryana have a common high court.
Relations During Emergencies
(i) During the operation of a national emergency (under Article 352), the Centre becomes entitled to give executive directions to a state on ‘any’ matter. Thus, the state governments are brought under the complete control of the Centre, though they are not suspended.
(ii) When the President’s Rule is imposed in a state (under Article 356), the 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.
(iii) During the operation of a financial emergency (under Article 360), the Centre can direct the states to observe canons of financial propriety and the President can give other necessary directions including the reduction of salaries of persons serving in the state and the high court judges.
The Constitution contains the following other provisions which enable the Centre to exercise control over the state administration:
(i) Article 355 imposes two duties on the Centre: (a) to protect every state against external aggression and internal disturbance; and (b) to ensure that the government of every state is carried on in accordance with the provisions of the Constitution.
(ii) The governor of a state is appointed by the president. He holds office during the pleasure of the President. In addition to the Constitutional head of the state, the governor acts as an agent of the Centre in the state. He submits periodical reports to the Centre about the administrative affairs of the state.
(iii) The state election commissioner, though appointed by the governor of the state, can be removed only by the President.
In addition to the above-mentioned constitutional devices, there are extra-constitutional devices to promote cooperation and coordination between the Centre and the states. These include a number of advisory bodies and conferences held at the Central level.
The non-constitutional advisory bodies include the Planning Commission, 9 the National Development Council, the National Integration Council, 10 the Central Council of Health, the Central Council of Local Government and Urban Development, the Zonal Councils, 11 the North-Eastern Council, the Central Council of Indian Medicine, Central Council of Homo-eopathy, the Central Family Welfare Council, the Transport Development Council, the University Grants Commission and so on.
The important conferences held either annually or otherwise to facilitate Centre–state consultation on a wide range of matters are as follows: (i) The governors’ conference (presided over by the President). (ii) The chief ministers’ conference (presided over by the prime minister). (iii) The chief secretaries’ conference (presided over by the cabinet secretary). (iv) The conference of inspectorgeneral of police. (v) The chief justices’ conference (presided over by the chief justice of India). (vi) The conference of vice-cancellors. (vii) The home ministers’ conference (presided over by the Central home minister). (viii) The law ministers’ conference (presided over by the Central law minister).
Articles 268 to 293 in Part XII of the Constitution deal with Centre–state financial relations. Besides these, there are other provisions dealing with the same subject. These together can be studied under the following heads:
Allocation of Taxing Powers
The Constitution divides the taxing powers between the Centre and the states in the following way:
• The Parliament has exclusive power to levy taxes on subjects enumerated in the Union List (which are 15 in number 12 ).
• The state legislature has exclusive power to levy taxes on subjects enumerated in the State List (which are 20 in number 13 ).
• Both the Parliament and the state legislature can levy taxes on subjects enumerated in the Concurrent List (which are 3 in number 14 ).
• The residuary power of taxation (that is, the power to impose taxes not enumerated in any of the three lists) is vested in the Parliament. Under this provision, the Parliament has imposed gift tax, wealth tax and expenditure tax.
The Constitution also draws a distinction between the power to levy and collect a tax and the power to appropriate the proceeds of the tax so levied and collected. For example, the income-tax is levied and collected by the Centre but its proceeds are distributed between the Centre and the states. Further, the Constitution has placed the following restrictions on the taxing powers of the states:
(i) A state legislature can impose taxes on professions, trades, callings and employments. But, the total amount of such taxes payable by any person should not exceed Rs. 2,500 per annum.
(ii) A state legislature can impose taxes on the sale or purchase of goods (other than newspapers). But, this power of the states to impose sales tax is subjected to the four restrictions: (a) no tax can be imposed on the sale or purchase taking place outside the states; (b) no tax can be imposed on the sale or purchase taking place in the course of import or export; (c) no tax can be imposed on the sale or purchase taking place in the course of inter-state trade and commerce; and (d) a tax imposed on the sale or purchase of goods declared by Parliament to be of special importance in inter-state trade and commerce is subject to the restrictions and conditions specified by the Parliament.
(iii) A state legislature can impose tax on the consumption or sale of electricity. But, no tax can be imposed on the consumption or sale of electricity which is (a) consumed by the Centre or sold to the Centre; or (b) consumed in the construction, maintenance or operation of any railway by the Centre or by the concerned railway company or sold to the Centre or the railway company for the same purpose.
(iv) A state legislature can impose a tax in respect of any water or electricity stored, generated, consumed, distributed or sold by any authority established by Parliament for regulating or developing any inter-state river or river valley. But, such a law, to be effective, should be reserved for the president’s consideration and receive his assent.
Distribution of Tax Revenues
The 80th Amendment of 2000 and the 88th Amendment of 2003 have introduced major changes in the scheme of the distribution of tax revenues between the centre and the states. The 80th Amendment was enacted to give effect to the recommendations of the 10th Finance Commission. The Commission recommended that out of the total income obtained from certain central taxes and duties, 29% should go to the states. This is known as the ‘Alternative Scheme of Devolution’ and came into effect retrospectively from April 1, 1996. This amendment has brought several central taxes and duties like Corporation Tax and Customs Duties at par with Income Tax (taxes on income other than agricultural income) as far as their constitutionally mandated sharing with the states is concerned. 17 The 88th Amendment has added a new Article 268-A dealing with service tax. It also added a new subject in the Union List – entry 92-C (taxes on services).
Service tax is levied by the centre but collected and appropriated by both the centre and the states. After these two Amendments, the present position in this regard is as follows:
A. Taxes Levied by the Centre but Collected and Appropriated by the States (Article 268): This category includes the following taxes and duties: (i) Stamp duties on bills of exchange, cheques, promissory notes, policies of insurance, transfer of shares and others. (ii) Excise duties on medicinal and toilet preparations containing alcohol and narcotics. The proceeds of these duties levied within any state do not form a part of the Consolidated Fund of India, but are assigned to that state.
B. Service Tax Levied by the Centre but Collected and Appropriated by the Centre and the States (Article 268-A): Taxes on services are levied by the Centre. But, their proceeds are collected as well as appropriated by both the Centre and the states. The principles of their collection and appropriation are formulated by the Parliament.
C. Taxes Levied and Collected by the Centre but Assigned to the States (Article 269): The following taxes fall under this category: (i) Taxes on the sale or purchase of goods (other than newspapers) in the course of inter-state trade or commerce. (ii) Taxes on the consignment of goods in the course of inter-state trade or commerce. The net proceeds of these taxes do not form a part of the Consolidated Fund of India. They are assigned to the concerned states in accordance with the principles laid down by the Parliament.
D. Taxes Levied and Collected by the Centre but Distributed between the Centre and the States (Article 270): This category includes all taxes and duties referred to in the Union List except the following: (i) Duties and taxes referred to in Articles 268, 268-A and 269 (mentioned above); (ii) Surcharge on taxes and duties referred to in Article 271 (mentioned below); and (iii) Any cess levied for specific purposes. The manner of distribution of the net proceeds of these taxes and duties is prescribed by the President on the recommendation of the Finance Commission.
E. Surcharge on Certain Taxes and Duties for Purposes of the Centre (Article 271): The Parliament can at any time levy the surcharges on taxes and duties referred to in Articles 269 and 270 (mentioned above). The proceeds of such surcharges go to the Centre exclusively. In other words, the states have no share in these surcharges.
F. Taxes Levied and Collected and Retained by the States These are the taxes belonging to the states exclusively. They are enumerated in the state list and are 20 in number. These are 18 : (i) land revenue; (ii) taxes on agricultural income, succession and estate duties in respect of agricultural land; (iii) taxes on lands and buildings, on mineral rights, on animals and boats, on road vehicles, on luxuries, on entertainments, and on gambling; (iv) excise duties on alcoholic liquors for human consumption and narcotics; (v) taxes on the entry of goods into a local area, on advertisements (except newspapers), on consumption or sale of electricity, and on goods and passengers carried by road or on inland waterways; (vi) taxes on professions, trades, callings and employments not exceeding Rs. 2,500 per annum; (vii) capitation taxes; (viii) tolls; (ix) stamp duty on documents (except those specified in the Union List); (x) sales tax (other than newspaper); and (xi) fees on the matters enumerated in the State List (except court fees).
Distribution of Non-tax Revenues
A. 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; (vi) central public sector enterprises; and (vii) escheat and lapse.
B. 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.
Grants-in-Aid to the States
Besides sharing of taxes between the Centre and the states, the Constitution provides for grants-in-aid to the states from the Central resources. There are two types of grants-in-aid, viz, statutory grants and discretionary grants:
Statutory Grants Article 275 empowers the Parliament to make grants to the states which are in need of financial assistance and not to every state. Also, different sums may be fixed for different states. These sums are charged on the Consolidated Fund of India every year.
Apart from this general provision, the Constitution also provides for specific grants for promoting the welfare of the scheduled tribes in a state or for raising the level of administration of the scheduled areas in a state including the State of Assam. The statutory grants under Article 275 (both general and specific) are given to the states on the recommendation of the Finance Commission.
Discretionary Grants Article 282 empowers both the Centre and the states to make any grants for any public purpose, even if it is not within their respective legislative competence. Under this provision, the Centre makes grants to the states on the recommendations of the Planning Commission —an extra-constitutional body.
“These grants are also known as discretionary grants, the reason being that the Centre is under no obligation to give these grants and the matter lies within its discretion. These grants have a two-fold purpose: to help the state financially to fulfil plan targets; and to give some leverage to the Centre to influence and coordinate state action to effectuate the national plan.
Notably, the discretionary grants form the larger part of the Central grants to the states (when compared with that of the statutory grants). Hence, the Planning Commission has assumed greater significance than the Finance Commission in Centre state financial relations.
Other Grants The Constitution also provided for a third type of grants-in-aid, but for a temporary period. Thus, a provision was made for grants in lieu of export duties on jute and jute products to the States of Assam, Bihar, Orissa and West Bengal. These grants were to be given for a period of ten years from the commencement of the Constitution. These sums were charged on the Consolidated Fund of India and were made to the states on the recommendation of the Finance Commission.
Article 280 provides for a Finance Commission as a quasi-judicial body. It is constituted by the President every fifth year or even earlier. It is required to make recommendations to the President on the following matters:
• The distribution of the net proceeds of taxes to be shared between the Centre and the states, and the allocation between the states, the respective shares of such proceeds.
• The principles which should govern the grants-in-aid to the states by the Centre (i.e., out of the Consolidated Fund of India).
• The measures needed to augment the Consolidated fund of a state to supplement the resources of the panchayats and the municipalities in the state on the basis of the recommendations made by the State Finance Commission.
• Any other matter referred to it by the President in the interests of sound finance.
Till 1960, the Commission also suggested the amounts paid to the States of Assam, Bihar, Orissa and West Bengal in lieu of assignment of any share of the net proceeds in each year of export duty on jute and jute products.
The Constitution envisages the Finance Commission as the balancing wheel of fiscal federalism in India. However, its role in the Centre–state fiscal relations has been undermined by the emergence of the planning commission, a non-constitutional and non-statutory body.