Centre-State Relations in India

Centre-State Relations in India

Centre-State Relationship in India

The centre-state relationship in India is looking towards federalism, which has been derived from the Constitution of Canada. 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.

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 7th Schedule.

1. Union List

The Parliament has exclusive powers to make laws with respect to any of the matters enumerated in the Union List.

• Number of Subjects: At present, 100 subjects (originally 97 subjects)

• Examples: Defense, banking, foreign affairs, currency, atomic energy, insurance, communication, interstate trade and commerce, census, audit, postal services, rail, air and water transport, Broadcasting, foreign debt, foreign trade, and so on.

2. State List

The state legislature has, in normal circumstances, exclusive powers to make laws with respect to any of the matters enumerated in the State List.

• Number of Subjects: At present, 61 subjects (originally 66 subjects)

  • Examples: Public service, public order, Police, Public health and sanitation, Agriculture, irrigation, prisons, local government, fisheries, markets, theaters, gambling, land revenue, and so on.

3. Concurrent List

Both the Parliament and the State Legislature can make laws with respect to any of the matters enumerated in the Concurrent List.

• Number of Subjects: At present, 52 subjects (originally 47 subjects)

• Examples: National waterways, criminal law and procedure, civil procedure, marriage and divorce, population control and family planning, electricity, labour welfare, economic and social planning, drugs, newspapers, books and printing press, factories, and others.

Note:

The 42nd Amendment Act of 1976 transferred 5 subjects to the Concurrent List from the State List:

1. Education

2. Forests

3. Weights and measures

4. Protection of wild animals and birds

5. Administration of justice; constitution and organisation of all courts except the Supreme Court and the High Courts

Special Provisions

• Parliament has the power to make laws with respect to any matter for any part of the territory of India not included in a state, though that matter is enumerated in the State List. This provision has reference to the Union Territories or the Acquired Territories (if any).

• The 101st Amendment Act of 2016 has made a special provision with respect to Goods and Services Tax (GST). Accordingly, the Parliament and the state legislature have the power to make laws with respect to GST imposed by the Union or by the State.

• Parliament has exclusive power to make laws with respect to GST where the supply of goods or services or both takes place in the course of inter-state trade or commerce.

Residuary Subjects

• 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 legislation includes the power to levy residuary taxes.

Important Articles

Parliamentary Legislation in the State Field

• According to Article 249, if the Rajya Sabha declares that it is necessary in the national interest that Parliament should make laws with respect to 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 1 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.

• Parliament acquires the power to legislate with respect to goods and services tax or matters in the State List, while a proclamation of national emergency or the President's rule is in operation. The laws become inoperative expiration of six months after the emergency has ceased to operate.

• According to Article 253, 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.

Administrative Relations

• Articles 256-263 in Part XI of the Constitution deal with the administrative relations between the Centre and the States.

• Article 312 authorizes the Parliament to create new All-India Services based on a Rajya Sabha resolution to that effect.

• Under Article 263, the President can establish an Inter-State Council to investigate and discuss subjects of common interest between the Centre and the States.

Financial Relations

• 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.

Tax Revenue

Distribution of Tax Revenue:

• The 80th Amendment Act of 2000 and the 101st Amendment Act of 2016 have introduced major changes in the scheme of the distribution of tax revenues between the Centre and the States.

101st Amendment:

• Provided for subsuming of various central indirect taxes and levies such as Central Excise Duties, Additional Excise Duties, Excise Duty levied under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, Service Tax, Additional Customs Duty, commonly known as Countervailing Duty, Special Additional Duty of Customs and Central Surcharges and Cesses so far as they related to the supply of goods and services.

• Similarly, the Amendment provided for subsuming of State Value Added Tax/Sales Tax, Entertainment Tax (other than the Tax levied by the local bodies), Central Cess Tax (Levied by the Centre) and Collected by the states, Octroi and Entry Tax, Purchase Tax, Luxury Tax, Taxes on Lottery, Betting and Gambling, and State Surcharges and Cesses in so far as they related to the supply of goods and services.

Further, the amendment deleted Article 268-A as well as Entry 92-C in the Union List, both of which dealt with service tax.

Distribution of Non-tax Revenue

• Major Sources of the Centre: Posts and Telegraphs, Railways, Banking, Broadcasting, Coinage and Currency, Central Public Sector Enterprises, Escheat and Lapse, and others.

• Major Sources of the State: Irrigation, Forests, Fisheries, State Public Sector Enterprises, Escheat and Lapse, and others.

Commissions on Centre-State Relations

To resolve contentious issues between the Centre and the States, four commissions were formed:

1. Administrative Reforms Commission 1966 (Chairman - Moraraji Desai, followed by K. Hanumanthayya)

2. Rajamannar Committee in 1969 (Chairman Dr. PV Rajamannar)

3. Sarkaria Commission in 1983 (Chairman - Justice R. S. Sarkaria)

4. Punchhi Commission in 2007 (Chairman - Justice Madan Mohan Punchhi)

Sarkaria Commission

• In 1983, the Central government appointed a three-member Commission on Centre-State relations under the chairmanship of R.S. Sarkaria, a retired judge of the Supreme Court.

• The commission was asked to examine and review the working of existing arrangements between the Centre and states in all spheres and recommend appropriate changes and measures.

• Initially given one year to complete its work, but its term was extended four times.

• Submitted its report in 1988.

• The Commission made 247 recommendations to improve Centre-state relations.

• The Central Government has implemented 180 (out of 247) recommendations of the Sarkaria Commission.

• The most important recommendation is the establishment of the Inter-State Council in 1990.

Punchhi Commission

• The Second Commission on Centre-State Relations was set up by the Government of India in April 2007 under the Chairmanship of Madan Mohan Punchhi, former Chief Justice of India.

• Other members were Dhirendra Singh, Vinod Kumar, Prof. N.R. Madhav Mennon, and Dr. Amresh Bagchi (later replaced by Vijay Shankar).

• It was required to look into the issues of Centre-State relations, keeping in view the changes in the polity and economy of India since the Sarkaria Commission.

• Submitted its report to the government in April 2010.

• In finalizing the 1,456-page report in seven volumes, the Commission took extensive help from the Sarkaria Commission report, the National Commission to Review the Working of the Constitution (NCRWC) report, and the Second Administrative Reforms Commission report.

• The Commission made over 310 recommendations, touching upon several significant areas in the working of Centre-State relations.

Final Thoughts

The Centre-State relationship in India forms the backbone of the federal structure, ensuring a balance of power between the Union and the States. The division of powers through the Union, State, and Concurrent Lists provides clarity while allowing flexibility to address emerging issues. Residuary powers vested in the Parliament ensure that new challenges can be legislated effectively.

Over the years, commissions like Sarkaria and Punchhi have strengthened cooperation and coordination between the Centre and States. Financial relations, including tax sharing and grants, play a crucial role in maintaining economic stability and fairness. Administrative mechanisms such as the Inter-State Council facilitate dialogue and conflict resolution.

Overall, the system seeks to maintain a dynamic balance where both the Union and States can function effectively, promoting national unity while respecting regional diversity.