Centre-State Relations in India

Centre-State relations:

The Centre-state relations can be studied under three heads:

  • Legislative relations.
  • Administrative relations.
  • Financial relations.

Legislative relations:

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.

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

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:

  • 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.
  •  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.
  • 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.

Distribution of legislative subjects

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.

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.

Union list 100 items(Authority solely of center)

Subjects such as defence, banking, foreign affairs, currency, atomic energy, insurance, communication, inter-state trade and commerce, census, audit and so on.

Concurrent list 52 items (Authority of both center & state)

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

( 5 items transferred to concurrent list by 42 amendment; viz. Education, forests, Justice, Weight & measures and Protection of wildlife, animals & birds)

State List 61 Items

This has at present 61 subjects (originally 662 subjects) like public order, police, public health and sanitation, agriculture, prisons, local government, fisheries, markets, theaters, gambling and so on.

List predominance

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

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.

. Parliamentary Legislation in the State Field

Under certain conditions, constitution authorizes union government to extend its jurisdiction over matters included in state list viz.

When a proclamation of emergency is in force, parliament can legislate on matters included in all 3 lists

Article 356

On breakdown of constitutional machinery in state, parliament can take over legislative authority of the state

Article 249

Empowers Rajya Sabha to transfer any matter in state list to legislative jurisdiction of parliament by a resolution passed by 2/3rd of the majority

Article 252

If legislature of 2 or more states passes a resolution that a desirable law shall be passed by parliament on any matter enumerated in state list, then parliament can make laws regulating that matter. Any other state can also adopt such law by passing a resolution but these laws can be amended / repealed by parliament only

Article 253

Empowers parliament to make laws for whole or any part of Indian territory for implementing international agreements & conventions, even if the subjects covered by such treaties & agreements falls within state list

Residuary powers have been paced under legislative jurisdiction of the parliament

Central control over state legislation

The Constitution empowers the Centre to exercise control over the state’s legislative matters in the following ways:

  • 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.
  • 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).
  • 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

Sarkaria commission recommendations on legislative matters between Center and states:

While it made the general observation that the Constitution is basically sound and there is no need for drastic changes in the basic character of the Constitution, nevertheless it gave following recommendations:

(1) Ordinarily, the Union should occupy only that much field of a concurrent subject on which uniformity of Policy and Action is required in the larger interest of the Nation, leaving the rest of the details for State action, within the abroad frame-work of the Policy laid down in the Union Law.

(2) Whenever, the Union proposes to undertake Legislation on a subject belonging to the Concurrent List, the States’ views must be ascertained through inter-Governmental Councils.

(3) Parliamentary law passed under clauses (1) of Article 252, on request of two or more States should not be perpetual but should be for specific period not exceeding three years.

(4) On receipt of a resolution from a State recommending creation or abolition of a Legislative Council, the same will be presented before the Parliament within a reasonable time.

ADMINISTRATIVE RELATIONS

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.

 

 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

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 States

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.  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.

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

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.

(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.

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.

Financial relations

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 number12).
  • The state legislature has exclusive power to levy taxes on subjects enumerated in the State List (which are 20 in number13).
  • Both the Parliament and the state legislature can levy taxes on subjects enumerated in the Concurrent List (which are 3 in number14)

. • 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

Grants-in-Aid

Besides sharing of taxes between the Center and the States, the Constitution provides for Grants-in-aid to the States from the Central resources. There are two types of grants:

1.Statutory Grants: These grants are given by the Parliament out of the Consolidated Fund of India to such States which are in need of assistance. Different States may be granted different sums. Specific grants are also given to promote the welfare of scheduled tribes in a state or to raise the level of administration of the Scheduled areas therein (Art.275).

2.Discretionary Grants: Center provides certain grants to the states on the recommendations of the Planning Commission which are at the discretion of the Union Government. These are given to help the state financially to fulfill plan targets (Art.282).

Effects of Emergency on Center-State Financial Relations:-

  1. During National Emergency: The President by order can direct that all provisions regarding division of taxes between Union and States and grants-in-aids remain suspended. However, such suspension shall not go beyond the expiration of the financial year in which the Proclamation ceases to operate.
  2. During Financial Emergency: Union can give directions to the States:-

1.To observe such canons of financial propriety as specified in the direction.

2.To reduce the salaries and allowances of all people serving in connection with the affairs of the State, including High Courts judges.

3.To reserve for the consideration of the President all money and financial Bills, after they are passed by the Legislature of the State.

Borrowing by the Centre and the States

The Constitution makes the following provisions with regard to the borrowing powers of the Centre and the states:

  • The Central government can borrow either within India or outside upon the se-curity of the Consolidated Fund of India or can give guarantees, but both within the limits fixed by the Parliament. So far, no such law has been enacted by the Parliament.
  • Similarly, a state government can borrow within India (and not abroad) upon the security of the Consolidated Fund of the State or can give guarantees, but both within the limits fixed by the legislature of that state.
  • The Central government can make loans to any state or give guarantees in respect of loans raised by any state. Any sums required for the purpose of making such loans are to be charged on the Consolidated Fund of India.
  • A state cannot raise any loan without the consent of the Centre, if there is still out-standing any part of a loan made to the state by the Centre or in respect of which a guarantee has been given by the Centre.

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.

 

14th FINANCE COMMISSION

1)The 14th Finance Commission is of the view that tax devolution should be the primary route for transfer of resources to the States.

2)In understanding the States’ needs, it has ignored the Plan and non-Plan distinctions

3) According to the Commission, the increased devolution of the divisible pool of taxes is a “compositional shift in transfers’’ – from grants to tax devolution

4)In recommending an horizontal distribution, it has used broad parameters – population (1971), changes in population since then, income distance, forest cover and area, among others.

5)It has recommended distribution of grants to States for local bodies using 2011 population data with weight of 90 per cent and area with weight of 10 per cent

6)Grants to States are divided into two

One, grant to duly constituted gram panchayats

Two, grant to duly constituted municipal bodies

7). it has divided grants into two parts

A basic grant, and a performance one for gram panchayats and municipal bodies

8)The ration of basic to performance grant is 90:10 for panchayats; and 80:20 for municipalities

9)The total grant recommended is Rs. 2,87,436 crore for a five-year period. Out of which, the grant to panchayats is Rs.2,00,292 crore. And, the reminder goes to municipalities

10)The Commission has significantly departed from previous commission vis-à-vis recommendation of the principles governing grants-in-aid to the States by the Centre

It has chosen to take the entire revenue expenditure for this purpose. Hence, it has decided to take into account a state’s entire revenue expenditure needs without making a distinction between plan and non-plan expenditure

11)The Commission is of the view that sharing pattern in respect to various Centrally-sponsored schemes need to change. It wants the States to share a greater fiscal responsibility for the implementation of such schemes.

SARKARIA COMMISSION RECOMMENDATIONS ON CENTRE-STATE RELATIONS:

The Commission made 247 recommendations to improve Centre–state relations. The important recommendations are mentioned below:

  1. A permanent Inter-State Council called the Inter-Governmental Council should be set up under Article 263.
  2. Article 356 (President’s Rule) should be used very sparingly, in extreme cases as a last resort when all the available alternatives fail.
  3. The institution of All-India Services should be further strengthened and some more such services should be created.
  4. The residuary powers of taxation should continue to remain with the Parliament, while the other residuary powers should be placed in the Concurrent List.
  5. When the president withholds his assent to the state bills, the reasons should be communicated to the state government.
  6. The National Development Council (NDC) should be renamed and reconstituted as the National Economic and Development Council (NEDC).
  7. The zonal councils should be constituted afresh and reactivated to promote the spirit of federalism.
  8. The Centre should have powers to deploy its armed forces, even without the consent of states. However, it is desirable that the states should be consulted.
  9. The Centre should consult the states before making a law on a subject of the Concurrent List.
  10. The procedure of consulting the chief minister in the appointment of the state governor should be prescribed in the Constitution itself.
  11. The net proceeds of the corporation tax may be made permissibly shareable with the states.
  12. The governor cannot dismiss the council of ministers so long as it commands a majority in the assembly.
  13. The governor’s term of five years in a state should not be disturbed except for some extremely compelling reasons.
  14. No commission of enquiry should be set up against a state minister unless a demand is made by the Parliament.
  15. The surcharge on income tax should not be levied by the Centre except for a specific purpose and for a strictly limited period.
  16. The present division of functions between the Finance Commission and the Planning Commission is reasonable and should continue.
  17. Steps should be taken to uniformly implement the three language formula in its true spirit.
  18. No autonomy for radio and television but decentralisation in their operations.
  19. No change in the role of Rajya Sabha and Centre’s power to reorganise the states.
  20. The commissioner for linguistic minorities should be activated.

PUNCHHI COMMISSION RECOMMENDATIONS:

The Punchhi Commission recommended that Articles 355 and 356 of the Indian Constitution should be amended. These articles describe the emergency provisions. The Punchhi Commission recommended that the emergency provisions should be used very scarcely only in cases of extreme emergencies. Moreover, these provisions should be applied for period of not more than three months.

  • The Punchhi Commission recommended that a superseding body should be constituted which shall look into the matters related to internal security. The name of the council was proposed to be National Integration Council. This council shall meet on an annual basis. In the affected states, the council shall constitute and send a five member delegation to the affected areas within two days.
  • The commission recommended that whenever the centre introduces a bill on a subject that is mentioned in the concurrent list, the states should be consulted.
  • In case the president uses his pocket veto on a state bill, he must give the reason for the same to the state within six months.

On the office of Governor

  1. While selecting Governors, the Central Government should adopt the following strict guidelines as recommended in the Sarkaria Commission report and follow its mandate in letter and spirit :

(i) He should be eminent in some walk of life

(ii) He should be a person from outside the state

(iii) He should be a detached figure and not too intimately connected with the local politics of the states

(iv) He should be a person who has not taken too great a part in politics generally and particularly in the recent past

  1. Governors should be given a fixed tenure of five years and their removal should not be at the sweet will of the Government at the Centre.
  2. The procedure laid down for impeachment of President, mutatis mutandis can be made applicable for impeachment of Governors as well.
  3. Article 163 does not give the Governor a general discretionary power to act against or without the advice of his Council of Ministers. In fact, the area for the exercise of discretion is limited and even in this limited area, his choice of action should not be arbitrary or fanciful. It must be a choice dictated by reason, activated by good faith and tempered by caution.
  4. In respect of bills passed by the Legislative Assembly of a state, the Governor should take the decision within six months whether to grant assent or to reserve it for consideration of the President.
  5. On the question of Governor’s role in appointment of Chief Minister in the case of an hung assembly, it is necessary to lay down certain clear guidelines to be followed as Constitutional conventions. These guidelines may be as follows:

(i) The party or combination of parties which commands the widest support in the Legislative Assembly should be called upon to form the Government.

(ii) If there is a pre-poll alliance or coalition, it should be treated as one political party and if such coalition obtains a majority, the leader of such coalition shall be called by the Governor to form the Government.

  1. The Governor should have the right to sanction for prosecution of a state minister against the advice of the Council of Ministers, if the Cabinet decision appears to the Governor to be motivated by bias in the face of overwhelming material.
  2. The convention of Governors acting as Chancellors of Universities and holding other statutory positions should be done away with. His role should be confined to the Constitutional provisions only.

On cooperation:

1.Suitable amendments to Article 263 are required to make the Inter-State Council a credible, powerful and fair mechanism for management of inter-state and Centre-state differences.

  1. The Zonal Councils should meet at least twice a year with an agenda proposed by states concerned to maximise co-ordination and promote harmonisation of policies and action having inter-state ramification. The Secretariat of a strengthened Inter-State Council can function as the Secretariat of the Zonal Councils as well.
  2. The Empowered Committee of Finance Ministers of States proved to be a successful experiment in inter-state co-ordination on fiscal matters. There is need to institutionalise similar models in other sectors as well. A forum of Chief Ministers, Chaired by one of the Chief Minister by rotation can be similarly thought about particularly to co-ordinate policies of sectors like energy, food, education, environment and health.
  3. New all-India services in sectors like health, education, engineering and judiciary should be created.
  4. A balance of power between states inter se is desirable and this is possible by equality of representation in the Rajya Sabha. This requires amendment of the relevant provisions to give equality of seats to states in the Rajya Sabha, irrespective of their population size.
  5. The scope of devolution of powers to local bodies to act as institutions of self-government should be constitutionally defined through appropriate amendments

On Emergency Provisions:

1.When an external aggression or internal disturbance paralyses the state administration creating a situation of a potential break down of the Constitutional machinery of the state, all alternative courses available to the Union for discharging its paramount responsibility under Article 355 should be exhausted to contain the situation and the exercise of the power under Article 356 should be limited strictly to rectifying a “failure of the Constitutional machinery in the state”.

  1. On the question of invoking Article 356 in case of failure of Constitutional machinery in states, suitable amendments are required to incorporate the guidelines set forth in the landmark judgement of the Supreme Court in S.R. Bommai V . Union of India (1994). This would remove possible misgivings in this regard on the part of states and help in smoothening Centre-state relations.
  2. Given the strict parameters now set for invoking the emergency provisions under Articles 352 and 356 to be used only as a measure of “last resort”, and the duty of the Union to protect states under Article 355, it is necessary to provide a Constitutional or legal framework to deal with situations which require Central intervention but do not warrant invoking the extreme steps under Articles 352 and 356.

Providing the framework for “localised emergency” would ensure that the state government can continue to function and the Assembly would not have to be dissolved while providing a mechanism to let the Central Government respond to the issue specifically and locally. The imposition of local emergency is fully justified under the mandate of Article 355 read with Entry 2A of List I and Entry 1 of List II of the Seventh Schedule.

SUPREME COURT DOCTRINES IN CONTEXT OF LEGISLATIVE RELATIONS B/W CENTRE & STATES

Doctrine of Pith & Substance

  • Within their respected areas of authority, Union & state legislatures are supreme & are not supposed to encroach upon others sphere
  • if a new law passed by one encroaches upon the subject, held & assigned by the other, court will apply Doctrine of Pith & Substance
  • If it is found that law in substance is within the subjects assigned to that legislature & intention of law is genuine, the law shall be valid, even though there is some overlapping.
  • Hence, there can not be watertight division of powers b/w centre & the state, because if it is, it would made several laws invalid on simple grounds of overlapping

Doctrine of Colorable legislation

  • In federal government, transgression of its limit of powers by a legislature may be overt or covert. When the legislation is indirect & covert, it is known as colorable legislation
  • In this, although the subject on which legislature make laws falls within its legislative competence in exterior appearance but its real motive is to transgress the powers of other legislature covertly
  • In this, case applying the Doctrine of colorable legislation, court can invalidate the entire law which means, what legislature can not do directly, it can not do the same indirectly.

RECENT TRENDS:

INTER-STATE TRIBUNALS

The Central Government has decided to amend Inter-State Water Disputes Act, 1956 (ISWDA) to constitute a permanent tribunal to decide on all inter-state water disputes that arise.

An agency, to collect and maintain all relevant water data, like rainfall, water flow and irrigation area, in each of the river basins of the country, is also proposed to be created.

Centre currently sets up ad hoc tribunals under ISWDA to adjudicate disputes as they arise. Eight tribunals have been constituted so far.  With water becoming scarce resource, inter-state water disputes are increasing.

Constitutional Provisions

Article 262(1) of the Constitution lays down that “Parliament may by law provide for the adjudication of any dispute or complaint with respect to the use, distribution or control of the waters of, or in, any inter-State river, or river valley”. Parliament has enacted the InterState River Water Disputes Act, 1956.

Interstate water dispute Act, 1956:

Salient Features  Constitution of the tribunal  -The Tribunal shall have the same powers as are vested in a civil court,  Power to make schemes for implementing decisions of tribunal, Dissolution of Tribunal and power to make rules. Adjudication of water disputes, Maintenance of data bank and information,  Bar of jurisdiction of Supreme Court and other Courts

COMPETITIVE FEDERALISM

Recent studies show signs of successful competitive federalism in Indian economy especially in terms of ease of doing business. States are trying to attract investments by facilitating reforms.

While states began to receive a higher share of 42 percent of central taxes, the Centre diluted the benefits that accompanied the SCS status and even slashed the outlay for Centrally Sponsored Schemes.

What is competitive federalism?

Competitive federalism is a concept where centre competes with states and vice-versa, and states compete with each other in their joint efforts to develop India.

The policy of one-size-fit-all is replaced with different policies of various states based on the own priorities with in the state.

Competitive federalism follows the concept bottom-up approach as it will bring the change from the states.

The meaning of competitive federalism as espoused by the Liberty Foundation in the US would entail a system that allows States to compete with each other over a broad range of issues to provide citizens with the best value goods and services at the lowest cost.

INTER-STATE COUNCIL MEETING

Recently, the eleventh meeting of the Inter-State Council (ISC) was held after a gap of 10 years.

Article 263 provides the establishment of an Inter-State Council to effect coordination between the states and between Centre and states.  It is not a permanent constitutional body. It can be established ‘at any time’ if it appears to the President that the public interests would be served by the establishment of such a Council. First time it was set up on the recommendation of the Sarkaria Commission and established the ISC by a presidential ordinance on May 28, 1990.  The ISC is proposed to meet thrice a year, but in 26 years, it has met only 11 times.

Composition

Prime Minister acts as the chairman of the council.

Members:

Union Ministers of Cabinet rank in the Union Council of Ministers nominated by the Prime Minister.

Chief Ministers of all states and Chief Ministers of Union Territories having a Legislative Assembly and Administrators of UTs not having a Legislative Assembly.

NITI AAYOG

NITI Ayog, The National Institution for Transforming India, was formed via a resolution of the Union Cabinet on January 1, 2015.

One of the key mandates of NITI Aayog is to foster co-operative federalism through structured support initiatives. The key functions which refer to ‘Cooperative Federalism’ are:

  • To evolve a shared vision of national development priorities, sectors and strategies with the active involvement of States in the light of national objectives
  • To foster cooperative federalism through structured support initiatives and mechanisms with the States on a continuous basis, recognising that strong States make a strong nation.

SOME INITIATIVES THAT HAVE BEEN TAKEN

  • Constitution of three sub-groups of Chief Ministers to advise the central government on Rationalization of Centrally Sponsored Schemes, Skill Development and Swachh Bharat Abhiyaan.
  • Reform in social sector through Indices Measuring States’ Performance in Health, Education and Water Management: NITI has come out with indices to measure incremental annual outcomes in critical social sectors like health, education and water with a view to nudge the states into competing with each other for better outcomes, while at the same time sharing best practices & innovations to help each other – an example of competitive and cooperative federalism.
  • Facilitating the resolution of issues involving states and central ministries by bringing the two sides together on a single platform.

COOPERATIVE FEDERALISM

EK BHARAT SHRESHTA BHARAT INITIATIVE

Ek Bharat Shreshtha Bharat” was launched by Prime Minister recently.

  • It is an innovative measure that will lead to an enhanced understanding and bonding between the States through the knowledge of the culture, traditions and practices of different States & UTs, for strengthening the unity and integrity of India.
  • All States and UTs will be covered under the programme.
  • According to the scheme, two states will undertake a unique partnership for one year which would be marked by cultural and student exchanges. 6 MoUs between two States each were also signed on the occasion of launch, under this initiative

Objectives of Ek Bharat Shreshtha Bharat

  • To celebrate the Unity in Diversity of our Nation and to maintain and strengthen the fabric of traditionally existing emotional bonds between the people of our Country.
  • To promote the spirit of national integration through a deep and structured engagement between all Indian States and Union Territories through a year-long planned engagement between States.
  • To showcase the rich heritage and culture, customs and traditions of either State for enabling people to understand and appreciate the diversity of India, thus fostering a sense of common identity.
  • To establish long-term engagements and to create an environment which promotes learning between States by sharing best practices and experiences

Centre-State relations:

The Centre-state relations can be studied under three heads:

  • Legislative relations.
  • Administrative relations.
  • Financial relations.

Legislative relations:

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.

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

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:

  • 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.
  •  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.
  • 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.

Distribution of legislative subjects

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.

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.

Union list 100 items(Authority solely of center)

Subjects such as defence, banking, foreign affairs, currency, atomic energy, insurance, communication, inter-state trade and commerce, census, audit and so on.

Concurrent list 52 items (Authority of both center & state)

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

( 5 items transferred to concurrent list by 42 amendment; viz. Education, forests, Justice, Weight & measures and Protection of wildlife, animals & birds)

State List 61 Items

This has at present 61 subjects (originally 662 subjects) like public order, police, public health and sanitation, agriculture, prisons, local government, fisheries, markets, theaters, gambling and so on.

List predominance

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

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.

. Parliamentary Legislation in the State Field

Under certain conditions, constitution authorizes union government to extend its jurisdiction over matters included in state list viz.

When a proclamation of emergency is in force, parliament can legislate on matters included in all 3 lists

Article 356

On breakdown of constitutional machinery in state, parliament can take over legislative authority of the state

Article 249

Empowers Rajya Sabha to transfer any matter in state list to legislative jurisdiction of parliament by a resolution passed by 2/3rd of the majority

Article 252

If legislature of 2 or more states passes a resolution that a desirable law shall be passed by parliament on any matter enumerated in state list, then parliament can make laws regulating that matter. Any other state can also adopt such law by passing a resolution but these laws can be amended / repealed by parliament only

Article 253

Empowers parliament to make laws for whole or any part of Indian territory for implementing international agreements & conventions, even if the subjects covered by such treaties & agreements falls within state list

Residuary powers have been paced under legislative jurisdiction of the parliament

Central control over state legislation

The Constitution empowers the Centre to exercise control over the state’s legislative matters in the following ways:

  • 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.
  • 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).
  • 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

Sarkaria commission recommendations on legislative matters between Center and states:

While it made the general observation that the Constitution is basically sound and there is no need for drastic changes in the basic character of the Constitution, nevertheless it gave following recommendations:

(1) Ordinarily, the Union should occupy only that much field of a concurrent subject on which uniformity of Policy and Action is required in the larger interest of the Nation, leaving the rest of the details for State action, within the abroad frame-work of the Policy laid down in the Union Law.

(2) Whenever, the Union proposes to undertake Legislation on a subject belonging to the Concurrent List, the States’ views must be ascertained through inter-Governmental Councils.

(3) Parliamentary law passed under clauses (1) of Article 252, on request of two or more States should not be perpetual but should be for specific period not exceeding three years.

(4) On receipt of a resolution from a State recommending creation or abolition of a Legislative Council, the same will be presented before the Parliament within a reasonable time.

ADMINISTRATIVE RELATIONS

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.

 

 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

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 States

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.  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.

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

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.

(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.

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.

Financial relations

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 number12).
  • The state legislature has exclusive power to levy taxes on subjects enumerated in the State List (which are 20 in number13).
  • Both the Parliament and the state legislature can levy taxes on subjects enumerated in the Concurrent List (which are 3 in number14)

. • 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

Grants-in-Aid

Besides sharing of taxes between the Center and the States, the Constitution provides for Grants-in-aid to the States from the Central resources. There are two types of grants:

1.Statutory Grants: These grants are given by the Parliament out of the Consolidated Fund of India to such States which are in need of assistance. Different States may be granted different sums. Specific grants are also given to promote the welfare of scheduled tribes in a state or to raise the level of administration of the Scheduled areas therein (Art.275).

2.Discretionary Grants: Center provides certain grants to the states on the recommendations of the Planning Commission which are at the discretion of the Union Government. These are given to help the state financially to fulfill plan targets (Art.282).

Effects of Emergency on Center-State Financial Relations:-

  1. During National Emergency: The President by order can direct that all provisions regarding division of taxes between Union and States and grants-in-aids remain suspended. However, such suspension shall not go beyond the expiration of the financial year in which the Proclamation ceases to operate.
  2. During Financial Emergency: Union can give directions to the States:-

1.To observe such canons of financial propriety as specified in the direction.

2.To reduce the salaries and allowances of all people serving in connection with the affairs of the State, including High Courts judges.

3.To reserve for the consideration of the President all money and financial Bills, after they are passed by the Legislature of the State.

Borrowing by the Centre and the States

The Constitution makes the following provisions with regard to the borrowing powers of the Centre and the states:

  • The Central government can borrow either within India or outside upon the se-curity of the Consolidated Fund of India or can give guarantees, but both within the limits fixed by the Parliament. So far, no such law has been enacted by the Parliament.
  • Similarly, a state government can borrow within India (and not abroad) upon the security of the Consolidated Fund of the State or can give guarantees, but both within the limits fixed by the legislature of that state.
  • The Central government can make loans to any state or give guarantees in respect of loans raised by any state. Any sums required for the purpose of making such loans are to be charged on the Consolidated Fund of India.
  • A state cannot raise any loan without the consent of the Centre, if there is still out-standing any part of a loan made to the state by the Centre or in respect of which a guarantee has been given by the Centre.

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.

 

14th FINANCE COMMISSION

1)The 14th Finance Commission is of the view that tax devolution should be the primary route for transfer of resources to the States.

2)In understanding the States’ needs, it has ignored the Plan and non-Plan distinctions

3) According to the Commission, the increased devolution of the divisible pool of taxes is a “compositional shift in transfers’’ – from grants to tax devolution

4)In recommending an horizontal distribution, it has used broad parameters – population (1971), changes in population since then, income distance, forest cover and area, among others.

5)It has recommended distribution of grants to States for local bodies using 2011 population data with weight of 90 per cent and area with weight of 10 per cent

6)Grants to States are divided into two

One, grant to duly constituted gram panchayats

Two, grant to duly constituted municipal bodies

7). it has divided grants into two parts

A basic grant, and a performance one for gram panchayats and municipal bodies

8)The ration of basic to performance grant is 90:10 for panchayats; and 80:20 for municipalities

9)The total grant recommended is Rs. 2,87,436 crore for a five-year period. Out of which, the grant to panchayats is Rs.2,00,292 crore. And, the reminder goes to municipalities

10)The Commission has significantly departed from previous commission vis-à-vis recommendation of the principles governing grants-in-aid to the States by the Centre

It has chosen to take the entire revenue expenditure for this purpose. Hence, it has decided to take into account a state’s entire revenue expenditure needs without making a distinction between plan and non-plan expenditure

11)The Commission is of the view that sharing pattern in respect to various Centrally-sponsored schemes need to change. It wants the States to share a greater fiscal responsibility for the implementation of such schemes.

SARKARIA COMMISSION RECOMMENDATIONS ON CENTRE-STATE RELATIONS:

The Commission made 247 recommendations to improve Centre–state relations. The important recommendations are mentioned below:

  1. A permanent Inter-State Council called the Inter-Governmental Council should be set up under Article 263.
  2. Article 356 (President’s Rule) should be used very sparingly, in extreme cases as a last resort when all the available alternatives fail.
  3. The institution of All-India Services should be further strengthened and some more such services should be created.
  4. The residuary powers of taxation should continue to remain with the Parliament, while the other residuary powers should be placed in the Concurrent List.
  5. When the president withholds his assent to the state bills, the reasons should be communicated to the state government.
  6. The National Development Council (NDC) should be renamed and reconstituted as the National Economic and Development Council (NEDC).
  7. The zonal councils should be constituted afresh and reactivated to promote the spirit of federalism.
  8. The Centre should have powers to deploy its armed forces, even without the consent of states. However, it is desirable that the states should be consulted.
  9. The Centre should consult the states before making a law on a subject of the Concurrent List.
  10. The procedure of consulting the chief minister in the appointment of the state governor should be prescribed in the Constitution itself.
  11. The net proceeds of the corporation tax may be made permissibly shareable with the states.
  12. The governor cannot dismiss the council of ministers so long as it commands a majority in the assembly.
  13. The governor’s term of five years in a state should not be disturbed except for some extremely compelling reasons.
  14. No commission of enquiry should be set up against a state minister unless a demand is made by the Parliament.
  15. The surcharge on income tax should not be levied by the Centre except for a specific purpose and for a strictly limited period.
  16. The present division of functions between the Finance Commission and the Planning Commission is reasonable and should continue.
  17. Steps should be taken to uniformly implement the three language formula in its true spirit.
  18. No autonomy for radio and television but decentralisation in their operations.
  19. No change in the role of Rajya Sabha and Centre’s power to reorganise the states.
  20. The commissioner for linguistic minorities should be activated.

PUNCHHI COMMISSION RECOMMENDATIONS:

The Punchhi Commission recommended that Articles 355 and 356 of the Indian Constitution should be amended. These articles describe the emergency provisions. The Punchhi Commission recommended that the emergency provisions should be used very scarcely only in cases of extreme emergencies. Moreover, these provisions should be applied for period of not more than three months.

  • The Punchhi Commission recommended that a superseding body should be constituted which shall look into the matters related to internal security. The name of the council was proposed to be National Integration Council. This council shall meet on an annual basis. In the affected states, the council shall constitute and send a five member delegation to the affected areas within two days.
  • The commission recommended that whenever the centre introduces a bill on a subject that is mentioned in the concurrent list, the states should be consulted.
  • In case the president uses his pocket veto on a state bill, he must give the reason for the same to the state within six months.

On the office of Governor

  1. While selecting Governors, the Central Government should adopt the following strict guidelines as recommended in the Sarkaria Commission report and follow its mandate in letter and spirit :

(i) He should be eminent in some walk of life

(ii) He should be a person from outside the state

(iii) He should be a detached figure and not too intimately connected with the local politics of the states

(iv) He should be a person who has not taken too great a part in politics generally and particularly in the recent past

  1. Governors should be given a fixed tenure of five years and their removal should not be at the sweet will of the Government at the Centre.
  2. The procedure laid down for impeachment of President, mutatis mutandis can be made applicable for impeachment of Governors as well.
  3. Article 163 does not give the Governor a general discretionary power to act against or without the advice of his Council of Ministers. In fact, the area for the exercise of discretion is limited and even in this limited area, his choice of action should not be arbitrary or fanciful. It must be a choice dictated by reason, activated by good faith and tempered by caution.
  4. In respect of bills passed by the Legislative Assembly of a state, the Governor should take the decision within six months whether to grant assent or to reserve it for consideration of the President.
  5. On the question of Governor’s role in appointment of Chief Minister in the case of an hung assembly, it is necessary to lay down certain clear guidelines to be followed as Constitutional conventions. These guidelines may be as follows:

(i) The party or combination of parties which commands the widest support in the Legislative Assembly should be called upon to form the Government.

(ii) If there is a pre-poll alliance or coalition, it should be treated as one political party and if such coalition obtains a majority, the leader of such coalition shall be called by the Governor to form the Government.

  1. The Governor should have the right to sanction for prosecution of a state minister against the advice of the Council of Ministers, if the Cabinet decision appears to the Governor to be motivated by bias in the face of overwhelming material.
  2. The convention of Governors acting as Chancellors of Universities and holding other statutory positions should be done away with. His role should be confined to the Constitutional provisions only.

On cooperation:

1.Suitable amendments to Article 263 are required to make the Inter-State Council a credible, powerful and fair mechanism for management of inter-state and Centre-state differences.

  1. The Zonal Councils should meet at least twice a year with an agenda proposed by states concerned to maximise co-ordination and promote harmonisation of policies and action having inter-state ramification. The Secretariat of a strengthened Inter-State Council can function as the Secretariat of the Zonal Councils as well.
  2. The Empowered Committee of Finance Ministers of States proved to be a successful experiment in inter-state co-ordination on fiscal matters. There is need to institutionalise similar models in other sectors as well. A forum of Chief Ministers, Chaired by one of the Chief Minister by rotation can be similarly thought about particularly to co-ordinate policies of sectors like energy, food, education, environment and health.
  3. New all-India services in sectors like health, education, engineering and judiciary should be created.
  4. A balance of power between states inter se is desirable and this is possible by equality of representation in the Rajya Sabha. This requires amendment of the relevant provisions to give equality of seats to states in the Rajya Sabha, irrespective of their population size.
  5. The scope of devolution of powers to local bodies to act as institutions of self-government should be constitutionally defined through appropriate amendments

On Emergency Provisions:

1.When an external aggression or internal disturbance paralyses the state administration creating a situation of a potential break down of the Constitutional machinery of the state, all alternative courses available to the Union for discharging its paramount responsibility under Article 355 should be exhausted to contain the situation and the exercise of the power under Article 356 should be limited strictly to rectifying a “failure of the Constitutional machinery in the state”.

  1. On the question of invoking Article 356 in case of failure of Constitutional machinery in states, suitable amendments are required to incorporate the guidelines set forth in the landmark judgement of the Supreme Court in S.R. Bommai V . Union of India (1994). This would remove possible misgivings in this regard on the part of states and help in smoothening Centre-state relations.
  2. Given the strict parameters now set for invoking the emergency provisions under Articles 352 and 356 to be used only as a measure of “last resort”, and the duty of the Union to protect states under Article 355, it is necessary to provide a Constitutional or legal framework to deal with situations which require Central intervention but do not warrant invoking the extreme steps under Articles 352 and 356.

Providing the framework for “localised emergency” would ensure that the state government can continue to function and the Assembly would not have to be dissolved while providing a mechanism to let the Central Government respond to the issue specifically and locally. The imposition of local emergency is fully justified under the mandate of Article 355 read with Entry 2A of List I and Entry 1 of List II of the Seventh Schedule.

SUPREME COURT DOCTRINES IN CONTEXT OF LEGISLATIVE RELATIONS B/W CENTRE & STATES

Doctrine of Pith & Substance

  • Within their respected areas of authority, Union & state legislatures are supreme & are not supposed to encroach upon others sphere
  • if a new law passed by one encroaches upon the subject, held & assigned by the other, court will apply Doctrine of Pith & Substance
  • If it is found that law in substance is within the subjects assigned to that legislature & intention of law is genuine, the law shall be valid, even though there is some overlapping.
  • Hence, there can not be watertight division of powers b/w centre & the state, because if it is, it would made several laws invalid on simple grounds of overlapping

Doctrine of Colorable legislation

  • In federal government, transgression of its limit of powers by a legislature may be overt or covert. When the legislation is indirect & covert, it is known as colorable legislation
  • In this, although the subject on which legislature make laws falls within its legislative competence in exterior appearance but its real motive is to transgress the powers of other legislature covertly
  • In this, case applying the Doctrine of colorable legislation, court can invalidate the entire law which means, what legislature can not do directly, it can not do the same indirectly.

RECENT TRENDS:

INTER-STATE TRIBUNALS

The Central Government has decided to amend Inter-State Water Disputes Act, 1956 (ISWDA) to constitute a permanent tribunal to decide on all inter-state water disputes that arise.

An agency, to collect and maintain all relevant water data, like rainfall, water flow and irrigation area, in each of the river basins of the country, is also proposed to be created.

Centre currently sets up ad hoc tribunals under ISWDA to adjudicate disputes as they arise. Eight tribunals have been constituted so far.  With water becoming scarce resource, inter-state water disputes are increasing.

Constitutional Provisions

Article 262(1) of the Constitution lays down that “Parliament may by law provide for the adjudication of any dispute or complaint with respect to the use, distribution or control of the waters of, or in, any inter-State river, or river valley”. Parliament has enacted the InterState River Water Disputes Act, 1956.

Interstate water dispute Act, 1956:

Salient Features  Constitution of the tribunal  -The Tribunal shall have the same powers as are vested in a civil court,  Power to make schemes for implementing decisions of tribunal, Dissolution of Tribunal and power to make rules. Adjudication of water disputes, Maintenance of data bank and information,  Bar of jurisdiction of Supreme Court and other Courts

COMPETITIVE FEDERALISM

Recent studies show signs of successful competitive federalism in Indian economy especially in terms of ease of doing business. States are trying to attract investments by facilitating reforms.

While states began to receive a higher share of 42 percent of central taxes, the Centre diluted the benefits that accompanied the SCS status and even slashed the outlay for Centrally Sponsored Schemes.

What is competitive federalism?

Competitive federalism is a concept where centre competes with states and vice-versa, and states compete with each other in their joint efforts to develop India.

The policy of one-size-fit-all is replaced with different policies of various states based on the own priorities with in the state.

Competitive federalism follows the concept bottom-up approach as it will bring the change from the states.

The meaning of competitive federalism as espoused by the Liberty Foundation in the US would entail a system that allows States to compete with each other over a broad range of issues to provide citizens with the best value goods and services at the lowest cost.

INTER-STATE COUNCIL MEETING

Recently, the eleventh meeting of the Inter-State Council (ISC) was held after a gap of 10 years.

Article 263 provides the establishment of an Inter-State Council to effect coordination between the states and between Centre and states.  It is not a permanent constitutional body. It can be established ‘at any time’ if it appears to the President that the public interests would be served by the establishment of such a Council. First time it was set up on the recommendation of the Sarkaria Commission and established the ISC by a presidential ordinance on May 28, 1990.  The ISC is proposed to meet thrice a year, but in 26 years, it has met only 11 times.

Composition

Prime Minister acts as the chairman of the council.

Members:

Union Ministers of Cabinet rank in the Union Council of Ministers nominated by the Prime Minister.

Chief Ministers of all states and Chief Ministers of Union Territories having a Legislative Assembly and Administrators of UTs not having a Legislative Assembly.

NITI AAYOG

NITI Ayog, The National Institution for Transforming India, was formed via a resolution of the Union Cabinet on January 1, 2015.

One of the key mandates of NITI Aayog is to foster co-operative federalism through structured support initiatives. The key functions which refer to ‘Cooperative Federalism’ are:

  • To evolve a shared vision of national development priorities, sectors and strategies with the active involvement of States in the light of national objectives
  • To foster cooperative federalism through structured support initiatives and mechanisms with the States on a continuous basis, recognising that strong States make a strong nation.

SOME INITIATIVES THAT HAVE BEEN TAKEN

  • Constitution of three sub-groups of Chief Ministers to advise the central government on Rationalization of Centrally Sponsored Schemes, Skill Development and Swachh Bharat Abhiyaan.
  • Reform in social sector through Indices Measuring States’ Performance in Health, Education and Water Management: NITI has come out with indices to measure incremental annual outcomes in critical social sectors like health, education and water with a view to nudge the states into competing with each other for better outcomes, while at the same time sharing best practices & innovations to help each other – an example of competitive and cooperative federalism.
  • Facilitating the resolution of issues involving states and central ministries by bringing the two sides together on a single platform.

COOPERATIVE FEDERALISM

EK BHARAT SHRESHTA BHARAT INITIATIVE

Ek Bharat Shreshtha Bharat” was launched by Prime Minister recently.

  • It is an innovative measure that will lead to an enhanced understanding and bonding between the States through the knowledge of the culture, traditions and practices of different States & UTs, for strengthening the unity and integrity of India.
  • All States and UTs will be covered under the programme.
  • According to the scheme, two states will undertake a unique partnership for one year which would be marked by cultural and student exchanges. 6 MoUs between two States each were also signed on the occasion of launch, under this initiative

Objectives of Ek Bharat Shreshtha Bharat

  • To celebrate the Unity in Diversity of our Nation and to maintain and strengthen the fabric of traditionally existing emotional bonds between the people of our Country.
  • To promote the spirit of national integration through a deep and structured engagement between all Indian States and Union Territories through a year-long planned engagement between States.
  • To showcase the rich heritage and culture, customs and traditions of either State for enabling people to understand and appreciate the diversity of India, thus fostering a sense of common identity.
  • To establish long-term engagements and to create an environment which promotes learning between States by sharing best practices and experiences

Centre-State relations:

The Centre-state relations can be studied under three heads:

  • Legislative relations.
  • Administrative relations.
  • Financial relations.

Legislative relations:

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.

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

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:

  • 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.
  •  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.
  • 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.

Distribution of legislative subjects

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.

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.

Union list 100 items(Authority solely of center)

Subjects such as defence, banking, foreign affairs, currency, atomic energy, insurance, communication, inter-state trade and commerce, census, audit and so on.

Concurrent list 52 items (Authority of both center & state)

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

( 5 items transferred to concurrent list by 42 amendment; viz. Education, forests, Justice, Weight & measures and Protection of wildlife, animals & birds)

State List 61 Items

This has at present 61 subjects (originally 662 subjects) like public order, police, public health and sanitation, agriculture, prisons, local government, fisheries, markets, theaters, gambling and so on.

List predominance

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

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.

. Parliamentary Legislation in the State Field

Under certain conditions, constitution authorizes union government to extend its jurisdiction over matters included in state list viz.

When a proclamation of emergency is in force, parliament can legislate on matters included in all 3 lists

Article 356

On breakdown of constitutional machinery in state, parliament can take over legislative authority of the state

Article 249

Empowers Rajya Sabha to transfer any matter in state list to legislative jurisdiction of parliament by a resolution passed by 2/3rd of the majority

Article 252

If legislature of 2 or more states passes a resolution that a desirable law shall be passed by parliament on any matter enumerated in state list, then parliament can make laws regulating that matter. Any other state can also adopt such law by passing a resolution but these laws can be amended / repealed by parliament only

Article 253

Empowers parliament to make laws for whole or any part of Indian territory for implementing international agreements & conventions, even if the subjects covered by such treaties & agreements falls within state list

Residuary powers have been paced under legislative jurisdiction of the parliament

Central control over state legislation

The Constitution empowers the Centre to exercise control over the state’s legislative matters in the following ways:

  • 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.
  • 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).
  • 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

Sarkaria commission recommendations on legislative matters between Center and states:

While it made the general observation that the Constitution is basically sound and there is no need for drastic changes in the basic character of the Constitution, nevertheless it gave following recommendations:

(1) Ordinarily, the Union should occupy only that much field of a concurrent subject on which uniformity of Policy and Action is required in the larger interest of the Nation, leaving the rest of the details for State action, within the abroad frame-work of the Policy laid down in the Union Law.

(2) Whenever, the Union proposes to undertake Legislation on a subject belonging to the Concurrent List, the States’ views must be ascertained through inter-Governmental Councils.

(3) Parliamentary law passed under clauses (1) of Article 252, on request of two or more States should not be perpetual but should be for specific period not exceeding three years.

(4) On receipt of a resolution from a State recommending creation or abolition of a Legislative Council, the same will be presented before the Parliament within a reasonable time.

ADMINISTRATIVE RELATIONS

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.

 

 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

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 States

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.  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.

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

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.

(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.

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.

Financial relations

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 number12).
  • The state legislature has exclusive power to levy taxes on subjects enumerated in the State List (which are 20 in number13).
  • Both the Parliament and the state legislature can levy taxes on subjects enumerated in the Concurrent List (which are 3 in number14)

. • 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

Grants-in-Aid

Besides sharing of taxes between the Center and the States, the Constitution provides for Grants-in-aid to the States from the Central resources. There are two types of grants:

1.Statutory Grants: These grants are given by the Parliament out of the Consolidated Fund of India to such States which are in need of assistance. Different States may be granted different sums. Specific grants are also given to promote the welfare of scheduled tribes in a state or to raise the level of administration of the Scheduled areas therein (Art.275).

2.Discretionary Grants: Center provides certain grants to the states on the recommendations of the Planning Commission which are at the discretion of the Union Government. These are given to help the state financially to fulfill plan targets (Art.282).

Effects of Emergency on Center-State Financial Relations:-

  1. During National Emergency: The President by order can direct that all provisions regarding division of taxes between Union and States and grants-in-aids remain suspended. However, such suspension shall not go beyond the expiration of the financial year in which the Proclamation ceases to operate.
  2. During Financial Emergency: Union can give directions to the States:-

1.To observe such canons of financial propriety as specified in the direction.

2.To reduce the salaries and allowances of all people serving in connection with the affairs of the State, including High Courts judges.

3.To reserve for the consideration of the President all money and financial Bills, after they are passed by the Legislature of the State.

Borrowing by the Centre and the States

The Constitution makes the following provisions with regard to the borrowing powers of the Centre and the states:

  • The Central government can borrow either within India or outside upon the se-curity of the Consolidated Fund of India or can give guarantees, but both within the limits fixed by the Parliament. So far, no such law has been enacted by the Parliament.
  • Similarly, a state government can borrow within India (and not abroad) upon the security of the Consolidated Fund of the State or can give guarantees, but both within the limits fixed by the legislature of that state.
  • The Central government can make loans to any state or give guarantees in respect of loans raised by any state. Any sums required for the purpose of making such loans are to be charged on the Consolidated Fund of India.
  • A state cannot raise any loan without the consent of the Centre, if there is still out-standing any part of a loan made to the state by the Centre or in respect of which a guarantee has been given by the Centre.

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.

 

14th FINANCE COMMISSION

1)The 14th Finance Commission is of the view that tax devolution should be the primary route for transfer of resources to the States.

2)In understanding the States’ needs, it has ignored the Plan and non-Plan distinctions

3) According to the Commission, the increased devolution of the divisible pool of taxes is a “compositional shift in transfers’’ – from grants to tax devolution

4)In recommending an horizontal distribution, it has used broad parameters – population (1971), changes in population since then, income distance, forest cover and area, among others.

5)It has recommended distribution of grants to States for local bodies using 2011 population data with weight of 90 per cent and area with weight of 10 per cent

6)Grants to States are divided into two

One, grant to duly constituted gram panchayats

Two, grant to duly constituted municipal bodies

7). it has divided grants into two parts

A basic grant, and a performance one for gram panchayats and municipal bodies

8)The ration of basic to performance grant is 90:10 for panchayats; and 80:20 for municipalities

9)The total grant recommended is Rs. 2,87,436 crore for a five-year period. Out of which, the grant to panchayats is Rs.2,00,292 crore. And, the reminder goes to municipalities

10)The Commission has significantly departed from previous commission vis-à-vis recommendation of the principles governing grants-in-aid to the States by the Centre

It has chosen to take the entire revenue expenditure for this purpose. Hence, it has decided to take into account a state’s entire revenue expenditure needs without making a distinction between plan and non-plan expenditure

11)The Commission is of the view that sharing pattern in respect to various Centrally-sponsored schemes need to change. It wants the States to share a greater fiscal responsibility for the implementation of such schemes.

SARKARIA COMMISSION RECOMMENDATIONS ON CENTRE-STATE RELATIONS:

The Commission made 247 recommendations to improve Centre–state relations. The important recommendations are mentioned below:

  1. A permanent Inter-State Council called the Inter-Governmental Council should be set up under Article 263.
  2. Article 356 (President’s Rule) should be used very sparingly, in extreme cases as a last resort when all the available alternatives fail.
  3. The institution of All-India Services should be further strengthened and some more such services should be created.
  4. The residuary powers of taxation should continue to remain with the Parliament, while the other residuary powers should be placed in the Concurrent List.
  5. When the president withholds his assent to the state bills, the reasons should be communicated to the state government.
  6. The National Development Council (NDC) should be renamed and reconstituted as the National Economic and Development Council (NEDC).
  7. The zonal councils should be constituted afresh and reactivated to promote the spirit of federalism.
  8. The Centre should have powers to deploy its armed forces, even without the consent of states. However, it is desirable that the states should be consulted.
  9. The Centre should consult the states before making a law on a subject of the Concurrent List.
  10. The procedure of consulting the chief minister in the appointment of the state governor should be prescribed in the Constitution itself.
  11. The net proceeds of the corporation tax may be made permissibly shareable with the states.
  12. The governor cannot dismiss the council of ministers so long as it commands a majority in the assembly.
  13. The governor’s term of five years in a state should not be disturbed except for some extremely compelling reasons.
  14. No commission of enquiry should be set up against a state minister unless a demand is made by the Parliament.
  15. The surcharge on income tax should not be levied by the Centre except for a specific purpose and for a strictly limited period.
  16. The present division of functions between the Finance Commission and the Planning Commission is reasonable and should continue.
  17. Steps should be taken to uniformly implement the three language formula in its true spirit.
  18. No autonomy for radio and television but decentralisation in their operations.
  19. No change in the role of Rajya Sabha and Centre’s power to reorganise the states.
  20. The commissioner for linguistic minorities should be activated.

PUNCHHI COMMISSION RECOMMENDATIONS:

The Punchhi Commission recommended that Articles 355 and 356 of the Indian Constitution should be amended. These articles describe the emergency provisions. The Punchhi Commission recommended that the emergency provisions should be used very scarcely only in cases of extreme emergencies. Moreover, these provisions should be applied for period of not more than three months.

  • The Punchhi Commission recommended that a superseding body should be constituted which shall look into the matters related to internal security. The name of the council was proposed to be National Integration Council. This council shall meet on an annual basis. In the affected states, the council shall constitute and send a five member delegation to the affected areas within two days.
  • The commission recommended that whenever the centre introduces a bill on a subject that is mentioned in the concurrent list, the states should be consulted.
  • In case the president uses his pocket veto on a state bill, he must give the reason for the same to the state within six months.

On the office of Governor

  1. While selecting Governors, the Central Government should adopt the following strict guidelines as recommended in the Sarkaria Commission report and follow its mandate in letter and spirit :

(i) He should be eminent in some walk of life

(ii) He should be a person from outside the state

(iii) He should be a detached figure and not too intimately connected with the local politics of the states

(iv) He should be a person who has not taken too great a part in politics generally and particularly in the recent past

  1. Governors should be given a fixed tenure of five years and their removal should not be at the sweet will of the Government at the Centre.
  2. The procedure laid down for impeachment of President, mutatis mutandis can be made applicable for impeachment of Governors as well.
  3. Article 163 does not give the Governor a general discretionary power to act against or without the advice of his Council of Ministers. In fact, the area for the exercise of discretion is limited and even in this limited area, his choice of action should not be arbitrary or fanciful. It must be a choice dictated by reason, activated by good faith and tempered by caution.
  4. In respect of bills passed by the Legislative Assembly of a state, the Governor should take the decision within six months whether to grant assent or to reserve it for consideration of the President.
  5. On the question of Governor’s role in appointment of Chief Minister in the case of an hung assembly, it is necessary to lay down certain clear guidelines to be followed as Constitutional conventions. These guidelines may be as follows:

(i) The party or combination of parties which commands the widest support in the Legislative Assembly should be called upon to form the Government.

(ii) If there is a pre-poll alliance or coalition, it should be treated as one political party and if such coalition obtains a majority, the leader of such coalition shall be called by the Governor to form the Government.

  1. The Governor should have the right to sanction for prosecution of a state minister against the advice of the Council of Ministers, if the Cabinet decision appears to the Governor to be motivated by bias in the face of overwhelming material.
  2. The convention of Governors acting as Chancellors of Universities and holding other statutory positions should be done away with. His role should be confined to the Constitutional provisions only.

On cooperation:

1.Suitable amendments to Article 263 are required to make the Inter-State Council a credible, powerful and fair mechanism for management of inter-state and Centre-state differences.

  1. The Zonal Councils should meet at least twice a year with an agenda proposed by states concerned to maximise co-ordination and promote harmonisation of policies and action having inter-state ramification. The Secretariat of a strengthened Inter-State Council can function as the Secretariat of the Zonal Councils as well.
  2. The Empowered Committee of Finance Ministers of States proved to be a successful experiment in inter-state co-ordination on fiscal matters. There is need to institutionalise similar models in other sectors as well. A forum of Chief Ministers, Chaired by one of the Chief Minister by rotation can be similarly thought about particularly to co-ordinate policies of sectors like energy, food, education, environment and health.
  3. New all-India services in sectors like health, education, engineering and judiciary should be created.
  4. A balance of power between states inter se is desirable and this is possible by equality of representation in the Rajya Sabha. This requires amendment of the relevant provisions to give equality of seats to states in the Rajya Sabha, irrespective of their population size.
  5. The scope of devolution of powers to local bodies to act as institutions of self-government should be constitutionally defined through appropriate amendments

On Emergency Provisions:

1.When an external aggression or internal disturbance paralyses the state administration creating a situation of a potential break down of the Constitutional machinery of the state, all alternative courses available to the Union for discharging its paramount responsibility under Article 355 should be exhausted to contain the situation and the exercise of the power under Article 356 should be limited strictly to rectifying a “failure of the Constitutional machinery in the state”.

  1. On the question of invoking Article 356 in case of failure of Constitutional machinery in states, suitable amendments are required to incorporate the guidelines set forth in the landmark judgement of the Supreme Court in S.R. Bommai V . Union of India (1994). This would remove possible misgivings in this regard on the part of states and help in smoothening Centre-state relations.
  2. Given the strict parameters now set for invoking the emergency provisions under Articles 352 and 356 to be used only as a measure of “last resort”, and the duty of the Union to protect states under Article 355, it is necessary to provide a Constitutional or legal framework to deal with situations which require Central intervention but do not warrant invoking the extreme steps under Articles 352 and 356.

Providing the framework for “localised emergency” would ensure that the state government can continue to function and the Assembly would not have to be dissolved while providing a mechanism to let the Central Government respond to the issue specifically and locally. The imposition of local emergency is fully justified under the mandate of Article 355 read with Entry 2A of List I and Entry 1 of List II of the Seventh Schedule.

SUPREME COURT DOCTRINES IN CONTEXT OF LEGISLATIVE RELATIONS B/W CENTRE & STATES

Doctrine of Pith & Substance

  • Within their respected areas of authority, Union & state legislatures are supreme & are not supposed to encroach upon others sphere
  • if a new law passed by one encroaches upon the subject, held & assigned by the other, court will apply Doctrine of Pith & Substance
  • If it is found that law in substance is within the subjects assigned to that legislature & intention of law is genuine, the law shall be valid, even though there is some overlapping.
  • Hence, there can not be watertight division of powers b/w centre & the state, because if it is, it would made several laws invalid on simple grounds of overlapping

Doctrine of Colorable legislation

  • In federal government, transgression of its limit of powers by a legislature may be overt or covert. When the legislation is indirect & covert, it is known as colorable legislation
  • In this, although the subject on which legislature make laws falls within its legislative competence in exterior appearance but its real motive is to transgress the powers of other legislature covertly
  • In this, case applying the Doctrine of colorable legislation, court can invalidate the entire law which means, what legislature can not do directly, it can not do the same indirectly.

RECENT TRENDS:

INTER-STATE TRIBUNALS

The Central Government has decided to amend Inter-State Water Disputes Act, 1956 (ISWDA) to constitute a permanent tribunal to decide on all inter-state water disputes that arise.

An agency, to collect and maintain all relevant water data, like rainfall, water flow and irrigation area, in each of the river basins of the country, is also proposed to be created.

Centre currently sets up ad hoc tribunals under ISWDA to adjudicate disputes as they arise. Eight tribunals have been constituted so far.  With water becoming scarce resource, inter-state water disputes are increasing.

Constitutional Provisions

Article 262(1) of the Constitution lays down that “Parliament may by law provide for the adjudication of any dispute or complaint with respect to the use, distribution or control of the waters of, or in, any inter-State river, or river valley”. Parliament has enacted the InterState River Water Disputes Act, 1956.

Interstate water dispute Act, 1956:

Salient Features  Constitution of the tribunal  -The Tribunal shall have the same powers as are vested in a civil court,  Power to make schemes for implementing decisions of tribunal, Dissolution of Tribunal and power to make rules. Adjudication of water disputes, Maintenance of data bank and information,  Bar of jurisdiction of Supreme Court and other Courts

COMPETITIVE FEDERALISM

Recent studies show signs of successful competitive federalism in Indian economy especially in terms of ease of doing business. States are trying to attract investments by facilitating reforms.

While states began to receive a higher share of 42 percent of central taxes, the Centre diluted the benefits that accompanied the SCS status and even slashed the outlay for Centrally Sponsored Schemes.

What is competitive federalism?

Competitive federalism is a concept where centre competes with states and vice-versa, and states compete with each other in their joint efforts to develop India.

The policy of one-size-fit-all is replaced with different policies of various states based on the own priorities with in the state.

Competitive federalism follows the concept bottom-up approach as it will bring the change from the states.

The meaning of competitive federalism as espoused by the Liberty Foundation in the US would entail a system that allows States to compete with each other over a broad range of issues to provide citizens with the best value goods and services at the lowest cost.

INTER-STATE COUNCIL MEETING

Recently, the eleventh meeting of the Inter-State Council (ISC) was held after a gap of 10 years.

Article 263 provides the establishment of an Inter-State Council to effect coordination between the states and between Centre and states.  It is not a permanent constitutional body. It can be established ‘at any time’ if it appears to the President that the public interests would be served by the establishment of such a Council. First time it was set up on the recommendation of the Sarkaria Commission and established the ISC by a presidential ordinance on May 28, 1990.  The ISC is proposed to meet thrice a year, but in 26 years, it has met only 11 times.

Composition

Prime Minister acts as the chairman of the council.

Members:

Union Ministers of Cabinet rank in the Union Council of Ministers nominated by the Prime Minister.

Chief Ministers of all states and Chief Ministers of Union Territories having a Legislative Assembly and Administrators of UTs not having a Legislative Assembly.

NITI AAYOG

NITI Ayog, The National Institution for Transforming India, was formed via a resolution of the Union Cabinet on January 1, 2015.

One of the key mandates of NITI Aayog is to foster co-operative federalism through structured support initiatives. The key functions which refer to ‘Cooperative Federalism’ are:

  • To evolve a shared vision of national development priorities, sectors and strategies with the active involvement of States in the light of national objectives
  • To foster cooperative federalism through structured support initiatives and mechanisms with the States on a continuous basis, recognising that strong States make a strong nation.

SOME INITIATIVES THAT HAVE BEEN TAKEN

  • Constitution of three sub-groups of Chief Ministers to advise the central government on Rationalization of Centrally Sponsored Schemes, Skill Development and Swachh Bharat Abhiyaan.
  • Reform in social sector through Indices Measuring States’ Performance in Health, Education and Water Management: NITI has come out with indices to measure incremental annual outcomes in critical social sectors like health, education and water with a view to nudge the states into competing with each other for better outcomes, while at the same time sharing best practices & innovations to help each other – an example of competitive and cooperative federalism.
  • Facilitating the resolution of issues involving states and central ministries by bringing the two sides together on a single platform.

COOPERATIVE FEDERALISM

EK BHARAT SHRESHTA BHARAT INITIATIVE

Ek Bharat Shreshtha Bharat” was launched by Prime Minister recently.

  • It is an innovative measure that will lead to an enhanced understanding and bonding between the States through the knowledge of the culture, traditions and practices of different States & UTs, for strengthening the unity and integrity of India.
  • All States and UTs will be covered under the programme.
  • According to the scheme, two states will undertake a unique partnership for one year which would be marked by cultural and student exchanges. 6 MoUs between two States each were also signed on the occasion of launch, under this initiative

Objectives of Ek Bharat Shreshtha Bharat

  • To celebrate the Unity in Diversity of our Nation and to maintain and strengthen the fabric of traditionally existing emotional bonds between the people of our Country.
  • To promote the spirit of national integration through a deep and structured engagement between all Indian States and Union Territories through a year-long planned engagement between States.
  • To showcase the rich heritage and culture, customs and traditions of either State for enabling people to understand and appreciate the diversity of India, thus fostering a sense of common identity.
  • To establish long-term engagements and to create an environment which promotes learning between States by sharing best practices and experiences

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