Centre-State Relations

How has authority in India been divided between the Center and the States? How Center controls the Power of States? How is harmony between the Centre and State ensured? Read further to know more about Centre-State Relations in India.

The Indian Constitution’s federal system divides all legislative, executive, and financial powers between the Center and the States.

However, because the Constitution established a unified judicial system to uphold both federal and state laws, there is no division of powers in the judiciary.

Even though the federal government and the states are leaders in their own fields, for the federal system to work effectively, there must be the greatest possible concord and cooperation between them.

Centre state relations

All legislative, executive and financial powers are divided between the centre and the states according to the Indian constitution in the context of Centre-State Relations.

There are three types of relationships involved in the centre -states relations:

• Legislative Relations
• Administrative Relations
• Financial Relations

Also read: Indian Federalism – 15 Issues that Challenge the Federal Structure of India; Functions and responsibilities of the Union and the States

Legislative Relations

Article 245 to 255 of the constitution deals with the legislative relation between the centre and states. Indian constitution also divides the legislative power between the centre and states with respect to both territories and the subjects of legislation.

There are four aspects of the legislative relationships between the union and the states:

• Territorial extent of central and state legislation
• Distribution of legislative subjects
• Parliamentary legislation in the state field
• Centre’s control over state legislation

Territorial Extent of Central and State Legislation

The ability to pass legislation that covers all or a portion of India’s territory belongs to Parliament (territory includes union, state, UT)

Laws can be passed by the state legislature that is applicable to the entire state or only a portion of it. Unless there is a sufficient connection

between the state and the object, state laws are not applicable outside of the state.

The only body with the power to pass “extraterritorial” legislation is Parliament.

Situations where parliamentary laws aren’t applicable in the following areas:

• The President has the authority to enact rules that have the same force and effect as laws passed by parliament for the Andaman and Nicobar Islands, Daman and Diu, Dadra and Nagar Haveli, Ladakh and Lakshadweep.
• Governor is empowered to direct that an act of Parliament does not apply to scheduled areas in the state or apply with specified modifications and exceptions.

Distribution of Legislative Subjects

The Union List, State List, and Concurrent List are the three divisions established by the constitution.

Parliament is the exclusive authority when it comes to the Union list.

In most cases, the state legislature alone has the power to pass legislation pertaining to the things on the state list.

The state and federal governments can both pass laws on the subjects mentioned in the concurrent list.

The ability to pass laws with a recurring theme rest with Parliament.

The concurrent list is given precedence over the state list, and the union list is given precedence over the state list.

The power to make laws with respect to residuary subjects is vested in the Parliament.

Parliamentary Legislation in the State Field

• The Constitution permits Parliament to enact laws on any topic included in the state list under the following five exceptional circumstances:
• When Rajya Sabha approves a resolution with the support of two-thirds of the members present and voting, it will provide parliament with the authority to enact legislation on a state list issue that is best for the nation. Such a resolution lasts for a full year. A resolution like this can be renewed a number of times, but not for more than a year at a time. The laws passed in accordance with the resolution cease to be in force six months after it was adopted. In the event of a disagreement between state and union legislation, the latter prevails. A state may, however, pass legislation on the same issue.
• When a declaration of a National emergency is in force the Parliament may pass laws on any matter covered by the state list. The legislation passed under this are only valid for six months before they expire. State law may also enact legislation on the matter, but in the event of a conflict, union law will take precedence.
• When a state makes a request to Parliament to act on a list of issues by passing a resolution to that effect, Parliament is given the power to do so. The state forfeits all rights there once this resolution is approved. To implement International Agreements, the parliament can make laws on any matter in the state list for implementing International Treaties, agreements and conventions.
• When President’s Rule is imposed in a state, the parliament becomes empowered to make laws with respect to any matter in the State List.

Centre’s Control Over State Legislation

According to the Constitution, the federal government is authorised to exercise the following influence over state legislative affairs:

• Specific laws established by the state legislature may be set aside by the governor for presidential consideration. They are entirely under the president’s power.
• Bills on specified subjects listed in the state list can only be filed in the state legislature with the President’s prior consent. For instance, interstate trade and commerce.
• The President may ask a state to lay aside money bills and other financial bills for his consideration in the case of a financial emergency.

Administrative Relations

The distribution of legislative authority has resulted in a shared executive branch between the federal government and the states.

Article 256 to 263 of the constitution deals with the administrative relation between the Centre and States.

Distribution of Executive Powers

The centre’s power encompasses the entire nation when it comes to matters over which it has exclusive jurisdiction (union list), as well as when it exercises any rights, jurisdiction, or authority granted to it by a treaty or agreement.

The subjects listed in the state list fall under the state’s purview.

The states have the executive authority in matters involving the concurrent list.

The state’s executive branch must act in a way that ensures the laws established by Parliament are upheld.

A state’s executive power may not be interfered with or affected in any way.

The 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.

• The state’s executive branch must act in a way that ensures the laws established by Parliament are upheld.
• As not to prejudice the executive power of the centre in the state.

In both cases, the executive power of the Centre extends to giving such directions to the state as are necessary for the purpose.

The sanction behind these directions of the Centre is coercive in nature.

Thus, Article 365 says that where any state has failed to comply with 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 Direction to the States

In Centre-State Relations, the following circumstances are where the Centre may provide advice to states:

Construction and maintenance of communication systems deemed to be of national or military importance by the government.

Actions to be taken to guarantee the state’s railways are safe.

Provision of enough resources for students from linguistic minority groups to receive elementary school instruction in their home tongue.

The creation and execution of specific initiatives for the ST’s welfare in the various states.

Mutual Delegation of Functions

To decrease rigidity and prevent a deadlock, the constitution permits intergovernmental delegation of executive authorities.

With the state government’s approval, the president may delegate the union’s executive functions to it.

The governor may delegate the executive responsibilities of the state to the union with the approval of the federal government.

This agreement to share authority may be either conditional or unconditional.

The constitution also permits the state to provide the union executive authority without the state’s consent.

But such delegations are made by Parliament, not by the President. The executive authority of a state, however, cannot be transferred in the same manner.

Cooperation Between Centre and States

The following provisions have been included to ensure cooperation and coordination between the centre and the states.

Parliament has the authority to rule on any dispute or grievance involving the use, distribution, and management of any interstate river’s and river valleys’ water resources.

The President has the power to convene an inter-state council to examine and deliberate on subjects of common interest between the centre and the states.

All of India is required to provide full faith and credit to the public actions, records, and judicial proceedings of the federal government and each state.

In order to carry out the constitutional requirements relating to interstate trade, commerce, and intercourse, Parliament has the authority to designate the proper authorities.

All India Services

In 1947, the colonial Indian Civil Service (ICS) and Indian Police (IP) were replaced by the Indian Administrative Service (IAS) and Indian Police Service (IPS).

As the third all-India service in the nation, the Indian Forest Service (IFS) was founded in 1966.

The members of All India Services occupy the top positions under both the Centre and States. But they are recruited and trained by the centre.

The ultimate control lies with the central government while immediate control vests with the state governments.

Article 312 of the Indian constitution gives Parliament the authority to create an all-India service provided the Rajya Sabha passes a resolution to that effect.

With the combination of these three services, a single service is created with uniform pay schedules, rights, and status.

All India Services is required for:

• Assist in maintaining the federal government and the states’ administrative standards high.
• Aid in ensuring that the administrative framework is consistent throughout the nation.
• They enhance communication, collaboration, coordination, and cooperative action between the federal government and the states on issues of shared concern.

Public Service Commission

The centre-state relationships in this area are as follows:

• The state public service commission’s chairman and members are chosen by the governor, but only the president has the authority to remove them.
• The President appoints the chairman and members of the state public service commission in cases when two or more states request that Parliament establish a combined public service commission.
• The President’s approval is required for UPSC to help the state public service commission at the governor’s request.
• In order to create and implement joint recruiting plans for any services that require candidates with certain qualifications, the UPSC works with the states.

Integrated Judicial System

Despite its dual polity, India has built an integrated judicial system.

This unified judicial system is in charge of enforcing both federal and state laws.

The judges of a high court are appointed by the President of India, in consultation with the Chief Justice of India and the governor of the state.

The President has the power to transfer or remove them.

Parliament has approved the creation of joint high courts for two or more states.

Relation During Emergency

During a national emergency, The centre has the authority to provide directives to the state on any matter.

The State governments are brought under the complete control of the centre, though, they are not suspended.

When President Rule is imposed in a state, the president may exercise the duties and authority vested in him and powers vested in the governor or any other administrative authority in the state.

During a Financial Emergency, The President may also give other crucial orders, such as lowering the salaries of high court judges and state personnel. The centre may require states to abide by financial propriety canons.

Financial Relations

Article 268 to 293 of the constitution deals with Centre-State Financial Relations.

Allocation of Taxing Power

• Taxation of the subjects on the Union list is the sole responsibility of Parliament.
• Taxation on the things included in the state list may only be done by the state legislature.
• The items on the concurrent list are subject to taxation by both the state and the union.
• The residuary power to tax belongs to the Parliament.

The Constitutional Restriction on The State’s Taxation Power

The power to tax occupations, trades, callings, and professions belongs to the state legislature. However, no one should receive more than Rs 2500 in total compensation each year.

Taxes on the sale or purchase of products can be imposed by a state (other than a newspaper). However, The following factors restrict the state’s capacity to impose a sales tax:

• Sales and purchases made outside of the states are exempt from taxation
• Sales or purchases done during the import or export process are exempt from taxation.
• No tax may be levied on a transaction or purchase made during interstate trade or commerce.
• A tax imposed on goods sold or bought that the Parliament has determined are of particular importance to interstate trade and commerce is subject to the limitations and specifications set forth by the Parliament.

Electricity used by or sold to the centre, as well as electricity used in the building, upkeep, or operation of any railway by or sold to the railway company for the same purpose, are exempt from state taxes.

A state may charge a price for the water or electricity it sells to an interstate river authority that Parliament established to manage and develop the river. On the other hand, a law that receives the approval of the President may enact such an imposition.

Distribution of Tax Revenues

Taxes are levied by the centre, but they are collected and used by the state (Article 268). The state’s consolidated fund receives the proceeds from this and holds them there. For instance, excise tax and stamp duty.

Article 269). One illustration would be taxes imposed on goods purchased or sold in interstate commerce.

The state’s consolidated fund receives the proceeds from this and holds them there.

Although the federal government imposes and collects taxes, they are divided between the federal government and the states (Article 270). This category includes all taxes, with the exception of the ones mentioned above, surcharges, and cess. Based on the Finance Commission’s recommendations, the President determines how these taxes are divided.

The tax and levies surcharges mentioned in Articles 269 and 270 may be enacted at any time by Parliament. Proceeds from the surcharge are only used for the centre.

State-imposed gathered, and held-back taxes consist of:

• These are the taxes that fall under the purview of the states only.
• They are listed on the state list.
• Agriculture income taxes, Alcohol excise taxes, Profession-specific taxes, Ceilings, etc.

Distribution of Non-Tax Revenues

The centre’s primary non-tax revenue sources are as follows:

• Postal and telegraph services
• Railroads
• Banking
• Broadcasting
• Coinage and currency
• Central public sector enterprise
• Escheat and lapse.

The main sources of non-tax revenue for states are as follows:

• Irrigation
• Forests
• Fisheries
• State public sector enterprise
• Escheat and lapse.

Grants-in-Aid to the states

State grants-in-aid are permitted by the Constitution to come from the federal government. The two types of grants-in-aid are statutory grants and discretionary grants.

Statutory grants:

The parliament is empowered by Article 275 of the Constitution to provide grants to states that specifically require them rather than to all states.

These amounts may vary for various states. These funds are levied annually to the Consolidated Fund of India.

Depending on the Finance Commission’s recommendations, these are given to the states.

Discretionary grants:

Article 282 gives both the federal government and the states the authority to provide grants for any public purpose, even if it is not within their purview.

The choice is entirely up to the centre, which is under no obligation to offer these subsidies.

Other grants:

A one-time donation for a particular cause was permitted by the Constitution. For the states of Assam, Bihar, Odisha, and West Bengal, grants on jute and jute products could be used in place of export taxes.

These funds were to be given out for ten years starting at the time the constitution was adopted, per the recommendation of the Finance Commission.

Goods and Services Tax Council

The smooth and efficient administration of the goods and services tax ( GST ) requires cooperation and coordination between the Centre and the States.

In order to facilitate this consultation process, the 101st Amendment Act of 2016 provided for the establishment of a Goods and Services Tax Council or the GST Council.

Article 279 – A empowered the President to constitute a GST Council.

The Council is a joint forum of the Centre and the States. It is required to make recommendations to the Centre and the States on the following matters :

• The taxes, cesses and surcharges levied by the Centre, the States and the local bodies would get merged into GST.
• The goods and services that may be subjected to GST or exempted from GST.
• Model GST Laws, principles of levy, apportionment of GST levied on supplies in the course of inter-state trade or commerce and the principles that govern the place of supply.
• The threshold limit of turnover below which goods and services may be exempted from GST.
• The rates include floor rates with bands of GST.
• Any special rate or rates for a specified period to raise additional resources during any natural calamity or disaster.

Read: Fiscal federalism in India

Important Recommendations on Centre-State Relations

Administrative Reforms Commission

•  The creation of an interstate council under Article 263 of the constitution
• Appointment of governors with substantial expertise in public service and impartial viewpoints
• The most power has been granted to states.
• In order to reduce the state’s reliance on the federal government, more financial resources ought to be distributed to them.
• Federal armed troops are stationed in states at their request or on their own initiative.

Sarkaria Commission Recommendations

• Setting up a permanent inter-State Council under Article 263
• Article 356 should only be utilized when necessary.
• The all-India service institution needs to be strengthened.
• The residuary power of taxation should belong to the parliament.
• >The states should be informed of the President’s grounds for his or her vetoes of state legislation.
• Without the consent of the states, the Center ought to be able to use its military forces. However, it would be ideal if the states were consulted.
• The centre should consult the states before making law on the subject of concurrent list.
• Governors should be allowed to complete their five-year terms.
• The position of Linguistic Minority Commissioner should be filled.

Punchhi Commission Recommendations

• The impeachment process is used to remove governors after a five-year tenure.
• The Union should exercise extreme prudence when asserting Parliamentary precedence in matters given to the states.
• It specified the number of criteria to be taken into account when choosing governors:

               He ought to be well-known in some industries.

              He should not be a state resident.

              He ought to be a neutral figure who stays out of regional politics.

              He shouldn’t have recently become involved in politics.

• The term limit for the government should be set at five years.
• Governors could be subject to the same impeachment process as the president.

Conclusion

The interactions between the Center and the States are the primary characteristics of Indian federalism. To safeguard Indian residents’ safety and well-being, the Central Government and State Governments must collaborate with each other. They work together to prevent terrorism, manage families, protect the environment, and prepare for the socioeconomic future. The evolution of the nation has been greatly influenced by these exchanges between the centre and the states. The better Centre-State relations contributed to the improved national government, an improved administrative system, and the integration of disparate communities into society at large.

Article written by: Aryadevi E S