Centre-state relations

Lesson From The Law

Part XI of the Indian Constitution specifically deals with centre-state relations. It has been bifurcated into legislative and administrative relations. Further, in Part XII, provisions related to financial relations are laid down. All three categories have been discussed in detail hereafter.

Legislative relations

Articles 245 to 255 deal with legislative relations between the Union and the states i.e. the Parliament and state legislatures. It discusses the extent of law-making powers given to the Union and states. On analysing the provisions, it is evident that the Parliament clearly has superseding powers as compared to state legislatures. The different provisions lay down the subject matters on which they can legislate, the effect of inconsistency between state and national law, residuary powers of the Parliament and many other provisions. It is this chapter that provides for Schedule VII which deals with the Union List, State List and Concurrent List.

Administrative relations

Articles 256 to 263 deal with administrative relations i.e. Central Government and various state governments. Though India is federal yet it has unitary features and thus in Article 256 itself, it is stated that the state governments should ensure that they abide by the laws made by Parliament and do not perform any executive or administrative function in contravention of the same. The Sarkaria Commission urged for cooperative federalism in case of administrative relations between the Centre and states to ensure better relations between the two. The same was important since there often arises the situation of different parties working at the Central and state levels which creates chaos and distrust thereby leading to inefficient administration.

Financial relations

Articles 264 to 293 of Part XII of the Constitution deal with financial relations between the Centre and state. Since India is a federal country, it follows the separation of powers relating to taxes and it is the duty of the Centre to allocate funds to the states. All such related provisions have been covered herein. The power of the Centre and states to levy taxes has been mentioned in Schedule VII. Further, it has many other provisions relating to levy and allocation of taxes by centre and states, grants to states, surcharges etc. A very recent example of financial centre-state relation is the Goods and Services Tax which is a dual structure tax. The tax is imposed and collected by both the Centre and state and then is distributed between the Centre and states. To simplify, CGST and SGST are received by Centre and state respectively and IGST is received by the Centre and redistributed between states. This is a precise example of cooperative federalism in the financial sphere.

Constitutional provisions relating to centre-state relations

Article 246

The provision deals with the subject matters on which the Centre and states can make laws. List-I deals with subjects on which the Centre can make laws. List-II deals with subjects on which states can make laws. List-III deals with laws on which both can make laws. This promotes legislative relations between the Centre and states.

Article 246A

The provision relates to GST. No authority had the power to levy GST since the same was not mentioned in the Seventh Schedule. Therefore, by the 101st Constitution Amendment Act, 2016, GST was made valid. It is important since India follows a dual GST structure in which both the Centre as well as the states have an important role to play.

Article 256

This provision makes it an obligation on part of the state governments to ensure compliance with laws made by the Parliament and also gives power to the Central Government to give directions to states as it may deem necessary. This makes administration easier since in the absence of such a provision, there would be conflicts relating to the validity of laws.

Article 258

The provision empowers the Centre to confer and entrust powers to a state even in matters where the Union has executive powers. It is believed that this provision is a tool for encouraging cooperative federalism since it would lead to more decentralised powers leading to a more federalist nation.

Article 269A

This provision relates to GST. It states that in case of inter-state supply, taxes i.e. IGST shall be levied and collected by the Central Government and will be distributed by the Centre to the states. As stated earlier, this is a reformative step as India is one of the very few countries which follow dual structure GST wherein both the Centre and states are involved.

Article 270

This provision deals with levying and distribution of taxes between the Centre and the states. These include those taxes which are collected by the Central Government in accordance with List-I. It prescribes for the formation of a Finance Commission and distribution of such percentage to every state as may be discussed by the commission.

Schedule VII

Article 246 has already been discussed and it is clear that three lists exist. These three lists are provided in Schedule VII of the Constitution. The Union list has 100 items, the state list has 61 items and the concurrent list has 52 items. Schedule VII also encourages cooperative federalism since it clearly distinguishes the legislative powers of the Centre and states but also provides certain subjects on which the opinion of both Centre and state should be taken into consideration.

Impact on good governance

A step towards cooperative federalism

This relationship of trust and faith between the Centre and states would lead India towards becoming a cooperative federal nation. The separation of powers on different matters would yield better results since it would not lead to the overlapping of activities and thus, a proper mechanism would be in place.

Harmony between Centre and states

The powers of the Centre and states have already been distinguished by the Indian Constitution. The provision for different lists ensures less confusion and conflicts between the Centre and states. Similarly, making laws of Parliament superior to that of state legislature ensures what prevails in case of inconsistency between the two. This would result in a streamlined mechanism where the states would not try to exceed their jurisdiction since the same has already been provided in the Constitution. This would result in lesser chaos and more harmonious relations between the Centre and states.

Better role of states

Certain provisions empower the states to take active participation in administrative, legislative and financial matters. For example, states are empowered to make their own laws in accordance with the State List. Similarly, they perform their administrative or executive functions without much interference from states. Also, they perform certain financial functions such as levying and collecting taxes. All these functions make the state autonomous and make India a better federal state.

Lesser burden on the Centre

Undoubtedly, better centre-state relations would lessen the burden of the Centre. A federal country divides the power between the Centre and states, which makes administration easy and more effective. Moreover, the states would be able to handle the situation better, however, the Centre might not be ready to accept so many regional disparities.

Inclusion of different sections of society

Division of powers between Centre and state in a country like India is very useful for the reason that there are regional disparities. Thus, it will not be possible for the Centre to handle the situation differently in every state according to the needs of the state. In this context, the role of the states becomes important since they would be able to handle the situation and govern the area according to the needs of the people which would ultimately lead to the inclusion of more sections of people in the mainstream society.