Centre State Relations, Legislative, Administrative and Financial Relations

Introcduction to Centre State Relations

If you’re getting ready for competitive exams, it’s important to know about how the central government and state governments work together in India. This topic is called Centre-State Relations. It’s a key part of the IAS Exam and the polity syllabus (GS-II). If you’re aiming to become an IAS officer, it’s crucial to understand this topic really well. This article will help you understand all about Centre-State Relations, which is important for both the polity and governance parts of the UPSC syllabus.

What is Centre State Relations?

Centre-state relations refer to the relationship between the central government of India and the state governments. The Indian Constitution divides power between the centre and the states in a federal system. The centre has control over certain subjects, such as defense, foreign affairs, and currency, while the states have control over other subjects, such as education, agriculture, and health. The centre and the states are supposed to cooperate with each other on matters of common interest. However, there have been tensions between the centre and the states in the past, particularly when the same party does not control the centre and the states.

Types of Centre State Relations

The Indian Constitution divides the power between the centre and the states in a federal system. There are three types of centre-state relations in India:

1. Legislative relations: The Constitution divides legislative powers between the centre and the states. The centre has exclusive power to legislate on certain subjects, while the states have exclusive power to legislate on other subjects. There are also some subjects on which both the centre and the states can legislate.
2. Administrative relations: The centre has the power to appoint governors to the states. The governors are the representatives of the President of India in the states. The centre also has the power to take over the administration of a state if it is unable to function properly.
3. Financial relations: The centre collects most of the taxes in India. It then distributes a portion of these taxes to the states. The centre also gives grants-in-aid to the states to help them meet their financial needs.

Discuss the centre State Relations in indian Federalism

The centre and the states are supposed to cooperate with each other on matters of common interest. However, there have been tensions between the centre and the states in the past, particularly when the same party does not control the centre and the states. Here are some of the key challenges in centre-state relations in Indian federalism:

• The issue of overlapping jurisdiction: The Constitution divides legislative powers between the centre and the states, but there are some subjects on which both the centre and the states have concurrent jurisdiction. This can lead to conflicts between the centre and the states, as each side tries to assert its authority over a particular subject.
• The issue of financial resources: The centre collects most of the taxes in India, and it then distributes a portion of these taxes to the states. However, the states often complain that they do not get enough financial resources from the centre. This can lead to tensions between the centre and the states, as the states may feel that they are not being given enough financial autonomy.
• The issue of central intervention in states: The Constitution gives the centre the power to intervene in the affairs of a state if it is unable to function properly. This power has been used by the centre in the past to dismiss state governments, impose President’s rule, and take over the administration of a state. This can lead to resentment from the states, as they feel that their autonomy is being undermined.

Despite these challenges, centre-state relations in Indian federalism have generally been good. The centre and the states have been able to cooperate on a number of important issues, such as economic development, national security, and disaster management. However, there is always room for improvement, and it is important to address the challenges that exist in order to ensure that centre-state relations remain strong in the future.

Legislative Relations between Centre and State

Articles 245 to 255 of the Indian Constitution cover the way laws are made by both the central government and state governments. These articles explain how the central and state governments work together in terms of making laws, which is an important aspect of federalism. These articles focus on four different aspects of legislative relations between the Centre and the states.

Territorial Extent of Centre and State Legislation

• The authority to create laws for application across India, including its states, union territories, and provisional territories, rests with the Indian Parliament.
• Similarly, individual states possess the jurisdiction to formulate and enforce laws within their respective borders, which can pertain to the entire state or specific regions within it.
• Furthermore, the Parliament holds the power to enact laws with extraterritorial reach, affecting Indian citizens and their assets in any global location.

Exceptions to the laws of Parliament

The President of India possesses the authority to enact laws aimed at maintaining peace, ensuring effective governance, and promoting development in the five union territories: Daman and Diu, Ladakh, Andaman and Nicobar Islands, Lakshadweep, Dadra, and Nagar Haveli. The legislative powers exercised by the President hold an equivalent status to those of the Indian Parliament. This grants the President the ability to revoke or modify any legislations established by the Indian Parliament pertaining to these five union territories.

Distribution of Legislative Subjects

The Indian constitution has established a tripartite allocation of legislative subjects between the central government and the state governments. This allocation is structured into List 1, which pertains to the Union; List 2, covering the states; and List 3, encompassing the concurrent list within the 7th schedule.

• The Parliament of India is vested with the power and jurisdiction to formulate laws on topics such as defense, banking, communication, trade, audit, foreign affairs, and more, as outlined in the union list.
• State legislatures possess the authority to enact laws concerning areas like upholding law and order, public health, sanitation, agriculture, police, and similar subjects.
• Both the Parliament and state legislatures are competent to establish laws related to criminal law, civil procedure, marriages, divorce, population control, electricity, social planning, drugs, and so on.
• The Constitution of India grants precedence to the union list over the state list and concurrently to the concurrent list over the state list. Thus, in instances where there is an overlap between Union and State matters, the former takes precedence. Similarly, in cases of overlap between the concurrent and union lists, the former prevails once again.

Centre’s Control Over State Legislation

In addition to the parliament, the constitution grants the central government the ability to exert certain influence over state-level legislations.

• The Governor possesses the authority to hold back bills that have been approved by the state legislature. These bills are then put forward for the president’s review, where the president has an absolute veto power over them.
• The central government is empowered to instruct or advise states to withhold financial bills. These bills, passed by state legislatures, are set aside for the president’s review during a financial emergency.
• Moreover, bills addressing specific matters listed in the state list require prior approval from the President before they can be introduced in the state legislature.

Parliamentary Legislation in Centre State Relations

The constitution empowers the Parliament to legislate on matters within the state list in five exceptional situations.

1. Rajya Sabha Resolution: If the Rajya Sabha, with a two-thirds majority, passes a resolution directing Parliament to create laws for a state in areas like GST, the Indian Parliament gains the authority to legislate on those specific matters.
2. During National Emergency: Legislation enacted during a National Emergency becomes effective, but these laws come into effect six months after the end of the emergency period.
3. State Request: When two or more states jointly request Parliament to enact laws on a shared matter from the state list, the resulting laws apply only to the states that made the request.
4. International Agreements Implementation: Parliament holds the jurisdiction to establish laws necessary for implementing international treaties, conventions, and agreements. This enables the central government to fulfill its international commitments.
5. President’s Rule: Even when a state is under President’s Rule, Parliament retains the ability to legislate on state-related matters. The laws enacted by Parliament remain operative even after the President’s Rule concludes. However, the state legislature can modify or reintroduce such laws.

Administrative Relations Between Centre and State

The administrative connections between the Central and State governments in India pertain to the collaborative framework for managing administrative affairs. This framework encompasses the distribution of administrative duties, the process of making decisions, and the execution of policies and initiatives. For a comprehensive understanding of these relations in administrative capacities, explore the detailed elaboration on Centre-State Relations below.

Centre’s Direction to States

The central government is vested with the authority to instruct the state government to utilize its executive powers under the following circumstances:

• When the establishment of communication infrastructure holds significance in terms of national interest or defense.
• In matters concerning the safeguarding and upkeep of the state’s railways.
• Allowing the use of the native language (mother tongue) for primary-level students.
• The formulation and implementation of schemes targeted at the welfare of scheduled tribes within the states.

The Obligation of States and Centre

The Constitution has imposed limitations on state executive powers to create space for the central government’s unimpeded exercise of their executive authority. As a result, state executive powers need to be exercised in a manner that aligns with the laws enacted by the Indian Parliament. This practice should avoid obstructing the central government’s executive powers within the state.

Distribution of Executive Powers

The division of executive powers between the Central and state governments extends across all of India based on two main principles:

1. In areas where the Parliament holds exclusive legislative authority.
2. For the execution of rights, jurisdiction, and authority granted through specific agreements.

All-India Services

Within a federal nation like India, distinct administrative systems are in place. Both the state and the Central government maintain separate administrative entities to uphold law and order. Nonetheless, the paramount administrative units – the IAS, IPS, IFS, and IES – alternate their service between the state and the Centre.

In 1947, the Indian Civil Services transitioned into the Indian Administrative Services, and the Indian Police were succeeded by the Indian Police Services. A third significant category, the Indian Forest Services, was introduced in 1966.

Public Service Commissions

State-specific Public Service Commissions are established, confining the operational scope of their administrators to their respective states.

• The functioning of Public Service Commissions involves a blend of responsibilities from both the Central and state levels. While the state’s governor appoints the chairman and members of the commission, their removal can be initiated by the President of India.
• The Constitution allows for the creation of a Joint Public Service Commission (JPSC) by the Parliament upon the specific request of two or more states. In this case, the President appoints the chairman and members of the JPSC.
• The Union Public Service Commission (UPSC) can provide assistance to the Public Service Commission of a state, as per a special request from the state’s governor, with the President’s consent.
• The Union Public Service Commission also aids states in devising and executing joint recruitment schemes for various services.

Integrated Judicial System

As previously mentioned in this article, the Judiciary System lacks provisions for decentralizing powers. However, the Constitution has set up both the Supreme Court at the Union level and high courts at the state level. This move was aimed at minimizing variations in the remedies sought through legal processes.

High Court Judges are appointed by the President of India, following consultations with the Chief Justice of India and the respective State Governor. Interestingly, the Constitution allows for the establishment of a single High Court to serve two or more states. For instance, Maharashtra and Goa, as well as Punjab and Haryana, share common High Courts.

Financial Relations Between Centre and State

Financial interactions between the Central and State governments in India revolve around the apportionment and supervision of monetary resources. These interactions encompass the allotment of funds, division of revenues, and monetary transfers aimed at bolstering diverse developmental initiatives and social welfare schemes. The financial relationship between the Centre and the States is categorized based on certain criteria, which include:

Allocation of Taxing Power

The division of taxation powers between the Central and state governments operates as follows:

1. The Parliament holds the authority to impose taxes on the 13 subjects listed in the union list.
2. The state government possesses the power to levy taxes on 18 subjects delineated in the state list.
3. Concurrent jurisdiction is not applicable when it comes to taxation matters.
4. A distinct provision for the Goods and Services Tax was introduced through the 101st Amendment Act of 2016.

Distribution of Tax Revenues

The apportionment of taxes between the Central and state governments is structured as follows:

• Taxes imposed by the Centre but gathered by the states under Article 268. This category encompasses taxes like stamp duty on bill exchanges, cheques, and share transfers.
• Taxes levied and collected by the Centre but assigned to the states according to Article 269, specifically those concerning the sale, purchase, or consignment of goods in commerce.
• Implementation and collection of the Goods and Services Tax (GST) in the context of interstate commerce, as specified in Article 269A.
• Taxes that are imposed and collected by the Centre, yet subsequently distributed among the states.

Distribution of Non-Tax Revenues

Read here about the Centre State Relations for non-tax revenues are mentioned below.

For the States

• Irrigation
• Fisheries
• Forest
• Public sector enterprises
• Escheat and lapse
• Other types of non-taxes revenue

For the Centre

• Banks
• Information and broadcasting
• Currencies
• Post and telegraphs
• Railways
• Central and public sector enterprises
• Escheat and lapse
• Other types of non-taxes revenue

GST

Enacted through the 101st Amendment Act of 2016, the Goods and Services Tax (GST) was introduced to streamline the management of goods and services. Article 279A of the Constitution grants the President of India the authority to establish a GST council. This council serves as a collaborative platform for both the Central and State governments to converge on matters concerning GST.

Finance Commission

Under Article 280 of the Constitution, the Finance Commission serves as a constitutional entity. It is established every five years by the President of India, accompanied by specific recommendations. Emphasizing recommendations in each revision is crucial. Within the constitutional framework, the Finance Commission is recognized as a vital component that upholds the equilibrium of fiscal federalism.

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