Centre-State Relations (Federalism in India)
Centre-State relation revolves around distribution of powers under three major categories:
- 🧾 Legislative Power Distribution
- ⚙️ Executive Power Distribution
- 💰 Financial Power Distribution
🧾 Legislative Relations
1️⃣ Territorial Distribution of Powers
Union controls entire India + extraterritorial powers
State controls only within its own territory
State controls only within its own territory
- Union laws can apply to citizens abroad
- Parliament’s jurisdiction limited in Scheduled Areas/UTs
2️⃣ Subject Distribution (3 Lists)
- List I – Union List (100 subjects): Defense, Foreign Affairs, Banking, Currency
- List II – State List (59 subjects): Police, Public Order, Health, Agriculture
- List III – Concurrent List (52 subjects): Marriage, Education, Criminal Law
If conflict arises → **Parliament law prevails**
🌀 Residuary Powers
Subjects not in any list go to the Union Government.
🚨 Exceptional Legislative Situations
- National Emergency: Parliament can legislate on State List
- State Agreement: Parliament can legislate for agreeing states
- International Agreements: Parliament can make laws even on State List
- President’s Rule (Art. 356): Centre legislates for that state
⚙️ Executive Relations
- Union: Executes Union List
- States: Execute State List
- Concurrent List: Shared execution; Centre can issue directions
🔁 Delegation of Executive Functions
- Union ↔ State functions can be delegated with mutual consent
- Union → State: Can delegate with Parliament’s consent even without state’s
💰 Financial Relations
📊 Tax Revenue Distribution
- Union-only taxes: Corporation Tax, Customs
- State-only taxes: Sales Tax (now GST)
- Union levies, State collects: Stamp Duty, Excise (Alcohol-based)
- Union collects, States get proceeds: Advertisement tax on newspapers
- Income tax (except agriculture): Shared between Union & States
💸 Non-Tax Revenue
- Union: Railways, Posts, Broadcasting, Industries
- States: Forests, Irrigation, Transport, Electricity
🤝 Grants-in-Aid (Article 275)
Special assistance to states like Assam for tribal development
🧮 Finance Commission (Article 280)
- Constituted every 5 years by President
- Chairman + 4 members (expertise: finance, law, economics)
Functions:
- Distribute tax revenues between Union and States
- Recommend Grants-in-Aid
- Support Panchayats and Urban Local Bodies
- Handle special matters referred by President
Centre-State Relations in Indian Federal Setup
In the Indian federal setup, the Constitution divides the legislative, executive, and financial functions between the Centre and the States. It also provides for an integrated judicial system.
Three Types of Relations
- Legislative Relations
- Administrative Relations
- Financial Relations
Legislative Relations (Articles 245–255)
| Aspect | Description |
|---|---|
| State Legislature | Can make laws for its territory |
| Parliament | Can make laws for whole or part of India and also outside India for Indian citizens |
Distribution of Legislative Subjects
- Union List: Centre has exclusive power (e.g., Defence, Banking)
- State List: States have exclusive power (e.g., Police, Agriculture)
- Concurrent List: Both can legislate (e.g., Marriage, Education); Union law prevails in case of conflict
- Residuary Powers (Article 248): Belong to the Centre
When Centre Can Legislate on State Subjects
- Article 249: If Rajya Sabha passes with 2/3rd majority
- Article 250: During National Emergency
- Article 252: If states request Parliament
- Article 253: For international treaties
- Article 356: During President’s Rule
Centre’s Control Over State Legislation
Article 200: Governor can reserve certain bills for the President
Administrative Relations (Articles 256–263)
- Article 256: States must comply with Central laws
- Article 257: Union’s control in specific cases
- Emergency: Centre directs states during National Emergency and President’s Rule
- Governor: Appointed by President, holds office at President’s pleasure
- State Election Commissioner: Appointed by Governor, removed by President
- Public Service Commissions: Centre can remove state PSC members
Financial Relations (Articles 268–293)
Taxation Powers
- Parliament and State legislatures have exclusive power on respective list subjects
- Residuary tax powers with Parliament
Grants-in-aid
- Article 275(1): Grants given as per Parliament decision
- Article 282: Grants for public purpose by Centre or State
Finance Commission (Article 280)
- Quasi-judicial body for tax sharing, grant principles, panchayat/ULB funding
GST Amendment (101st CAA 2016)
Empowered both Centre and States to levy GST
Issues in Centre-State Relations
- Resource allocation disputes
- Legal challenges to central laws (e.g., CAA, NIA Act)
- Political misuse of Article 356
- Office of Governor seen as Centre’s tool
Recommendations for Improvement
Sarkaria Commission
- Strengthen All-India Services
- Limit Centre’s use of Concurrent List
MM Punchhi Commission
- Define local body powers in Constitution
- Five-year Governor term; removal only by impeachment
NCRWC
- Inter-State Trade Commission under Article 307
- Disaster management in Concurrent List
Other Measures
- Strengthen Inter-State Council, NITI Aayog
- Promote Fiscal Federalism
- Revisit Seventh Schedule
- Encourage innovation at state level
- Power sharing & cooperation