Centre- State & Inter Relations - Free MCQ Practice Test with solutions,

2 only

Statement 1 is incorrect. The statute that provides for constitution of river boards is the River Boards Act, 1956; the Inter-State River Water Disputes Act, 1956 deals with the adjudication mechanism for inter-state water disputes, not the creation of river boards.

Statement 2 is essentially correct but needs clarification. Under the Inter-State River Water Disputes Act, 1956 the Central Government constitutes a Water Disputes Tribunal and appoints its Chairman and members; the Act requires the Central Government to consult the Chief Justice of India in respect of the appointment of the Chairman and judicial members. Thus appointments are made by the Central Government after consultation with the Chief Justice of India (not by unilateral nomination by the CJI).

Statement 3 is incorrect. A State cannot directly approach a Tribunal; a State must request the Central Government to refer the dispute, and only the Central Government can constitute a Tribunal by notification. This centralized referral mechanism is consistent with Article 262 and the Act's procedures for inter-state water disputes.

Hence, only statement 2 is correct.

• Article 282 empowers both the Centre and the states to make any grants for any public purpose, even if it is not within their respective legislative competence. Under this provision, the Centre makes grants to the states. Hence option (b) is the correct answer.
• These grants are also known as discretionary grants, the reason being that the Centre is under no obligation to give these grants and the matter lies within its discretion. These grants have a two-fold purpose: to help the state financially to fulfil plan targets; and to give some leverage to the Centre to influence and coordinate state action to effectuate the national plan.

The Finance Commission is a constitutional body, formed under Article 280 of the Indian Constitution. The main purpose of forming the Finance Commission is to give its recommendations on the distribution of Tax revenues between the Centre and the states as well as among the states. The Finance Commission is required to recommend the distribution of the net proceeds of taxes of the Union between the Union and the States (commonly referred to as vertical devolution), and the allocation between the States of the respective shares of such proceeds (commonly known as horizontal devolution). So, Statement 1 is correct. The Finance Commission 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. So, Statement 2 is correct.
• The taxing powers of the central government encompass taxes on income (except agricultural income), excise on goods produced (other than alcohol), customs duties, and inter-state sale of goods. The state governments are vested with the power to levy income tax on agricultural income, land and buildings, sale of goods (other than inter-state), stamp duty and excise on alcohol. Local authorities such as Panchayat and Municipality also have the power to levy some minor taxes. In general, the central government has the power to levy and collect personal and corporate income tax. So, Statement 3 is not correct.
• Besides sharing of taxes between the Centre and the states, the Constitution provides for grants-in-aid to the states from the Central resources. There are two types of grants-in-aid, Statutory Grants: Article 275 empowers the Parliament to make grants to the states which are in need of financial assistance and not to every state. Also, different sums may be fixed for different states. These sums are charged on the Consolidated Fund of India every year. Apart from this general provision, the Constitution also provides for specific grants for promoting the welfare of the scheduled tribes in a state or for raising the level of administration of the scheduled areas in a state including the State of Assam.
• Discretionary Grants: Article 282 empowers both the Centre and the states to make any grants for any public purpose, even if it is not within their respective legislative competence. Under this provision, the Centre makes grants to the states. So, Statement 4 is correct.

Key Points

• Article 262(1)- 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.
• Article 262(2)- Notwithstanding anything in this Constitution, Parliament may by law provide that neither the Supreme Court nor any other court shall exercise jurisdiction in respect of any such dispute or complaint as is referred to in clause (1) Coordination between States.
• Entry 17 of State List deals with water i.e. water supply, irrigation, canal, drainage, embankments, water storage and water power.
• Entry 56 of Union List empowers the Union Government for the regulation and development of inter-state rivers and river valleys to the extent declared by Parliament to be expedient in the public interest.

Option (c) is correct:
North-Eastern Council was created by a separate Act of Parliament—the North- Eastern Council Act of 1971. Its members include Assam, Manipur, Mizoram, Arunachal Pradesh, Nagaland, Meghalaya, Tripura and Sikkim. Its functions are similar to those of the zonal councils, but with few additions. It has to formulate a unified and coordinated regional plan covering matters of common importance. It has to review from time to time the measures taken by the member states for the maintenance of security and public order in the region.