The federal policy survives on the cooperation and coordination between the Central and state Governments. The dual government system and the division of powers are parts of the federal system. To avoid confrontation or a repugnant situation, the framers of the Constitution made detailed provisions of the powers of both Union and the units. Under such provisions, both governments exercise their powers in the administrative domain.
The provisions have taken into account all the possible eventualities and new circumstances that might crop up in federal functioning. To meet them, detailed provisions are enumerated in Chapter II of Part XI of our Constitution.
The administrative relations between the Union and the states are primarily a review of the Union's control over the states. They can be studies under two heads: powers of Union granted by the Constitution, and powers exercised by extra constitutional agencies.
Powers Granted by the Constitution
Direction by the Union to the State Government
Although the concept of Union direction to the state is repugnant to the rule of federal system, it was taken from the 1935 Government of India Act by the framers of the Constitution. This was mainly owing to the peculiar conditions of the country and, particularly the circumstances out of which the federation emerged.
Under Art. 256, the Union is empowered to send directives to the state for its compliance. The executive power of the Union extends to the limit of directing a state in the manner it feels essential for the purpose. Such power is inevitable, since it is necessary to ensure that parliamentary laws are implemented all over the country.
Art. 257, provides that states must exercise their executive power in such a way as not to impede or prejudice the exercise of executive power of the Union in the states. The power of the Union extends to two other matters also. These are:
(i) the construction and maintenance of the means of communication which are declared to be of national or military importance, and
(ii) Measures to be take for the protection of railways within the state.
It, in carrying out the directions of the Union Government, the state incurs additional costs, the Union Government under Art. 257 (4) has to pay to the State Government such sum as may be agreed. If the Centre and states cannot come to an agreement, the disputes would be resolved by an arbitrator appointed
by the Chief Justice of India.
Sanction for the Enforcement of Directions
The Constitution prescribes a coercive sanction for the enforcement of its direction through Art. 356.
This Article provides that if the state has failed to comply with or to give effect to any directions given by the Central Government, the President is empowered to declare an emergency to the effect that the state cannot be run in accordance with the provisions of the Constitution and assumes himself all the functions of the state.
Delegation of the Union's Functions to the States
Art. 258 provides that the President may, with the consent of the State Government, entrust either conditionally or unconditionally to that government functions relating to any matters falling within the executive power of the Union. Under clause (2), Parliament is also entitled to use that state machinery for the enforcement of the Union laws, and for this purpose may confer power or impose duties upon the state in respect of these matters to see that the laws are made applicable to the state.
The State Government may also delegate its powers to the Union. It is thus clear that where it is not convenient to either government to directly carry out its administrative functions, it may get those functions executed through the other government.
Besides the separate services for the Union and the state, the Constitution provides for the creation of additional 'all-India services' common to the Union and the states under Art. 312.
Parliament is given power to make such grants as it may deem necessary to give financial assistance to any state which is in need of such assistance (Art. 275).
By means of the grants, the Union would be in a position to correct inter-state disparities in financial resources which are not conducive to an integrated development of the country and also to exercise control and coordination over the welfare schemes of the state on a national scale.
The President is empowered to establish an Inter-State Council if at any time it appears to him that public interest would be served by it (Article 263).
The threefold duties envisaged by the Constitution for such a council are:
(i) To inquire into and advise upon disputes which may have arisen between States;
(ii) To investigate and discuss subjects of common interest between the Union and States or between two or more States;
(iii) To make recommendation for co-ordination of policy and action relating to such subject. The Government has set up a Central Council of Health, a Central Council of Local Self-Government, a Transport Development Council for coordinating the policy of States relating to these matters. Based on the Sarkaria Commission's recommendation, a permanent Inter-State Council has been created in April 1990, consisting of 6 Union Cabinet Ministers and the Chief Ministers of all the States.
Inter-State Commerce Commission
Parliament is empowered to constitute an InterState Commerce Commission for the purpose of freedom of trade, commerce and intercourse throughout the territory of India (Art. 301-305) and confer on it such powers and duties as it may deem fit (Art. 307).
However, no such commission has been constituted till now.
For uniform all-India development, the constitutional measures alone are not sufficient. Many agencies created by state perform the function of advisory agencies. They facilitate uniform planning and strive to maintain regional balance in the development.
They also help resolve Union-state and state disputes amicably.
Formed in 1950, the Planning Commission aims to formulate an integrated five-year plan for economic and social development. It acts as an advisory board of the Union Government in plan formulation. The Prime Minister is its chairman.
The Commission consists of distinguished members of different faculties with special stress on economics. Of late, this institution is being held responsible for giving the maximum strength to the forces of centralisation in India.
National Development Council (NDC)
NDC is an extra-constitutional and extralegal body which functions as an adjunct to the Planning Commission. It consists of all the Union Cabinet Ministers, members of the Planning Commission, the Chief Ministers of all states and the administrators of all UTs.
Formed in 1952, the NDC aims to strengthen and mobilise the efforts and resources of the nation in support of the plans, to promote common economic policies in all vital spheres and to ensure the balanced and rapid development of all parts of the country. It particularly reviews the working of the National Plan and recommends measures for the achievement of the aims and targets set out in the National Plan.
National Integration Council
The National Integration Council, another nonconstitutional body, was created in 1986 to deal with welfare measures for the minorities on an all-India basis. The National Front Government revived it in 1990, with a broad-based composition, including not only Union Ministers and Chief Ministers of States, but also representatives of national and regional political parties, labour, women, public figures as well as media representatives.
Apart from the agencies of federal control smooth working of both the Union and State governments is sought to be achieved through:
(i) mutual delegation of functions; and
(ii) immunity from mutual taxation.
For the delegation of Union functions, the President may, with the consent of the State Government and without any legislative sanction, entrust any executive function to that State [Art. 258 (1)]. Parliament may, while legislating with respect to Union subject, confer powers upon a State or its officers, relating to such subject [Art. 258 (2)]. Such delegation has in short, a statutory basis.
Conversely, the Governor of a State may, with the consent of the Government of India, entrust on the Union Government or its officer, functions relating to a State subject, so far as that State is concerned [Art. 258A].
Art. 258 provides that the property of the Union shall, save insofar as Parliament may by law otherwise provide, be exempt from all taxes imposed by a State or by any authority within a State.
Similarly the property of a State is immune from Union taxation [Art. 289 (1)]. The immunity, however, does not extend to all Union taxes, as held by our Supreme Court, but is confined only to such taxes as are levied on property. A State is, therefore not immune from customs duty which is imposed not on property, but on the act of import or export of goods.
The 'income' of a State is also exempted from Union taxation. The immunity of the income of a State is, again, subject to an overriding power of Parliament as regards any income derived from a commercial activity. Thus:
(i) Ordinarily, the income derived by a State from commercial activities shall be immune from income-tax levied by the Union.
(ii) Parliament is, however, competent to tax the income of a State derived from a commercial activity.
(iii) If, however, Parliament declares any apparently trading functions as functions 'incidental to the ordinary functions of government', the income from such functions shall be no longer taxable, so long as such declaration stands.