Union-State Administrative, Legislative and Financial Relations | Public Administration Optional for UPSC (Notes) PDF Download

Introduction

The relationship between the central government and the state governments in India is governed by the principles of federalism laid out in the Indian Constitution. This article aims to provide a comprehensive understanding of centre-state relations by exploring the dynamics of financial, administrative, and legislative interactions. By delving into the intricacies of these relationships, we gain insights into the functioning of India's federal structure and the importance of cooperation and coordination between the centre and the states.

Legislative Relations Between the Centre and State Governments

A. Territorial Extent
Article 245: This article establishes the applicability of laws made by the Parliament throughout India, including extraterritorial legislation. However, there are exceptions in certain territories and scheduled areas where Parliament's applicability may vary.

B. Legislative Subjects

• Union List: The Union List consists of subjects on which only the Parliament has exclusive legislative authority. These subjects include defense, foreign affairs, atomic energy, etc.
• State List: The State List consists of subjects on which the state legislatures have exclusive legislative authority. These subjects include police, public health, agriculture, etc.
• Concurrent List: The Concurrent List includes subjects on which both the Centre and the states can make laws. These subjects include criminal law, bankruptcy and insolvency, education, etc.
• Residual Subjects: Subjects that are not included in any of the above lists fall under the residual subjects, granting legislative power to the Parliament.

C. Centre's Control Over State Legislation

• Reservation of state laws by the Governor: The Governor of a state can reserve certain state bills for the President's consideration, who may give or withhold his/her assent.
• President's approval for introducing bills on state list subjects: In certain situations, such as when the President's approval is required to introduce bills on subjects in the State List, the Parliament exercises control over state legislation.
• Parliament's authority during a financial emergency: In times of a financial emergency, Parliament can set aside money bills and financial bills for consideration, thus exerting control over state finances.

D. Parliamentary Legislation in the State Field

• Approval of Resolution by Rajya Sabha: For a resolution to be passed by the Rajya Sabha, the upper house of Parliament, it requires a special majority, ensuring a check on the exercise of legislative power in the state field.
• Enforcement of Declaration of National Emergency: During a national emergency, Parliament can legislate on state subjects, effectively supplanting the state legislature's authority.
• Parliamentary Request by State: In certain circumstances, a state legislature may request the Parliament to legislate on a particular subject, providing a mechanism for the centre to intervene in state matters.
• Imposition of President's Rule: Under specific conditions, such as failure of constitutional machinery in a state, the President can impose President's Rule, leading to the suspension of the state government and the direct rule of the Centre.

E. Punchhi Commission Recommendations

• Agreement on concurrent list laws: The Punchhi Commission recommended that laws on concurrent list subjects should be enacted only after consulting the state governments, ensuring better coordination between the Centre and the states.
• Centre following the principle of subsidiarity: The commission emphasized that the Centre should adhere to the principle of subsidiarity, allowing the states to exercise their legislative powers effectively.
• Selection and tenure of Governors: The commission suggested revisiting the selection process and tenure of Governors to enhance their impartiality and independence.
• Equal representation in the Rajya Sabha: The commission recommended equal representation for all states in the Rajya Sabha, ensuring a balanced representation of states at the national level.
• Zonal Councils: The Punchhi Commission proposed strengthening zonal councils as platforms for inter-state and Centre-state coordination and cooperation.

Financial Relations Between the Centre and State Governments

A. Division of Financial Resources

• Tax Sharing: Taxes collected by the Centre and the states are shared based on the recommendations of the Finance Commission, which determines the proportions allocated to each level of government.
• Grants-in-Aid: The Centre provides grants-in-aid to the states for specific purposes, such as centrally sponsored schemes and plan assistance.
• Borrowing Powers: Both the Centre and the states have the power to borrow, but the Centre has more flexibility in this regard, whereas states have certain restrictions.

B. Finance Commission and Resource Allocation

• Constitutionally Mandated: The Finance Commission, constituted every five years, recommends the distribution of tax proceeds between the Centre and the states, as well as the principles for grants-in-aid.
• Criteria for Resource Allocation: The Commission considers multiple factors, such as population, income distance, fiscal capacity, and area, to determine the sharing of financial resources.
• Vertical and Horizontal Devolution: The Finance Commission ensures vertical devolution by allocating resources between the Centre and the states, while horizontal devolution refers to resource sharing among the states.

C. Planning and Plan Assistance

• National Development Council: The National Development Council provides a platform for discussion between the Centre and the states regarding economic planning and plan assistance.
• Five-Year Plans: The Centre formulates five-year plans that outline development priorities and allocate resources to the states accordingly.
• Centrally Sponsored Schemes: The Centre implements centrally sponsored schemes, with the states contributing a certain percentage of the cost. The funding pattern varies based on the scheme and the state's fiscal capacity.

Administrative Relations Between the Centre and State Governments

A. Civil Services

• All India Services: The All India Services, including the Indian Administrative Service (IAS) and the Indian Police Service (IPS), serve both the Centre and the states, fostering administrative continuity and coordination.
• State Civil Services: State civil services play a vital role in state administration, working in collaboration with the Centre to implement policies and programs effectively.

B. Inter-State Council

• Role and Functions: The Inter-State Council, established under Article 263 of the Constitution, promotes cooperative federalism by facilitating coordination and resolving disputes between the Centre and the states.
• Reforms and Policy Recommendations: The Inter-State Council provides a platform for discussing policy issues, suggesting reforms, and reviewing matters of common interest.

Conclusion

Centre-state relations in India are crucial for effective governance and the smooth functioning of a federal structure. The financial, administrative, and legislative interactions between the Centre and the states shape policy formulation, resource allocation, and the overall development of the nation. By understanding these dynamics and promoting cooperation, India can strengthen its federal structure and ensure balanced progress across all levels of government.