Centre–State relations refer to the constitutional distribution of powers, responsibilities and financial resources between the Union and the States. The Constitution establishes a federal system with a strong unitary bias to ensure national unity while allowing States to exercise autonomy in matters of regional importance.
The Constitution deals with Centre–State relations under:
- Part XI (Articles 245–263) – Legislative and Administrative Relations
- Part XII (Articles 264–293) – Financial Relations
- Other relevant provisions include Articles 355, 356, 360, 280, 282 and the Seventh Schedule.
How are the Powers and Functions Divided in the Indian Federal Setup?
The Constitution adopts a three-fold distribution of legislative powers through the Seventh Schedule.
| List | Subjects | Law-making Authority |
|---|---|---|
| Union List | 100 subjects (originally 97) including defence, foreign affairs, banking, currency, atomic energy, citizenship, railways, communication etc. | Parliament |
| State List | 61 subjects (originally 66) including police, public order, agriculture, public health, fisheries, markets, local government etc. | State Legislatures |
| Concurrent List | 52 subjects (originally 47) including education, forests, marriage, criminal law, electricity, labour welfare, population control etc. | Parliament and State Legislatures |
Residuary Powers: Matters not mentioned in any of the three lists fall under residuary powers, which are vested in Parliament (Article 248 & Entry 97 of Union List).
Centre–State Relations on Legislative Matters
Territorial Jurisdiction (Articles 245–246)
- Parliament can make laws for the whole or any part of India.
- State Legislature can make laws only for the territory of the respective State.
Distribution of Legislative Subjects: The Seventh Schedule distributes legislative powers through the Union, State and Concurrent Lists.
Parliament's Power over State Subjects: Although State List normally belongs to States, Parliament can legislate under certain situations.
(A) During National Emergency (Article 250): During a National Emergency, Parliament can legislate on any subject in the State List.
(B) Rajya Sabha Resolution (Article 249): If Rajya Sabha passes a resolution by a two-thirds majority of members present and voting, declaring that a matter in the State List has national importance, Parliament may legislate on that subject.
(C) Request by Two or More States (Article 252): When two or more State Legislatures request Parliament to legislate on a State subject, Parliament can enact such a law, which applies only to those States (and any other State adopting it later).
(D) International Agreements (Article 253): Parliament may legislate on any subject, including those in the State List, to implement international treaties, agreements or conventions.
(E) During President's Rule (Article 356): When President's Rule is imposed in a State, Parliament assumes the legislative powers of that State Legislature.
Doctrine of Repugnancy (Article 254): When a State law conflicts with a Parliamentary law on a Concurrent List subject:
- Parliamentary law generally prevails.
- A State law receiving Presidential assent may prevail within that State.
- Parliament can later override such State law.
Parliament's Power to Create New States (Articles 2 & 3)
Parliament may:
- Form new States.
- Alter boundaries.
- Change names.
- Increase or decrease the area of States.
The concerned State Legislature is consulted but its consent is not mandatory.
Centre–State Relations on Administrative Matters
Administrative relations ensure coordination between the Union and the States for effective governance.
1. Executive Power of the States (Article 256): States must ensure compliance with Parliamentary laws and Union executive directions.
2. Union Directions to States (Article 257): The Union may issue directions to States to ensure that State executive power does not impede Union executive functions.
3. Protection of States (Article 355)
It is the duty of the Union to:
- Protect every State against external aggression and internal disturbance.
- Ensure governance according to the Constitution.
4. President's Rule (Article 356): If constitutional machinery fails in a State, the President may assume the functions of the State Government.
5. All India Services (Article 312): IAS, IPS and IFoS officers serve both the Union and the States, ensuring administrative uniformity and national integration.
6. Inter-State Council (Article 263): The President may establish an Inter-State Council to:
- Investigate disputes.
- Discuss common policies.
- Promote coordination between the Centre and States.
7. River Water Disputes (Article 262): Parliament may provide for adjudication of inter-State river water disputes and may exclude judicial jurisdiction in such matters.
8. Full Faith and Credit (Article 261): Public acts, records and judicial proceedings of the Union and States are recognised throughout India.
9. Mutual Delegation of Functions (Articles 258 & 258A)
- Union may entrust functions to States.
- States may entrust functions to the Union with mutual consent.
10. Zonal Councils
Established under the States Reorganisation Act, 1956, they promote:
- Interstate cooperation
- Regional development
- Coordination on law and order, infrastructure and economic planning
Centre–State Relations on Financial Matters
Distribution of Taxation Powers
| Union Taxes | State Taxes |
|---|---|
| Customs, Corporation Tax, Income Tax (except agricultural income), GST components, Excise on specified goods | Stamp Duty (specified), State GST, Taxes on land and buildings, Excise on alcoholic liquor, Electricity Duty, Vehicle Tax etc. |
Finance Commission (Article 280)
The Finance Commission is constituted every five years to recommend:
- Distribution of Central taxes.
- Grants-in-aid.
- Measures to strengthen State finances.
- Fiscal balance between Centre and States.
Grants-in-Aid (Article 275): The Union provides statutory grants to States requiring financial assistance, especially for tribal welfare and special needs.
Discretionary Grants (Article 282): Both Union and States may make grants for public purposes, even on subjects outside their legislative competence.
Goods and Services Tax (GST): The GST Council (Article 279A) ensures cooperative fiscal federalism by recommending GST rates, exemptions and administrative mechanisms.
Borrowing Powers (Articles 292–293)
- Union may borrow upon the security of the Consolidated Fund of India.
- States may borrow within constitutional limitations.
- States requiring Central loans may need Union consent.
Centrally Sponsored Schemes (CSS): The Centre provides financial assistance to States for implementing nationally important development programmes through cost-sharing arrangements.
Issues Pertaining to Centre–State Relations in India
- Growing Fiscal Imbalance: States often argue that expenditure responsibilities are increasing while fiscal autonomy has declined due to greater dependence on Central transfers and GST compensation issues.
- Frequent Use of Central Agencies: Concerns are raised over the alleged political use of agencies such as CBI, ED and Income Tax authorities against opposition-ruled States.
- Misuse of Article 356: Although judicial safeguards exist after the S.R. Bommai (1994) judgment, allegations of politically motivated use of President's Rule continue.
- Governor–State Government Conflicts: Delays in granting assent to Bills, reserving Bills for the President and disputes regarding discretionary powers have generated friction.
- Inter-State River Water Disputes: Long-pending disputes over rivers such as Cauvery, Krishna and Ravi-Beas often create tensions between States.
- Centrally Sponsored Schemes: States frequently contend that many schemes reduce their policy flexibility while increasing their financial burden.
- GST-Related Concerns: States seek greater fiscal autonomy, timely compensation and increased flexibility in tax administration.
- Regional Imbalances: Differences in development levels and allocation of Central resources often become sources of interstate dissatisfaction.
- Legislative Encroachment: Expansion of Central legislation in areas traditionally administered by States is viewed by some as weakening federal autonomy.
Measures to Ensure Harmonious Centre–State Relations
- Sarkaria Commission (1983)
o Strengthen All India Services and create more such services.
o Union should legislate on Concurrent List subjects only where national uniformity is essential; leave the rest to States.
- Punchhi Commission (2007)
o Constitutionally define greater devolution of powers to local bodies.
o Provide a fixed five-year tenure for Governors; removal only through impeachment by the State Legislature.
- National Commission to Review the Working of the Constitution (NCRWC), 2000
o Establish an Inter-State Trade and Commerce Commission under Article 307.
o Shift Emergency and Disaster Management to the Concurrent List.
- Strengthen Cooperative and Competitive Federalism: Encourage regular policy dialogue, joint decision-making and healthy competition among States while respecting constitutional autonomy.
- Implement Sarkaria and Punchhi Commission Recommendations: Adopt recommendations relating to the role of Governors, Article 356, Inter-State Council and greater consultation with States.
- Empower the Inter-State Council: Hold regular meetings and make it an effective forum for resolving disputes and discussing national policies.
- Strengthen GST Council Consensus: Promote consensus-based decision-making while balancing the fiscal interests of both the Centre and the States.
- Strengthen Local Governments: Effective devolution to Panchayats and Municipalities under the 73rd and 74th Constitutional Amendments can reduce governance conflicts and deepen cooperative federalism.
Conclusion
Centre–State relations constitute the backbone of India's federal structure. While the Constitution provides a strong Centre to preserve national unity, it also grants significant autonomy to the States. The success of Indian federalism ultimately depends on cooperative federalism, mutual trust, institutional dialogue and respect for constitutional principles, ensuring both national integration and regional aspirations are harmoniously balanced.
