Federalism in India

Article 1 of the constitution declares that India, that is Bharat, shall be a Union of States. Part XI of the Indian constitution defines the power distribution between the federal government (the Centre or union) and the States in India.^[1] This part is divided between legislative, administrative and executive powers. The legislative section is divided into three lists: Union list, States list and Concurrent list.

The constitutional powers devolved to each state are not the same. The state of Jammu and Kashmir was accorded higher degree of federalism under Article 370 read with Appendix I {The Constitution (Application to Jammu and Kashmir) Order, 1954} of the Indian constitution.^[1] The Union Territories of Delhi and Puducherry are accorded lesser degree of federalism under Article 239A and 239AA respectively and these territories are not included in the list of states in Schedule I of the constitution.^[1] The other union territories are directly governed by the union government.

Legislative Powers

The power of the states and the Centre are defined by the constitution and the legislative powers are divided into three lists. i.e.^[2]

Union List

Union list consists of 100 items (previously 97 items) on which the parliament has exclusive power to legislate including: defence, armed forces, arms and ammunition, atomic energy, foreign affairs, war and peace, citizenship, extradition, railways, shipping and navigation, airways, posts and telegraphs, telephones, wireless and broadcasting, currency, foreign trade, inter-state trade and commerce, banking, insurance, control of industries, regulation and development of mines, mineral and oil resources, elections, audit of Government accounts, constitution and organisation of the Supreme Court, High Courts and union public service commission, income tax, custom duties and export duties, duties of excise, corporation tax, taxes on capital value of assets, estate duty, terminal taxes.^[3][1]

State list

State list consists of 61 items (previously 66 items). Uniformity is desirable but not essential on items in this list: maintaining law and order, police forces, healthcare, transport, land policies, electricity in state, village administration, etc. The state legislature has exclusive power to make laws on these subjects. But in certain circumstances, the parliament can also make laws on subjects mentioned in the State list, then the Council of States (Rajya Sabha) has to pass a resolution with 2/3rd majority that it is expedient to legislate on this state list in the national interest.^[1]

Though states have exclusive powers to legislate with regards to items on the State list, articles 249, 250, 252, and 253 state situations in which the federal government can legislate on these items.^[3]

Concurrent List

Concurrent list consists of 52 (earlier 47) items. Uniformity is desirable but not essential on items in this list: Marriage and divorce, transfer of property other than agricultural land, education, contracts, bankruptcy and insolvency, trustees and trusts, civil procedure, contempt of court, adulteration of foodstuffs, drugs and poisons, economic and social planning, trade unions, labour welfare, electricity, newspapers, books and printing press, stamp duties.^[3][1]

Residuary Subjects

The subjects that are not mentioned in any of the three lists are known as Residuary Subjects. Subject to the provisions of the constitution, the power to legislate on these, rests with parliament or state legislative assembly as the case may be per Article 245. In case the above lists are to be expanded or amended, the legislation should be done by the Parliament under its constituent power per Article 368 with ratification by the majority of the states.^[4] Federalism is part of the basic structure of the Indian constitution which cannot be altered or destroyed through constitutional amendments under the constituent powers of the Parliament without undergoing judicial review by the Supreme Court.

Executive powers

The Union and states have independent executive staffs fully controlled by their respective governments and executive power of the states and the Centre are extended on issues they are empowered to legislate. As in legislative matters, in administrative matters also, the Central government can not overrule the constitutional rights/powers of a state governments except when president rule is promulgated in a state. It is the duty of the Union to ensure that the government of every State is carried on in accordance with the provisions of the Constitution per Article 355. Article 256 of the Constitution has made it clear that the State governments cannot go against the Central laws in administrative matters. When a State has failed to work according to the Constitution, President’s rule is imposed under Article 356 and President takes over its (the State’s) administration with post facto consent of the Parliament per Article 357.

Financial powers

Article 282 accords financial autonomy in spending the financial resources available with the states for public purpose.^[1][5] Article 293 gives liberty to states to borrow without any limit to its ability for its requirements within the territory of India without any consent from the union government. However union government can insist for compliance of its loan terms when a state has outstanding loan charged to the consolidated fund of India or an outstanding loan in respect of which a guarantee has been given by the Government of India under the liability of consolidated fund of India.^[6]

President constitutes a Finance Commission after every five years to recommend the modality for devolving union government revenues between central and state governments.

Under Article 360 of the constitution, President can proclaim a financial emergency when the financial stability or credit of the nation or of any part of its territory is threatened. However, until now no guidelines defining the situation of financial emergency in the entire country or a state or a union territory or a panchayat or a municipality or a corporation have been framed either by the finance commission or by the central government.

Such an emergency must be approved by the Parliament within two months by simple majority. It has never been declared. A state of financial emergency remains in force indefinitely until revoked by the President. The President can reduce the salaries of all government officials, including judges of the Supreme Court and High Courts, in cases of a financial emergency. All money bills passed by the State legislatures are submitted to the President for approval. He can direct the state to observe certain principles (economy measures) relating to financial matters.

Disputes with union / other states

States can make agreements between themselves without violating applicable laws in respective states. When a dispute arises with another state or group of states or union territory or central government, Supreme Court shall adjudicate in such disputes per Article 141 of the constitution. However Article 262 excludes Supreme Court jurisdiction with respect to adjudication of any dispute in the use, distribution or control of the interstate river waters per Article 262.

Under Article 263, President can also establish an interstate council for serving the public interest to coordinate / resolve the disputes between states and the union and for better implementation of policies.

Jammu & Kashmir state

The state of Jammu and Kashmir has separate set of applicable laws under Article 370 read with Appendix I & II {The Constitution (Application to Jammu and Kashmir) Order, 1954} of the Indian constitution. Only matters related to defence, foreign relations and communications of Jammu and Kashmir are under the jurisdiction of union government. The laws enacted by the parliament (including amendments to the Indian constitution) applicable to rest of India are not valid in J&K state unless ratified by its state assembly.^[7][8] Government of India can declare emergency in Jammu and Kashmir and impose governor's rule in certain conditions. The state has its own constitution other than applicable Indian constitution.^[9] Part XII of the J&K state constitution makes provision to amend its constitution with two thirds majority by the state assembly. Part VI (The states) and Part XIV (Services) of the Indian constitution is not applicable to J&K state per Article 152 and Article 308.

Criticism

Article 1 of the constitution says India shall be union of states and its citizens shall have at least two tier governance. The people of Delhi which is not a full-fledged state but more of a union territory, are still denied constitutional right of self governance though its population is exceeding the aggregate population of smaller eight full-fledged states in India (Sikkim, Meghalaya, Mizoram, Manipur, Nagaland, Tripura, Arunachal Pradesh and Goa).

States are at liberty to manage their finances as long it is not leading to financial emergency per Article 360. Instead GoI is trying to impose uniform taxation laws throughout India and trying to take over of tax collection mechanism of states without regards for the positive and negative inherent aspects of each state which are to be addressed by each state from time to time.^[10][11] Recently Supreme court upheld the constitutional right of states to impose Entry Tax which is against the principle of GST.^[12]

GoI laws permit a private / public limited company to raise loans internally and externally to its capacity based on its performance/repayment reputation. Whereas states are unconstitutionally limited by the GoI to limit the borrowings when they have not defaulted / led to financial emergency. The employees salary and pension expenditure of many state governments are exceeding their total revenue, but no financial emergency by the President is imposed to restrict the expenditure for enhancing the productivity of the government employees. Article 47 of Directive Principles of the state policy stipulates prohibition of intoxicating drinks which are injurious to health but it is not imposed even after the constitution is adopted 65 years ago. In contrary, many states promote liquor sales exponentially and collect major chunk of their tax revenues from liquor sales for meeting expenditure on developmental works.

GoI is devolving central funds to the states under specific identified schemes (like NREGA, etc.) whose implementation by the states is subject to the satisfaction of the GoI which is highly controversial and against Article 282.^[5] Invariably, the ruling party at the centre would discriminate the opposition ruled states in devolving central funds applying different yard sticks citing misuse / unsatisfactory use of identified funds.

A new commission similar to Sarkaria Commission to examine the relationship and balance of power between state and central governments and enforcement of constitutional provisions, is the need of the hour to protect federalism in India.

Comparison with USA and EU

Indian federalism comparison with United States (USA) and European Union (EU)

USA	EU	India
A state can not come out of the Union	It is a loosely held federation of sovereign countries with monetary union only. A state can leave the union at at any time	A state or states can part from the union with the approval of the parliament under Article 356. Territorial integrity is not part of the basic structure of the constitution. Territory is ceded to Bangladesh under the 9 and 100 constitutional amendment acts.[13][14]
Merging or splitting of a state not allowed except with the consent of the states affected and the Congress	Merging or splitting of a country possible with the citizens consent of respective countries	Constitution provides provision for merging with another state or splitting of a state in to few states.
Head of the Union is indirectly elected by its citizens through popular electoral college. It is a presidential democracy	No head of the Union created.	Head of the union government (Prime minister) is usually a leader of the party with majority or largest party in the House of the People who is not directly elected by the people throughout the country and can be either directly elected by the citizens from a particular Lok Sabha constituency as a member of House of the People or can be indirectly elected as the member of Council of States.
Free movement of labour and goods permitted across the states	The main purpose of the union is for the free movement of labour and goods across the states	Free movement of labour and goods permitted across the states per Articles 301 and 303.[15] Interstate Migrant Workmen Act 1979 protects the interests of migrant workmen.
Single currency, single foreign policy and common armed forces under the control of federal government	Single currency, individual foreign policy and individual armed forces	Single currency, single foreign policy and common armed forces under the control of federal government
Every state has constitutional rights to impose taxes and raise debt.	EU body has no power to raise taxes and works as common central bank of all countries except for United Kingdom	Every state has constitutional rights to impose certain taxes and raise debt. Part of union government revenues are also devolved to the states for public purpose.
Predominantly, people speak one language and follow one religion under a secular constitution	Multilingual people with predominantly following one religion under secular constitutions	Multilingual and multiracial people following multi religions under a secular constitution.
Highly developed democratic country	Highly developed democratic countries	Largest democratic country with one sixth of the world population. Democracy survives peacefully under the age old ethos of morals and compassion for fellow human beings.
Highly efficient executive and dedicated lawmakers	Highly efficient executive and dedicated lawmakers	Low quality and corrupt executive and lawmakers with motives to bring judiciary under their control or try to topple opposition ruled states by unconstitutional means.[16][17][18]
High standard and prompt justice delivery set up	High standard and prompt justice delivery set up	Sub standard and delayed justice delivery set up in a constitutional democracy.[19][20]

See also

• Lawmaking procedure in India
• President's rule
• President of India
• Governors of states of India
• Part I of the Constitution of India
• List of amendments of the Constitution of India
• List of Acts of the Parliament of India

References

1. "The Constitution of India". Retrieved 21 March 2012.
2. Robert L. Hardgrave and Stanley A. Koachanek (2008). India: Government and politics in a developing nation (Seventh ed.). Thomson Wadsworth. p. 146. ISBN 978-0-495-00749-4.
3. Babulal Fadia (1984). State politics in India Volume I. Radiant publishers, New Delhi. pp. 92–122.
4. "Pages 311 & 312 of A. K. Roy, Etc vs Union Of India And Anr on 28 December, 1981". Retrieved 23 August 2014.
5. "Supreme Court Judgement: Bhim Singh vs U.O.I & Ors on 6 May, 2010". Retrieved 21 March 2012.
6. "Article 293 and its application" (PDF). Retrieved 21 March 2016.
7. "Central acts applicable to J&K state" (PDF). Retrieved 23 August 2014.
8. "Proposed GST scenario for state of Jammu and Kashmir". Retrieved 21 September 2016.
9. "Constitution of J&K state" (PDF). Retrieved 23 August 2016.
10. "Gujarat opposes GST regime". Retrieved 21 March 2016.
11. "There is merit in Jayalalithaa's arguments against GST bill says Subramanian Swamy". Retrieved 20 June 2016.
12. "Supreme Court rules states have right to levy entry tax on goods coming in". Retrieved 13 November 2016.
13. "Prez assents: Constitution (One Hundredth Amendment) Act, 2015". 1, Law Street. Retrieved 3 June 2015.
14. "The constitution (ninth amendment) act, 1960". Retrieved 23 March 2014.
15. "Freedom of Trade, Commerce and Intercourse in India". Retrieved 23 March 2016.
16. "India ranks 76 in Corruption Perception Index". Retrieved 23 August 2016.
17. "National Commission to Review the Working of the Article 356 of the constitution". Retrieved 23 August 2016.
18. "SC declares NJAC unconstitutional, upholds Collegium". Retrieved 23 August 2016.
19. Shailesh Gandhi, Ex Central Information Commissioner. "Don't need 70,000 judges. Just fill vacancies to cut backlog". Retrieved 3 June 2015.
20. "Rule of law index, 2016". Retrieved 3 June 2016.