Centre-State Relations 

• The federal system established by the Indian Constitution divides all legislative, executive, and financial powers between the Center and the States. 
• However, there is no division of powers in the judiciary because the Constitution established a unified judicial system to uphold both federal and state laws. 
• Even though the federal government and the states are both leaders in their respective fields, for the federal system to function effectively, they must work together as closely as possible. 
• The Indian constitution divides all legislative, executive, and financial powers between the centre and the states in the context of Centre-State Relations. 
• The centre-states relationship involves three types of relationships: 
• Legislative Relations 
• Administrative Relations 
• Financial Relations 

Legislative Relations 

• The legislative relationship between the centre and the states are addressed in Articles 245 to 255 of the constitution. In addition, the Indian constitution divides legislative power between the centre and the states in terms of both territories and legislative subjects. 
• The legislative relationships between the union and the states are divided into four categories: 
• Territorial extent of central and state legislation 
• Distribution of legislative subjects 
• Parliamentary legislation in the state field 
• Centre’s control over state legislation 

Central and State Legislation's Territorial Scope 

• Parliament has the authority to enact legislation that applies to all or a portion of India's territory (territory includes union, state, UT) 
• The state legislature can pass laws that apply to the entire state or only a portion of it. State laws are not applicable outside of the state unless there is a sufficient connection between the state and the object. 
• Parliament is the only body with the authority to enact "extraterritorial" legislation. 

Situations in which parliamentary laws do not apply include the following: 

• For the Andaman and Nicobar Islands, Daman and Diu, Dadra and Nagar Haveli, Ladakh, and Lakshadweep, the President has the authority to enact rules that have the same force and effect as laws passed by parliament. 
• The Governor has the authority to direct that a parliamentary act does not apply to specific areas of the state, or that it applies with specified modifications and exceptions. 

Distribution of Legislative Subjects 

• The constitution establishes three divisions: the Union List, State List, and Concurrent List. 
• When it comes to the Union list, Parliament is the sole authority. 
• In most cases, only the state legislature has the authority to pass legislation concerning the items on the state list. 
• Both the state and federal governments have the authority to enact legislation on the subjects mentioned in the concurrent list. 
• Parliament has the authority to pass laws with recurring themes. 
• The union list takes precedence over the state list, and the concurrent list takes precedence over the state list. 
• The power to make laws on residuary subjects is vested in Parliament. 

Parliamentary legislation in the state field 

• Under the following five exceptional circumstances, the Constitution allows Parliament to enact laws on any topic on the state list: 
• When Rajya Sabha passes a resolution with the support of two-thirds of those present and voting, it gives parliament the authority to enact legislation on a state list issue that is best for the country. This type of resolution lasts a full year. This type of resolution can be renewed several times, but not for more than a year at a time. The laws enacted in response to the resolution are no longer in effect six months after it was passed. In the event of a conflict between state and union legislation, the latter takes precedence. 
• A state, on the other hand, may pass legislation on the same subject. 
• When a national emergency is declared, the Parliament may pass laws on any subject covered by the state list. The legislation enacted as a result of this is only valid for six months before it expires. State law may also enact legislation on the subject, but if they do, union law will take precedence.
• When a state requests that Parliament act on a list of issues by passing a resolution, Parliament is given the authority to do so. Once this resolution is approved, the state loses all rights there. To implement international treaties, agreements, and conventions, the parliament can pass legislation on any subject on the state list. 
• When President's Rule is imposed in a state, the legislature gains the authority to pass laws on any matter on the State List. 

Control of State Legislation by the Centre 

• The federal government is authorised by the Constitution to have the following influence over state legislative affairs: 
• The governor may set aside specific laws passed by the state legislature for presidential consideration. They are completely under the control of the president. 
• Bills on specific subjects listed in the state list may be introduced in the state legislature only with the President's prior approval. Consider interstate trade and commerce. 
• In the event of a financial emergency, the President may request that a state set aside money bills and other financial bills for his consideration. 

Administrative Relations 

• Because of the distribution of legislative authority, the federal government and the states now share an executive branch. 
• The administrative relationship between the Centre and the States is addressed in Articles 256 to 263 of the Constitution. 
• The executive power has been divided between the centre and the states along the lines of legislative power distribution. 
• The centre's authority extends to the entire country in matters over which it has exclusive jurisdiction (union list), as well as the exercise of any rights, authority, or jurisdiction conferred on it by any treaty or agreement. 
• The state's jurisdiction extends to the matters listed on the state list. 
• The executive power in matters pertaining to the concurrent list is held by the states. 

The obligation of states to the centre:  

• The executive power of a state must be exercised in such a way that it ensures compliance with the laws made by the Parliament and does not impede or prejudice the exercise of executive power by the centre in a state. 
• These instructions are coercive in nature (Article 365), because failure to follow them may result in the application of Article 356. 

The Centre is authorised to provide advice to states in the following situations: 

• Construction and maintenance of means of communication declared by the state to be of national or military importance 
• Measures to be taken for the protection of the state's railways 
• Provision of adequate facilities for instruction in the mother tongue to children from linguistic minority groups at the primary level of education 
• The development and implementation of specified schemes for the welfare of the ST in the states 
• In this case, the coercive sanction underlying the central directives under Article 365 is also applicable. 

Mutual delegation of functions:  

• To reduce rigidity and avoid a deadlock, the constitution provides for inter-governmental delegation of executive functions. 
• The president, with the consent of the state government, may delegate the union's executive functions to the state. 
• The governor, with the approval of the central government, may delegate state executive functions to the union. 
• This reciprocal delegation could be conditional or unconditional. 
• The constitution also allows for the delegation of union executive functions to the state without the state's consent. The such delegation, however, is made by Parliament rather than the President. A state, on the other hand, cannot delegate its executive power in the same way. 

Cooperation between the centre and the states:  

• To ensure cooperation and coordination between the centre and the states, the following provisions have been included. 
• Parliament may make provisions for the resolution of any dispute or complaint relating to the use, distribution, and control of any interstate river and river valleys. 
• The President may form an inter-state council to investigate and discuss issues of mutual interest between the centre and the states. 
• Public acts, records, and judicial proceedings of the centre and each state are to be given full faith and credit throughout India. 
• Parliament may appoint an appropriate authority to carry out the purposes of the constitutional provisions governing interstate trade, commerce, and intercourse. 

All-India services 

• The colonial Indian Civil Service (ICS) and Indian Police (IP) were replaced in 1947 by the Indian Administrative Service (IAS) and the Indian Police Service (IPS). 
• The Indian Forest Service (IFS) was established in 1966 as the third All-India service. 
• Article 312 of the Indian constitution empowers Parliament to establish an All-India service based on a Rajya Sabha resolution to that effect. 
• These three services combine to form a single service with common rights and status, as well as uniform pay scales across the country. 

Commission of Public Service 

• The following are the centre-state relations in this field: 
• The governor appoints the chairman and members of the state public service commission, but they can only be fired by the President. 
• If two or more states request it, Parliament can appoint a joint public service commission; in such cases, the President appoints the chairman and members of the state public service commission. 
• On the request of the governor and with the approval of the President, UPSC can serve the needs of the state public service commission. UPSC assists states in developing and implementing joint recruitment schemes for any services that require candidates with special qualifications. 

Judicial System Integrated 

• Despite the fact that India has a dual polity, an integrated judicial system has been established. 
• This centralised court system enforces both federal and state laws. 
• The President of India appoints high court judges in consultation with the Chief Justice of India and the governor of the state. The President may also remove or transfer them. Parliament has authorised the establishment of common high courts for two or more states. 

Relationships during an emergency 

• During a national emergency, the centre can give any state instructions on any subject. 
• During his presidency, the president may assume the functions of the state government and the powers vested in the governor or any other executive authority in the state. 
• During a financial emergency, the centre can direct states to follow financial propriety canons, and the President can issue other necessary directives, such as reducing the salaries of state employees and high court judges. 

Other provisions in the executive sphere concerning centre-state relations 

• In the centre, Article 355 imposes two duties: 
• To protect each state from external aggression and internal strife 
• To ensure that each state's government operates in accordance with the provisions of the constitution. 
• The president appoints the governor of the state. He serves at the pleasure of the President. 
• Although appointed by the governor of the state, the state election commissioner can only be removed by the President. 
• Aside from the aforementioned methods, there are a variety of extra-constitutional methods for obtaining centre-state cooperation. For example, National Integration Councils, Chief Ministers' Conferences, and so on. 

Financial Relations 

• Articles 268 to 293 of the constitution deal with Centre-State Financial Relations. 
• Allocation of Taxing Authority 
• Parliament is solely responsible for the taxation of subjects on the Union list. 
• Only the state legislature has the authority to tax items on the state list. 
• The items on the concurrent list are taxed by both the state and the federal government. 
• The residuary power to tax is held by Parliament. 

The Constitutional Limitation on State Taxation Power 

• The state legislature has the authority to tax occupations, trades, callings, and professions. However, no one should be paid more than Rs 2500 per year in total compensation. 
• A state may levy taxes on the sale or purchase of goods (other than a newspaper). However, the state's ability to levy a sales tax is limited by the following factors: 
• Sales and purchases made outside of the states are tax-free. 
• Taxation does not apply to sales or purchases made during the import or export process. 
• A tax may not be levied on an interstate trade or commerce transaction or purchase. 
• A tax imposed on goods sold or purchased that the Parliament has determined are of particular importance to interstate trade and commerce is subject to the Parliament's limitations and specifications. 
• Electricity used or sold to the centre, as well as electricity used or sold to the railway company for the same purpose, are exempt from state taxes. 
• A state may charge a fee for water or electricity sold to an interstate river authority established by Parliament to manage and develop the river. A law that is approved by the President, on the other hand, may enact such an imposition. 

Distribution of Tax Revenues 

• The centre levies taxes, but the state collects and uses them (Article 268). The proceeds are received and held in the state's consolidated fund. For example, excise and stamp duty. 
• 269 (Article). Taxes levied on goods purchased or sold in interstate commerce are one example. 
• The proceeds are received and held in the state's consolidated fund. 
• Despite the fact that the federal government imposes and collects taxes, they are split between the federal government and the states (Article 270). Except for the taxes mentioned above, surcharges, and cess, this category includes all taxes. The President decides how these taxes are divided based on the recommendations of the Finance Commission. 
• Parliament may enact the tax and levies surcharges mentioned in Articles 269 and 270 at any time. The surcharge proceeds are only used for the centre. 

State-imposed collected and held-back taxes include: 

• These are the taxes that are solely the responsibility of the states. 
• They are on the list of states. 
• Agriculture income taxes, excise taxes on alcohol, profession-specific taxes, ceilings, and so on. 
• Non-Tax Revenues Are Divided 

The following are the centre's primary non-tax revenue sources: 

• Postal and courier services 
• Railroads 
• Banking 
• Broadcasting 
• Currency and coinage 
• Enterprise in the central government sector 
• Escheat and fail. 
• The following are the primary sources of non-tax revenue for states: 
• Irrigation 
• Forests 
• Fisheries 
• Enterprises in the public sector run by the government 
• Escheat and fail. 

Grants in Aid to States 

• The federal government may make grants to states under the terms of the Constitution. Statutory grants and discretionary grants are the two types of grants-in-aid. 

GRANTS FROM THE STATE: 

• Article 275 of the Constitution empowers the parliament to provide grants to specific states rather than to all states. 
• These amounts may differ between states. These funds are paid to the Consolidated Fund of India on an annual basis. 
• These are distributed to the states based on the recommendations of the Finance Commission. 

DISCRETIONARY GRANTS:  

• Article 282 empowers both the federal government and the states to make grants for any public purpose, even if it falls outside of their purview. 
• The choice is entirely up to the centre, which is not required to provide these subsidies. 

Other grants include: 

• The Constitution allows for a one-time donation to a specific cause. Grants on jute and jute products could be used in place of export taxes in the states of Assam, Bihar, Odisha, and West Bengal. 
• According to the Finance Commission's recommendation, these funds were to be distributed for ten years beginning with the adoption of the constitution. 

Council on Goods and Services Tax 

• Cooperation and coordination between the Centre and the States are required for the smooth and efficient administration of the goods and services tax (GST). 
• To facilitate this consultation process, the 101st Amendment Act of 2016 established the Goods and Services Tax Council or GST Council. 
• Article 279 - A gave the President the authority to form a GST Council. 
• The Council is a forum for the Centre and the States to collaborate. It must make recommendations to the Centre and the States on the following topics. 
• GST would incorporate the taxes, cesses, and surcharges levied by the Centre, the States, and local governments. 
• The goods and services that may or may not be subject to GST. 
• GST Template Laws, levy principles, apportionment of GST levied on supplies made in the course of interstate trade or commerce, and principles governing the place of supply. 
• The turnover threshold below which goods and services are exempt from GST. 
• The rates include GST bands and floor rates. 
• Any special rate or rates for a specified period to raise additional resources during a natural calamity or disaster. 

Cooperative federalism 

• Co-operative Federalism refers to the collaboration of the federal and state governments. It also implies that multiple states collaborate to achieve the states' and nations' growth and development goals. 

Meaning of Cooperative Federalism 

• Cooperative federalism is a concept or subset of federalism in which the federal, state, and local governments collaborate to solve common problems. 
• In a system dominated by the national government, such as India or Canada, numerous policies are made separately but more or less equally, or there is a policy dispute. 
• Cooperative federalism establishes a relationship in which the federal government exerts influence over the policies and behaviours of state governments, often through the use of in-kind or cash funding, the manipulation of policies and norms (for example, freight equalisation policy, SEZs), the construction of strategic highways or similar corridors, and other means. 
• For example, if the federal government wants to ensure that national highways are well-maintained, it could offer grants in aid, which are federal grants that send funding to states in order for them to pursue a policy. 
• In this scenario, the grants would most likely be used to purchase necessary elements or other supplies or to pay contractors and road construction personnel. 

Need for Cooperative Federalism in India 

• In India, federalism is defined as "an indestructible union of destructible states." 
• The constituent assembly felt that states should be integral parts of India, with no right to secede. 
• As a result, the need for a strong union was anticipated, and the central government was granted supremacy in the constitution. 
• However, enough authority was delegated to the states to allow them to effectively manage and govern local government. 
• The seventh schedule's Union, concurrent, and state lists all show such groupings. Cooperation between the centre and the state is critical for streamlining the development process and advancing all regions. 
• Because of India's breadth, immensity, and diversity, cooperative federalism is even more necessary. 

How Cooperative Federalism is practised in India. 

Framework for Legislation and Administration 

• Schedule 7 of the Constitution establishes a clear division of powers between the federal government and the states. (With the exception of emergencies, which are reviewed by the courts.) 
• Under Article 131 of the Constitution, the Supreme Court has exclusive jurisdiction to hear disputes between states and the Centre. Chhattisgarh filed a petition in the Supreme Court in January 2020, challenging the NIA Act. 
• Governments in coalition: Coalition administrations have increased states' bargaining power. 
• In terms of the imposition of the President's rule under Article 356 of the Constitution, federalism is far more developed than it was previously. 

Financial Framework 

• GST Council: The passage of GST is a beautiful example of cooperative federalism, in which the states and the federal government have given up their taxing authority to create a single tax system in order to realise the dream of a single Economic India with 'One Nation, One Market.' 
• The state's share has steadily increased from the 10th FC until the 14th FC when it devolved 42%. 

Institutional Framework 

• NITI Aayog: The Aayog, which has taken over from the old Planning Commission, promotes a bottom-up approach to development planning. 
• Inter-State Council: Article 263 of the Constitution calls for the establishment of an Inter-State Council to investigate, debate, and make recommendations for improved cooperation between the Centre and the States. 
• Zonal Councils were established by the State Reorganization Act of 1956 as an additional institutional instrument for centre-state and inter-state cooperation to resolve disagreements and strengthen the framework of cooperation. 
• National Integration Council and National Development Council: The National Development Council and the National Integration Council are two other major forums for debate and disagreement resolution. To improve cooperation, various ministries have established central councils. 
• States are included as equal development partners in Sabka Saath Sabka Vikas. There is a competitive and cooperative shift towards federalism. 

Cooperative federalism - Challenges 

• A trust imbalance and the shrinking of divisible pools are among the obstacles to Centre-State interactions. When they work together, they make complete cooperation impossible. 
• On the one hand, the Centre has increased the states' share of the divisible pool, while states actually receive less. 
• As a result of the 16th FC proposals, many southern states, for example, are losing their share of tax revenue. 
• The amount of money allocated to various social assistance initiatives has also decreased, negatively impacting state health. 
• Interstate water disputes, such as the Mahadayi water dispute between Goa and Karnataka and the Mahanadi water dispute between Odisha and Chhattisgarh, necessitate cooperation from all parties involved (centre and riparian states). 

The Way Forward 

• Articles 3 and 4 are enabling measures that allow Parliament to act in unusual circumstances in their current form. Agreements and recommendations of this nature should be reached through broad consensus or negotiation. 
• Governors should be appointed generously and with the confidence of the state government. 
• More organisations, such as the National Development Council, the National Integration Council, and the Inter-State Council, should be formed to address issues such as tax devolution, constitution amendment, and grants. 
• Previously, there were flaws in the application of Article 356. It should be used with extreme caution and vigilance, in accordance with the recommendations of the Sarkaria and Punchhi Commissions, as well as other Supreme Court directives. 
• States in India have limited sovereignty, and the operation of the Constitution is guided by the federal spirit. However, as a result of global trends, India's federalism is becoming more pronounced. More prudent autonomy could be granted to states. 

Important Centre-State Relations Recommendations 

Administrative Reforms Commission  

• Article 263 of the constitution provides for the establishment of an interstate council. 
• Appointment of governors with substantial public service experience and impartial perspectives 
• States have been given the most power. 
• More financial resources should be distributed to the states in order to reduce their reliance on the federal government. 
• Federal armed forces are stationed in states at the request of the states or on their own initiative. 

Recommendations of the Sarkaria Commission 

• Establishing a permanent inter-State Council under Article 263 and Article 356 should be used only when absolutely necessary. 
• The all-India service institution requires strengthening. 
• The residuary power of taxation should be reserved for parliament, and the states should be informed of the President's reasons for vetoing state legislation. 
• The Center should be able to use its military forces without the consent of the states. It would be preferable, however, if the states were consulted. 
• Before passing legislation on the subject of the concurrent list, the centre should consult with the states. 
• Governors' five-year terms should be allowed to expire. 
• It is necessary to fill the position of Linguistic Minority Commissioner. 

Recommendations of the Punchhi Commission 

• After a five-year tenure, governors are removed through the impeachment process. 
• When asserting Parliamentary precedence in matters delegated to the states, the Union should exercise extreme caution. 
• It specified the number of criteria to be considered when selecting governors: 
• He should be well-known in a few industries. 
• He should not be a resident of the state. 
• He should be a non-partisan figure who stays out of regional politics. 
• He shouldn't have gotten involved in politics so recently. 
• The government's term should be limited to five years. 
• Governors may face the same impeachment process as the president. 

Conclusion 

• The primary characteristics of Indian federalism are the interactions between the Center and the States. The Central Government and State Governments must work together to ensure the safety and well-being of Indian residents. They collaborate to prevent terrorism, manage families, protect the environment, and plan for the future. These exchanges between the centre and the states have had a significant impact on the evolution of the nation. Better Centre-State relations aided in the improvement of the national government, the improvement of the administrative system, and the integration of disparate communities into society as a whole.