India’s political system is often described as ‘quasi-federal’ or ‘federal in form but unitary in spirit,’ a unique blend designed to accommodate its immense diversity while ensuring national unity and integrity. This complex arrangement necessitates a finely balanced distribution of powers and responsibilities between the Union (Central) government and the State governments. The intricacies of Center-State relations are embedded deeply within the Constitution of India, reflecting the framers’ foresight in creating a system that could adapt to the nation’s evolving needs, yet maintain a strong central authority, particularly in the aftermath of partition and during periods of national emergency.

The equilibrium between the Centre and the States is not static; it is a dynamic interplay continuously shaped by political, economic, social, and judicial forces. Over the decades, the nature of this relationship has oscillated between phases of cooperative federalism, where consensus and collaboration are paramount, and periods of confrontational federalism, marked by disputes over jurisdiction, resources, and political power. Understanding these relations is crucial to comprehending the functioning of Indian democracy, as they directly impact governance, public policy, and the equitable distribution of development across the diverse regions of the country.

Constitutional Basis of Federalism in India

The Constitution of India, adopted in 1950, establishes a dual polity with the Union at the Centre and the States at the periphery, each endowed with sovereign powers in their respective fields. However, unlike classical federations like the USA, the Indian federal structure exhibits several unitary biases, often leading to the description of India as a “holding together” federation rather than a “coming together” one. Key articles and schedules delineate the boundaries of authority, providing a comprehensive framework for legislative, administrative, and financial relations. Article 1, for instance, declares India as a “Union of States,” signifying the indestructible nature of the Union and implying that states have no right to secede. The Seventh Schedule is perhaps the most defining feature, allocating subjects into three exhaustive lists: the Union List, the State List, and the Concurrent List, thereby clearly demarcating legislative competencies. Despite this division, the Centre retains significant overarching powers, particularly during emergencies, demonstrating its paramountcy.

Legislative Relations

The distribution of legislative powers forms the bedrock of India’s federal system, meticulously laid out in Articles 245 to 255 of the Constitution and the Seventh Schedule. This schema prevents overlapping jurisdictions and potential conflicts between the Centre and the States, though challenges do arise due to the dynamic nature of governance.

The Union List (List I) enumerates 97 subjects (originally 97, now 100 entries, but actual number of subjects might vary depending on how they are counted) of national importance, on which Parliament has exclusive power to legislate. These include defense, foreign affairs, railways, banking, currency, atomic energy, inter-state trade and commerce, and citizenship. The comprehensive nature of this list ensures a unified national policy on critical matters.

The State List (List II) comprises 61 subjects (originally 66 subjects), on which State Legislatures have exclusive power to make laws. These pertain to matters of local and regional importance such as public order, police, public health and sanitation, agriculture, local government, land, and prisons. This grants states significant autonomy in managing affairs directly impacting their populace.

The Concurrent List (List III) contains 52 subjects (originally 47 subjects, with 5 subjects transferred from the State List by the 42nd Amendment Act of 1976), on which both the Parliament and the State Legislatures can make laws. These include criminal law, civil procedure, marriage and divorce, forests, education, trade unions, and economic and social planning. In case of a conflict between a Central law and a State law on a subject in the Concurrent List, the Central law generally prevails, unless the State law has received Presidential assent after being reserved for his consideration (Article 254). This provision reinforces the Centre’s supremacy while allowing states to enact region-specific laws.

Beyond these lists, the Constitution grants residuary powers to the Parliament (Article 248), meaning the Union has the exclusive power to legislate on any matter not enumerated in any of the three lists. This further strengthens the Centre’s position. Furthermore, Parliament can legislate on subjects in the State List under specific circumstances:

  1. In the national interest (Article 249): If the Rajya Sabha declares, by a resolution supported by two-thirds of its members present and voting, that it is necessary or expedient in the national interest for Parliament to legislate on a State List subject. Such a resolution remains in force for one year but can be extended.
  2. During a Proclamation of Emergency (Article 250): While a Proclamation of Emergency is in operation, Parliament gains the power to make laws on any State List subject.
  3. By agreement between States (Article 252): If two or more State Legislatures pass resolutions requesting Parliament to legislate on a State List matter for those states, Parliament can do so. The law then applies only to those consenting states but can be adopted by other states subsequently.
  4. To implement international agreements (Article 253): Parliament can make laws on any subject for implementing any treaty, international agreement, or convention, even if it relates to a State List subject.
  5. During President’s Rule (Article 356): When President’s Rule is imposed in a state, Parliament can make laws for that state.

These provisions collectively illustrate a Legislative Relations framework that is federal in principle but possesses a strong centralizing tendency, ensuring national unity and the ability to address emergent challenges effectively.

Administrative Relations

The distribution of executive power largely mirrors the legislative distribution, but with significant central oversight and control, as outlined in Articles 256 to 263. While states are granted executive authority over State List subjects, the Centre retains considerable administrative leverage.

Obligation of States and the Centre’s Executive Power (Articles 256-257): States are constitutionally obligated to ensure compliance with laws made by Parliament and existing laws that apply in the state. The Union government, in turn, has the power to issue directions to states to ensure this compliance. Furthermore, the Union’s executive power extends to giving directions to a state as deemed necessary for the purpose, ensuring that the executive power of the state does not impede or prejudice the exercise of the executive power of the Union. Failure to comply with these directions can, in extreme cases, lead to the imposition of President’s Rule under Article 356.

Delegation of Functions (Articles 258 & 258A): The President can, with the consent of the state government, entrust any function of the Union to the state or its officers. Similarly, a state governor can, with the consent of the Union government, entrust any functions of the state to the Union or its officers. This provision allows for flexibility and cooperative action in administrative matters, promoting efficiency by utilizing existing administrative machinery.

All-India Services (Articles 312): Services like the Indian Administrative Service (IAS), Indian Police Service (IPS), and Indian Forest Service (IFS) are recruited and trained by the Union but serve in various states. While they work under the state government, they are ultimately accountable to the Union, giving the Centre a vital link and influence over state administration. This unique feature strengthens the unitary character by ensuring a uniform standard of administration and fostering national integration.

Grants-in-aid (Articles 275 & 282): The Union provides financial assistance to states in the form of grants-in-aid. Article 275 provides for statutory grants, recommended by the Finance Commission, to states in need of assistance. Article 282 provides for discretionary grants, which allow the Centre to provide funds for any public purpose, even if it is not within the legislative competence of the Centre. These grants serve as a mechanism for the Centre to influence state policies and development priorities, often leading to debates over conditionalities and equitable distribution.

Inter-State Council (Article 263): Established by the President, the Inter-State Council serves as a vital forum for coordination and resolution of disputes between states, and between the Centre and states. It investigates and discusses subjects of common interest, makes recommendations for better policy coordination, and deliberates on matters referred to it by the President. This body is crucial for fostering cooperative federalism by providing a platform for dialogue and consensus-building.

NITI Aayog (National Institution for Transforming India): Replacing the erstwhile Planning Commission in 2015, NITI Aayog embodies a shift towards cooperative federalism. It acts as a premier policy ‘think tank’ of the Government of India, providing both directional and policy inputs. Its governing council comprises the Prime Minister as chairperson, Chief Ministers of all states and Union Territories with legislatures, and Lieutenant Governors of other Union Territories. This structure ensures that states are integral to the policy formulation process, promoting a bottom-up approach to planning and development, rather than the centralized planning approach of its predecessor.

Financial Relations

The financial arrangements between the Centre and the States are critical for determining the operational autonomy and fiscal health of both levels of government. Articles 268 to 293 detail the complex system of tax sharing, grants, and borrowing powers.

Distribution of Taxing Powers: The Constitution clearly demarcates the power to levy taxes. Parliament has exclusive power to levy taxes on subjects in the Union List (e.g., customs duties, corporation tax, income tax on non-agricultural income, service tax until GST). State Legislatures have exclusive power to levy taxes on subjects in the State List (e.g., land revenue, excise on alcohol, sales tax until GST, property taxes). Taxes on the Concurrent List are few, generally not explicitly assigned.

Sharing of Tax Revenues: Historically, India has had a system where certain taxes are levied by the Union but collected and appropriated by states (e.g., stamp duties, excise duties on medicinal preparations); others are levied and collected by the Union but assigned to states; and certain taxes are levied and collected by the Union but compulsorily distributed between the Union and the states (e.g., income tax, excise duties).

The introduction of the Goods and Services Tax (GST) in 2017 marked a monumental shift in India’s financial federalism. GST subsumed a multitude of Central and State indirect taxes into a single, comprehensive tax. This has created a unified national market but also necessitated a mechanism for sharing GST revenues between the Centre and states. The Goods and Services Tax Council, comprising the Union Finance Minister (chairperson) and State Finance Ministers, is a unique constitutional body empowered to make recommendations on all GST-related matters, functioning as a testament to collaborative federalism in financial decision-making.

Grants-in-Aid: Apart from shared taxes, states also receive grants from the Centre. Statutory grants (Article 275) are recommended by the Finance Commission to states in need of financial assistance for specific purposes or general revenue deficit. Discretionary grants (Article 282) are provided by the Centre for public purposes, often tied to specific development projects, giving the Centre considerable influence over state spending priorities.

Finance Commission (Article 280): A quasi-judicial body constituted by the President every five years (or earlier), the Finance Commission plays a pivotal role in India’s fiscal federalism. Its primary function is to recommend the distribution of net proceeds of taxes between the Union and the states, and the allocation of the states’ share among themselves. It also suggests principles governing grants-in-aid and measures needed to augment the Consolidated Fund of a state to supplement the resources of Panchayats and Municipalities. Its recommendations significantly influence the fiscal autonomy and resource availability of states.

Borrowing Powers: Both the Union and the states have the power to borrow. The Union can borrow within or outside India, while states can borrow only within India. However, states require the consent of the Union government to raise any loan if there is still outstanding any part of a loan made to the state by the Union, or in respect of which a guarantee has been given by the Union. This provision gives the Centre a degree of control over state fiscal prudence.

Emergency Provisions

The emergency provisions in the Indian Constitution (Articles 352, 356, and 360) are a significant manifestation of its unitary tilt, allowing the Centre to assume extraordinary powers during crises.

National Emergency (Article 352): Proclaimed by the President on grounds of war, external aggression, or armed rebellion (originally ‘internal disturbance’), a National Emergency transforms the federal structure into a unitary one without a formal amendment. The legislative and executive powers of the Union extend to any matter, including those in the State List, and the Centre can issue directions to states on any matter. The financial distribution can also be modified.

President’s Rule (State Emergency) (Article 356): This is the most controversial and frequently invoked provision. If the President is satisfied that a situation has arisen in which the government of a state cannot be carried on in accordance with the provisions of the Constitution, or on the report of the Governor, President’s Rule can be imposed. It leads to the suspension of the state government and legislature, with the President exercising all powers on behalf of the Governor, and Parliament assuming the legislative powers of the state. Its frequent misuse for political ends has led to significant judicial scrutiny, most notably in the S.R. Bommai case (1994), where the Supreme Court significantly curtailed its arbitrary application by making it subject to judicial review.

Financial Emergency (Article 360): If the President is satisfied that a situation has arisen whereby the financial stability or credit of India, or of any part of the territory thereof, is threatened, a Financial Emergency can be declared. During such an emergency, the Union can issue directions to states regarding financial propriety, including reductions in salaries and allowances of all government employees, including High Court judges. This provision has never been invoked in India.

Role of the Governor

The office of the Governor is a crucial, yet often contentious, link in Centre-State relations. Appointed by the President (and thus, by the Union government), the Governor serves as both the constitutional head of the state and as a representative of the Centre. This dual role frequently leads to friction, especially when different political parties are in power at the Centre and in the state.

The Governor has certain discretionary powers, most notably in deciding whether to give assent to a state bill, reserve it for the consideration of the President, or return it to the state legislature. The decision to recommend President’s Rule (Article 356) is another significant discretionary power, which has historically been a major source of conflict, with allegations of partisan use to destabilize elected state governments. Commissions like Sarkaria and Punchhi have recommended reforms to ensure that the Governor acts as a constitutional sentinel rather than a political agent of the Centre, emphasizing objectivity and adherence to constitutional norms.

Challenges and Evolving Dynamics

The relationship between the Centre and the states in India is a constantly evolving tapestry, influenced by shifting political landscapes, economic exigencies, and socio-cultural demands.

Demand for Greater State Autonomy: Over the years, many states, particularly those governed by regional parties, have articulated demands for greater autonomy—be it financial, legislative, or administrative. They argue that a strong Centre stifles regional aspirations and prevents states from addressing their unique development challenges effectively. These demands often revolve around greater fiscal devolution, reduced central interference in state subjects, and a re-examination of the powers of the Governor.

Centralization Tendencies: Despite calls for greater autonomy, there has been a noticeable trend towards centralization. This is often attributed to the inherent design of the Constitution, the dominant position of the ruling party at the Centre, and the increasing reliance of states on central grants. The use of centrally sponsored schemes, where the Centre provides financial assistance for schemes implemented by states, often comes with conditionalities that dictate state spending priorities.

Impact of Regional Parties and Coalition Politics: The rise of regional parties since the late 1980s has significantly altered the dynamics of Centre-State relations. With coalition governments becoming common at the Centre, regional parties often wield considerable influence, leading to more negotiations and compromises in policy-making and resource allocation. This has, at times, led to more cooperative federalism but also to political instability and gridlock.

Judicial Interpretations: The judiciary, particularly the Supreme Court, has played a crucial role in interpreting the constitutional provisions governing Centre-State relations. Landmark judgments, such as the S.R. Bommai case (1994) on Article 356, have strengthened federalism by curbing arbitrary central interventions in state affairs. These judicial pronouncements have helped define the boundaries of power and introduced a system of checks and balances.

Commissions and Reforms: Several commissions have been appointed to review and recommend changes to Centre-State relations. The Sarkaria Commission (1983) was perhaps the most comprehensive, making 247 recommendations, including guidelines for the use of Article 356, strengthening the Inter-State Council, and greater financial devolution. The Punchhi Commission (2007) reiterated many of these recommendations and also suggested reforms concerning the Governor’s appointment, deployment of central forces, and treaty-making powers. The Rajamannar Committee (1969), appointed by the Tamil Nadu government, also advocated for significant state autonomy, though many of its radical recommendations were not adopted.

The Center-State relationship in India is a continuous balancing act between the imperative of national unity and the recognition of regional diversity. The Constitution of India provides a robust framework, but its practical operation is constantly shaped by political realities, economic pressures, and social aspirations. The dynamic interplay necessitates continuous dialogue, institutional mechanisms like the Inter-State Council and NITI Aayog, and a spirit of cooperative federalism to ensure efficient governance and equitable development. The strength of India’s federal structure lies in its ability to adapt and evolve, accommodating the diverse voices of its constituent units while maintaining the cohesion of the nation. It is through mutual respect, understanding, and a commitment to shared goals that the balance between centralized authority and state autonomy can be effectively maintained, ensuring the stability and progress of the world’s largest democracy.