Centre–State Relations: Constitutional Provisions, Principles and Doctrines

The Indian Constitution establishes a dual polity with a distribution of powers between the Union and the States. It divides relations between the Centre and the States into legislative, administrative, and financial domains. While legislative and administrative relations are covered under Part XI, financial relations are outlined in Part XII. The constitutional design balances state autonomy with overarching national integrity and central authority.

Legislative Relations (Articles 245 to 255)

Territorial Extent of Central and State Legislation

• Article 245 defines the territorial limits of legislative powers exercised by Parliament and State Legislatures.
• Parliament can make laws for the whole or any part of the territory of India and possesses extra-territorial legislative competence.
• State Legislatures can make laws only for the whole or any part of their respective states.
• State laws do not operate outside state boundaries unless there is a sufficient nexus between the state and the subject matter.

Distribution of Legislative Subjects (Article 246)

The Seventh Schedule contains three distinct lists governing subject allocations:

• Union List (List I): Comprises 100 items (originally 97) of national importance such as defence, foreign affairs, atomic energy, banking, and railways. Only Parliament has exclusive jurisdiction to legislate.
• State List (List II): Comprises 61 items (originally 66) of local importance including public order, police, public health, agriculture, and local government. State Legislatures hold exclusive legislative authority under normal conditions.
• Concurrent List (List III): Comprises 52 items (originally 47) including criminal law, civil procedure, marriage, trade unions, education, and forests. Both Parliament and State Legislatures can make laws.
• Residuary Powers (Article 248): Vests the exclusive power to make laws on any subject not enumerated in the Concurrent List or State List in Parliament.

Parliamentary Legislation in the State Field

Parliament can legislate on State List subjects under five specific exceptional circumstances:

• National Interest (Article 249): When the Rajya Sabha passes a resolution supported by not less than two-thirds of the members present and voting. Such a law remains valid for one year at a time.
• National Emergency (Article 250): During the operation of a Proclamation of Emergency under Article 352. The law ceases to have effect six months after the emergency ends.
• Agreement Between States (Article 252): When the legislatures of two or more states pass resolutions requesting Parliament to enact laws on a State subject. Such an act applies only to the consenting states.
• International Agreements (Article 253): To implement any international treaty, agreement, or convention without requiring state consent.
• President’s Rule (Article 356): When a State Legislature is suspended or dissolved during President’s Rule, Parliament exercises its lawmaking functions.

Administrative Relations (Articles 256 to 263)

Distribution of Executive Powers

Executive power is co-extensive with legislative power. The Union’s executive power extends across matters in the Union List and treaty rights. State executive power extends to subjects in the State List. For Concurrent List subjects, executive authority rests with the states unless a central law expressly confers it on the Union.

Constitutional Directives and Obligations

• Compliance with Laws (Article 256): State executive power must ensure compliance with Parliamentary laws. The Union executive can issue directions to states for this purpose.
• Unimpeded Central Authority (Article 257): State executive actions must not impede or prejudice the exercise of the Union’s executive power. The Centre can direct states to construct and maintain means of communication of national or military importance and protect railways.
• Consequences of Non-Compliance (Article 365): If a state fails to comply with any directions given by the Union, the President may hold that a situation has arisen in which the government of the state cannot be carried on in accordance with the Constitution, paving the way for Article 356.

Inter-State Coordination Mechanisms

• Full Faith and Credit Clause (Article 261): Full faith and credit must be given throughout India to public acts, records, and judicial proceedings of the Union and every State.
• Adjudication of Water Disputes (Article 262): Empowers Parliament to provide by law for the adjudication of disputes relating to the use, distribution, or control of waters of inter-state rivers and river valleys.
• Inter-State Council (Article 263): Authorizes the President to establish an Inter-State Council to inquire into, discuss, and deliberate on subjects of common interest between the Union and the States.

Financial Relations (Articles 268 to 293)

Allocation of Taxing Powers

The Constitution makes a clear separation between the taxing powers of the Union and the States. There are no taxes in the Concurrent List, with the sole exception of the Goods and Services Tax (GST) introduced by the 101st Constitutional Amendment Act, 2016 under Article 246A.

Grants-in-Aid to States

• Statutory Grants (Article 275): Parliament can provide grants-in-aid to specific states in need of financial assistance from the Consolidated Fund of India, based on the recommendations of the Finance Commission.
• Discretionary Grants (Article 282): Empowers both the Union and the States to make grants for any public purpose, even if the purpose is not within their respective legislative competencies.

Finance Commission (Article 280)

The President constitutes a Finance Commission every fifth year (or earlier). It consists of a Chairman and four other members. It recommends:

• The distribution of net tax proceeds between the Union and the States (vertical devolution) and the allocation among states (horizontal devolution).
• The principles governing grants-in-aid to the states under Article 275.
• Measures to augment the Consolidated Fund of a State to supplement the resources of local governments (Panchayats and Municipalities).

Major Judicial Doctrines on Centre-State Relations

Doctrine of Territorial Nexus

Derived from Article 245, this doctrine states that state legislation can have extra-territorial operation only if a real and legitimate connection exists between the state enacting the law and the object or person located outside the state. Established in State of Bombay v. R.M.D. Chamarbaugwala (1957).

Doctrine of Pith and Substance

Applied when a law enacted by one legislature is challenged for encroaching upon the field of another. The court examines the true nature, character, and essence of the statute rather than its incidental encroachment. Upheld in Prafulla Kumar Mukherjee v. Bank of Commerce, Khulna (1947).

Doctrine of Colorable Legislation

Based on the maxim what cannot be done directly, cannot be done indirectly. It tests whether a legislature had the constitutional competence to enact a particular statute or disguised its encroachment under an apparent power. Articulated in K.C. Gajapati Narayan Deo v. State of Orissa (1953).

Doctrine of Repugnancy

Rooted in Article 254, it resolves direct conflicts between a Central law and a State law on a Concurrent List subject.

• The Central law prevails over the State law to the extent of the inconsistency.
• Exception (Article 254(2)): If a State law receives the President’s assent after being reserved for consideration, the State law prevails in that specific state. Parliament can still enact a subsequent law modifying or repealing it.

Important Commissions on Centre-State Relations

Key Facts and Points

• The 42nd Constitutional Amendment Act, 1976 transferred five subjects from the State List to the Concurrent List: education, forests, weights and measures, protection of wild animals and birds, and administration of justice (constitution and organization of all courts except Supreme Court and High Courts).
• Article 312 provides for the creation of new All India Services by Parliament, provided the Rajya Sabha passes a resolution supported by a two-thirds majority of members present and voting.
• The Inter-State Council was established in 1990 by a Presidential Order on the recommendations of the Sarkaria Commission.
• The Prime Minister acts as the Chairman of the Inter-State Council, with Chief Ministers of all states and union territories with legislative assemblies as members.
• The Sarkaria Commission submitted its final report in 1988 with 247 specific recommendations on legislative, administrative, and financial relations.
• Under Article 292, the Union Government can borrow upon the security of the Consolidated Fund of India within limits set by Parliament.
• Under Article 293, a State cannot raise any loan without the consent of the Government of India if there is still outstanding any part of a central loan or a guaranteed loan.
• The Supreme Court ruled in the landmark S.R. Bommai v. Union of India (1994) case that federalism is a basic feature of the Constitution and the presidential proclamation under Article 356 is subject to judicial review.
• Property of the Union is exempt from all taxes imposed by a State or any authority within a State under Article 285, unless Parliament by law provides otherwise.
• Property and income of a State are exempt from Union taxation under Article 289, except in cases where a State carries on a commercial trade or business.