Reforms in Centre-State Relations

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99notes October 25, 2023

Despite the various provisions made in the Indian Constitution for the smooth functioning of
the Indian Union, it has faced many practical challenges. Most of these challenges orbit
around the demand for greater autonomy.

In post-independent India, the need for planned development, national integration and
maintenance of law and order led to a significant degree of centralisation of powers in the
hands of the Centre. Long-term single-party government has also contributed to the Centre’s
growing dominance of politics.

The working of the federal system in the last seven decades shows that centre-state
relations have not always been cordial.

Till 1967, the Congress was in power both at the Centre and in most of the states; this
phenomenon was described as the “Congress system” by Rajni Kothari. This level of
political domination made sure of harmonious relations between states and the Centre.
However, after 1967, the change in the political scenario marked a paradigm shift in centre-
state relations.

Table of Contents

Toggle
Issues of Contention in Centre-state Relations
Demand for Reforms in centre-state relations
Administrative Reforms Committee (1966)
Reform committees appointed by various states
Sarkaria Commission

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 National Commission to Review the Working of the Constitution (NCRWC)
Punchhi Commission
Conclusion
Explore additional significant articles on Indian Constitution listed in the table below:

Issues of Contention in Centre-state Relations

The issues that have been a bone of contention in centre-state relations are:

1. Governor’s role:
The Governor acts as the Centre’s agent and has often played a partisan role in
Indian Polity.
This is amplified by the fact that the Centre controls the appointment and removal
of Governors.
2. Reservation of state bills for the consideration of the President: The Governor’s
right to reserve a bill for the President’s assent is another source of contention, as a
governor usually reserves a bill against the advice of a state to serve the interest of the
central government.
3. Arbitrary imposition of President’s rule (Article 356) instead of using it as a last
resort. For instance, When the Janata Government (in 1980) came into power at the
Centre, it dismissed the congress government in nine states.
4. Distribution of finances:
The union government controls vast tax resources in terms of Income tax,
Corporate tax, 50% of GST, Customs duties, etc. As a result, as per the 15th
Finance Commission report, the Centre’s share in total tax resources in India
is 62.7%.
Only the Union government has full freedom to finance loans from the organised
money market.
The State often fails to mobilise their own resources, becoming dependent upon
the Centre.
Further, the Centre raises more than 25% of its revenue through cesses, which
are not shared with states as “Net Proceeds”. Therefore, even though the 15th
Finance Commission raised the State’s share to 41%, the effective allocation has
stagnated between 29-32%.
5. Encroachment of state list by the Centre: For example –
5 subjects, including Education, Forest, Administrative Justice, Weights and
Measures, and Protection of Wildlife, were removed from the State list in the 42nd
Constitutional Amendment
Similarly, the Entry tax and Advertisement tax are now under the concurrent list
after the introduction of GST.

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 6. Deployment of armed forces in states for maintenance of law and order: The
Union government deploys paramilitary forces without consulting the State’s
government to preserve peace and order and occasionally even deploys forces against
the preferences of the concerned State.
7. The dominant role of non-constitutional and non-statutory bodies like the Niti
Ayog in formulating schemes and approving state projects.
8. Centre’s control over All India Services.
9. Use of state broadcasting mediums for political purposes.

Demand for Reforms in centre-state relations

There have been various attempts in India to find a solution to the contentious issues in the
Indian Federal system. The most important of these reforms are listed as follows:

Administrative Reforms Committee (1966)

To examine various issues in centre-state relations, the government appointed an
administrative reforms commission under Morarji Desai. The Committee made the following
recommendations:

Establishment of Inter-state Council under Article 263 of the Constitution.

Maximum delegation of powers to the Centre.
During the appointment of the Governor, it should be ensured that the person should
have a long experience in public life and administration and have a non-partisan
attitude.
Transfer of more resources to states in order to reduce their dependency on the
Centre.
Deployment of central armed forces in states on their request or otherwise.

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No action was taken on the Committee’s recommendation.

Reform committees appointed by various states

In the following years, demands were made by various states, which appointed commissions
and passed resolutions to press for reforms. A few of these demands are listed below.

I. Rajamannar Committee

In 1969, the Tamil Nadu government, under the DMK, set up a committee under the
chairmanship of Dr PV Rajamannar to examine the entire gamut of centre-state relations
and suggest constitutional amendments to secure greater autonomy for the states.

The Committee identified the following reasons for the centralising tendencies in the federal
structure:

1. Unitary provisions in the Constitution;

2. The one-party rule at the Centre as well as states;
3. Institution and role of planning commission;
4. Tight fiscal resources of states and their dependence on the Centre;

Recommendations:

1. The Finance Commission should be made a permanent body.

2. An Inter-state Council should be immediately set up.
3. The Planning Commission should be replaced with a statutory body.
4. The All India Services should be abolished.
5. Constitutional provisions dealing with the President’s rule should be completely
removed.
6. The provision that the state council of ministers holds office at the pleasure of the
Governor should be omitted.
7. Certain subjects in the Union and the concurrent list should be moved to the state list.
8. The residuary powers should be transferred to the states.

The Union government did not pay attention to the recommendations of the Rajamannar
committee.

II. Anandpur Sahib Resolution

The Anandpur resolution was passed by the Akali Dal in 1973. It contained political and
religious demands and asked for federalism in the true sense.

The demands of the resolution were the following:

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 1. The Centre’s jurisdiction should be limited only to defence, external affairs,
communication and currency.
2. The residuary powers should be transferred to states.

III. West Bengal Memorandum

In 1977, the Communist government in West Bengal published a memorandum on centre-

state relations and forwarded it to the Centre.

The key suggestions of the memorandum were:

1. The word ‘union’ in the Constitution should be replaced with ‘federal’.

2. The Centre’s jurisdiction should be limited only to defence, external affairs,
communication and currency and economic coordination.
3. The residuary powers should be transferred to states.
4. The provision of the President’s rule and financial emergency should be repealed.
5. State’s consent should be mandatory for the formation of new states and
reorganisation of existing states.
6. 3/4th of the total revenue generated by the Centre should be transferred to the states.
7. All India Services should be abolished.
8. Powers of the Rajya Sabha should be brought at par with the Loksabha.

In the context of these demands, the government has appointed the Sarkaria Commission
and Punchhi Commission to propose reforms to strengthen the Indian Federation.

Sarkaria Commission
In 1983, the Central Government set up a commission to review the Centre-state relations
under the Chairmanship of Justice R.S. Sarkaria. The Committee submitted its report in
1988 and made 247 recommendations.

Some key recommendations of the commissions are:

1. A permanent Inter-state Council should be set up under Article 263 (Established in

1990).
2. The use of Article 356 (President’s rule) should be limited and should only be used in
exceptional circumstances as a last resort.
3. The residuary power of taxation should be vested in the Centre; however, in other
matters, it should be transferred to the concurrent list.
4. The zonal councils should be reconstituted afresh to promote the spirit of federalism.
5. The net proceedings of the corporate tax should be permissibly shared with the states.
(Implemented by 80th Constitutional Amendment, 1999).
6. No commission of enquiry should be instituted against a state chief minister unless
demanded by the Parliament.

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 7. The Commissioner for linguistic minorities should be activated.
8. Recommendations on Legislative Matters
In the cases of state bills reserved for the President’s consideration, if the
President withholds a bill, the reasons should be communicated to the states.
The Centre should consult the states while making laws on concurrent
9. Recommendations regarding the post of Governor:
The procedure to consult the states in the appointment of Governors should be
mentioned in the Constitution itself.
The Governor cannot dismiss a council of ministers so long it enjoys a majority.
The Governor’s term of five years should be left untouched except in
compelling circumstances.
10. Recommendations in favour of unitary provisions
The institution of All India Services should be strengthened, and more services
should be created.
The Centre should have powers to deploy central armed forces in states even
without the consent of states; however, consultation with states is desirable.
The existing division of power between the Finance Commission and
Planning Commission should continue.
The three-language formula should be uniformly implemented throughout the
states.
No autonomy for Radio and Television, but their operations can be
decentralised.
No change in the role of the Rajya Sabha.
No change in the power of the Centre to reorganise states.

The Union government has till now implemented 180 (out of 247) recommendations of the
Commission. The most important of them was the establishment of the Inter-State Council in
1990.

National Commission to Review the Working of the Constitution

(NCRWC)
The Commission was set up by the NDA government in 2000, under the chairmanship of
Justice M.N Venkatachaliah, former chief justice of the Supreme Court, to suggest how the
Constitution stay relevant in the changing times.

The key recommendations of the Commission with respect to centre-state relations are:

1. The provisions of the Inter-state Council should mention the matters which should be
part of the consultation.
2. The subject of disaster management should be included in the concurrent
3. A statutory body named the Inter-State Trade and Commerce Commission should
be set up.

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 4. Assent on State Bill: When the state bill is reserved for the President’s consideration,
there should be a time limit within which the President has to act.
5. Provision related to President’s Rule (Article 356)
1. President’s rule in the State should be used sparingly.
2. The confidence of the Council of Ministers should be tested only on the floor of
the house. As long as the ministry has the confidence of the house, the Governor
shouldn’t dismiss it.
3. The assembly should not be dissolved before the proclamation under Article 356
has been laid before Parliament.

Punchhi Commission
In 2007, the central government constituted a Commission on Centre-State Relations under
Justice Madan Mohan Punchhi, former Chief Justice of India, to examine Centre-State
relations. The Commission submitted its report in 2010; the key recommendations were:

1. Provisions related to the Rajya Sabha need to be changed in order to make it a

representative forum of the states. There should be equality of seats in the Rajya
Sabha irrespective of the population of Rajya Sabha.
2. Recommendations on Institutional Cooperation
1. The workings of the Inter-state Council in the management of matters of
concurrent powers and overlapping jurisdiction should be continuously audited.
2. An Interstate Trade and Commerce Commission should be set up under
Article 307, with decision-making powers. Its recommendation and decisions
should be binding on all the parties, with a right to appeal in the apex court.
3. New All India Services should be created in the areas of health, education,
engineering and judiciary.

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 3. Recommendations on Distribution of Finances:
1. The ceiling on professional tax should be done away with.
2. The royalty rates for major minerals should be revised at least every three
years. The states should be duly compensated in case of a delay in revision.
3. To bring greater accountability, all fiscal legislation should be assessed by an
independent body on an annual basis.
4. The states should be involved in the framing of the term of reference for the
Finance Commission.
4. Recommendations of Legislative Matters:
A time limit should be imposed on the President’s action in matters of state
bills reserved for his consideration.
Before introducing legislation in Parliament relating to the subjects of concurrent
lists, a broad agreement should be reached between the Centre and states.
The Centre should maintain restraint in asserting parliamentary supremacy in
matters assigned to states.
The Parliament should make a law on entry 14 of List 1 ((treaty-making and
implementing it through Parliamentary legislation) to streamline the
procedure. The exercise of power cannot be absolute, keeping in mind the
federal scheme of the Constitution.
5. It is necessary to provide constitutional frameworks to deal with situations that require
the Centre’s intervention but do not warrant exceptional instruments under Articles
352 and 356. (Localised Emergency).

Recommendations related to the Governor and exercise of Article 356

(President’s Rule)

Punchhi Commission has made extensive recommendations regarding the role of the
Governor in the Indian Federation.

Appointment and Removal of Governor

1. During the selection of Governors, the recommendation of the Sarkaria
Commission should be followed. These are:
Person of eminence in some walk of life.
S/he should be of outside the State.
S/he should not be politically active in the recent past.
He should be a detached figure and not involved with the local politics of the
State.
2. The Governor should have a fixed tenure of five years. His/her term should not
depend on the whims of the Centre.
3. The process of impeachment of the President can be replicated for the removal of
the Governor.

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 4. The Constitution does not give general discretionary power to the Governor; even in
this limited choice, his/her actions should not be arbitrary.

Governor’s discretion in the appointment and Dismissal of Government

On the question of the Governor’s role in the appointment of the Chief Minister in the case of
a hung assembly, the guidelines based on Constitutional conventions need to be followed.
These guidelines may be as follows:

1. The party or combination of parties that holds the majority in the Legislative Assembly
should be invited to form the government.
2. If there is a pre-poll alliance or coalition, it should be regarded as one political party,
and if such coalition gets a majority, the leader of such coalition shall be invited by the
Governor to form the government.
3. In case no party or pre-poll coalition has been able to obtain a majority, the Governor
should select the Chief Minister in the order preference indicated here:
4.
The group of parties that had pre-poll alliances held the largest number.
The single largest party staking a claim to form the government with the backing
of others.
A post-election coalition with all partners becoming part of the government.
A post-electoral alliance with some parties becoming part of the government and
the remaining, including independents backing the government from outside.

On the question of dismissal of the chief minister, the Governor should always insist on the
chief minister to prove a majority in a prescribed time.

Governor’s Role during President’s Rule:

In case of external threat or internal disturbance paralysing the state administration, all
other recourses available under Article 355 should be exercised before resorting to
President Rule under Article 356.
In cases invoking Article 356, the guidelines stated by the Supreme Court in the SR
Bommai case should be followed.

Governor’s role in other Positions:

A time limit of six months should be prescribed for the Governor to act on the bills
passed by the state legislature.
The position of the Governor as a chancellor of universities and other such positions
should be eliminated. His role should be limited to the Constitutional provisions only.

Conclusion

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In the past, the politics of Union-state relations centred on issues like “more powers to the
states,” “more financial resources to the states,” and even calls for the Indian Constitution to
be rewritten.

However, it appears that consensus rather than control will become the preeminent
paradigm of centre-state relations in the years to come.

In recent years, the establishment of institutions like the GST Council and NITI Ayog, which
function on consensus rather than control, has had a positive impact on centre-state
relations.

Several commissions on centre-state relations, such as the Sarkaria Commission and

Punchhi Commission, suggested certain constitutional changes, which, if implemented,
would smoothen the relationship between the two layers of government.

Explore additional significant articles on Indian Constitution listed in

the table below:

What is a Constitution? Evolution of Indian Constitution

The Crown Rule Features of Indian Constitution

The Making of the Constitution Sources of the Indian Constitution

The Preamble of Indian Constitution Union and Its territory

Citizenship Fundamental Rights

DPSP Fundamental Duties

Amendment of the Indian Constitution The Doctrine of Basic Structure

Parliamentary System Federal System

Centre-State Relations Inter State Relations

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Emergency Provisions Polity

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