Open Access Research Article
“INDIAN FEDERALISMAND UNION-STATE FINANCIAL RELATIONS”
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Article Details
“INDIAN FEDERALISMAND UNION-STATE FINANCIAL
RELATIONS”
AUTHORED BY
- DIVYANSHI CHAUDHARY
LL.M (Constitutional
and Administrative law) ICFAI UNIVERSITY, DEHRADUN
Abstract
Modern political systems may be classified in terms of the method by which the powers of administration are distributed between the governments of
the whole country on the one hand, and regional or provincial governments that
exercise authority over the parts of a country on the other. On this basis, the
present governments have been designated as ‘Unitary’ or ‘Federal’. The government of every modern
constitutional state falls either of these two types. For instance,
there are unitary constitutions in Britain, France, Japan, while the United
States of America, Switzerland, Australia have federal constitutions.
A unitary government is a single integrated system of government for the
exercise of all powers. The legal sovereign confers all powers of government in
the first instance upon a single central government. The legislature of the
central government is the supreme law-making body in the country. The central government may exercise all these powers
by itself or create political sub-divisions and delegate them such powers, as
it may deem wise to delegate. In other words, the legislature of the whole
country may permit legislatures of regional
governments to exist and exercise their powers, but “it has the right,
in law, to over- rule them, because they are subordinate to it.”1Furthermore,
they exist and exercise their powers only at the mercy of the union government.
Federal system, on the other hand, involves the division of powers
between a government for the whole (National
government) and constituent
parts (Provincial governments) in such a way that
each government is legally independent within its own sphere.
The government for the whole
countryhas its own area of powers. It exercises its authority without
any control from the governments of the constituent parts of the country. The
constituent parts in their turn exercise their powers without being controlled
by the central government. The
national and the regional governments are free and autonomous within the sphere
assigned to them by the Constitution. Therefore, “Neither is subordinate to the
other; but both are coordinate and independent.”
1Gamer, J.W., Political Science
and Government, World Press, Calcutta, 1952, p. 348.
CONTENTS
I
INTRODUCTION 3
II
DEFINITION & NATURE
OF FEDERALISM… 5
III
THE PROCESS OF FEDERALIZATION IN INDIA 6
IV
BASIC FEATURES OF INDIAN FEDERALISM 8
V
CENTRE-STATE FINANCIAL RELATIONS 9
VI
ISSUES BETWEEN CENTRE
AND STATE IN FINANCIAL RELATIONS 12
VII
RESEARCH OBJECTIVES 13
VIII
HYPOTHESIS 13
IX
RESEARCH PROLEM 14
X
RESEARCH METHODOLOGY 14
XI
CONCLUSION & SUGGESTIONS 14
XII
REFERENCES 15
INTRODUCTION
The contemporary debates about federalism in India are rooted in a
long-standing contestation of sovereignty. Some Indian historians like K. P.
Jayaswal and R.K. Mukerjee could trace out the elements of federalism in the
ancient Indian polity. Ancient polity laid down that empire should not be at the expense of local autonomy,
culture and institutions. Most of the feudatory kingdoms held together by
masterful personalities for a few decades.2Beni Prasad called the
Mauryan empire “feudal and federal type” in which “the internal autonomy of
various regions was respected."3 Mukerjee also endorses this
view when he said, “the Mauryan empire recognized the local autonomy at the
expense of the central government.”4 This emphasis on local autonomy
is very similar to our present idea of a strong centre with full autonomy for
the states.” In the later Vedic period, the Kurupanchalas formed a composite
state under a common monarch. The Kshudrakas and the Malavas formed a
confederal union to meet the
invasion of Alexander the Great. In the period of Buddha and Mahavir, the Lichhavis formed a
confederation once with the Mafias and later
with the Videha’s. Jayaswal says: “The Videhas and the Lichhavis were,
according to Buddhist documents, united in a league and they were together
called Samvijjis (literally means “the Vajjians together”). The two Republics,
however, were not confined to their own federation. The Lichhavis once had
formed a federation with their neighbors, the Mallas, according tojain sutra.
However, the development of administrative institutions with a federal
character in India began with the expansion of British rule after 1857, when
the British Crown assumed the direct responsibility for India’s ‘protected’
states. In 1858, Lord Canning was proclaimed the first Viceroy and
GovernorGeneral for the British Crown. It is during this period that the Indian
Councils Act of 1861 gradually reversed the centralizing administrative aspects
of British rule as set out by the Charter Act of 1833. The Charter Act of 1833,
according to H.H. Dodwell, ‘had centralized the administration of the country’s
finances in the hands of the
Government of India.” However, it
negated the power of legislation
from the Governors in Legislative Council.
2Altekar, A.S., State and Government in Ancient India,
Motilal Banarsidas, Delhi,
1962, pp. 286-287.
3Beni Prasad,
The State in Ancient India, Central Press, Allahabad, 1928, p.162
4Mukerjee, R.K., Local Government in Ancient India,
Motilal Banarsidas, Delhi,
1958, p.10.
These are some stages
which introduced the concept of federalism in India
for the first time:
The Indian Councils
Act of 1861
This Act, for the first time introduced a grain of popular element. In
the earlier acts, the Govenor-General’s Executive comprised exclusively of
officials, but this Act included certain additional non-official members.
However, this Legislative Council was neither representative council nor
deliberative in any sense.
Minto - Morley Reforms of 1909
The Government of India Act of 1909, popularly known as MintoMorley reforms brought certain changes in the
composition of the Legislative Council and the Provincial Council and the
Provincial Legislatures. It empowered the members (both the Central and State
Legislative Councils) to discuss any matter, raise questions and supplementary
questions except military, diplomatic and religious matters.
Government of India Act, 1919
The next land mark in the constitutional development of India is
Montagu-Chemsford Report known as the Government of India Act, 1919. This act
introduced responsible government in the provinces without impairing the responsibility of the Governor for the
administration of the provinces. It introduced a device known as dyarchy or
dual government. This Act further divided the administrative subjects between
the union and the state governments into two types namely, Union List,
Provincial List. It included 47 subjects in
the Union List, for instance, defence, foreign affairs, public debt, posts and
telegraphs, navigation, export and import duties etc. The Provincial List
consisted of 51 subjects. Ex: Local government, public health, education,
agriculture, forests, law etc.
Government of India Act, 1935
The next stage in the
evolution of Indian federation was
the Government of India Act of 1935. This Act was considered the second
milestone in the introduction of the responsible government in India. It gave a
concrete design of federation to the future Constitution of India. It is also
the first legal document that proposed to unite the provinces of British India
and Indian states into a federation. The Act described the structure of central
government, the extent of provincial autonomy, and provinces and the paramount
power.The Government of India Act, 1935, also provided a bicameral federal
parliament that never came into being due to the reluctance of the princely
states to join the federation.The Government of India Act
also constituted a federal court in order to settle the conflicts between
the union and the provinces or between
the provinces.
NATURE OF INDIAN FEDERALISM
The political structure of the Indian constitution is so unusual that it
is not possible to describe it briefly. Characterizations such as
‘quasi-federal’ and ‘statutory decentralization’ are quite interesting but not
enlightening. The members of the Constituent Assembly themselves refused to
adhere to any theory or dogma about federalism. India had unique problems, they
believed, that had not “confronted by other federations in history”. These
problems could not be solved by recourse to theory because, federalism was “not
a definite concept and also lacked a stable meaning".
Therefore, the Members
of the Constituent Assembly,
drawing on the experience of the great federations like the United States,
Canada, Switzerland, and Australia pursued “the policy of pick and chose to see
what would suit (them) best, what would suit the genius of the nation’s best.” The Assembly, in fact,
produced a new kind of federalism to meet India’s peculiar needs.
Though federalism is an
important feature of Indian
political system, the word ‘federation’ was not used any where in
the constitution. The first Article of the Draft Constitution of India prepared
by Dr. B.N. Rao, the constitutional adviser, clearly stated, “India shall be a
federation.” 5But subsequently the Drafting Committee dropped the word ‘federation’ and stated, ‘India shall
be a Union of States’ This expression was taken from the preamble to the
British North America Act of 1867.” This change in the opinion of the Drafting
Committee was desirable in spite of the
fact that the Indian constitution may be federal in
structure.
Since the word ‘federation has not been used in the constitution, the
nature of the Indian federalism has become a
controversial one. As mentioned above, Article 1(1) of the Indian constitution declared, “India that is Bharat, shall be a Union of States”. 6The
word ‘Union’ here, was not to indicate any particular type of federation. It
was also used in the preamble of the Constitution of the United States of America, the model of federation and the preamble of the
British North America Act, 1867, and even in the Constitution of USSR (1977),
which formally acknowledges a right of secession to each Republic, i.e., units
of the Union.
There were, however, specific and valid reasons for calling our political system
as ‘Union of States’ and not a federation. While
submitting the Draft Constitution, Dr. B.R. Ambedkar, the Chairman of the
Drafting Committee, stated that “although it’s Constitution may be federal in structure.” the committee had used the
5Shiva Rao, B., Framing
of India’s Constitution, Universal Publications, New Delhi, 2004, Vol. Ill, P. 4.
6Basu, Durga Das., Introduction to the Constitution of India’, 1991, Wadhwa,
Nagpur, P. 51.
term “Union” because of certain advantages.” These advantages, he
explained in the Constituent Assembly, were to indicate two things. According
to him, the Indian federation was not the result of an agreement by the states
and (b) the federation not being the result of
an agreement, no state has
the right to secede from it. It means the federation in India is a Union, because it is indestructible, and the country isone integral whole. The Drafting Committee thought that it was better to make
it clear at the outset rather than to leave it to speculation or to
dispute. The explanation, coming as it
does, from the Chairman of the Drafting Committee, is significant and
throws sufficient light on the
nature of our polity and
intergovernmental relations.
A State is Federal or Unitary
is one of Degree
The controversy about the nature of Indian federalism is long-lasting
since federalism is a word of multiple meanings and diverse hues and colours.
Therefore, one difficulty is that there is no agreed definition of a federal
state. The other difficulty is that it is habitual with scholars on the subject
to start with the model of the United States, the oldest (1789) of all federal
constitutions in the world, and to exclude any system that does not conform to
that model from nomenclature of ‘federation’. Since 1787, several countries
have adopted constitutions having federal features.
If the strict historical standards of the United States be applied to all these latter constitutions,
only few will stand the test of federalism save perhaps Switzerland and
Australia. Nothing will be gained
by excluding recent constitutions from federal classand
classifying them as either
unitary or federal. If, therefore, constitution partakes of some features of
both types, the only alternative is to
analyses those features and to
ascertain whether it is unitary
or federal, although it may have
subsidiary variations.
A liberal attitude towards the question of federalism is, therefore,
inevitable particularly, in view of the fact that recent experiments in the
world of constitution-making are
departing more and more from ‘pure’ type of either unitary or a federal state.
An American research scholar argued, “The question whether a state is federal
or unitary is one of degrees and the answer will depend upon “how many federal
features it possesses.”7 Another American Scholar has in the same twist observed that federation is more a
‘functional’ than an ‘institutional’ concept" and “the institutions are
not the same things in different social and cultural environments.8
THE PROCESS
OF FEDERALISATION IN INDIA
The structural organization of the Indian Republic has come to exercise
through different constitutional process.
7Wagner, W.T., ‘Federal States and their Judiciary’ Moulton and Company,
1969, p. 25
8Livingstone, ‘Federal
and Constitutional Change’,
Moulton Company, 1956, pp. 6-7
The first was the process of division. The unitary
state of British India became a federal state under the Government of India
Act, 1935, and provinces of British India thereby acquired the status of the units
of a federation, which they have retained under the constitution. This process
of a unitary state splitting up into several states to form a federal union as
many historical precedents, as for instance, in Soviet Russia, Argentina, and
Mexico.
The second constitutional process was one of accession and unification
and was carried out into two different
stages. In the first stage, all Princely states with the exception of Hyderabad and Kashmir executed
Instruments of Accession surrendering specified powers of sovereignty to the
Government of India and thus entered into a federal arrangement with Dominion of India that came into existence on the 15th August 1947.
In the second stage of the constitutional process, some of these states
were closely associated because of their
historical and cultural affinity andgeographical proximity. These were grouped
together under covenants executed by their
rulers to form union of states
that ultimately became separate units of the Indian federation. Others were attached to the states,
which were formerly known as provinces, by virtue of the powers vested in the
government of India under their Instrument of Accession. Still others were
allowed to retain their separate identity, primarily because of their
geographical isolation while surrendering their powers of sovereignty to the
Government of India, and were classed as part of C states under the constitution.
The third was the process of dismemberment and amalgamation. This was
carried out under the provisions of
the States Reorganisation Act, 1956. Thus, the state of Hyderabad has been
dismembered and its territories
distributed between the states of Andhra Pradesh, Bombay and Mysore to which the state of Coorg has been attached. The
States of Saurashtra and Kutch have been merged in the State of Bombay.
Similarly, the State of Madhya Pradesh has absorbed the State of Madhya Bharat
and Bhopal. The Patiala and East Punjab State has been amalgamated with the
State of Punjab. The state of Rajasthan has been enlarged by an addition of
territories of the state of Ajmeer. All these process, it is evident, have led
to the clarification and simplification of the structure of the Republic.
BASIC FEATURES OF INDIAN
FEDERALISM
The views of the constitutional experts made it clear that the
Constitution of India presents a modified form of federation suitable to the
special requirements of the Indian society. It may not be similar to that of
the United States, which is a model of federation. Yet it possesses
some essential features
of federalism. There
might be differences in matters of details; the consensus is that a
federal system involves the following features.
Firstly, a federal state is a fusion of several states into a single
state in regard to the common objectives. All federal states must have two
governments namely, the federal government
and the state governments which is a common feature of any federal state. India
too possess two governments namely, the union government and the state
governments. Both the governments are substantially independent of each other.
All the state governments enjoy autonomy over the field allotted to them. The
federal and state governments draw their authority from the same source, viz., the
constitution of the land. The units have certain powers as has the union
itself. In the words of Dr. B.R. Ambedkar, “the states in our constitution are
in no way dependent upon the center for their legislative
authority.”9
Secondly, any federal state involves a division of authority between the
federal government and the states, though the method of division may not be
alike in all the federal constitutions. The constitution of India provides for
systematic division of powers between the union government and the state
governments. In the words of Dr.
B.R. Ambedkar, “the states are as sovereign in the field which is left to them
by the constitution as the centre in
the filed which is assigned to it.”10
Thirdly, Indian federation like all other federations derives its
existence from the constitution and therefore, the constitution is supreme. All
the organs of the national and the
state governments derive their powers and authority from the constitution and
function under the framework of the constitution. Every power - “executive,
legislative or judicial - whether it belongs to the federation or to the
component states is subordinate to and controlled by the constitution”.
Lastly, in a federal state, the legal supremacy of the Constitution is
essential to the existence of the federal system. The authority of the courts
protects the supremacy of the constitution and the division of powers. It is essential to maintain the division of
powers not only between the coordinate branches of the government, but also
between the federal government and the states themselves. It involves two
connected matters. Firstly, the Judiciary can prevent the federal and the state
governments for encroaching upon each other’s power. It can declare laws made
by them ultra vires on the ground of excess of power. Secondly, the Supreme
Court of India is a judicial body independent of both the national and state
governments, with the authority to say the last word in matters involving constitutional
interpretations. In other words, the highest
9Prasad, Anirudh,
Centre and State
Powers under Indian
Federalism’ Deep & Deep Publications, New Delhi, 1984,
p. 29.
10K.R. Acharya.
‘Perspectives of on Indian Government and Politics’, P.246,
S.Chand and Company,
New Delhi, 1991, p. 246
courts in the country have the final power to interpret the constitution and nullify an action on the part of the
federal and state governments or their different organs that violates the
provisions of the constitution.
Peculiar Features
of Indian Federalism
o The Mode of Formation
o Position of the States
in the Federation
o No Right for States
to Secede
o Unequal Representation of States in the Upper
House
o Residuary powers
o No separate Constitution except for Jammu & Kashmir
o Appointment of the
Heads of the States
o No Double
Citizenship
o No Division
of Public Services
o No Dual system of Courts
CENTRE-STATE
FINANCIAL RELATIONS
Articles 268 to 293 in Part XII of the Indian Constitution deal with
centre-state financial relations. In addition to these, there are other
provisions dealing with the same subject. These together can be studied under
the following heads:
(I)
ALLOCATION OF TAXING
POWERS
o The constitution divides the taxing
powers between the centre and the states
in the following way:
o
The Parliament has exclusive power to levy taxes on
subjects enumerated in the Union List. (Which are 15 in number)
o
The state legislature has exclusive power to levy
taxes on subjects enumerated in the State List. (Which are 20 in number)
o
Both the
Parliament and the state legislature can levy
taxes on subjects enumerated
in the Concurrent List. (Which are 3
in number)
o
The residuary power of taxation
(that is, the power to
impose taxes not enumerated in any of the three lists) is vested in the Parliament. Under this provision, the Parliament has imposed
gift tax, wealth tax and expenditure tax. There is no
concurrent sphere in the matter of tax legislation.
(II)
DISTRIBUTION
OF LEGISLATIVE POWERS
TO LEVYTAXES
The Legislative power to make
a law for imposing a tax is divided between the union and the
states by means of specific entries
in the union and state legislative lists in the VII Schedule of the Indian
constitution. For instance, while the state legislature has the power to levy
an estate duty in respect of
agricultural lands, the power to levy an estate duty in respect of
non-agricultural land belongs to Parliament. Similarly, it is the state
legislature, which is competent to levy a tax on agricultural income, while the Parliament has the power
to levy income tax on all incomes other than agricultural.
The constitution also draws a distinction between
the legislative power to levy
and collect a tax and the power to appropriate the proceeds of
a tax so levied and collected. For example, the income tax is levied and
collected by the union but its proceeds are distributed between the centre and
the states. In India, the powers of a legislature in these two respects are not
identical.
(III) LIMITATIONS ON
STATES
Taxing power A state legislature has the power to levy any of the taxes
enumerated in the state list. However, in the case of certain taxes, this power
is subject to certain limitations imposed by the substantive provisions of
constitution. The following are a few examples of this kind.
As per Article 276, a state legislature is empowered to levy a tax on
profession, trades callings and employment. However, the total amount of such
taxes payable by a person or an authority in the state shall not exceed Rs.
2500 per annum.11
Article 287 states that a state legislature can impose a tax on the
consumption or sale of electricity. But,
no tax can be imposed on the consumption or sale of electricity which is (i)
consumed by the Government of India or sold to the Government of India or (ii)
consumed in the construction, maintenance or operation of any railway by the centre or sold to the centre or the railway company for same purpose.
(IV) DISTRIBUTION OF PROCEEDS OF TAXES
The state legislature has power to levy taxes from the state list. But
the yield of different taxes is not sufficient to serve the purpose of the
state. To meet this situation, the constitution makes special provisions. Some duties
are leviable by the union, but they are to be collected
and entirely appropriated
11The Maximum
limit of the Profession
Tax has been raised from Rs. 250 to Rs. 2500 by the Constitution
(60th Amendment) Act, 1988.
by the states after collection. There are some other taxes, which are
both levied and collected by the union, but the proceeds are then assigned by
the union to those states within which they have been levied. Again, there are
taxes, which are levied and collected by the union, but the proceeds are
distributed between the union and the states.
(a) Taxes belonging to the Union exclusively
(b) Taxes
belonging to the States exclusively
(V) DISTRIBUTION OF TAX REVENUES
Article 268 provides the scheme of the distribution of revenue between
the union and the states. The states possess exclusive jurisdiction over taxes
enumerated in the state list. The union is entitled to the proceeds of the
taxes in the union list. The concurrent list includes no taxes. However, it is
to be noted that while the proceeds of taxes within the state lists are entirely retained by the states, proceeds of some
of the taxes in the union list may be allowed, wholly or partially to the
states.
(i)
Taxes Levied by the Union but collected
and appropriated by the States (Article
268)
(ii)
Service Tax levied by the Union but collected and appropriated by the Union
and the States (Article 268-A)
(iii)
Taxes Levied and collected by the Union but Assigned
to the States (Article 269).
(iv)
Surcharge on certain
taxes and duties for purposes of Centre (Article
271).
(VI) BORROWING POWERS OF THE UNION AND THE
STATES
The constitution makes the
following provisions with regard to the
borrowing powers of the centre and the states:
The union government has unlimited power of borrowing, upon the security
of the revenues of India either within India or outside. The union executive
exercises this power subject only to such limits as may be fixed by Parliament
from time to time (Art. 292).
The borrowing power of a state
is, however, subject to a
number of constitutional limitations. It cannot borrow outside
India. Under the Government of India Act, 1935, the states had the power to
borrow outside India with the consent of the centre but this power is totally
denied to the states by the constitution. The union shall have the sole right
to enter into the international money market in the matter of borrowing.
(VII) EXEMPTION FROM MUTUAL TAXATION
Under Article 285, the property of the union is exempted from all taxes imposed by a state or by any authority within a state, but
Parliament may authorize to do so. The word ‘property’ includes lands,
buildings, chattels, shares, debts, everything that has a money value, and
every kind of propertymovable or immovable and tangible or intangible.
Further, the property may be
used for sovereign (like armed
forces) or commercial purposes. But, the corporations or the companies created by the central
government are not immune from state taxation
or local taxation. The reason is that
a corporation or a company is a separate legal entity. Conversely, as per the Article
289, the property and income of a state is exempted from union taxation. Such
income may be derived from sovereign
functions or commercial functions. But the centre can tax the commercial
operations of a state if Parliament so provides.
However, the Parliament can declare any particular trade or business, as
incidental to the ordinary functions of the government and it would then not be
taxable.
(VIII) UNION CONTROL
OVER FINANCIAL MATTERS
As in the legislative and administrative spheres, so in financial matters
the normal relations between the union and the states is liable to be modified
in different kinds of emergencies.
While a proclamation of emergency (under Article 352) is in operation,
the President of India can modify the constitutional distribution of revenues
between the centre and the states. This means that the President can either
reduce or cancel the transfer of finances (both tax sharing and grants-in-aid)
from the centre to the states. Such modification continues till the end of the
financial year in which the emergency ceases to operate. Because of emergency,
the states will be left to their narrow resources from the revenues under the
state list, without any augmentation by contributions from the union.
While the President makes a proclamation of financial emergency (under
Article 360), it shall be competent for the union to give the following
directions to the states.
o
To observe
such canons of financial propriety and other safeguards as may be
specified in the directions;
o
To reduce the salaries and allowances of all persons
serving in connection with the affairs of the state, including High Court
Judges;
o
To reserve all money bills and other financial bills for the consideration of the President.
ISSUES ETWEEN CENTRE
AND STATE FINANCIAL
RELATIONS
Taxes not shared in Federal Spirit
There were complaints from different states that the centre had not
shared taxes with them in the spirit of constitution. They felt that they had
to perform the ever-widening functions in development and social services, but
matching finances were not being transferred to them from the centre, and that
under the existing system of allocation of funds the rich states had got more
and poor states less, resulting in an ever- widening gap.
The way the central leadership treats the states while giving grants is
often a source of reaction from the states. They regard it as the most serious constraint upon their autonomy. 12The states
ruled by parties other than the one in power at the centre often make
complaints of discretionary and step-motherly treatment “in matters of
allocation of funds and giving of grants-in-aid13. The use of the
superior financial power of the centre for partisan ends by the party in power
remains a perpetual complaint of the state governments.
RESEARCH OBJECTIVES
The specific
objectives of the present study are as follows:
·
To trace out the
origin and growth of federal
system in India.
·
To discuss about the nature,
organization and functioning of the Indian federalism.
·
To analyse critically the union-state relations
(Financial) keeping in view of Constitutional
provisions.
·
To identify the major areas of conflict
and co-operation between the centre and the
states in India.
·
To analyse the constitutional
and also financial provisions which helps to understand Centre State relations.
·
To suggest various
measures to increase
cooperation between the union and the states.
HYPOTHESIS
In order to draw meaningful conclusions, the data has been analyzed and
tabulated wherever necessary. An attempt was also made to codify the
information collected and presented in a manner, which is suitable for the
present study.
RESEARCH PROLEM
The fathers of the Indian constitution, keeping in view of the
linguistic, cultural, and regional diversities
have opted on a novel
type of federal government, which could satisfy the
diverse needs on the one hand
and
12Ghai, K.K., Indian Government and Politics’, Kalyani
Publishers, New Delhi, 2003, p.174.
13Rao, K.V., The Parliamentary Democracy of India,
Law Publishing House,
Madras, 1981, pp. 325-326.
bring unity and solidarity on the other. The working of the Indian
federation proved successfully with some bickering now and then. The federating
units in India often are demanding for more autonomy. Sometimes there are
conflicts between Centre and state while exercising their financial powers the
present study entitled- “INDIAN
FEDERALISM AND CENTRE
STATE FINANCIAL RELATIONS” is an attempt
to
identify more areas of cooperation between the two sets
of governments regarding their financial conflicts.
METHODOLOGY
The present study is based mainly on primary and secondary sources. Much
of the data is collected through desk research. The books relating to the
concept of federalism and Indian federalism were widely read. Much information has been gathered from
these sources. Many other books, which deal with Indian federalism, role of
Governor, were also made use of them. The Reports of various Commissions and
Committees appointed by both the union government and the state governments
have been taken into consideration.
In addition to above, the daily newspapers, internet, journals on
constitutional aspects, Journals on Political Science and Public Administration were also consulted. Academic and legal discussions were also held with the
subject experts and scholars on Indian Constitution, Government, Politics, and
Administration and extracted useful comments and conclusions.
CONCLUSIONS AND SUGGESTIONS
Financial relations between the union and the state governments have been
a major area of tensions. The states find themselves dependent upon the union
because of their meager resources and restricted field of taxation. The
treatment of the states by the union government while giving grants is often a
source of reaction from the states. They regard it as most serious constraint upon their autonomy. The
states often feel dissatisfied with
the system of central grants-in-aid and allocation of funds by the central
agenciesthe Planning Commission and the Finance Commissions. The union
government is often charged of partisan attitude towards some states and discrimination
against other states, which are ruled by opposition regional parties. The use
of superior financial power of the centre for partisan ends bythe party in
power remains a perpetual complaint of the
state governments. The Finance Commission, with its independent constitutional
status, was expected to engineer the necessary balance between the needs of the
centre and the states. In addition to wide income disparities, the Indian union
is characterized by vast regional
inequalities too. It may lead to regional
movements, the demand for separate statehoods. The union needs to resolve such
problems at the earliest.
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Article Information
“INDIAN FEDERALISMAND UNION-STATE FINANCIAL RELATIONS”
Authors: DIVYANSHI CHAUDHARY
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/05/07
- Issue 7
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International Journal for Legal Research and Analysis
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- ISSN 2582-6433
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