Centre-State Relations: Legislative, Administrative and Financial

Prerequisites: Constitutional Framework · Parliament · State Government

The Hook: Can a Governor Sit on a Bill Forever?

The Core Concept

India’s federalism is real but centralised. The Constitution divides power between two levels of government (a federal feature) but gives the Union the decisive edge in emergencies, finance and administration (unitary features). K.C. Wheare called the result “quasi-federal”; the Supreme Court in S.R. Bommai v. Union of India (1994) held that federalism is part of the basic structure.

Dr B.R. Ambedkar explained the phrase “Union of States” in the Constituent Assembly: the Indian federation was not the result of an agreement among States, and therefore no State has the right to secede from it.

Federal and unitary features side by side

1. Legislative relations (Articles 245–255)

Territorial extent (Article 245): Parliament legislates for the whole or any part of India and can make extra-territorial laws; a State legislature legislates for its own territory.

Subject matter (Article 246 and the Seventh Schedule):

The 42nd Amendment (1976) moved 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 organisation of all courts except the Supreme Court and High Courts).

When Parliament can legislate on a State subject:

Repugnancy (Article 254): if a State law on a Concurrent subject conflicts with a Union law, the Union law prevails. Exception, Article 254(2): a State law reserved for and assented to by the President prevails in that State — but Parliament can still override it later.

Control over State legislation: the Governor may reserve certain bills for the President (Article 200); the President may give or withhold assent (Article 201). Some bills need the President’s prior sanction (for example, bills restricting freedom of trade under Article 304(b)).

2. Administrative relations (Articles 256–263)

• Article 256: a State’s executive power must be exercised to ensure compliance with Union laws; the Union may give directions for this.
• Article 257: a State’s executive power must not impede the Union’s; the Union may direct States on communications of national or military importance and the protection of railways.
• Article 258: the President may, with a State government’s consent, entrust Union functions to the State. Article 258A (7th Amendment, 1956) allows the reverse.
• Article 365: if a State fails to comply with Union directions, the President may hold that the State’s government cannot be carried on in accordance with the Constitution — a gateway to Article 356.
• Article 262: Parliament may provide for adjudication of inter-State river water disputes and exclude courts’ jurisdiction — done through the Inter-State River Water Disputes Act, 1956.
• Article 263: the President may establish an Inter-State Council. It was set up in 1990 by Presidential order, on the Sarkaria Commission’s recommendation, chaired by the Prime Minister.
• Article 312: new All India Services may be created if the Rajya Sabha resolves so by a two-thirds majority of members present and voting.

Extra-constitutional and statutory forums: Zonal Councils (five, created by the States Reorganisation Act, 1956 — statutory, chaired by the Union Home Minister); the North Eastern Council (North Eastern Council Act, 1971); and NITI Aayog (an executive body set up in 2015).

3. Financial relations (Articles 264–293)

graph TD
    A[Union taxes] --> B[Article 270: divisible pool shared with States]
    B --> C[Finance Commission fixes share - Article 280]
    A --> D[Grants-in-aid]
    D --> E[Article 275: statutory grants on FC advice]
    D --> F[Article 282: discretionary grants for any public purpose]
    G[GST - Article 246A] --> H[GST Council - Article 279A]
    H --> I[Recommends rates and rules to Union and States]

• Article 246A (101st Amendment, 2016) gives Parliament and State legislatures concurrent power to levy GST; only Parliament levies GST on inter-State supplies (Article 269A, IGST).
• Article 268: duties levied by the Union but collected and appropriated by the States (for example, certain stamp duties).
• Article 270: taxes levied and collected by the Union and shared with States. After the 80th Amendment (2000), the entire pool of Union taxes (with stated exceptions such as cesses and surcharges) is divisible.
• Article 275: statutory grants-in-aid to States in need, charged on the Consolidated Fund of India, on Finance Commission advice.
• Article 280: Finance Commission every five years or earlier. The 15th Finance Commission (chair N.K. Singh) recommended a 41% share of the divisible pool for States for 2021–26. The 16th Finance Commission (chair Arvind Panagariya) covers 2026–31.
• Article 282: discretionary grants by the Union or a State for any public purpose, even outside its legislative competence — the route used for many centrally sponsored schemes.
• Article 293: a State cannot borrow without the Union’s consent if it still owes the Union part of an earlier loan.

GST Council (Article 279A): chaired by the Union Finance Minister; members are the Union Minister of State for Finance and each State’s Finance Minister. The Union’s vote carries one-third weight and the States together two-thirds; decisions need a three-fourths majority of weighted votes of members present and voting. In Union of India v. Mohit Minerals (May 2022), the Supreme Court held that the Council’s recommendations are persuasive, not binding, on Parliament and State legislatures.

4. Article 356 and the Bommai line

Article 356 allows President’s Rule when the President, on the Governor’s report or otherwise, is satisfied that a State’s government cannot be carried on in accordance with the Constitution.

• Approval by both Houses within two months; continues for six months at a time; maximum three years.
• Beyond one year only if a National Emergency is in operation and the Election Commission certifies that elections cannot be held (44th Amendment, 1978).
• S.R. Bommai v. Union of India (1994): the proclamation is subject to judicial review; majority must be tested on the floor of the House, not in the Governor’s chamber; the Assembly should not be dissolved until Parliament approves the proclamation; secularism and federalism are basic features.

5. Commissions on Centre-State relations

Memory Anchors

The three “Parliament-on-State-subject” routes in peacetime: “Nation, Neighbours, Nations” → 249 (National interest via Rajya Sabha), 252 (Neighbouring States ask for it), 253 (Nations — treaties).

Grants pair: “275 is Statutory, 282 is Spontaneous” — 275 flows on Finance Commission advice; 282 is discretionary.

42nd Amendment transfers — “E-F-W-W-J”: Education, Forests, Weights and measures, Wild animals and birds, Justice (administration of).

One-line Mains hooks:

• “India is an indestructible Union of destructible States” — Parliament can reshape States (Article 3), but no State can leave.
• S.R. Bommai (1994): the floor of the House, not the Raj Bhavan, decides majority.

For Prelims

For Mains

• Dimensions: constitutional (division of powers, Articles 200, 356); fiscal (vertical imbalance — States carry most spending duties but the Union raises most revenue; cesses and surcharges outside the divisible pool); political (Governor’s role, use of central agencies); institutional (Inter-State Council meeting rarely, GST Council as a model of pooled sovereignty).
• Keywords: cooperative federalism, competitive federalism, fiscal federalism, asymmetric federalism (Article 370’s former status, Article 371 special provisions, Sixth Schedule), pooled sovereignty, vertical and horizontal imbalance.
• Value-addition: S.R. Bommai (1994); Mohit Minerals (2022) on the GST Council; Sarkaria and Punchhi recommendations on Governors; State of Punjab v. Principal Secretary to the Governor of Punjab (November 2023) — a Governor who withholds assent must return the bill to the legislature and cannot keep it pending indefinitely.

Common Traps

In the News

• November 2023 — State of Punjab v. Principal Secretary to the Governor of Punjab: Governors cannot indefinitely withhold action on bills.
• April 2025 — State of Tamil Nadu v. Governor of Tamil Nadu: bills held deemed assented; timelines read into Articles 200 and 201.
• May 2025 — the President sought the Supreme Court’s advisory opinion under Article 143 on timelines for assent by Governors and the President.

Practice

Prelims

Mains

Quick Revision

Key Takeaways

Related Topics

• Federalism — quick revision
• Federalism — practice questions
• State Government
• Constitutional Bodies (Finance Commission, GST Council)
• Taxation and GST
• Comparison with Other Constitutions