Federalism in India| How it Works

The Constituent Assembly of India produced a new kind of federalism to meet India’s peculiar needs, the significant absence of the expression like federal or federation or federalism in the constitutional vocabulary has led constitutional experts to doubt the appropriateness of the appellation ‘federal’ to the constitution of India.

This peculiarity has influenced the constitutionalist to label Indian constitution with different names viz ‘Quasi Federal’, Unitary, Centralist, etc.

It appears that the thinkers neglected the historical forces and pressures that shaped the constitution of India as well as the circumstances in which it was framed. In the Indian constitution, the principle of federalism is neither a myth nor watered down.

The Indian constitution is basically federal in form and is marked by the traditional characteristics of a federal system, namely, supremacy of the constitution, division of powers between the union and state governments, existence of an independent judiciary and a rigid procedure for the amendment of the constitution.

It establishes the duly polity, with clearly defined spheres of authority between the union and the states to be exercised in fields assigned to them respectively. There is an independent judiciary to determine issues between the union and the states or between one state and another.

An amendment in the respective jurisdiction of the union and the states can be brought about only by invoking a special procedure in parliament and ratification by a majority of the states.

Provisions for a Federal Union

The makers of Indian constitution keeping in view of the continental size and huge number of its population on one hand and diverse nature of its society on the other opted for a federal system instead of a unitary one.

Federalism is one of the dominant features within the constitution without using the word ‘federal’. Article 1 of the Indian Constitution declares, “India, that is Bharat, shall be a Union of States”, the term union is preferably used to indicate four things.

a) That the Indian Constitution is not the result of the agreement by the units

b) That the constituents have no entitlement for secession.

c) That the Union can directly control the units in case of the failure of the constitutional machinery.

d) That the Union is privileged with more powers, Influences and incentives than the constituent units.

Dr. B.R. Ambedkar explained the position of Indian constitutions federal scheme clearly while introducing the Draft Constitution in the Constituent Assembly: “ though India was to be a federation, the federation was not the result of an agreement by the states to join in a federation, and that federation not being the result of an agreement, no state has the right to secede from it. The federation is a union because it is indestructible. Though the country and the people may be divided into different states for convenience of administration, the country is one integral whole, its people, a single people living under a single imperium derived from a single source.”

The emphasis on India being a “Union” was to convey the fact that it was not the result of a compact or agreement between the constituent units but a forthright declaration by the constituent units but a forthright declaration by the constituent Assembly, which derived its powers and authority from the sovereign people of India.

Article 2 provides that parliament may by law admit new states into the union of India or establish new states on such terms and conditions as it deems fit.

Article 3(a) states that the parliament is empowered to form a new state by separation of territory from any state or by uniting two or more states or parts of states or by uniting any territory to a part of any state, (b) increase the area of any state (c) decrease the area of any state (d) alter the boundaries of the state (e) alter the name of any state.

Article 3 also includes a saving clause in the constitution to protect the rights of the state in regard to the changes in their territories. The first condition is that no bill for the purpose can be introduced in either house of parliament except on the recommendation of the president. Secondly, where the proposal contained in the bill affects the area, boundaries or name of any states, the bill must be referred by the president of the legislatures of the concerned states for expressing opinion thereon. Such an opinion has to be expressed within a period specified by the president. Parliament is not bound to accept or act upon the views received on time.

Article 4 of the Indian Constitution states that any law passed by parliament affecting the area of any states shall contain necessary and consequential amending provisions of the first and fourth schedule and such law not be deemed to be an amendment of this constitution for the purpose of article 368. Thus, it is clear that for affecting the area of any state or making any territorial adjustments between two or more states, it is not necessary to invoke the provisions of Article 368.

Provisions for Amendment

The Rigid constitution is one of the important features of federal system. The central problem in devising a procedure for constitutional change is to reconcile two principles: the need for preventing ill considered change and the need to allow desirable and substantial amendments to be made.

The necessity of provision for change is recognized in all constitution by various methods, which make the amending process more difficult than the enactment or ordinary legislation. “While we want this constitution to be as solid and permanent as we can make it, there is no permanence in constitution.

There should be certain flexibility. If you make anything rigid and permanent, you stop the nations growth, the growth of a living, vital organic people… in any event, we could not make this constitution as rigid that it cannot be adapted to changing conditions” so said India’s first Prime Minister Jawaharlal Nehru on the nature of the Indian Constitution.

Amendment Method

Part XX, Article 368 of the constitution provides for three methods of amendment of different parts of the Constitution. These are

By Simple majority: Certain parts of the constitution are open to amendment by simple majority of the members of the house present and voting. These includes:

1. Admission or establishment of new states, formation of new states, and alteration of areas, boundaries or names of existing states (Art. 4)

2. Creation or abolition of legislative council (Art 169)

3. Admission of the tribal areas of the state of Assam, Meghalaya, Tripura and Mizoram.

4. To introduce bills pertaining to Art 4 and 169, a precondition is that there should be a presidential recommendation to introduce such bills and the state legislative assembly concerned should have passed resolution to that effect.

By Special Majority: Certain parts of the Constitution can only be amended by a special majority i.e., a majority of the total members of the house as well as two-third majority of the members present and voting. Part III and IV of the Constitution, which deal with the fundamental Rights and Directive Principles respectively belong to this category.

By both Special Majority and Ratification of the states: Certain articles cannot be sought without ascertaining special majority and ratification by the required number of states. The following are the articles and subject concerned.

• Election of the president and the manner of election (Art 54 & 55)
• Extent of the executive power of the Union (Art73)
• Extent of the executive power of the states (Art 162)

Union Judiciary (Chapter IV or Part V)

• High Court for a Union territory (Chapter V of Part V and Art 241)
• The three list (seventh Schedule) and
• Provision of Article 368 itself

Amendment Procedure

According to Article 368, an amendment may be initiated only by the introduction of a bill for the purpose in either house of parliament.

When the bill is passed in each house by a majority of the total membership of that house and by a majority of not less than two-thirds of the members of that house present and voting, it shall be presented to the president for his assent. When the president gives his assent, the constitution stands amended in accordance with the terms of the bill. But, in case of certain amendments, ratification by the legislatures of not less than one- half of the states by resolution to that effect is required before the amending bill is presented to the president for assent.

The amending process of the Indian Constitution shows India has an edge over other constitutions in certain vital aspects. The procedure for amendment must be classed as “rigid” in so far as it requires a special majority and in some cases, a special procedure prescribed for ordinary legislature.

Provisions for Distribution of Powers

Distribution of Powers between the union and the units and all the branches of government in a federal system is a natural phenomenon of constitution. The federal policy survives on the cooperation and co-ordination between the central and state governments.

The dual government system and the division of powers are parts of the federal system. To avoid confrontation or a repugnant situation, the framers of the constitution made a detailed provision of the powers of both union and the units. Under such provisions, both governments exercise their powers in the administrative domain.

Article 1 of our Constitution describes India as a “union of States”. When the British power was established in India it was highly centralized and unitary. To hold India under its imperial authority, the British had to control it from the center and ensure that power remained centralized in their hands.

Following the precedent set by the Government of India Act of 1935, the constitution makes perhaps the worlds most clear and detailed distribution of powers between the federation and its constituent units. The division of powers in India between centre and state divided into:

1. Legislative Powers
2. Administrative Powers
3. Financial Powers

Legislative Powers

Part XI, Article 245 to 255 contains a charter of distribution of powers between centre and state. The distribution of legislative powers is under following two heads:

The territory over which the federation and units shall, respectively, have their jurisdiction. The subjects to which their respective jurisdiction shall extend.

According to Article 245 states that “subject to the provisions of this constitution, parliament can make laws for the whole or any part of the territory of India and the legislature of a state may make laws for the whole or any part of the state.

Article 246 confers exclusive jurisdiction on parliament and the state legislatures to make laws with respect to any of the matters enumerated in List-I, II, III i.e., union, state and concurrent list of the seventh schedule.

List I or the union list includes 99 subjects including residuary powers, (the union has exclusive power to make any law with respect to any matter not enumerated in the concurrent list or state list). Subjects of national importance requiring uniform legislation are included in this list. The more important examples are, defence, armed forces, foreign affairs, insurance coinage, banking etc.

List II or the State list comprises 61 items over which the state legislature has exclusive power. Some subjects of vital importance under the state list are: State taxes, police, administration of justice, local Self-government and agriculture.

List III or the concurrent list, which comprises 52 subjects, accords power to both the union and state to legislate according to the needs of time. Important subjects in concurrent list are Criminal law and procedure, Civil Procedure, marriage, contract, welfare, labour, social planning etc.

The constitution vests the power to legislate on residuary subjects i.e., subjects not enumerated in any one of the three lists, in the union Parliament under Article 248. It is obvious that one may struck, by the size of the union list and the scope of central authority.

The makers of the constitution had foreseen exceptional circumstances, too. Under such conditions either the normal distribution of powers stands suspended or the union legislature gains a sway over the state subjects. These extraordinary circumstances are:

In the National Interest: Article 249 states that parliament has the power to legislate with respect to a matter enumerated in the state list in the national interest if the council of states declares by a resolution that such legislation is expedient in the national interest.

Under proclamation of emergency: While the president makes the proclamation of emergency, the parliament has the power to legislate with respect to any matter in the state list [Article 250].

By agreement between states: Article 252 states that parliament has the power to legislate for two or more states by consent and adoption of such legislation by any other state.

To implement treaties: Article 253 states that parliament has the power to legislate on any subject for implementing an international treaty, agreement or convention.

Under a proclamation of failure of the constitutional machinery: When a proclamation is made by the President under Art 356, the President may declare that the powers of the state legislatures shall be exercisable by or under the authority of parliament.

Administrative Powers

It is common in federal systems that the administrative relations between the union and the states are fraught with difficulties. The constitution of India seeks to achieve a smooth working relationship between the two levels. The administrative relations between centre and states have regulated in Article 256 to 263 in chapter II of Indian Constitution.

Article 256 of Indian Constitution states that, the executive power of every state shall be so exercised as to ensure compliance with the laws made by parliament and any existing laws which apply in that state, and the executive power of the union shall extend to the giving of such directions to a state, may appear to the government of India to be necessary for that purpose.

It may be considerable to note that the main theme of Art 256 is uninterrupted operation of union laws in every part of the territory in India. This article imposes a positive duty on the states to “ensure compliance” with the parliamentary enactments.

To ensure compliance means to secure compliance and therefore, this phrase is comprehensive enough to denote not only to the effective operation of the laws of parliament but also their obligation to aid the union government, which such assistance is necessary, in the enforcement of those laws.

The constitution clearly provides for inter-governmental delegation of functions between the union and states. As such, according to Article 258, the union can confer powers on states in certain cases-Article 258(1) reads, not withstanding anything in the constitution the president may with the consent of the government of a state, entrust either conditionally or unconditionally to that government or to its officers functions in relation to any matter to which the executive power of the union extends.

Article 258(2) states, a law made by parliament which applies in any state may, not withstanding that it relates to a matter with respect to which the legislature of the state has no power to make laws confer powers and impose duties, or authorize the conferring of powers and the imposition of duties upon the state or officers and authorities thereof.

Though the theme of Articles 258 and 258(A) is intergovernmental delegation of functions between the union and states, the main purpose of Article 258 originally seems to be decentralization of administrative powers as far as possible.

Article 260 provides that the government of India may undertake any executive, legislative or judicial functions in a foreign territory. Such functions have to be discharged by agreement with the government of such territory, which is not a part of the territory of India, by the government of India.

Another provision that facilitates the smooth transaction of administrative business is embodied in Article 261 directing that full faith and credit shall be given to public acts, records and judicial proceedings of the union and the states in all parts of the Indian Territory.

It also contains a provision relating to the inter-state rivers and river valleys. In this direction Article 262(1)b authorizes parliament to provide by law for the adjudication of any dispute or complaint with respect to the use, distribution or control of the waters of, or in, any inter-state river or river valley.

Finally, in order to have a smooth relations and smooth working of the administrative machinery of the country Article 263 of the constitution empowers the president to appoint an inter-state council and this council is charged with the following relevant duties.

1. Inquiring into the advising upon disputes, which may have arisen between states.
2. To investigate and discuss subject in which the states or the union and the states have a common interest.
3. To make recommendations for the better co-ordination of policy and action with respect to these duties.

Financial Powers

Finance is the backbone of politico economic strength and so it is the essential prerequisite of government. Part XII, chapter 1 of the constitution deals with finance. The success of a federal system depends on the proper exercise of respective powers by the union and the constituent states.

Such powers and functions are however, unthinkable in the absence of adequate financial resources. Unlike other federations, the Indian constitution has tried to demarcate the area of taxation as completely as possible. Every possible tax has been assigned either to the state or to the union. The constitution tries to prevent finances from becoming a bone of contention between centre and states.

Article 265 says that no tax can be levied or collected except by the authority of law. In other words no tax can be imposed by an executive order.

Article 266 provides for a consolidated fund of India and of the state, subject to the assignment of certain taxes to the state, all revenues received by the government of India, all loans raised by that government by the issue of treasury bills, loans or ways and means advances and all moneys received by that government in repayment of loans shall form one consolidated fund to be entitled “the consolidated fund of India shall be credited to the public account of India.

Article 267 empowers parliament and legislature of a state to create a contingency fund for India or for states, as the case may be.

Article 268 sates that stamp duties and duties of excise on medicinal and toilet preparations are levied by the union, but they are collected by, and assigned to the states.

By virtue of Article 269 the center levies and collects taxes on sale or purchase of goods rather than newspapers and taxes on consignment of goods shall all be levied and collected by the government of India but shall be assigned to the states concerned and distributed among the states as may be decided by parliament by law.

Again Clause (2) of Article 269 gives an impression that parliament is free to formulate any principle for the distribution of the net proceeds of the taxes and duties mentioned in Article 269(1) among the states, it is in fact, not so fee, because the same article, as shown earlier has imposed on it an obligation to adopt the “collection principle” as the basis of distribution of the said net proceeds among the states.

Another important provision, pertaining to the financial relationship between the union and the states is embodied in Article 272, which provides that union duties of excise mentioned in the union list, except those covered by article 268, shall be levied and colleted by the union, but, if parliament by law so provides, the whole or any part of the net proceeds of the duty shall be paid to the states, and those seems thus determined shall be distributed among the states in accordance with such principle of distribution as may be formulated by the union.

Article 274 is concerned to all bills relating to taxation in which the states are interested, the constitution requires the prior recommendation of the President.30 Thus, when a bill which effects the meaning and scope of the term agricultural income as applied to Indian income-tax is to be introduce in the house of the people, the presidents recommendation in necessary.

The purpose of such recommendation by the president is to safeguard the interest of the states by making it obligatory for the union government to consult them through the president.

Giving assistance to states in the form of grants and loans are embodied in Article 275 of Indian constitution.

Article 276 empowers the states to impose a tax, which is in the nature of a tax on income, in respect of professions, trades, or employment or the benefit of municipalities, district boards or other local authorities.

As the distribution of the financial resources has to be adjusted from time to time having regard to the changing economic conditions and varying financial needs of the union and the federating units, provision under Article 280 is made for the appointment of a Finance Commission to discharge this function.

The commission has to be constituted by the president after every five years. The commission is to consist of a chairman and four members to be appointed by the president. It is the duty of the commission to make recommendation to the president as to:

a) the distribution between the union and the states of the net proceeds of taxes which are to be, or may be, divided
between them under this chapter and the allocation between the states of the respective shares of such provinces.

b) The principles which should govern the grants-in-aid of the revenue of the states out of the consolidated fund of India.

c) Any other matter referred to the commission by the president in the interest of sound finance. And Article 281 states that the president shall cause every recommendation made by the Finance Commission under the provision of this constitution together with an explanatory memorandum as to the action taken thereon to be laid before each house of parliament.

Article 282 to 290 have been grouped together under the subtitle “Miscellaneous Financial Provisions”. The framers of the constitution realizing that the union and state government would not be able to raise sufficient funds through taxation, made provisions to enable them to borrow on the security of their consolidated funds. Therefore, the union executive is empowered under Article 292 to borrow from anywhere it likes upon the security of the consolidated fund of India.

Parliament may fix from time to time the limits within which such borrowings could be made as well as the giving of guarantees within such limits.

Again from Articles 301 to 307 provides for provisions dealing with inter state trade and commerce in the constitution.

Under Article 302 parliament may impose restrictions on trade and commerce and intercourse in any part of the territory of India in the public interest.

Article 307 empowers the parliament to appoint such authority as it considers appropriate for carrying out the purposes of Article 301,302,303 and 304 and to confer on that authority such powers and duties as it thinks necessary.

Emergency Provisions

The emergency provisions comprise nine articles 352-360 of Part XVIII of the constitution. Accordingly the emergency provisions empower the president in effect to suspend the constitution and to take over the administration of a state or states of the Indian union if he is satisfied that there is a threat to the security of the nation or a breakdown in the constitutional machinery of a state or states or a financial emergency.

During proclamation of financial emergency according to Article 360, the executive authority of the union shall extend to the giving of directions to observe canons of financial authority as may be specified in the directions, to require the education, salaries and allowances of all or any class of persons serving in connection with the affairs of a state, and to require all money bills or other financial bills to be reserved for the consideration of the president after they have been passed by the legislature of the state.

Provision for Citizenship

In a federation, there are two governments, which directly exercise their respective powers over the same individual. Therefore, the constitution confers the powers to legislate regarding citizenship upon both the union and the state legislatures, relating to their respective jurisdictions, this would obviously lead to a conflict of jurisdiction and allegiance, owing to diverse commands of the union and state laws of citizenship. Example U.S.A., Switzerland and Australia are the classical federations where the deal citizenship prevails.

Some other constitutions have avoided such complications, by providing for a single citizenship, viz., that of the union, and conferring on the union parliament exclusive power to legislate regarding citizenship. Under this category comes the constitution of Canada, India, and Nigeria.

As stated earlier, in U.S.A there is a dual citizenship with separate privileges and immunities but in India there is a single citizenship notwithstanding the adoption of a federal polity Indian constitution avoids all the complications that arise out of double allegiance and different sets of privileges and immunities as in the U.S.A.

There is no separate state citizenship in India. This is why a citizen of India has a fundamental right to move freely in and to reside or settle in any part of India, without any interference from the states (Art 19(1) (d) (e)),except in so far as provided in cl.(5) of Art 19.

The legislative power with respect to citizenship, naturalization and aliens belongs exclusively to the union legislature.

Provision for Settlement of Disputes

Due to the dual government involved in a federation, with a division of powers as between the two governments by the constitution federal constitutions usually provide machinery for settlement of disputes, which are bound to arise as between the union and the states on the one hand, and the states, on the hand. The more common machinery is adjudication by a supreme constitutional court.

In India, the supreme court has been given exclusive original jurisdiction which extends to settle the disputes:

a) between government of India and one or more states

b) between the government of India and one or more states on one side and one or more states on the other,

c) between two or more states (Art-131).