2.3 Centre–State Relations in India: Legislative, Administrative and Financial Relations


SIMPLY SMART

Introduction

Centre–State relations refer to how powers and responsibilities are shared between the Union Government (Centre) and the State Governments.
These relations are defined mainly in Part XI (Articles 245–263) of the Indian Constitution.

According to D.D. Basu, India follows a “federal system with a strong central authority”.
To maintain unity in a diverse nation, powers are divided into:

  1. Legislative Relations

  2. Administrative Relations

  3. Financial Relations

1. Legislative Relations (Articles 245–255)

Legislative relations explain which government makes laws on which subjects.
The Constitution clearly divides legislative powers through the Seventh Schedule.

1.1 Three Lists of the Seventh Schedule

(1) Union List

  • Contains subjects only Parliament can legislate on.

  • Examples: Defence, Foreign Affairs, Banking, Postal services.

  • Reason: Needed for national unity.

Keyword: Union List Powers

(2) State List

  • States have exclusive power to make laws on these subjects.

  • Examples: Police, Public Order, Agriculture, Health, Local Government.

Keyword: State Legislative Powers

(3) Concurrent List

  • Both Centre and States can legislate.

  • Examples: Education, Forests, Marriage & Divorce, Trade unions.

  • If there is a conflict → Central law prevails (Article 254).

Keyword: Concurrent List Dominance

1.2 Residuary Powers

Subjects not listed in any of the three lists belong to the Centre.
Example: Cyber laws, Space activities.

1.3 Parliament’s Power Over State List (Exceptional Cases)

Parliament may legislate on State subjects in these conditions:

  1. National Interest – Rajya Sabha Resolution (Article 249)

  2. During National Emergency (Article 250)

  3. President’s Rule in a State (Article 356)

  4. To implement International Agreements (Article 253)

  5. When States request Parliament to make laws (Article 252)

This strengthens the Centre’s role.

2. Administrative Relations (Articles 256–263)

Administrative relations describe how the Centre and States cooperate in administration.

2.1 Centre’s Control Over State Administration

(1) Directions by the Centre (Article 256)

States must comply with Central laws.
Centre can issue directions for:

  • Maintaining communication networks

  • Railway safety

  • Development schemes

(2) Protection of State Laws (Article 257)

State administration must not interfere with Union functions.

(3) Power in Emergencies

During National Emergency, the Centre can take complete control of State administration.

2.2 Appointment and Role of Governors

  • Governors are appointed by the President.

  • Act as a bridge between Centre and States.

  • Can reserve state bills for the President.

  • Can recommend President’s Rule in the state.

This gives the Centre indirect control.

2.3 All-India Services (Article 312)

Services like IAS, IPS, IFS are common to both Centre and States.
These officers ensure a uniform administrative structure.

Keyword: All India Services and Federalism

2.4 Inter-State Council (Article 263)

Promotes coordination between Centre and States.
Can investigate disputes, give recommendations, and improve cooperation.

2.5 Public Service Commissions

Central and State PSCs operate separately, but additional members may be appointed by the Centre to state commissions.

3. Financial Relations (Articles 268–293)

Financial relations explain how revenue is distributed and how financial cooperation occurs.

3.1 Taxation Powers

(1) Union Taxes

Examples: Income tax (except agricultural income), Customs, Excise, GST (shared).

(2) State Taxes

Examples: State GST (SGST), Land Revenue, State Excise, Road tax.

(3) Shared Taxes

Certain taxes collected by the Centre but distributed to States:

  • Income tax

  • GST share

  • Union excise duty

Keyword: Tax Sharing between Centre and States

3.2 Grants-in-Aid (Article 275)

The Centre gives grants to states for:

  • Tribal welfare

  • Development schemes

  • Special infrastructure

  • Disaster relief

Some are statutory; some are discretionary.

3.3 Finance Commission (Article 280)

A constitutional body established every 5 years.
It recommends:

  • Distribution of taxes

  • Grants-in-aid

  • Financial relations improvement

It ensures fair distribution of money.

Keyword: Finance Commission India

3.4 Loans to States (Articles 292–293)

The Centre can provide loans to states.
States must seek central permission before borrowing from external agencies.

3.5 GST & Cooperative Federalism

GST (Goods and Services Tax) created a GST Council which includes both Centre and States.
This promotes cooperative financial decision-making.

Evaluation of Centre–State Relations

1. Strong Central Tendency

Legislative, administrative, and financial powers favour the Centre.

2. Federal in Structure but Unitary in Practice

India is federal, but during emergencies or in exceptional powers, it becomes unitary.

3. Cooperative Federalism Growing

Institutions like GST Council, NITI Aayog support joint decision-making.

4. Judiciary Acts as a Balancing Authority

Supreme Court resolves disputes between Centre and States.

Conclusion

Centre–State relations form the backbone of Indian federalism.
The Constitution divides powers across legislative, administrative, and financial spheres to ensure both:

  • National unity, and

  • State autonomy

Though India has a strong Centre, the system encourages cooperative federalism, enabling both levels to work together for the nation’s development.



For Full Chapter  --->  22IMC7Z2 CONSTITUTION OF INDIA Unit-wise



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